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West Virginia Co-Tenancy Bill Passes House, Moves to Senate

A bill that would better facilitate unconventional horizontal drilling and help natural gas producers develop larger tracts of land was introduced in the West Virginia Senate on Friday after passing the House of Delegates a day before.

The co-tenancy legislation, HB 4268, passed the House mostly along party lines 60-40, with Republicans in favor. It was referred to the Senate Energy, Industry and Mining Committee on Friday.

Producers have struggled to execute leases for some properties in the state that can be owned by dozens of people, which has prevented access to assets. HB 4268 would require a producer to obtain consent from 75% of the mineral rights owners of a single tract of land. Currently, West Virginia is the only major oil and gas producing state that still allows a minority interest owner to prevent all others from allowing drilling, according to the West Virginia Oil and Natural Gas Association.

The bill cleared the House after lengthy debates on Thursday and Friday. Several amendments were discussed, but only a few were approved that lawmakers feel won’t affect the legislation’s progress. One would take some funds that are used to plug orphaned and abandoned wells to help fund insurance for public employees and another would preserve nonconsenting or unlocatable co-owners eligibility to negotiate for future leases.

HB 4268 is the latest effort to get some kind of legislation on the books to help natural gas producers develop more of their assets in the state and, in particular, get more acreage blocked up for today’s longer laterals. Forced pooling has repeatedly failed over the years because of legislators’ concerns about property rights. The industry dropped those efforts last year and instead introduced co-tenancy and joint development proposals.

Joint development would have allowed unconventional drilling to occur on land with older leases without modifying them. That proposal was dropped from this year’s bill because proponents felt it was too controversial. Last year’s legislation, SB 576, passed the Senate but the clock ran out on the bill after it got stuck in the House Energy Committee, where lawmakers were too busy working through a packed schedule. In 2015, House lawmakers couldn’t agree on several amendments to a forced pooling bill, which resulted in a rare 49-49 tie and defeated it.  

Both industry and royalty owner representatives said they still support the bill as the Senate prepares to consider it. The 60-day regular session ends on March 10. 

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