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Marcellus Bill Passes West Virginia Legislature in Landslide

The West Virginia legislature overwhelmingly approved a landmark Marcellus Shale regulatory reform bill on Wednesday, opening a new chapter for natural gas development in the state.

The House of Delegates passed HB 401 -- also known as the Natural Gas Horizontal Wells Control Act -- by a 92-5 vote on Wednesday morning after nearly two hours of debate on the House floor. The bill then went to the Senate, which passed it without discussion, 33-0.

Under HB 401, natural gas operators will pay a $10,000 permitting fee for the first well drilled on a pad, and $5,000 for each additional well. Tomblin said the fees would generate $2.4 million annually for the state Department of Environmental Protection (DEP) to use for hiring additional field inspectors and permit reviewers.

Other provisions of HB 401 include:

Both co-chairs of the 10-member, bipartisan Joint Select Committee on Marcellus Shale -- which crafted the regulatory basis for most of HB 401 after months of meetings -- agreed that additional legislation governing Marcellus Shale regulation would need to be enacted in the future.

"Obviously there are things left to do," said Rep. Tim Manchin (D-Marion). "Most people will recognize that we still need to do some more things for surface owners and the environment, and we still have some things to do for industry. There are issues such as pooling and unitization that need to be discussed in the future and we will engage in those [discussions]."

Sen. Doug Facemire (D-Braxton) concurred. "We now have a foundation on which the industry knows the rules in which they are to operate under, and the citizens know the rules [too]," he said. "As we go forward, if there are things that need to be tweaked or changed, we will have the ability [to do so]."

Charlie Burd, executive director of the Independent Oil and Gas Association of West Virginia, told NGI's Shale Daily that there hasn't been any discussion in the industry over challenging any aspect of the bill, which will become law once Tomblin signs it.

"I think industry has been fairly patient with the process," Burd said. "While they're not thrilled with the permit fee increases and providing public notice on every well, I don't think there's going to be an effort to go back in now and try to change those things. I think the industry will want to work within those new parameters and will attempt to simply move forward and deal with the hand that has been dealt."

L. Gil White -- a government affairs consultant for the Charleston-based firm Steptoe & Johnson and an aide to former Gov. Joe Manchin -- told NGI's Shale Daily that the nearly unanimous vote in the legislature showed that the industry was at least resigned to the changes.

"If the industry was adamantly opposed to this bill, it would have had different numbers based upon passage," White said. "The industry realized something had to happen, there had to be a first step taken. I think most realized that this is that first step. Even the legislators that didn't think this bill went far enough realized that something needed to be done, and it needed to be done now."

The state Senate unanimously approved its own version of the bill, SB 4001, also by a 33-0 vote on Tuesday (see Shale Daily, Dec. 14).

HB 401 mandates that the state Workforce Investment Council create a detailed jobs report and require that most oil and gas well inspectors be citizens of West Virginia. The bill also allows wells drilled to a depth of 100 feet into the Onondaga Formation to retain their classification as shallow wells.

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