West Virginia's oil and natural gas industry remains committed to getting legislation passed that would allow forced pooling in the Marcellus Shale and other shallow formations, according to remarks delivered before the state's Joint Standing Committee on Energy.
West Virginia Oil and Natural Gas Association attorney Kurt Dettinger said Monday that after this year's last minute defeat of forced pooling legislation, the industry is still dedicated to educating lawmakers and the public about a practice that it believes could significantly boost shale development in the state.
The state legislature's 2015 regular session adjourned in March. A bill that would have allowed forced pooling in the Marcellus failed after lawmakers in the state Senate tacked on several amendments that delayed debate and helped defeat it in the final hours of the regular session (see Shale Daily, March 16). HB 2688 was the latest piece of forced pooling legislation to fail in recent years, as lawmakers have consistently cited concerns about property rights (see Shale Daily, April 17, 2013; Feb. 1, 2011).
Forced pooling is allowed in the state for deep wells below the Marcellus, such as the Utica Shale, as well as shallow secondary oil recovery and coalbed methane wells. Under current law, the state does not allow pooling for wells targeting other shallow formations, such as the Marcellus.
Dettinger delivered his remarks during an interim meeting of the joint energy committee. He said the group and its members "want to build support for a policy-based compromise bill." Pooling allows an operator to gather landowners into a unit in which they share royalties and production costs. Dozens of states have similar laws.
HB 2688, however, would have required an operator to lease or acquire at least 80% of the net acreage in a proposed unit before applying with the state for a pooling order. That requirement, Dettinger said, would have been one of the highest in the region.
Combined conventional and unconventional natural gas production in West Virginia went from roughly 539.5 Bcf in 2012 to 741.9 Bcf in 2013, the latest period for which data is available, according to the West Virginia Department of Environmental Protection (see Shale Daily, Feb. 12). Industry representatives have said unconventional development in the state is still in its early stages. If forced pooling were allowed, they contend, operators would have fewer roadblocks to deal with in securing the mineral rights to develop more acreage.
Dettinger estimated that forced pooling legislation would likely lead to the development of 100 more shale wells per year, along with $1 billion of additional capital investment and $365 million more in tax revenues.
Dettinger said his organization would work to promote the legislation before next year's regular session, which begins in January.