Oil and gas wells Story Archives - West Virginia Public Broadcasting

Landowners Say They Are Being Taxed Unfairly At Public Hearing

The House of Delegates held a public hearing on a bill that would remove a sunset clause from the current oil and gas personal property tax assessment.

A sunset clause is a note in the bill that gives it an expiration date, unless other legislative action is taken to extend the bill.

The House of Delegates held a public hearing on a bill that would remove a sunset clause from the current oil and gas personal property tax assessment.

A sunset clause is a note in the bill that gives it an expiration date, unless other legislative action is taken to extend the bill.

House Bill 2581 in the 2021 session created the formula for how gas operators and property owners are taxed. The bill had a sunset clause, which comes due in July of 2025

House Bill 4850 would remove that sunset clause from the bill, making the tax formula permanent.

Del. Vernon Criss, R-Wood, said the bill would help create tax predictability for landowners and well operators.

“If we do not do this, then there will be no tax collected by the counties,” Criss said. “That is how the law is set up now. So the sunset clause needs to be taken off so that the counties can continue to collect their personal property tax on oil and gas in those counties.”

However, landowners taxed by this bill gathered at the Senate to express opposition.

They said that the 2021 bill taxes them unfairly and lacks transparency.

Scott Sondo receives royalties for land he owns that has a well on it.

“Now, one of the major problems is there’s no transparency in the industry,” Sondo said. “So they (well operators) could actually sell the products for a higher price. Tell me, they sell them for a lower price.”

He said that part of the formula for what he is taxed on is based on the prices that the gas actually sold for. The gas operators submit that information to the state but landowners like Sondo never know what that number is.

“When the operators turn these numbers in, they’re used to calculate my boundaries, well, we just would like to know what that value is. And so far, we’ve not been successful in getting that,” Sondo said.

He said, after taxes, landowners barely have enough to pay the taxes from the royalties they are paid by well operators for the use of their land.

The code also has proven to be complicated for the state Tax Division. It has come under scrutiny since the tax code was passed in 2021 for things like providing incorrect assessments and then taking so long to get the correct assessment back to property owners that they don’t have time to appeal the assessment.

Expert Panel Discusses Methane Loss Reduction, Job Creation

West Virginia University’s Energy Institute hosted a panel Thursday evening about reducing the state’s methane emissions from abandoned wells and leaking distribution systems.

Methane is a potent greenhouse gas that contributes to climate change, with research saying emissions into the atmosphere are more potent than carbon dioxide in the short term.

“If you’re leaking a couple of percent (of methane emissions), you’ve more than offset your carbon benefits,” Derek Johnson, panelist and associate professor of mechanical and aerospace engineering, said. “You really have to look at every step and try to minimize it every step. So, at the wellsite, at the pipeline, at the compressor stations, at the distribution to you know, local pipelines and even local meters that would go into a house.”

Panelists discussed methane leaks from oil and gas wells. The state’s Department of Environmental Protection tracks 55,000 active and 12,000 inactive such wells statewide and has identified more than 4,000 sites that have since been abandoned.

Around half the state’s population lives near well sites, according to research journal Environmental Health Perspectives.

Fellow panelist Morgan King, of the West Virginia Rivers Coalition, said leaks from abandoned sites could result in worsening health locally, as well as more local climate-related disasters.

“We’ll see more severe and frequent storms, we’ll see 100-year-flood events, which we’re already seeing more often. That should not be happening every year in just a single town,” King said.

Other advocates say mitigating leaks could also result in more jobs alongside West Virginia’s existing energy economy, which is the fourth-largest producer of marketed natural gas in the nation.

“West Virginians have been really good at exporting a lot of its natural resources,” Trina Wafle, assistant director of WVU’s Energy Institute, said. “And what I think we could be doing and should be doing more is inventing and taking advantage of our natural resources, again, to build our economy, diversify our economy, and attract more people.”

House Bill 3110 passed during the 2023 legislative session, and it increases funding for the Office of Oil and Gas. The increase could double the number of state inspectors to around 20. They would investigate and cap well leaks throughout the state, though at a rate of one inspector per thousands of wells.

The state also received federal funding last year to plug abandoned wells as the U.S. Environmental Protection Agency looks to strengthen its current methane emission rules.

Citizens Group Asks DEP for Hearing on Transfer of Thousands of Oil and Gas Wells

11/20/2018 8:55 p.m.: This story was updated with information from Diversified.

The West Virginia Surface Owners Rights Organization is asking state environmental regulators for a hearing to discuss a proposed transfer of more than 3,800 oil and gas wells located across West Virginia.

Natural gas driller EQT and others are proposing the deal. The move would transfer the rights to any oil and gas produced by these wells, but also the companies’ plugging liabilities to Diversified Oil and Gas.

Dave McMahon, a lawyer and co-founder of the WV Surface Owners’ Rights Organization, said in a press conference with reporters that the transfer could create one of the most widespread economic and property rights issues in the state.

“We hope to present evidence that the financial position of Diverisifed is that it will milk these wells for the first 15 years, and after that they will run out of money and leave these wells across thousands of people’s property across the state,” he said.

WVSORO argues the wells are older, which means they will be less profitable, which increases the financial burden on the company to plug the well.

In a statement, Diversified spokesperson Adrian Williams said the wells in question have average remaining lives of 40-50 years, or more. Williams added that Diversified is a publically-traded company, which allows it to tap into significant financial capital.

“We expect our assets to produce significant cash flow over the next 40 to 50+ years, a portion of which we will responsibly use to decommission these wells for the benefit of the communities within which we operate,” the statement said.

The group argues EQT and others should not be allowed to transfer the wells unless the well is currently producing enough oil and gas to make it profitable, thus ensuring there are enough resources to plug it later on.

There are 12,000 abandoned wells and more than 4,000 are orphaned across the state. The group says this deal could lead to many more. In total, WVSORO said EQT and others want to transfer an estimated 17,000 wells in West Virginia.

WVDEP is expected to issue a decision on whether to grant a hearing in the coming months.