Outdated laws block gas development in West Virginia
Today, Appalachian-produced natural gas is the primary power source for one out of every eight American households. And as the nation’s fourth-largest energy producing state and seventh largest natural gas producing state, West Virginia has a monumental opportunity to become the region’s leader in energy production.
An increase in the production of oil and natural gas will be a powerful and much-needed economic boost for the Mountain State with vast upside potential to support long-term job creation and growth.
In the past few weeks, we have seen a host of new rules and regulations out of Washington, D.C. aimed squarely at hard working Americans in the oil and natural gas industry. Natural gas pipeline projects are being stopped dead in their tracks. Exploration of natural gas on federal lands has been slowed. And the calls for an outright ban on the exploration, production and use of fossil fuels are becoming louder.
While we are hopeful that cooler heads will prevail, the movement to ban oil, natural gas and coal is getting stronger. It’s important for us to support changes that benefit our entire state.
Politicians in DC who most likely have never even been to West Virginia are doing their best to dictate energy policies in our state that will crush our economy. We have to show them West Virginians are strong and steadfast in their resolve to do what is best for our state. We have a tremendous resource right under our feet, but we must modernize our property laws to efficiently increase development of natural gas.
Unfortunately, a large amount of proven natural gas reserves — with owners eager to cash in on their property — remains undeveloped due to restrictions on producers’ ability to combine leases into units, which makes more efficient development possible. The current reality facing our state is that a single landowner can block thousands of West Virginians from reaping the economic benefits of their mineral rights. Such a system is unfair to those who wish to have their mineral assets developed, and we must work for them to keep that from happening.
Thankfully, leaders in the state legislature are looking at ways to address this problem. And now is exactly the time for action.
Newly introduced legislation — H.B. 2853 — will modernize West Virginia’s outdated property laws and treat an entire geologic shale formation as one resource unit, allowing production of the entire unit. This would group together natural gas mineral rights in areas where a majority of rights holders have agreed to reap royalties from these rights, allowing the efficient production of the entire unit.
A brand-new study from West Virginia University examining the economic impacts of more modern property laws found that fixing the policy would unleash a burst of economic activity and unlock the potential of the state’s unique position as one of the world’s largest gas producers. According to the study, the total economic impact of new property laws could be between $1.2 billion and $2.4 billion over five years, in addition to the creation thousands of new jobs. It also means millions more in royalty payments for mineral owners and new revenue for the state budget to fund programs important to all West Virginians.
West Virginians understand the importance of natural gas for the state and its economy. A recent poll conducted on behalf of the Gas and Oil Association of West Virginia (GO-WV) found that 87 percent of likely Mountain State voters support more drilling in the state. Most importantly, West Virginia voters understand what’s at stake and overwhelmingly agree that we must act now before the opportunity is lost.
In the same poll, 62 percent of likely voters agreed “there is a growing political movement in the United States to completely ban the use of natural gas in the near future, so it is important for West Virginia to tap into those resources now.” A mere 18 percent disagreed.
H.B. 2853 will allow royalty owners and the state to reap more of the benefits of our state’s vast natural gas resources. It will mean more efficient natural gas development, which is good for landowners, local communities and the state economy. It will attract new industries that will sustain long-term growth, while bringing more tax revenue to the state for education and other needed priorities.
Pursuing this smart, commonsense legislation will make West Virginia more competitive with other energy-producing states in the region. Right now, in nearby Pennsylvania, 6,000 workers are constructing a petrochemical plant. If we update our property laws, we can position ourselves to attract similar investments that provide job creation. From exploration and production, to downstream manufacturers, to construction companies, to restaurants and businesses on Main Street, ALL West Virginians stand to gain.
This approach is good for our environment, too. Better property laws will allow exploration, operational footprint and surface disturbance to be minimized as fewer well pads will be needed. That process alone conserves the resource for future generations. It will also streamline logistics and enhance and accelerate land restoration. And it will reduce truck traffic, along with wear and tear on our roads, while providing additional safety.
That is why we strongly urge legislators in Charleston to pass the H.B. 2853 to modernize West Virginia’s outdated property laws and create more efficient natural gas development. Let’s take action today to ensure a more prosperous tomorrow for all West Virginians before policies coming out of Washington close this window of opportunity for good.
(Burd is executive director of the Gas and Oil Association of West Virginia)