Shale Daily / NGI All News Access

West Virginia Operators Face Escalating Drilling, License Fees

West Virginia lawmakers have drafted revised rules and fees for Marcellus Shale drillers that could hike drilling and license fees by thousands of dollars.

The Joint Judiciary subcommittee of the state House and Senate on Monday advanced the draft bill, which is be considered in the regular legislative session this year (Draft No. 1 -- Sub A). If enacted the bill would amend the Code of West Virginia, Chapter 22, Environmental Resources by adding Article 6A, "Constructing Gas Wells Using Hydraulic Fracturing and Horizontal Drilling."

The subcommittee, which advanced the legislation without a recommendation (bill sponsors), removed controversial provisions that addressed forced pooling, which would require landowner leases to be combined into a common pool under one drilling production company and using one common underground geological reservoir.

In the draft bill, well license fees would soar to $15,000/well from the current $400. Producers also would be required to pay $10,000 to modify a drilling permit and $5,000 to renew it.

West Virginia has about 59,000 active wells, mostly in the northern part of the state, said officials. However, because of prospective Marcellus Shale acreage, the state expects drilling to continue to increase.

House Majority Whip Mike Caputo, a Democrat, said the draft bill is just that -- he expects the legislation to be revised once the Joint Judiciary committee begins its review. However, he said fees need to be increased as the Marcellus Shale is developed. For instance, he said more fees would allow the West Virginia Department of Environmental Protection (DEP) to hire more inspectors -- there are about 12 gas inspectors each overseeing close to 5,000 wells. DEP now has funding to hire up to 17 inspectors.

Among other things, the draft legislation would require operators to:

The joint House-Senate Judiciary Committee is expected to take up the legislation during the state's 60-day regular legislative session, which begins Wednesday.

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