WV Governor to Sign Marcellus Gas Rules Bill

Large-scale natural gas drilling in West Virginia's Marcellus shale deposit will require $10,000 and $5,000 permit fees, buffer zones, and advance notices to the public.

CHARLESTON, W.Va. (AP) — Large-scale drilling for natural gas in West Virginia's Marcellus shale deposit will require $10,000 and $5,000 permit fees, buffer zones around wells and advance notices to property owners and the public, under a broad regulatory package the Legislature approved Wednesday.

Gov. Earl Ray Tomblin heralded the measure at a packed Capitol news conference shortly after the House of Delegates passed it 92-5 and the Senate then voted unanimously to send it to his desk, ending a four-day special session.

"It's important for me to note that unlike what happens in Washington, the Legislature worked long and hard together to create this milestone piece of legislation," Tomblin said, as lawmakers crowded around behind him. "We may not agree on all points, but this bill accomplishes many great things."

Legislators had proved unable to agree on rules for his rich energy reserve earlier this year. After a special joint committee patched together a regulatory proposal following months of meetings and public hearings, Tomblin presented a modified version of their draft bill on Sunday. The final legislation will take effect as of Wednesday.

The mile-deep Marcellus is considered among the world's most promising natural gas reserves. Stretching beneath several states, including West Virginia, the rock formation presents hefty potential profits but also sizeable up-front costs to the industry. Tapping it can involve horizontally drilled wells as well as the hydraulic fracturing of the shale with water mixed with chemicals and sand. This fracking process has spurred concerns about the briny fluid seeping into area water supplies, and about the large volumes of water it requires.

The economic promise and environmental questions have invited comparisons to West Virginia's coal industry. Mining has brought much-valued jobs and revenues to the Mountain State, but its long history has also included incidents of ruined land, poisoned water and mistreated workers.

Among its provisions, Wednesday's measure increases permit fees from around $400 to $10,000 for an initial well and $5,000 for each additional well at that site. That should provide the $2.4 million annually that the Department of Environmental Protection needs to close a deficit in its oil and gas division while fielding 14 additional well inspectors and support staff.

New wells must be kept 250 feet from a water well, 300 feet from a natural trout stream, 625 feet from occupied houses and 1,000 feet from a public water supply intake. The bill requires 100 feet between wells and other water sources. The dwelling buffer also applies to large poultry and dairy barns, and the DEP's secretary can propose larger zones for homes if the circumstances warrant.

Under the prior notice provisions, drillers must publish newspaper ads, tell landholders at least a week before they send in survey crews, and inform all affected mineral and surface owners where they will sink a well. DEP must post information about all permit applications online, allow public comments and offer email alerts.

West Virginia surface owners don't necessarily own the minerals beneath their land, and have sometimes clashed with Marcellus developers armed with leases with gas owners. The bill attempts to keep surface and mineral rights on par, but falls short, said David McMahon of the state's Surface Owner Rights Organization. That group and the West Virginia Environmental Council opposed the bill, faulting Tomblin for removing provisions they favored from the joint committee's draft.

These groups consider the spacing distances insufficient. Among their other concerns, they disagree with provisions that rely on DEP to propose specific standards or policies, such as for preventing well leaks by casing their walls with cement.

Industry representatives also expressed disfavor with parts of the bill, particularly the permit fee hikes, but ultimately supported its passage.

"It provides certainty and clarity, and allows us to move forward," said Corky DeMarco, executive director of the West Virginia Oil and Natural Gas Association.

The bill applies to horizontally drilled wells that disturb three or more acres or consume at least 210,000 gallons of water monthly. It exempts conventional vertical Marcellus wells along with 1,655 that already have permits and another 206 with applications pending.

The measure also requires state agencies to examine the jobs and payroll arising from Marcellus operations, and whether they're going to West Virginians. Delegate Tim Manchin had co-chaired the joint committee, and pushed for stronger scrutiny of this issue.

"It is tough when you talk to people in Wetzel County, who have the highest unemployment rate in the state and see all of their hotels and motels filled with out-of-state Marcellus traffic, to tell them that they're getting the benefit," the Marion County Democrat said during the House debate

Tomblin singled out Manchin for applause during his news conference, after lauding him and Sen. Doug Facemire for heading the Marcellus committee, while noting that they did not always agree. Manchin voted for the bill Wednesday but had also argued for stronger environmental, public notice and surface owner protections, at times without success.

"They're going to be here for a long time. They're talking about 30 to 50 years on this," Manchin said of the drilling industry. "They should treat us like they would any long-term business partner."

House Minority Whip Mitch Carmichael was among the five delegates who voted against the bill. The Jackson County Republican said the gas industry has done nothing to warrant such increased oversight.

"We have a regulatory scheme in place that has served our state very well," Carmichael said.

Other lawmakers countered with allegations of families unable to sleep because of around-the-clock drilling noise, a farmer without mineral rights embittered by well operations forced upon his land, and episodes of Marcellus sites contaminating water wells in Pennsylvania.

Delegate Mike Manypenny, D-Taylor, offered some of the anecdotes while unsuccessfully proposing tougher standards for the bill. Manypenny also voted against the measure, and was one of several lawmakers who vowed to seek additions to the new law during the upcoming 2012 regular session.