Natural gas on radar In West Virginia

CHARLESTON — With a massive reserve of natural gas underground, an anticipated $84 billion investment by a Chinese company and continued questions over how resources will be extracted, oil and natural gas will likely be a significant topic in the West Virginia Legislature’s 2018 session.

Lawmakers and industry leaders said during Friday’s West Virginia Press Association Legislative Lookahead in Charleston that the No. 1 legislative priority is “co-tenancy,” which would address the handling of mineral rights for tracts of land with multiple owners. Under current law, if one of those individuals objects, the minerals cannot be extracted.

“In some tracts of land, you can have hundreds of mineral interest owners,” said Anne Blankenship, executive director of the West Virginia Oil and Natural Gas Association, which supports various businesses related to the industry.

Legislation introduced last year didn’t make it to the governor’s desk, but Delegate Bill Anderson, R-Wood and chairman of the House Energy Committee, said he believes there is general support for a plan that would allow for extraction of minerals if a supermajority of 75 percent of owners or more agree to it.

Charles Burd, executive director of the Independent Oil and Gas Association-West Virginia, said many states have similar laws on the books, but the number of owners who can speak for the property varies.

“There’s other places where just one owner can agree and speak for everybody else,” he said.

Sen. Glenn Jeffries, D-Putnam, said fairness for all involved is the goal, so the legislation must make sure there is a recourse for owners who would prefer not to allow drilling to still “make sure they’re getting fair market value.”

Blankenship said it seems lawmakers and the industry are on the same page.

“We feel that this is a fair way to deal with the issue,” she said. “It’s absolutely necessary for us to get where we need to be in the industry.”

Burd noted that in some cases lease owners can’t be located, a situation co-tenancy can address.

The November announcement that Commerce Secretary Woody Thrasher had signed a memorandum of understanding with China Energy Investment Corp. for that company to invest $83.7 billion in West Virginia’s shale natural gas resources over 20 years generated optimism and questions.

Anderson and Jeffries said they had not heard specifically from Gov. Jim Justice’s office about specific legislation needed to facilitate that development but they anticipate more information next week, when Justice delivers his State of the State address Wednesday or when Thrasher speaks to lawmakers.

Angie Rosser, executive director of the West Virginia Rivers Coalition, said many questions about the investment remain unanswered and expressed concern over a foreign entity coming into the state, extracting its resources and leaving.

“(We need to) avoid the temptation to just keep thinking about the short-term fix,” she said, adding there needs to be more talk about what it means for the state and its communities over the long term.

Another panel member was Steve Hedrick, president and CEO of the Mid-Atlantic Technology, Research and Innovation Center (MATRIC), which works with the chemical, energy, environmental and advanced software sectors. He said China Energy’s plan is a long-term one and he’s seen an emphasis by the company on worker safety that he believes will transfer to the community here.

“We would like to see safe, environmentally sound (development) for our citizens,” Hedrick said. “It can be done. It should be done safely. We should accept nothing less.”

It’s a sound business principle for companies that will utilize natural gas and related liquids to be located near those resources, Hedrick said. That would change a practice in West Virginia’s history where resources were extracted and sent outside the state, said Greg Kozera, marketing director for the Shale Crescent USA development organization.

“We are sitting on one of the largest natural gas reservoirs in the word,” Blankenship said. “The beautiful things about this investment (strategy) that we’ve heard from China Energy is that the endgame is to keep this natural gas in West Virginia. … Right now those natural gas liquids are either burnt off or they’re shipped.”

Jeffries and Anderson said the state needs to create an environment that entices companies that utilize natural gas and gas liquids to locate in the state.

“We need jobs. And I think that we can do it and be safe in the process,” Jeffries said.

“We have to manage this extraction in such a way that will maximize creation of jobs for citizens in this state,” Anderson said. “It’s those manufacturing jobs that will help create additional jobs, potentially much greater than the value of the minerals themselves.”

One component of keeping resources in the state is the creation of storage hubs, like the proposed Appalachian Storage Hub, which recently cleared a hurdle with the U.S. Department of Energy.

Hedrick said discussion of reducing or ultimately repealing the state’s personal property tax on business inventory — which would require a constitutional amendment — would facilitate development of “safe, environmentally sound subsurface storage.” However, he noted the revenue from the tax is important to counties and local governments.

“I think those that do understand the details around inventory tax need to attack it,” he said.

This article was authored by Evan Bevins for the Parkersburg News and Sentinel. Click here to read it on the publication's website.