This article originally provided by The Charleston Gazette

January 8, 2011

Drilling reforms expected to get legislative attention

CHARLESTON, W.Va. -- Oil and gas lobbyists and environmental groups are both offering cautious reactions to a Department of Environmental Protection proposal for a wholesale rewrite of the way West Virginia regulates drilling operations across the state.

Citizen groups are hoping to persuade lawmakers to strengthen the legislation, while industry officials are still suffering "sticker shock" from a permit fee increase intended to help pay for improved regulation of their operations.

"It's a start," said Don Garvin, lead lobbyist for the West Virginia Environmental Council. "It's significantly better than the current program."

DEP officials, after months of talks with groups on both sides, have put together a 141-page bill in response to growing citizen concerns about the boom in horizontal drilling, especially for gas reserves in the Marcellus Shale formation.

Among other things, the bill aims to get a handle on how much water drillers use and how they dispose of their polluted wastewater, and on the increased surface footprint required for the larger drilling sites and wells.

Companies would have to submit water management plans that list the chemicals used in drilling and describe how they would dispose of drilling wastewater. It includes a new set of performance standards, and would require any well sites greater than five acres in size to submit formal designs put together by a professional engineer.

DEP Secretary Randy Huffman said his agency got the approval of Acting Gov. Earl Ray Tomblin to seek a sponsor for the bill, but that the legislation is not among Tomblin's own legislative priorities.

The bill rewrites entire sections of oil and gas law and creates several major new regulatory requirements. A $10,000 permit fee on all horizontal wells would help DEP double the size of its 32-person Office of Oil and Gas.

"What we have here is not a new twist on the same industry," Huffman said last week. "In my view as a regulator, we have a whole new industry and we don't have a regulatory program to deal with that industry."

In their push for more natural gas, drilling operators are increasingly using a process called hydraulic fracturing, which shoots vast amounts of water, sand and chemicals deep underground to break apart rock and release the gas. More frequently, this process also involves drilling down and then turning horizontally.

"It's part of being responsive to the public," Huffman said of the bill. "We need to give the public a sense of confidence."

Corky DeMarco, lobbyist for the state Oil and Natural Gas Association, said his group has some concerns about the legislation, but is willing to continue working with DEP to work something out.

"We had a bit of sticker shock with the permit fees," DeMarco said. "The fees are a bit of a problem and we need to hear why they need to go up at that level.

"[But] we need to have the DEP in a position where they have the confidence of the citizens of this state," DeMarco said. "We need to work with them on this."

Garvin said his group is concerned that DEP did not address potential air pollution issues related to gas well facilities, and is also upset that the bill continues to allow operators to bury drilling pit wastes on site.

All sides are also just beginning to compare the DEP's language to an oil and gas proposal put together previously by a legislative subcommittee.

"What's important is what comes out of the legislative sausage grinder," Huffman said.

Reach Ken Ward Jr. at kw...@wvgazette.com or 304-348-1702.