A committee of West Virginia lawmakers has recommended steep increases to permit fees and bonding requirements for Marcellus Shale drilling, expanding the public notice and comment period over drilling activities and changing the way it hires natural gas well inspectors.

The Joint Select Committee on Marcellus Shale (JSCMS) said natural gas operators should pay $10,000 for the first horizontal well drilled and $5,000 for each additional well. The higher fees would provide the Department of Environmental Protection (DEP) $2.5 million annually, which the agency said it plans to use to add as many as 15 additional staffers.

“I think that this is a very good compromise,” co-chair Del. Tim Manchin (D-Marion) told the committee on Wednesday, its second meeting of the week. “This is a very good step forward in terms of trying to meet the needs of the folks in the impact zone and get more feet on the ground and to restore some confidence in the people that the state is watching out for them.”

But industry officials warned the higher fees could have a detrimental effect.

“That is a pretty dramatic increase,” Charlie Burd, executive director of the Independent Oil and Gas Association of West Virginia (IOGA) told NGI. ” I would be fearful of the message that would send to operators looking to invest in West Virginia. Smaller operators who are trying to adapt and drill the Marcellus would find these [fees] much more difficult to account for.”

The committee also recommended raising bonding requirements from $5,000 to $10,000 for each horizontal well drilled, and increasing blanket bonds — for operators permitted to drill a number of wells — from $50,000 to $250,000.

On Monday the JSCMS approved three amendments to the draft bill. The committee recommended eliminating the Oil and Gas Examining Board, giving the DEP secretary the power to call public hearings on permit applications, and expanding the notification requirements for permit applicants.

The JSCMS is using the Natural Gas Horizontal Well Control Act, also known as SB 424, as the basis for a new bill. 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 NGI, March 21; March 14; Feb. 28).

Gov. Earl Ray Tomblin issued an executive order in July directing the DEP to enforce several new safeguards and to issue an emergency rule over Marcellus regulations. The DEP complied by submitting an emergency rule to Secretary of State Natalie Tennant in August (see NGI, Aug. 29; July 18). Tennant signed the rule on Aug. 29, putting its changes into effect for 15 months while the West Virginia legislature debates and enacts legislation to make the changes permanent.

©Copyright 2011Intelligence Press Inc. All rights reserved. The preceding news reportmay not be republished or redistributed, in whole or in part, in anyform, without prior written consent of Intelligence Press, Inc.