This article originally provided by The Charleston Gazette

January 8, 2011

Bill to regulate Marcellus drilling advances

CHARLESTON, W.Va. --  A contentious draft bill to impose new regulations and higher fees for drilling for natural gas into the Marcellus shale fields advanced out of a legislative interim committee Monday -- but without a recommendation for its passage.

The bill would set new regulations for drillers tapping into the Marcellus shale field -- a massive natural gas basin, but one that requires hydraulic fracturing, or "fracking," which involves injecting a mixture of water and chemicals under high pressure to release the natural gas reserves contained in the shale.

Critics contend that tapping into the Marcellus shale field comes at a high cost, ranging from contamination of ground water to damage to local roadways from moving heavy equipment to the drilling sites.

"I think this energy needs to be developed, but it needs to be developed responsibly," Delegate Mike Caputo, D-Marion, said of the proposed legislation.

Earlier during the committee meeting, Department of Environmental Protection general counsel Kristen Boggs said that because of funding issues, the department has only 12 inspectors for the 59,000 active natural gas wells statewide.

"I know one thing for sure: Twelve inspectors for 59,000 wells certainly doesn't add up," Caputo said.

The proposed bill would raise about $3.5 million a year to hire additional inspectors by increasing the permitting fee for Marcellus shale field drilling to $15,000.

Natural gas drilling permits now cost as little as $400 per well.

Two legislators who have investments in the industry, both of whom lost re-election bids last year, argued against the tougher regulations Monday.

Delegate Mike Ross, D-Randolph, contended that tougher state regulations would drive national companies out-of-state to access the Marcellus shale field from Pennsylvania, New York or Ohio.

"I think it will discourage a lot of them," said Ross, who said the state is already at a competitive disadvantage with Pennsylvania, which has no severance tax on natural gas.

"They're doing twice the work in Pennsylvania that they're doing in West Virginia," he said.

Added Sen. Frank Deem, R-Wood, "We need to be very careful to not get so far out that we stop this fracking process. If you do, you're going to completely shut down the oil and gas industry."

Deem successfully amended the draft bill to remove all provisions regarding "pooling," which would require drillers to compensate nearby landowners for natural gas reserves drained from their properties as part of the horizontal drilling process.

That amendment prompted Caputo to have the bill advanced to the Legislature without recommendation for its passage.

"Let's keep this bill moving," he said, calling for all interested parties to continue working during the legislative session to try to come up with a workable compromise.

Reach Phil Kabler at ph...@wvgazette.com or 304-348-1220.