American Oil and Gas Reporter - April 2017 - 132

ConventionCoverage: Independent Oil and Gas Association of West Virginia

LEFT: Presenting an update on West Virginia's Aboveground Storage Tank Act to the Independent Oil and Gas Association of West Virginia, Doug Malcolm, chairman of
IOGAWV's Environmental Committee, says the 2016 law imposes very stringent requirements on setting up, moving or closing storage tanks. RIGHT: IOGAWV lobbyist Philip
Reale tells the association's winter meeting that when dealing with legislators, political
arguments often now matter more than state interests.

"Once you start to undertake closure, activities have to be performed to American
Petroleum Institute or National Fire Protection Association standards. You have
to follow Occupational Safety and Health
Administration standards. Maybe most
importantly, the work has to be performed
or overseen by a professional engineer
or a certified inspector."
Malcolm reported he and other West
Virginia operators met with DEP personnel, and learned the agency was considering proposing revisions to the act,
although he termed the possibility "still
in a state of flux." He added agency personnel recognized they needed to simplify
AST regulations and testing requirements.
Simplifying the AST compliance
process is IOGAWV's top priority, Malcolm assured.
"This probably is one of the most expensive, difficult and least understood
set of oil and gas requirements that we
face," he said. "We are trying to help our
members by clarifying that. If you have
questions, your best bet is to call DEP. If
you have a tank that you have to move
tomorrow, you have to find out what it
involves, because nobody seems know at
this point."
Political Picture
Until recently, a lobbyist could guarantee
his client a good chance of success on
legislative initiatives if the client's interests
could be aligned with state interests, suggested IOGAWV lobbyist and former President Philip Reale. Now, he said, the nature
of the legislative battle often emphasizes
political calculations, and not necessarily

the state's best interest. "That is a sad
commentary. It is up to us, as an industry,
to hold people accountable," he held.
Republican control of the West Virginia
Statehouse expanded in the 2016 general
election, with the party securing 22 of 34
Senate seats, and 66 GOP representatives
sitting with 33 Democrats and one independent in the House of Delegates, Reale
detailed.
"Political polarization has made it difficult for parties to work collaboratively,"
he said. "In 1989, West Virginians understood one thing: We had a huge problem
and had to come together and find a solution. Today, that does not happen. Even
within the Republican House caucus, you

have Chamber of Commerce Republicans,
Libertarian Republicans and Tea Party
Republicans."
Many of the issues amid that new political reality-including proposed higher
gasoline taxes-directly affect the state's
oil and gas sector, he said, adding "If we
are not consistent with our messages,
and if our message is not communicated
from every single person in this room,
then shame on us."
According to Reale, another problem
impacting producers is the state's lack of
action on removing the 5 percent increase
in the severance tax for the workers'
compensation fund deficit. State legislators
approved the tax in 2005 as part of an
effort to close a $2.4 billion hole in the
program. Reale said the workers compensation fund was scheduled to be actuarially sound in October, but the state
swept money out of the fund in 2016 to
cover a revenue shortfall.
The quickest way for West Virginia to
escape its economic turmoil is to create
jobs, and the best chance for that is
through natural gas, Reale said, urging
legislators interested in revitalizing the
state's economy to remove the shackles
that overregulate the industry.
"Because of the state of the West
Virginia government and its budget, we
are in a struggle for survival," he concluded.
"But, our strength is in our cohesiveness.
Our ability to overcome is through our
cohesiveness, our strength in numbers,
and our appreciation that our only real
weapon is our ability to communicate." ❒

Gas Producers Left Guessing
Thanks To Market Uncertainty
CHARLESTON, W.V.-The hydrocarbon sector has seen this scenario before:
low commodity prices, declining capital
spending, falling production rates, and
the resultant price increases that follow
after supply ebbs.
But in 2017, natural gas producers
are receiving mixed signals, Jim McKinney, senior vice president and general
manager, of EnerVest Operating Co., told
the Independent Oil and Gas Association
of West Virginia. Production declines
during recent quarters should strengthen
pricing, while storage at near the fiveyear average and below last year's figure
constitutes another positive signal. Futures

132 THE AMERICAN OIL & GAS REPORTER

prices above $3 an Mcf and an improving
Appalachian Basin differential add to the
encouraging outlook, he said.
"The weather forecast, with heating
degree days, I assume is negative," McKinney described. "Rig count is increasing.
That is positive if you are a service company or supplier; it is not necessarily
positive if you live and die on natural gas
prices. Service costs are increasing, and
that is negative for producers. New drilling
permit activity is sort of mixed: The Marcellus Shale still is down while the Utica
has trended up. I think we are in a
transition phase; it is too early to say we
are out of the woods but we certainly are

American Oil and Gas Reporter - April 2017

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