Tag: Co-tenancy

EQT Head Tells W.Va. Lawmakers Natural Gas Drillers May Need Some ‘Help’

The head of natural gas driller EQT Corporation told members of the West Virginia Legislature the company intends to ramp up the size of drilling projects to hedge against projected low natural gas prices. To accomplish that, the company may need help from lawmakers when it comes to “fractured mineral interests.”

Toby Rice, EQT’s new president and CEO, testified Monday to the Joint Committee on Natural Gas Development and Joint Standing Committee on Energy. 

“Gas prices are down. It has a big impact, the difference between $2.75 gas and $2.50 gas,” he said. “A lot of this development doesn’t work as well at $2.50 gas.” 

EQT is one of the largest natural gas producers in the country, with a focus in Pennsylvania, Ohio and West Virginia. Rice told lawmakers the company is moving toward “combo development,” or the practice of drilling multiple wells on multiple well pads adjacent to one another. 

“This allows us to do economies of scale in terms of low gas prices,” he said. 

Rice argued larger natural gas developments will ultimately be less disruptive to local communities because multiple wells will be drilled simultaneously. He said EQT sees “room for a lot more development in West Virginia.” 

But to accomplish that, Rice told the Legislature that EQT and other natural gas drillers may need “help at some point.” Large-scale development may require the company to sign deals with up to 1,000 landowners, instead of a few hundred. 

In West Virginia, often rights to the surface of a property and minerals below it have been severed and do not belong to the same person. Mineral rights are sometimes owned by multiple people. 

In 2018, the Legislature passed a co-tenancy bill that lessened the burdens on drillers by allowing companies the ability to enter into leases with co-tenants owning 75 percent of the interest in the minerals. 

Rice said he expects fractured ownership could be an issue to the company’s larger development strategy in some cases, “and maybe co-tenancy doesn’t get us there.”

He was not prepared to offer specific regulatory suggestions. 

The committees also heard a presentation about two bills from last session that addressed the plugging of abandoned and orphan oil and gas wells. Lawmakers may reconsider the measures during the 2020 session.  

One bill is a version of Senate Bill 665, which would create an expedited oil and gas permit program. Drillers would pay double the current $10,000 permit fee to the state Department of Environmental Protection to speed up the permitting process. Half of the proceeds would be placed in a fund earmarked for well plugging. The bill did not make it through the House last session. 

Another bill that may get a second chance is House Bill 2673 , which was vetoed by Gov. Jim Justice last year. The legislation halves the severance tax paid by low-producing oil and gas wells. The proceeds would be provided to DEP to tackle the state’s abandoned well problem. 

There are more than 14,000 abandoned wells across the state. More than 4,500 are classified as“orphan,” which means they don’t have an operator. Sealing orphan wells falls on state regulators. Plugging one well can cost upwards of $60,000.

House Passes Landowner Rights Bill Known As Co-tenancy

The West Virginia House of Delegates has passed a controversial bill dealing with landowner and mineral rights.

House Bill 4268 would require — in the case of seven or more landowners of a single tract of land — the approval of 75 percent of owners to allow natural gas drilling on the property.

The bill passed on a 60-40 vote after more than an hour and a half of debate.

Supporters said the measure is key to further development of the natural gas industry in West Virginia.

 

“The passage of this legislation will allow us to, in my opinion, increase the production — which will increase the wealth the citizens and the mineral owners of this state — which will increase the tax revenue of our state, allowing us to better deal with the problems facing our state,” said Del. Bill Anderson, the lead sponsor of the bill.

 

Democrats — and some Republicans who opposed the bill — argued the legislation forces non-consenting landowners to allow drilling when it is unwanted.

 

“Now I’ve heard a lot of people here yell and scream, ‘How can just a handful of people hold up development?’ Because it’s their land. It’s a constitutional right to hold land,” Del. Issac Sponaugle said.
 

Sponaugle went on to argue that legal arrangements can already be made to transfer ownership to those who would want to authorize drilling through partitions suits. He and other Democrats like Del.Joe Canestrano acknowledged the bill’s history in the Legislature in recent sessions.

“You can call this bill whatever you want. Co-tenancy, lease integration, joint development, forced pooling. What it really is — it’s a watered down version of the bill that was defeated on this floor in 2015,” Canestrano said.

“Instead of pitting neighbor against neighbor — like you all did that here in ’15 — now you’re just going to pit brother against brother on one parcel of property,” he added.

An amendment to the bill Wednesday would place revenues from unknown or unlocatable owners in a stability fund for PEIA if those owners could not be found in seven years. The other half would go to an oil and gas reclamation fund.

The bill now heads to the Senate.

 

Discussion and Delay on Film, DHHR, Co-tenancy, Intermediate Courts

Discussion and delay. That was the theme for some notable pieces of legislation Thursday. While the House and Senate moved on some measures in their respective committees and floors, some bills were set aside and left for another day.

In a Thursday morning House floor session, delegates debated Senate Bill 263, which would eliminate the West Virginia Film Tax Credit. The bill was on Third Reading and up for a vote. Discussion around the bill began when Del. Dianna Graves, a Republican who said she has worked in the film industry, stood to oppose passage of the bill.

“We talk about industry diversification within the state. We’re just starting to have a decent film crew industry in the state. I know a lot of them personally,” said Graves. “I’ve had — I can’t tell you how many — phone calls and emails where these people are going to have to move across — most of them are planning on going to Kentucky — if we discontinue this film tax credit.”

Last month, legislative auditors called for the elimination of the state’s film tax credit, citing the less than $1 million economic impact per year as not substantial enough to keep it in existence. The West Virginia Film Office, once an independent agency and now operated by the state Division of Tourism, administers the tax credit. Funded at $5 million annually with no per-project caps, the film tax credit calls for a minimum spend of $25,000.

Many Democrats echoed Graves’ call to keep the tax credit in place. Del. Josh Barrett, cited states such as Georgia who have built up their film industry through a growing tax credit.

“The lady from the 38th, who is an expert in the industry, said that the $25,000 minimum spend is part of the problem, and we should raise that. We should have a floor of $250,000 or $500,000 dollars to have them have that minimum spend, so that we are attracting out of state film production companies,” Barrett said.

Republicans argued that the credit didn’t bring money to West Virginia. Before closing discussion, Minority Leader Daryl Cowles moved to delay action on the bill until Friday.

“Most of this money did not help West Virginia at all. We just simply don’t have the infrastructure, and the credit isn’t large enough to build that infrastructure, and we’re just throwing money away. It’s not a good return on investment,” said Cowles, before his motion to delay.

That theme of delay carried on into afternoon committees in the House as well. In House Energy, a bill addressing land owner rights in relation to natural gas was also held back. House Bill 4268 would allow for oil and gas drilling on a piece of property, when owned by multiple persons, if three-fourths of the owners agree.

“I had a request for a minority to defer action on the bill in committee until next Tuesday — giving all of their members a chance to pose any other questions and members to formulate amendments they might want to offer to the legislation,” said House Energy Chair Bill Anderson.  “It seemed to be a reasonable request. I’ve accommodated that. I believe that we can move forward on the legislation next Tuesday.”

The House Health Committee picked up on the trend of delaying action on bills with House Bill 4014, a bill that aims to split the West Virginia Department of Health & Human Resources into four separate agencies. Without explanation, House Health Chair Joe Ellington pulled the bill from the committee’s agenda.

The Senate Judiciary Committee also held back a bill of their own. Legislation that would create an intermediate state court of appeals, Senate Bill 341, was discussed at length but did not go to a vote in the committee.  

Notable legislation that did move on Thursday includes a bill involving drones, which passed the House on a 78-18 vote. A bill limiting taxpayer-funded abortions through Medicaid passed House Health, and a bill to increase teacher pay cleared the Senate Finance Committee.  

 

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