Monday, January 31, 2011

State DOH Issues Permit, Bond Policy For Horizontal Activities

The state Division of Highways has issued an updated policy regarding notice and bonding requirements for vehicles involved in horizontal drilling activities in West Virginia. “Upon further review of the Interim Oil and Gas Roads Policy (Policy), the Division of Highways (DOH) recognizes the need to focus the scope of its Policy on those horizontal drilling operations that are anticipated to have significant impacts on State roadways and to ensure continued maintenance of the State’s local roadways in light of heavy road traffic attendant to those types of oil and gas development operations,” the DOH’s Policy states. The policy includes new provisions for vehicles transporting 5,000+ barrels of liquids used in drilling and stimulation activities. The updated Policy calls for a DOH permit process and bonding requirements, including a blanket bond provision. Click to see a link to the DOH Policy.

Thursday, January 27, 2011

IOGA of W.Va. Plans "IOGAWV Day" At State Capitol On February 16

The Independent Oil and Gas Association of West Virginia will host its first ever "IOGAWV Day" on February 16, 2011 at the West Virginia Legislature. This event will be held at the West Virginia Capitol Rotunda and "will be a coordinated effort to put a face on our industry to our 134 elected House of Delegate and Senatorial representatives."

"Our industry is currently facing an assault on our right to drill and produce natural gas and oil of a magnitude never before seen in our history. From nearly every direction, our ability to work, provide a living for our families and to produce two valuable energy sources for America is being challenged. If we are to be successful in our endeavors to thwart this onslaught of mistruths and misinformation, it is imperative we act quickly and decisively to let our elected officials know the economic impact of our industry in West Virginia," the association said.

Wednesday, January 26, 2011

New Version Of Administration's DEP Bill Includes Pooling For Shallow Horizontal Wells

The Tomblin Administration’s new version of its DEP regulatory reform bill includes a statutory pooling provision for shallow horizontal wells. The bill is largely based on the existing requirements for statutory pooling of deep wells with certain revisions. Under this bill, a slightly reconstituted Oil and Gas Commission shall decide pooling and unitization issues for shallow horizontal wells.

Under the bill, the operator having the majority interest in the unit may seek a pooling order after notice to the interested parties and a hearing. The operator shall be the person who controls 75% or more of the acreage in the pooled unit. If no one owns more than 75%, the commission will designate the operator. The bill places certain limitations on surface disturbances for unleased mineral interests.

Leased interest owners have no election rights and, other than the operator having the right to pool the interests, their interests shall be governed by the terms of the lease.

Unleased interest owners may elect as follows:

Option 1: assign an oil and gas lease ownership interest to the operator by agreement or, if no agreement, upon such terms as are established by the commission in an order; or to lease pursuant to the terms of the oil and gas lease submitted with the application; or

Option 2: to become a non-operating working interest owner by participating in the risk and cost of the well (net proceeds of sale of oil and gas multiplied by interest within the unit); or
Option 3: to participate in the operation of the well as a non-operating carried interest owner. A risk premium determined by the commission to be between 200%-300% of the carried well operator’s share of the operator’s actual costs for well development and operation allocable to the interest of the carried interest owner applies to this option.

Option 1 is the default election.

The bill also provides for the holding in a suspense account of any unlocated interest owner’s share of the proceeds until the owner is located or the property is deemed abandoned and disposed of in accordance with the provisions of the Uniform Unclaimed Property Act.

Lewis Glasser Casey & Rollins, and its GR affiliate, continue to follow legislative developments and advocate for a statutory pooling component as part of this bill, or as a stand-alone bill. Please call if you have questions or comments.

Tuesday, January 25, 2011

WVONGA Releases Economic Impact Study For Natural Gas Industry

The West Virginia Oil & Natural Gas Association today released an economic impact study on the state’s natural gas industry. Here are some key findings (for 2009):
- the oil and natural gas industry in West Virginia employed 9,869 individuals and paid over $551.9 million in wages;
- economic activities of the industry in 2009 generated a business volume impact of over $12 billion in the state’s economy and created approximately 24,400 jobs;
- the natural gas industry paid $65.9 million in state severance taxes and the oil and natural gas industry paid approximately $88.4 million in property taxes to the state; and
- the economic impact of the Marcellus Shale development in the state in 2009 was calculated to be $2.35 billion of business volume and accounted for the generation of 7,600 jobs.
Click to see the full report: http://www.wvonga.com/LinkClick.aspx?fileticket=BtAZqbV5TKg%3d&tabid=244

Monday, January 24, 2011

Pooling Provision To Be Included In DEP Bill

Lewis Glasser Casey & Rollins has learned that the Tomblin Administration will be including statutory pooling as part of the DEP regulatory reform bill. The new version of the DEP bill is expected to be shared tomorrow, January 25. Lewis Glasser will be reviewing the provisions, but expects the pooling provisions to be in line with industry’s needs.

Friday, January 21, 2011

Marcellus Shale A 'Game Changer' For West Virginia

West Virginian's natural gas industry has a great future thanks to tremendous production potential of natural gas horizons such as the Marcellus Shale. That was the message delivered yesterday at the IOGA of W.Va. Winter Meeting by leading natural gas CEOs. Here are stories from the meeting:

Read: The Charleston Gazette

Read: Charleston Daily Mail

Thursday, January 20, 2011

State CALA Chapter Criticizing Motive Behind Hydraulic Fracturing 'Public Forum'

New York-based personal injury law firm, Weitz & Luxenberg, has scheduled its "public forum" for tomorrow in Marshall County, W.Va. The forum is being billed as an information-sharing activity focused on increased natural gas drilling activities in the area and hydraulic fracturing. However, critics complain it is just an effort to line up plaintiffs for future lawsuits. According to an article on-line at WVRecord.com, the West Virginia Citizens Against Lawsuit Abuse (CALA) is warning residents that the meeting has ulterior motives. "Area residents need to realize that while this law-firm-sponsored event is held out as a 'public forum,' an ulterior motive could be to sign up plaintiffs for potential future lawsuits," WV CALA Executive Director Richie Heath is quoted in the WVRecord.com. "Anyone attending should go in knowing that the out-of-state personal injury law firm providing them with information has a profit motive for doing so. Area residents need to ask themselves why a New York-based personal injury law firm is interested all of the sudden in holding informational meetings in Cameron, West Virginia." Click to read the WVRecord.com article.

Wednesday, January 19, 2011

Law Firm, Connected to New York Assembly Speaker, Planning Public Forums In West Virginia

The New York Post is reporting that an influential New York personal-injury law firm is planning “public forums” in Pennsylvania and West Virginia to "listen to the concerns of the community, share information and discuss legal options" about natural gas exploration and hydraulic fracturing. The law firm, Weitz & Luxenberg, has as one its principals the Speaker of the New York State Assembly, The Hon. Sheldon Silver. The “exclusive” story appeared in the January 17 edition of the daily newspaper. The news article leads off with this statement: “As Assembly Speaker Sheldon Silver leads the fight to block a type of natural-gas drilling in New York, his private law firm is in other states trying to drum up multimillion-dollar lawsuits against the practice, The Post has found.” The newspaper notes that Speaker Silver has been a major opponent to expanded natural gas drilling in the Empire State. A spokesperson for the Speaker is quoted in the story as saying, “The speaker believes hydrofracking poses a major threat to the safety of New York's drinking water.” Click to read story.

Monday, January 17, 2011

Northern Legislators Speak Out On Natural Gas Regulatory Changes

An article in the Wheeling, W.Va. newspaper reveals strong sentiments by certain area legislators who want to make changes to the state's natural gas regulations. However, some of the changes being outlined by legislators are of concern to the industry's two trade groups. Among the suggested changes mentioned in the article are new requirements on water use and disposal, surface owner rights and higher permit fees to fund additional inspectors. Click to read article. Pooling is also being discussed by major horizontal drilling producers as a way to more efficiently and fairly develop strata by horizontal drilling techniques. Industry representatives, including Lewis Glasser, are working to ensure that the Legislature enacts balanced regulatory changes.

Thursday, January 13, 2011

DEP Set To Introduce Oil/Gas Regulatory Bill; Industry Providing Comments

Officials with the W.Va. Department of Environmental Protection have met with IOGA of W.Va. and then separately with WVONGA, and the department intends to introduce a bill by next Friday dealing with oil and natural gas regulatory matters. The Secretary has been urged to include pooling provisions or, in the alternative, to publicly support pooling legislation introduced in separate legislation that LGCR is reviewing. The proposed DEP legislation is in its final draft stages, and producers are making final comments on streamlining and clarifying language, best practices concepts and permitting fees. DEP will provide its bill to interested parties prior to its introduction next week.

Wednesday, January 12, 2011

Governor Tomblin Calls For West Virginia To Embrace Marcellus Shale Development, Investment

Governor Earl Ray Tomblin called on the state of West Virginia to "embrace" the economic opportunities that will come from development of the Marcellus Shale. Here are excerpts from the Governor's 2011 State-of-the-State Address:

"West Virginia's economic future lies not only in its continued use of coal as a resource. 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, today 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."

Tuesday, January 11, 2011

Marcellus/Horizontal Well Regulatory Bill, Pooling Issue Headed To 2011 Session

A Joint Judiciary subcommittee voted Monday to separate a pooling provision from a proposed bill that will create new rules and increased licensing fees for drilling in West Virginia Marcellus Shale. Both provisions were reported out of the Legislative interim committee without recommendation. Both matters now head to the full Legislature for consideration during the 2011 legislative session.

The subcommittee bill recommends developing the new rules and fee increases to provide the state’s Office of Oil & Gas with added resources and new water-use procedures to manage horizontal drilling and fracturing techniques.

Lewis Glasser and other horizontal producer companies will continue to advance statutory pooling provisions during the 60-day legislative session, which begins January 12. Read more by clicking on this link.

Friday, January 7, 2011

Marcellus/Horizontal Well Bill Pending Final Action By Interim Committee

Legislation related to the regulation of Marcellus/horizontal wells is on the agenda for an upcoming interim meeting of the West Virginia Legislature’s Joint Judiciary Subcommittee A. The subcommittee has been studying this matter for several months and has developed proposed legislative changes. The bill includes statutory (forced) pooling, water withdrawal and tracking and spacing. The subcommittee is scheduled to meet January 9 and 10 at the state Capitol. The West Virginia Department of Environmental Protection also has been drafting legislation that is not as comprehensive as the subcommittee's proposed bill.

Lewis Glasser and its affiliate LGCR Government Solutions continue to be actively involved in reviewing and commenting on both versions of the proposed legislation and will be monitoring the subcommittee’s meetings.

This issue is expected to be taken up during the 2011 60-day regular session of the West Virginia Legislature, which convenes January 12.

Tuesday, January 4, 2011

Nick Casey: End Rule of Capture In West Virginia

In an op-ed published today in The Charleston Gazette, Nick Casey, Managing Member of Lewis Glasser Casey & Rollins PLLC, calls on West Virginia lawmakers to enact statutory forced pooling to replace the rule of capture. "Legislation is expected during the 2011 Legislature to allow pooling for horizontal wells. Pooling would replace the rule of capture. Gas owners who are at risk of having their gas drained by a horizontal gas well would be notified that such a well is planned and could elect to participate in the royalties or to own a share of the well. With a pooling law no longer will gas owners find their gas has been drained without compensation." Click to read the entire op-ed.

Sunday, January 2, 2011

What Does The Future Hold For Coal Vs. Natural Gas?

The Beckley, W.Va. newspaper has published an article that examines the possible impact on coal from the recent prolific natural gas discoveries in the Marcellus Shale. "Though coal still provides about half of the nation’s energy, others are skeptical about coal’s ability to hang on to its market share for long. Black & Veatch, an energy consulting company, estimate coal’s market share will fall from 48 percent to 21 percent by 2035. The same group expects natural gas to grow from 21 percent of the electricity market to about 40 percent by 2035," the article reports. Click to read the entire article.