WV Legislature ~ House Bill (HB-3110) To Add Oil & Gas Inspectors

WV Legislature HB-3110 for Oil & Gas Inspectors Passes House, Now in Senate Finance Committee

From an Article by Mike Tony, Charleston Gazette, February 23, 2023

The West Virginia House of Delegates approved a bill that would increase funding for the state Office of Oil and Gas after rejecting an amendment from Delegate Evan Hansen, D-Monongalia, that would have given the office a bigger financial boost.

The West Virginia House of Delegates passed the bill without opposition or debate Thursday that would bolster funding for the state’s understaffed, financially stressed gas and oil well inspection unit. The House approved this HB-3110 in a 98-0 vote, sending it to the Senate.

The state Department of Environmental Protection has estimated the bill would raise roughly $2 million annually to be allocated to the Office of Oil and Gas, which is responsible for monitoring the exploration, drilling, storage and production of natural gas and oil in West Virginia. The office is in charge of monitoring 75,000 wells statewide. The bill would allocate 0.75% of oil and gas severance taxes and a tiered system of annual well oversight fees to benefit the Office of Oil and Gas.

HB 3110 would impose an annual $350 fee per well for an operator’s first 400 unplugged wells that produce an average of 250,000 cubic feet of natural gas or more per day. The bill would impose an annual $75 fee per well for an operator’s first 400 unplugged wells that produce an average of between 60,000 and 250,000 cubic feet of gas per day.

The legislation would impose a $25 fee for an operator’s first 4,000 wells that produce between 10,000 and 60,000 cubic feet of gas per day, with operators with 500 or fewer unplugged wells producing in that range of gas excluded from that fee.

The House had rejected an amendment proposed by Delegate Evan Hansen, D-Monongalia, that would have removed the 400- and 4,000-well caps on unplugged wells for which operators would have to pay oversight fees to support the Office of Oil and Gas. Hansen and environmental health proponents have argued that large producers can afford and should be required to pay more to support the state’s oil and gas regulators.

Stephanie Catarino Wissman, executive director of American Petroleum Institute Pennsylvania, Appalachia Region, showed a lack of support for any fee-driven approach to supporting West Virginia environmental regulators. Wissman said the industry backs supporting the DEP through the existing severance tax. “[W]e need policies that enable investment in drilling and energy infrastructure, not additional taxes and fees,” Wissman said.

The DEP reduced the size of the Office of Oil and Gas from about 45 to 25 staff members in 2020 over a lack of funding stemming from a decrease in revenue from the one-time permit fees the office relies on for support.

DEP Deputy Secretary Scott Mandirola has said HB 3110’s tiered fee system followed discussions with industry. Mandirola told the House Energy and Manufacturing Committee prior to its approval of HB 3110 the Office of Oil and Gas’ 10 well inspectors are dwarfed by Pennsylvania’s 66 and Ohio’s 38. (West Virginia is the nation’s fourth-largest gas producer. The WV DEP has planned to bring back 10 inspectors to get back to the 20 the Office of Oil and Gas had prior to the 2020 cutbacks.)

West Virginia Surface Owners’ Rights Organization co-founder Dave McMahon has urged state lawmakers to support around 40 well inspectors instead of going back to the 2020 status quo. Before the Energy and Manufacturing Committee earlier this month, McMahon cited a 2018 study of West Virginia well sites by Princeton and McGill university researchers that found active conventional wells are a significant source of methane emitted into the atmosphere.

Environmental, royalty and surface owner advocates have urged the Legislature to shore up funding for the Office of Oil and Gas in recent years, citing lost royalties and harmful methane emissions due to gas leaks thriving with limited monitoring stemming from an understaffed inspection unit.

The study estimated that each active conventional well loses roughly 9% of production. Researchers found that the emission factor used by the U.S. Environmental Protection Agency to project methane emissions from conventional active wells underestimates those emissions by 7.5 times.

Methane is typically released alongside other air pollutants that can cause cancer, asthma, premature birth and other devastating health outcomes. Also, methane traps at least 80 times as much heat in the atmosphere as carbon dioxide over a 20-year period, accelerating climate change that is driving an increase in major floods and power outages — to which West Virginia is especially prone.

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HOUSE BILLS, HB-3110, “Relating to funding the Office of Oil and Gas in the Department of Environmental Protection”. West Virginia Legislature, February 28, 2023. HB-3110 assigned to Senate Finance Committee.