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.
The West Virginia Supreme Court has affirmed a lower court’s ruling in favor of landowners’ claims that a company had no right to drill on their property to access oil and gas on other lands.
The court’s ruling released Wednesday, June 6, says a mineral owner has the right to access only what’s directly below the surface. The court says “it is trespassing to go on someone’s land without the right to do so.”
A Doddridge County Circuit Court jury in 2017 awarded $180,000 to David Wentz and $10,000 to his ex-wife, Margot Beth Crowder, in their lawsuit against EQT Production.
The company held a century-old lease allowing it to drill wells to extract oil and gas from beneath the plaintiffs’ land. The plaintiffs sued to challenge the company’s use of their land to drill horizontal wells extending to neighboring properties.
Governor Jim Justice released justifications Friday for 15 bills passed by the West Virginia Legislature that he vetoed due to technical errors, including two that would have impacted the state’s natural gas industry.
According to a press release issued by the governor’s office, technical issues that could have garnered vetoes included bills that contained language that created laws that would have contradicted or eliminated other laws, overly-broad language or bills with titles that were not descriptive of its contents.
“I am working with the Legislature to fix the technical errors and get these bills added to the Special Session call,” Justice said in a press release. “If this happens, and the Legislature passes the bills during Special Session, I will have an opportunity to sign them in time for them to take effect on July 1.”
Two bills vetoed for technical reasons were priorities of natural gas trade groups in West Virginia.
House Bill 2673 would have halved severance tax paid by oil and gas producers with wells producing up to 60,000 cubic feet of gas and low-producing oil wells.
Revenues from the tax would be placed into a fund to clean up the state’s more than 4,500 orphan wells.
In a letter to Secretary of State Mac Warner, Justice said while the goal of plugging orphan wells was laudable, it should be paid for by revenue from the current severance tax, not by cutting it for some drillers.
The governor also vetoed House Bill 2661. The bill would have allowed natural gas utilities to lobby the Public Service Commission to approve incentives for drilling in places where natural gas service isn’t currently available. The bill also allowed those utilities to recover costs if the PSC decided gas is no longer the cheapest option in the area.
Justice said the bill was flawed because its title did not accurately reflect its contents.
You can read letters Justice sent to Warner on each vetoed bill here.
On a recent chilly Tuesday morning, about 20 people filed along a winding dirt path leading deeper into West Virginia University’s Arboretum in Morgantown.
Armed with binoculars, smartphones and hiking boots, the group had one goal — spot and identify the chittering birds hidden in the trees above.
“There’s a good local bird singing,” he told the group, pointing high up in a tree nearby. “They do migrate south and come back in the spring, but he’ll nest here. The one that says ‘drink your tea.’ ”
The birders stop and listen. Graffious reveals the bird’s name: the eastern towhee. It is one of hundreds of species making its way through the Ohio Valley during spring migration or making a nest after a long trip home.
Over the next two hours, the birders will excitedly identify dozens of birds including bay-breasted warblers, Swainson’s thrush, and tufted titmouse. Many species are traveling northward from the sun-drenched forests of Central America.
Migratory birds are important ecological and economic drivers. Each year, birders spend an estimated $41 billion on trips and equipment. Birds are the proverbial ‘canary in the coal mine,’ and also literal ones. As ecological indicator species they inform us when environmental conditions have changed.
And for the last 100 years, their status as creatures worth protecting has been enshrined by a U.S. law called the Migratory Bird Treaty Act. The law makes it illegal to hunt, capture, kill, possess, import or export any migratory bird, or its feathers, nests or eggs without a permit.
But at the end of last year, the Trump administration announced a change to how the stalwart environmental law will be enforced. The change has to do with just two words in the law: “incidental take.” Two words may not seem like much, but the small change has big implications for thousands of birds that migrate through and nest in the Ohio Valley. On Thursday, a coalition of conservation groups sued the administration to restore the protections the law had long offered.
Two Little Words
In December, the Interior Department announced the U.S. Fish and Wildlife Service would no longer enforce “incidental take.” That provision of the law refers to when birds are unintentionally killed by something such as a building, power lines, wind turbines or oil and gas ponds. These open pits near and oil and gas operations often contain toxic drilling fluids and trace amounts of oil.
Credit Brittany Patterson / West Virginia Public Broadcasting
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West Virginia Public Broadcasting
Birds are important indicators of an ecosystem’s health.
In the past, the agency has, in select cases, issued fines to industry operators, when actions that fall under incidental take kills birds. Often, the agency works with companies to change practices. That may involve installing netting over waste ponds or changing lights on wind turbines so as not to attract as many birds.
Industry Applauds
Many industry groups support Interior’s decision on incidental take. In a statement, the Independent Petroleum Association of America, which represents thousands of independent oil and natural gas producers, said the agency’s previous interpretation of incidental take expanded the law beyond its original intent and placed blame on lawful industries and activities.
Lowell Rothschild, an environmental lawyer with the law firm Bracewell has represented the oil and gas and other natural resource industries for more than 20 years. He said the law’s broad framing — largely a result of the fact that it’s a century old and was crafted to be broad in its scope — poses challenges.
“The Migratory Bird Treaty Act is difficult to comply with and it’s also difficult to equitably administer,” he said.
Conservationists Concerned
The administration’s change prompted immediate backlash from environmental and conservation groups as well as from 17 former agency officials who served under Republican and Democratic administrations. In a letter, they wrote that the new interpretation of the law is “ill-conceived” and “creates a huge loophole” in the law.
Conservation advocates say the ability to leverage fines over incidental take has been instrumental for getting companies to make little changes that may protect thousands of birds.
“While not every case is going to be enforced, I think by having a number of fines and in the past by having that potential, and this baseline level of protection, and potential for enforcement is really what brings these companies to the table and provides a critical amount of leverage,” said Erik Schneider, a policy analyst for Audubon.
A Seminal Law
When the Migratory Bird Treaty Act was signed into law 100 years ago, one of its objectives was to stop the extinction of bird species being hunted for their feathers. At the time, plumage was all the rage in ladies’ hats.
Since then, the law has been credited with saving species like the snowy egret, wood duck and sandhill crane, said Christopher Lituma, an assistant professor and wildlife biologist at WVU.
“It was a seminal law passed 100 years ago that really resulted in a focus on reversing many of these bird population declines,” he said, describing the Act as an “umbrella law” for migratory birds. “It’s an important one because I think it forces entities to be accountable for their actions, at least as it relates to birds.”
Credit Brittany Patterson / West Virginia Public Broadcasting
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West Virginia Public Broadcasting
WVU arboretum director Zack Fowler watches a pair of owls.
The Fish and Wildlife Service does not provide numbers on how often it has taken enforcement action under the law unless a compelled by a public records request, but Audubon keeps a database of cases.
The vast majority of cases brought under the Act have been related to bird deaths in oil pits and tanks, Audubon said. Of the 452 cases the group has tracked, 407 violations, or 90 percent, were related to the oil and gas industry.
The average fine for an oil pit violation is $6,500.
Already, some who work with migratory birds say they may already be seeing the consequences of the change to the law.
‘Drenched’ in Oil
At the Avian Conservation Center of Appalachia, Jesse and Katie Fallon treat and rehabilitate sick and injured birds. The center, which was founded in 2012, is located inside the Cheat Lake Animal Hospital near Morgantown.
Credit Courtesy Avian Conservation Center of Appalachia
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This pied-billed grebe died after landing in a pond of fracking waste
Recently, the Fallons received an oil covered pied-billed grebe. The small, brown migratory bird was fished out of a nearby oil and gas fracking pond.
Grebes are champion swimmers and charismatic little birds.
“My daughter who’s five loves to see pied-billed grebes on the water,” Katie Fallon said. “They just appear to be having so much fun and are so happy out there. She calls them baby dinosaurs.”
Migratory water birds, like grebes, often see ponds near oil and gas operations as just another water source, a place to rest or a potential source of food.
Katie Fallon said when the grebe came in, volunteers immediately noticed it smelled strongly of oil.
“He was just drenched, drenched in it,” she said. “He had several baths with Dawn dish soap that he wasn’t too fond of, us bathing him with the dish soap, but he was happy to float in the water and to try and preen.”
Preening is when birds run their beaks over their feathers trying to clean them off, which causes them to inadvertently ingest some of the material on their feathers.
“And in the case of oil, that’s toxic. So, this bird trying to keep himself clean, he was poisoning himself at the same time,” she said.
Video on the center’s Facebook page showed the grebe seemed to enjoy a nice warm blow dry. But as is the case with most of the birds the Fallons receive from oil and gas operations, within a day the bird had died.
Prior to the change made to the Migratory Bird Treaty Act someone could have been held responsible for the bird’s death.
“By the Migratory Bird Treaty Act being able to be applied toward incidental take that would encourage companies from a financial perspective to cover their ponds,” Jesse Fallon said. “Now, we have to rely essentially on the common sense and conservation mindset of those companies. We don’t have a way to encourage them to help prevent these types of bird deaths.”
It’s hard to quantify the effect enforcement under the Act has had on the numbers of oiled birds.
Audubon says most cases related to oil and gas operations have been in western states. But anecdotally, Fallon says, they’ve seen the impact in northern West Virginia.
“We saw a drop, a temporary drop, when there was enforcement in that regard,” he said. “We’ll see what this year holds.”
A Legal Challenge
On Thursday, May 24, a coalition of national environmental groups, including American Bird Conservancy, Center for Biological Diversity, Defenders of Wildlife, National Audubon Society, National Wildlife Federation, and the Natural Resources Defense Council, filed suit challenging the administration’s changes to the law.
In National Audubon Society v. Department of the Interior, the groups say the Interior Department exceeded its authority and asks the court to tell Interior to “revert to their prior, correct longstanding interpretation and policy.”
In a statement, Audubon’s Vice President for Conservation Sarah Greenberger said the Act was one of the nation’s first conservation laws and has a long record of success. “It defies all facts for the Department of the Interior to suggest that this law is somehow broken when we have a century of evidence that says otherwise,” she said.
Four people have been hospitalized after oil tanks exploded in West Virginia.
News outlets report a company was removing three oil tanks in West Union on Friday when the tanks exploded. State Department of Environmental Protection spokesman Jake Glance said workers were dismantling the tanks with some type of torch. But the tanks were not entirely empty and caught fire.
A report from the Department of Environmental Protection says the tanks’ contents spilled into a nearby stream. Officials said they did not know how much was spilled.
The work was done in a residential area. But officials say only the workers were injured.
West Virginia’s Senate has voted to authorize natural gas producers to drill when three-fourths of those with royalty rights agree and a reasonable effort has been made to negotiate with the remaining owners of a gas mineral property.
The bill, approved 19-14, is a priority of the West Virginia Oil and Natural Gas Association. The group says it updates the law to reflect current technology with horizontal drilling and the state poised for major gas development.
It’s opposed by the West Virginia Surface Owners Rights Organization, which says it enables out-of-state gas producers to effectively take mineral owners’ property for the benefit of shareholders.
Sen. Charles Trump, a Morgan County Republican who supports the legislation, says lawmakers heard from many royalty owners who’ve leased rights and want the bill passed.
