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West Virginia Natural Gas Industry Has High Hopes for Speedier Permitting

An executive order signed by West Virginia Gov. Jim Justice on Monday to expedite all permitting in the state was welcomed with open arms by the oil and natural gas industry, whose representatives said it’s most likely to benefit the midstream sector and downstream projects. 

There are currently five major natural gas pipelines in varying stages of construction in the state, including the Mountain Valley Pipeline, Atlantic Coast Pipeline and the Mountaineer Xpress project. Like others operating across the Appalachian Basin, producers working in West Virginia’s Marcellus and Utica shales have been awaiting more takeaway capacity as production has increased to surpass 1 Tcf in recent years.

“We hope that this will apply to projects related to the oil and gas industry, both upstream and downstream, so that we can take full advantage of the vast quantities of natural gas we are sitting on in West Virginia,” said Anne Blankenship, executive director of the West Virginia Oil and Natural Gas Association (WVONGA). “The executive order signals economic growth to come and a prioritization for job creation in our area, which is certainly consistent with WVONGA’s goals.”

Industry representatives have also discussed the positive impacts Justice’s order could have on downstream projects that utilize natural gas, such as power plants and  manufacturers, but are waiting to see how the state’s executive agencies handle the mandate.

The four-page order requires those agencies, such as the West Virginia Department of Environmental Protection (WVDEP), which oversees the oil and gas industry, to “immediately review all completed permit applications upon receipt.” It also requires agencies to prioritize projects of “critical economic concern.”

Under the order, companies can submit an application to the West Virginia Development Office to be certified as a critical project. The office would then be required to make a decision on that application within 45 days of receiving it.

For projects deemed critical, executive agencies would then be required to provide the applicant with a written report of a permit’s status if it hasn’t been issued within 90 days of receipt. The order also requires the development office to issue an annual report to the governor and lawmakers about the progress of the expedited permitting program.

Blankenship said the move would hopefully attract more companies to West Virginia and help to change its reputation as “an unfriendly business climate.” Industry representatives working in other nearby states, such as Pennsylvania, have been critical of the regulatory environment, especially in the face of permitting backlogs that have at times slowed unconventional development.

For upstream operators in West Virginia, the move could lead to an uptick in permitting, which has started to bounce back from a low point during the commodities downturn two years ago. In 2016, unconventional producers applied for 264 horizontal permits and 223 were issued, according to WVDEP data. That was down from the 638 horizontal permits issued in 2014 and the 582 issued in 2015. Last year, operators applied for 517 horizontal permits and received 509.

Justice, a Republican, said the actions mirror a similar move by President Trump, who signed an order in 2017 to expedite major infrastructure permitting. Earlier this year, the governor signed two other orders establishing a moratorium on new regulations and a regulatory review. He has also signed two bills to address over-regulation.

“This isn’t about cutting corners or having a lack of regulation; it’s about making sure that the processes work,” said West Virginia Chamber of Commerce President Steve Roberts of Justice’s Monday order. “I frequently hear business owners say they can get permits approved more quickly in neighboring states. The delay in getting a permit approved can mean the difference between a company locating here or somewhere else.”

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