This article originally provided by The Charleston Gazette

December 12, 2011

Views mixed on Tomblin's drilling bill

By Phil Kabler

Governor weakens bill

Interests attack Tomblin's 'tweaks'

CHARLESTON, W.Va. -- Legislation to regulate Marcellus Shale gas well drilling (SB4001, HB401) drew the wrath of environmental and landowners groups, and reluctant acceptance from the oil and gas industry during the legislative special session Monday.

By day's end, the Senate's version of the bill (SB4001) had advanced through the Judiciary and Finance committees, and will be on amendment stage on the Senate floor this morning, where it likely will be up for a passage vote later today.

That puts pressure on the House of Delegates -- where Marcellus Shale legislation died at the end of the 2011 regular session -- which takes up the special session bill for a first time today.

Earlier Monday, the Senate Judiciary Committee advanced its draft of the bill, after a 4 1/2-hour marathon meeting. Committee members made minor amendments to the bill, primarily expanding timelines for drilling companies to notify landowners.

Monday afternoon, the Senate Finance Committee quickly approved the bill without amendment.

Finance Chairman Roman Prezioso, D-Marion, said there was consensus on the fiscal side of the bill, including provisions to increase permit fees up to $10,000.

"There had been extensive work in Judiciary Committee on the policy part of it," he said. "I don't think any of our members wanted to open up the policy part again."

In the Judiciary Committee meeting, and later in a public hearing in House chambers, environmentalists and landowners' rights advocates denounced the governor's bill for diluting industry regulations proposed last month by a House-Senate select committee, which had worked through the summer and fall to draft Marcellus Shale regulations.

"We feel the governor's bill falls short," Don Garvin, with the West Virginia Environmental Council, told lawmakers. "These are huge operations that affect a lot more than the surface tract that's being disturbed."

Garvin later Monday urged members of the House to insert the provisions of the select committee bill into the governor's bill when the House Judiciary Committee takes up the legislation this morning.

Dave McMahon, with the West Virginia Surface Owners Association, contended that the administration bill favors oil and gas operators at the detriment of landowners, who could have massive Marcellus Shale drilling pads within two football fields of their homes.

"If a well is 625 feet away from a residence, you will not be able to sleep at night," he said of drilling that initially goes on day and night at well sites.

Both Garvin and McMahon had hoped that legislators would spend the special session strengthening the select committee bill, a proposal they believe does not have sufficient safeguards for landowners, or to protect the state's groundwater supply.

However, McMahon noted, "When we saw the governor's bill, we think it's much worse."

Conversely, industry representatives objected to the bill's high fees and tougher regulations, but in the words of the Oil and Gas Association's Corky DeMarco, said they could "grin and bear it."

He said West Virginia's 5 percent severance tax on natural gas puts it at a disadvantage with Marcellus states of Ohio, with a 7/10th of one percent tax, and Pennsylvania, with no severance tax, and that the industry would be the first in the state to be hit with a 1,400-percent increase in permit fees, from about $400 a well to $10,000 for the first well and $5,000 for subsequent wells.

However, he said the primary issue for industry is regulatory stability.

"We don't want to read about Marcellus every day on every front page of every paper in the state," DeMarco said in support of the governor's bill. "It gives us a set of rules to operate by, and it gives the public confidence so we don't get beat up."

Phil Reale, representing the Independent Oil and Gas Association of West Virginia, agreed that the industry's first objective is stability -- particularly with opportunities such as multi-billion-dollar ethane cracker plants on the horizon.

"When you look down the road, you're seeing tens of thousands of jobs, you're not seeing thousands of jobs," he said of the potential manufacturing spin-offs from a cracker plant.

"It's probably a pretty good indication that not everyone is happy with what's contained in this bill," Reale said. "While nothing's perfect, this represents the opportunity for the industry to move forward."

During the House public hearing, the Independent Oil and Gas Association made a show of support, lining the chamber with dozens of members wearing association T-shirts.

At the hearing, speakers supporting the bill -- mainly those in the oil and gas industry or representing manufacturers -- alternated with those who believe the bill is inadequate to protect the environment or landowners' rights.

"This governor's Marcellus bill is a Christmas gift to drillers," said Gary Zuckett with the West Virginia Citizen Action Group. "We're not against jobs in the gas fields. We want to see a strong, thought-out bill so we don't make the same mistakes as we did with coal."

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