American Oil and Gas Reporter - March 2016 - 92

ConventionCoverage: Independent Oil and Gas Association of West Virginia

Producer Issues Committee
Working On Solutions
By Bill Campbell
CHARLESTON, W.V.-Preserving
some of the meager cash flow afforded
West Virginia producers by languishing
natural gas prices and preparing for the
eventual rebound by enabling Marcellus
Shale horizontal drilling units are among
the priorities overseen by the Independent
Oil and Gas Association of West Virginia's
Producer Issues Committee.
During the association's 2016 winter
meeting, held Feb. 2-3 at the Marriott
Town Center in Charleston:
* IOGAWV past-President Jim McKinney discussed a stakeholder group's efforts to push through the 2016 West Virginia Legislature, pooling and unitization
legislation that fell one vote shy in 2015.
* Environmental and Safety Committee Chairman Doug Malcolm updated
members on implementation of West Virginia's new safety requirements for aboveground storage tanks (ASTs).
* IOGAWV Vice President Scott
Freshwater reviewed the association's
gas gathering and processing fee negotiations with midstream providers.
In addition, during a luncheon address,
West Virginia Governor Earl Ray Tomblin
announced he was sponsoring legislation
to eliminate a 4.7 cent-an-Mcf add-on
severance tax dedicated to paying off the
state's unfunded workers' compensation
liability. "We must continue to maximize
natural gas development in West Virginia,"
Tomblin told IOGAWV. "I know (upstream) development will help create
years of downstream development opportunities. More importantly, it will
create jobs in West Virginia for West Virginians."
Marcellus Pooling
"As most of you know, we have pooling
for coalbed methane in West Virginia,
and we have pooling for deep rights,"
observed McKinney, senior vice president
and general manager for EnerVest Operating LLC in Charleston, who heads IOGAWV's Pooling and Unitization Subcommittee.
After HB 2688, a Marcellus pooling
92 THE AMERICAN OIL & GAS REPORTER

bill sponsored by House Energy Chairman
Lynwood "Woody" Ireland, R-Ritchie,
and backed by IOGAWV and the West
Virginia Oil & Natural Gas Association,
died on the last day of the 2015 legislature
on a 49-49-2 vote, McKinney said the
associations spent the summer and fall
meeting with surface, royalty and mineral
owner groups "to forge the stakeholders'
bill."
That bill is HB 4426, which, according
to the West Virginia Legislature's website,
was introduced by Delegate Ireland on
Feb. 5. Like its predecessor, HB 4426 requires an operator to obtain approval
from 80 percent of mineral owners within
the unit before submitting a unitization
petition to the Office of Oil & Gas, along
with "increased property protections"
(AOGR, January 2016, pg. 111).
McKinney contrasted HB 4426 with
S 383 by Senator Greg Boso, R-Nicholas,
which McKinney referred to as "not
stakeholder friendly. It is not the bill we
worked hand-in-hand with WVONGA
and the stakeholders to advance."
According to the legislative website,
while S 383 authorizes horizontal development of "multiple contiguous leases,"
it sets no minimum participation or other

West Virginia Governor Earl Ray Tomblin
(left) takes a moment with Independent
Oil and Gas Association of West Virginia
President Jon Hildreth, president of Roy
G. Hildreth & Son Inc. in Spencer, W.V.,
prior to the governor's luncheon address at IOGAWV's winter meeting, Feb.
2-3 in Charleston.

property right protections, and specifies
only that "in the absence of an agreement
by all affected royalty owners, the production shall be allocated to each lease
in such proportion as the operator reasonably determines."
"There are risks with both and we understand that with gas prices where they
are, the opportunity for development certainly is less than it has been in other
years," McKinney mused. "But gas prices
will come back; Marcellus drilling will
come back. For development and the resources of the state, both IOGAWV and
WVONGA continue to support the stakeholder bill."
Aboveground Storage Tanks
Environmental and Safety Committee
Chairman Malcolm began by recalling
how West Virginia lawmakers, in their
haste to respond to a January 2014 chemical spill into the Elk River in Charleston,
passed the Aboveground Storage Tank
Act, which subjected up to 51,000 ASTs
to new registration and enhanced safety
requirements.
Realizing the AST Act's overreach,
he said, the following year the legislature
amended the law by exempting many
smaller tanks that already were subject
to other regulatory requirements.
Following passage of SB 423 last year,
the West Virginia Department of Environmental Protection adopted implementing regulations, which Malcolm said were
working their way through the legislature.
"It appears these rules will pass this session," he remarked.
The DEP rules designate level 1 ASTs-
tanks greater than 50,000 gallons capacity,
that contain listed hazardous chemicals,
or are located in a zone of critical concern
(ZCC)-and level 2 ASTs-tanks located
in a zone of peripheral concern (ZPC).
He added that a ZCC encompassed an
area within 1,000 feet of a primary stream
or within 500 feet of a primary stream
tributary and within five hour flowingwater travel time of a surface water intake.
ZPCs extend an additional five hours
travel time upstream.
Owners/operators of regulated tanks

American Oil and Gas Reporter - March 2016

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