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Industry Not Thrilled With West Virginia Marcellus Bill

A committee of West Virginia legislators has finalized a compromise Marcellus Shale regulatory reform bill and is urging Gov. Earl Ray Tomblin to call a special session for its passage.

But the prospects of the governor calling a special session -- a move lawmakers have desired for months -- remain unclear as supporters of the shale gas industry take a dim view of the bill, also known as the Marcellus Draft Bill (MDB).

"There's been talk about a special session covering this issue for awhile, and the governor has always said that if the legislature can develop a bill that they would agree upon, he would be willing to call a special session," Kimberly Osborne, Tomblin's press secretary, told NGI's Shale Daily on Monday.

In a statement, Tomblin said the 10-member Joint Select Committee on Marcellus Shale (JSCMS) had "completed its mission," and added that his administration "will now turn our attention to working with the legislative leadership to determine what aspects of the proposed legislation can be agreed upon and what changes are needed." There was no reference to calling a special session.

Asked if a special session might be called during the interim committee meetings scheduled for Dec. 12-14, Osborne said, "It certainly would be best to complement any special session with already planned interim meetings because the legislators would already be in town. But at this point I don't know if we're putting a date on it. As the governor said, the legislation is currently being reviewed."

Charlie Burd, executive director of the Independent Oil and Gas Association of West Virginia (IOGA), told NGI's Shale Daily that he doubted there would be a special session. He said he thinks the MDB will advance to the Joint Interim Committee on Government and Finance followed by a vote in the West Virginia legislature, which convenes for its next 60-day session on Jan. 11.

According to Burd, the full legislature will have to work hard to pass a bill that the shale gas industry supports. He said the industry isn't thrilled with the MDB in its current form because of its numerous amendments, especially one that calls for operators to pay a $10,000 permitting fee for the first well drilled on a pad, and $5,000 for each additional well (see Shale Daily, Oct. 17; Sept. 16).

"There were nearly 30 amendments to the original document that they started with," Burd said Monday. "In a general sense, the vast majority of those amendments are not in industry's favor. There are provisions of this bill which just harm a producer's ability to drill and harvest his resource. IOGA has made it perfectly clear from the very beginning that we support certainty in the regulatory process and a bill that is fair and reasonable. The bill as it stands now, in our opinion, falls short of that."

The JSCMS has been using the Natural Gas Horizontal Well Control Act, also known as SB 424, as the basis for a new bill (see Shale Daily, Aug. 11).

"We have stated publicly that we do not object to reasonable permit fee increases," Burd said. "What they have in the bill now is more than we had hoped to see, but less than they originally started with. [But] the only thing that basically changes in the permit application is the coordinates on the well."

The state Department of Environmental Protection had proposed increasing horizontal drilling permit fees to $10,000 from the current $650 paid by all drillers to fund the additional inspectors (see Shale Daily, Feb. 11).

"You have to wonder is that in excess of what the DEP might need," Burd said. "It's been difficult to get the DEP to clearly identify their exact needs with regard to additional inspectors and staff."

Other regulatory changes contained in the MDB include:

SB 424 passed the Senate by a unanimous vote on March 2, and a different version of the bill was approved by the House of Delegates on March 10. But legislators could not pass a reconciled version of the bill before the legislature convened for the 2011 season (see Shale Daily, March 15; March 11; March 4).

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