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NatGas-Related Bills Advance, Hit Snags in West Virginia

The West Virginia House Judiciary Committee has rewritten a bill that would have exempted 29,000 oil and natural gas industry storage tanks from a 2014 law aimed at better protecting public water supplies.

The committee substitute would only exempt 2,300 industry tanks from part of the Aboveground Storage Tank Act, including the submittal of spill prevention response plans and certified inspections. The amended version would still require operators of those tanks to submit a registration form and pay a small fee.

HB 2811 would have originally exempted smaller tanks with capacities of 210 barrels that hold brine water or any other fluids from "hydrocarbon production activities" if they were not located in an area near drinking water intakes. About 42,000 tanks are covered statewide by the 2014 law.

The 2,300 smaller tanks that would be exempt from additional regulatory requirements are those farther away from drinking water intakes or 10 hours upstream. The bill now heads to the full House. The aboveground storage act was prompted by a January 2014 incident in which thousands of gallons of coal-cleaning chemicals leaked from a Freedom Industries processing facility on the Elk River, a waterway from which numerous communities draw their water supplies.

The committee made its changes last week after more than an hour of discussion and a separate public hearing during which it heard testimony from stakeholders, according to local news media reports.

Another piece of industry-backed legislation has competition. SB 244 was introduced in February to enact co-tenancy and joint development instead of the similar forced pooling legislation that has failed in years past. The bill has been stuck in the Senate Judiciary Committee.

Forced pooling legislation has failed five times in the last seven years in West Virginia. Lawmakers have rejected the legislation over concerns about property rights. West Virginia is one of only three states without some kind of pooling law.

Republican Sen. Charles Trump has introduced SB 576 in a better effort to address stakeholder concerns. The bills would establish co-tenancy, allowing a producer to secure a simple majority agreement from mineral rights owners to access natural gas on adjoining properties rather than the current 100%. Joint development would allow gas from nearby properties where mineral rights owners have already agreed to drilling to be accessed.

While SB 576 would require drillers to obtain surface-use agreements from integrated landowners, the West Virginia Royalty Owners Association said the new bill doesn't do enough to address its members' concerns about the post-production costs that are being deducted from some royalty checks. The organization also claims that the new bill provides worse terms if a landowner is forced into development and, like SB 244, said it does not support the legislation.

The West Virginia Oil and Natural Gas Association has worked closely with lawmakers on SB 244. Under current law, forced pooling is allowed in the state for deep wells below the Marcellus, such as the Utica, as well as shallow secondary oil recovery and coalbed methane wells, but not those targeting shallow formations, such as the Marcellus. The legislature's 60-day session adjourns on April 8.

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