Friday, February 28, 2014

LGCR Provides Update, Analysis On Latest Version Of Storage Tank Regulation Bill

To address the chemical leak in the Elk River that occurred on January 9th, Senate Bill 373 has been winding its way through the West Virginia Legislature.  Since we last reported, the bill has undergone substantial changes in the House and may undergo even more changes as it is still being debated before the House Judiciary Committee...and is slated to go to the House Finance Committee thereafter.  Although it is too early to say with certainty what the final bill may look like, there are a few things those in the oil and gas industry should be aware of as the bill currently stands:

1. The bill now consists of three distinct parts.  The first part still includes the bill’s original purpose to amend the Water Resources Protection and Management Act to update the reporting of water usage throughout the state.  The second part consists of a new regulatory program (The Aboveground Storage Tank Act (ASTA”)) for aboveground storage tanks, similar to the existing program for underground storage tanks.  The third and final part creates The Public Water Supply Protection Act (“PWSPA”) which expands upon the Bureau of Public Health’s source water assessment protection program.

2. The ASTA that was originally included in the Senate’s version of the bill had several exemptions for oil and gas operations that were permitted under other programs.  The proposed bill in House Judiciary removes many exemptions and leaves it to the WVDEP to develop rules providing a waiver from the ASTA permitting requirements on the condition that the permitted activity includes certain AST standards set forth in the statute.  Certain exemptions that remain include pipeline facilities, liquid traps or associated gathering lines, surface impoundments, pits, ponds or lagoons and process vessels.  Note however, that no AST, as defined in the Act, is exempt from the inventory and registration process set forth in the Act.  Practically speaking, the new AST standards set forth in the ASTA will likely be incorporated by WVDEP into existing programs, including the Office of Oil and Gas’s well work permits.

3. The proposed definition for ASTs attempts to incorporate the EPA’s Spill Prevention, Control and Countermeasure (“SPCC”) rule’s applicability threshold of greater than 1320 aggregate gallons of oil.  In the ASTA, the definition states that ASTs are defined as containing more than 1320 gallons of fluid per tank, not in the aggregate and not just limited to oil.  Smaller aboveground storage tanks thus would be excluded from regulation under the ASTA.

4. The PWSPA, along with amendments to the Bureau of Public Health’s source water assessment protection program,  applies to ALL potential significant contaminate sources, regardless of how they are stored, located in a zone of critical concern above a public water system’s surface water intake or groundwater intake where the groundwater is influenced by surface water.  Potential significant contaminate sources is left undefined in the Act.

5. Main distinction to remember regarding the ASTA and PWSPA is that ASTA applies to aboveground storage tanks throughout the state while the PWSPA applies to potential significant contaminate sources within the zone of critical concern.

6. Finally, one of the major concerns with the PWSPA is that it prevents WVDEP from issuing a general NPDES permit to any operation within the zone of critical concern and requires that operation to seek an individual permit instead.  Individual permits take more time and resources to obtain so this provision could have a significant impact.

LGCR and its government relations affiliate, LGCR Government Solutions, are monitoring this bill and will provide additional updates.  Please call Joe Jenkins, LGCR’s environmental regulatory attorney, if you have any questions. 

Wednesday, February 26, 2014

Study: Significant Long-term Economic Impacts Of Petrochemical Investment In W.Va.

A new research study shows significant potential long-term economic impacts of petrochemical investment in West Virginia and the Appalachian Basin. The study, “Building Value from Shale Gas: The Promise of Expanding Petrochemicals in West Virginia,” was prepared by Dr. Tom Witt, Chief Economist at Witt Economics LLC and a Professor Emeritus at West Virginia University.  His study was presented Tuesday to the Legislature’s natural gas caucus.

“The presence of an ethylene cracker and associated polyethylene plants would be a catalyst for even more investment, revitalizing the chemical industry in West Virginia and the region,” according to a press release on the new study.

“Construction would have an economic impact of more than $2 billion in West Virginia, with ongoing operations driving more than $110 million in annual employee compensation and more than 2,000 permanent jobs during the life of the facility. Downstream investments in end-use polyethylene converter plants could create more than 900 additional jobs and $280 million in annual output,” the study notes.

Click to read more.

Thursday, February 20, 2014

Drilling Unitization Bill To Die In House Committee

Horizontal producers likely will have be wait another year to get a drilling unitization law enacted by the West Virginia Legislature.  Yesterday the House Energy Committee adjourned without taking any action on H.B. 4558, the proposed fair pooling act that was developed jointly by WVONGA and IOGA.  The committee had received a full briefing on the provisions of the proposal from its staff counsel and had barely gotten into asking questions on various aspects of the bill when the chairman announced that, because there was a meeting of a major committee (Health), he was obligated to adjourn his meeting.  There were numerous members of the committee who wanted to ask questions, and there were already seven amendments that had filed with the chairman.  However, due to the lateness of the current 60-day session and other procedural rules, H.B. 4588 is not expected to receive further consideration.

Tuesday, February 18, 2014

Drilling Unitization Bill Expected To Receive Committee Action

Legislation that would establish unitization of interests in drilling units in connection with horizontal oil and natural gas wells is expected to be taken up tomorrow by a committee of the W.Va. House of Delegates.  The committee, the House Energy Committee, plans to consider H.B. 4558 tomorrow.  The bill is backed by both West Virginia natural gas associations.  More details about the bill will be provided in the coming days.

Monday, February 3, 2014

Storage Tank Regulation Bill Passes State Senate, Faces Triple Reference In House

The West Virginia Senate has approved its version of a bill, SB 373, that relates to water resources protection and the regulation of above-ground storage tanks. This bill is in response to the tank leak/chemical spill that happened earlier this month in Charleston.  Much work has been put into this bill, and senators worked carefully to eliminate duplicative regulations before sending it to the House of Delegates.

The bill was referred to three committees in the W.Va. House of Delegates, which is an unprecedented action for a bill that is an active part of the governor’s agenda and which the governor wanted as a quick priority in the House.

House Judiciary Chairman Tim Manchin has indicated he does not believe SB 373 "goes far enough" and is expected to split it into two separate bills and remove many of the provisions that seek to prevent excess and inefficient regulation.

A public hearing on SB 373 will be held this evening at 5:30 p.m. in the House chamber.  The hearing will be streamed online at the website of the Legislature or over broadcast statewide over West Virginia Public Television.
News articles:
House Defends Triple Committee Reference of Senate's Water Bill
Senate leadership questions House Speaker's actions on chemical spill bill
Senate passes chemical storage tank bill