American Oil and Gas Reporter - January 2012 - 202

ConventionSection: Independent Oil and Gas Association of West Virginia
to revise some of their provisions. He reports hearing from one state representative
that he planned to introduce 22 bills in
the regular session that would increase
safeguards for surface owners and the
public.
The industry's economic impact on
the state will be a source of support for
the producing community, Burd asserts.
"Legislators must consider the potential
impacts on oil and gas activities as well
as the state budget, and that is a point we
make when talking to legislators," he
says. "Not only are there direct investments-in the billions of dollars-but there
are the tens of thousands jobs, as well as
severance, property and payroll taxes.
The jobs are there for the taking for those
who choose to come forward and work."

cede that $10,000 is too high," he says.
"Compare that with other states. Pennsylvania has permits in the $3,500-$3,700
range and Ohio's permits are less than
$1,000. Here we stand at $10,000 for the
first well and $5,000 for any subsequent
wells on the same pad. Those are pretty
steep fee increases."
Malcolm points out Marcellus Shale
wells are considered shallow wells in
West Virginia, which was the reason for
the relatively low $450 permit fee.
Burd adds the legislative fiscal note
on the bill projects the increased fees
will generate $2.4 million, of which the
state plans to use $1.3 million for additional staff, including inspectors, in the
Office of Oil and Gas. The remainder is
slated to help reduce the money the office
owes to the state for past expenses, Burd
says.
Malcolm says equally important as
adding new inspectors is increasing the
administrative support staff in the Office
of Oil and Gas. "IOGAWV thinks the office needs more people pushing paper to
get permits out in a timely manner," he
comments. "The fee increase is not totally

Higher Fees
Producers have just as much to complain about in the new legislation as do
the anti-development groups, Burd asserts,
especially about the increase in permit
fees from $450 to $10,000 for each well.
"I think everyone would admit that
$450 is too low, but they also would con-

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202 THE AMERICAN OIL & GAS REPORTER

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bad news for the industry, we hope."
The permit fee jump comes with natural
gas prices at Henry Hub holding steady
near $3 an Mcf, he points out, saying at
those prices, costs are a concern when
producers are seeking to entice investment
dollars.
Haskins warns that in addition to the
initial permit expenses, West Virginia
operators must expect increased operating
costs, as Dominion's Appalachian Gateway
pipeline project comes on line. Dominion
says the project will use new pipes to
move natural gas from West Virginia and
Pennsylvania to eastern U.S. markets,
with transportation beginning in September
2012.
Producers who signed firm transportation contracts will pay 60 cents a
dekatherm, Haskins reports.
"We purchased firm transportation
about three years ago, when gas prices
were a lot different than they are today,"
he says. "A lot of folks in West Virginia
are going to be impacted by the additional
cost of firm transportation. While we
need the transportation, with gas at $3.00,
it will be very, very difficult."
American Oil and Gas Reporter - January 2012

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