Acting West Virginia Gov. Earl Ray Tomblin last week said he would continue to fight for the state’s huge coal industry, but he also urged state residents to embrace the opportunities that would come from natural gas drilling in the Marcellus Shale. However, producers face soaring drilling fees under draft legislation expected to be considered by lawmakers.

Tomblin, formerly president of the West Virginia Senate, assumed the duties of governor when former Gov. Joe Manchin resigned following his successful run for a U.S. Senate seat. The next gubernatorial election is scheduled for November.

Creating new opportunities for industry and jobs will be a major focus, said Tomblin in his state of the state address. Coal continues to be a key to the state’s prosperity, but he said the Marcellus Shale’s gas resource potential cannot be ignored.

“West Virginia’s economic future lies not only in its continued use of coal as a resource,” he said. “Lying just a mile below the surface of much of our State is a rock formation called the Marcellus Shale. This formation is rich in natural gas and new technology and techniques have made access possible for the oil and gas industry.

“The development of the Marcellus Shale formation for natural gas production is an economic development opportunity for the state, and we need to embrace it. Billions of dollars of private capital have already been invested in this activity and with it has come many jobs.

“For example, [Wednesday] Dominion announced its intention to build a natural gas processing facility in Natrium, West Virginia. This project will allow for significant development opportunities in West Virginia. And it is not only about the production of natural gas. The development of the Marcellus Shale has the potential to restart the manufacturing industry in West Virginia. It is an opportunity that we simply cannot let go by.”

The “appropriate use of natural resources can serve as a strong foundation for West Virginia’s economic future,” said Tomblin. “We all know that coal keeps the lights on. But we cannot forget — or let others ignore — that it is vital to the economic and national security of our country to utilize West Virginia’s natural resources.”

Tomblin did not mention a proposal before the legislature advocated by the state Department of Environmental Protection (DEP) to increase fees and regulations on the gas industry.

The Joint Judiciary subcommittee of the state House and Senate last week advanced the draft bill, which is be considered in the regular legislative session this year (Draft No. 1 — Sub A). If enacted the bill would amend the Code of West Virginia, Chapter 22, Environmental Resources by adding Article 6A, “Constructing Gas Wells Using Hydraulic Fracturing and Horizontal Drilling.”

The subcommittee, which advanced the legislation without a recommendation (bill sponsors), removed controversial provisions that addressed forced pooling, which would require landowner leases to be combined into a common pool under one drilling production company and using one common underground geological reservoir.

In the draft bill, well license fees would soar to $15,000/well from the current $400. Producers also would be required to pay $10,000 to modify a drilling permit and $5,000 to renew it.

West Virginia has about 59,000 active wells, mostly in the northern part of the state, said officials. However, because of prospective Marcellus Shale acreage, the state expects drilling to continue to increase.

House Majority Whip Mike Caputo, a Democrat, said the draft bill is just that — he expects the legislation to be revised once the Joint Judiciary committee begins its review. However, he said fees need to be increased as the Marcellus Shale is developed. For instance, he said more fees would allow the West Virginia Department of Environmental Protection (DEP) to hire more inspectors — there are about 12 gas inspectors each overseeing close to 5,000 wells. DEP now has funding to hire up to 17 inspectors.

Among other things, the draft legislation would require operators to:

The state’s joint House-Senate Judiciary Committee is expected to take up the legislation during the 60-day regular legislative session, which began last Wednesday.

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