Opportunities for West Virginia
West Virginia’s potential does not often get recognized. Our state has been ranked last in national polls, and often gets criticized rather than praised. It’s time this changed.
There are immense opportunities in this state, particularly within the oil and natural gas industry. The development of the Marcellus and Utica shales has given West Virginia tremendous advantages, but the industry still faces many challenges. We’ve attempted to remedy these problems in the past, but it’s time for a different approach – a West Virginia approach.
A critical step in this process is continued support from the West Virginia legislature. We need lawmakers to carefully review the current severance tax structure and realize how it lessens our competitiveness against other natural gas producing states such as Ohio and Pennsylvania.
Another way we can begin to create a West Virginia approach is to introduce co-tenancy and begin to evaluate solutions to ensure landowners’ wants and needs are recognized. Co-tenancy has been enacted in many other states. However, West Virginia is operating under outdated laws that never contemplated the drilling of horizontal wells. Not only would a co-tenancy statute allow for more wells to be drilled, it will allow for the drilling of longer laterals resulting in less surface disturbance and exponentially greater amounts of gas being produced from a single pad. This in turn leads to increased royalty payments to mineral owners and increased revenue to the state in the form of severance and ad valorem property taxes. As a result, we can attract investment and activity planned for adjacent states, increase value to royalty owners and add much needed high-paying jobs for West Virginians. We need to educate our lawmakers, leaders and citizens about the provisions needed in the natural gas industry to create regulatory surety, economic stability and profitability in the state.
There also seems to be widespread misunderstanding regarding how our industry is regulated. The oil and natural gas industry is strictly regulated – in fact, it’s one of the nation’s most meticulously regulated industries. Regulations and laws such as the Clean Water Act, Horizontal Well Act, USEPA air emission rules and more are in place to oversee the processes of the industry. However, if additional unreasonable or unneeded regulations are placed on the industry, it will be nearly impossible to operate at a profit and compete with neighboring states. We need to have open discussions with regulators to provide them with the facts, let them know we do comply with the regulations currently in place and that unnecessary regulation will harm this industry and the benefits it provides for all West Virginians.
The natural gas industry can be an enormous part of change in West Virginia. But we must start now by addressing significant challenges so we can take advantage of the amazing opportunities that lie ahead. We must have a stable regulatory environment and legislative support for items that will help this industry regain momentum.
This op-ed was authored by Brett Loflin, member of the IOGAWV board of directors and VP of regulatory affairs for Northeast Natural Energy.