Drilling Company Sues Morgantown, WV for $42 Million in Lost Investment & Lost Future Revenue

Another chapter in the ongoing saga of Morgantown, WV. For those who have not followed the story, Morgantown city council members took it upon themselves to ban hydraulic fracturing outside of the city limits—up to one mile—which they say is allowable under a West Virginia law that grants cities the right to exceed their boundaries in certain circumstances. The council members are concerned that two Marcellus gas wells that will be hydraulically fractured are too close to the city’s water supply and the risks are too great.

The drilling company, Northeast Energy, says the state DEP issued permits for those two wells and that Northeast has worked with the city every step of the way to ensure there will be no problems, and that the city at the last minute changed their tune. Northeast has sued to overturn Morgantown’s ban, and if that doesn’t work, they want compensation not only for their lost investment, but also for potential lost revenue.

The natural gas company suing to end the City of Morgantown’s ban on hydraulic fracturing is confident that a court will strike down the ban.

But, if not, Charleston-based Northeast Energy wants about $42 million from the city to make up for its lost investment and the gas it won’t be able to get out of the ground if the ban is kept in place.

In a series of filings in Monongalia County Circuit Court on Thursday, Northeast asked Circuit Judge Phillip Gaujot to temporarily prevent Morgantown officials from enforcing the law while the company "fracks" its wells.

The company would need a few weeks to frack the Morgantown site and would be ready to do so in mid-August, said Northeast’s attorney in the case, Mike Garrison.

"Northeast intends to prosecute its claim against the City of Morgantown aggressively and to the fullest extent," he said.

Garrison added, "In the unlikely event, however, that the ordinance is upheld, Northeast will seek tens of millions of dollars from the city for compensation for the unlawful taking of the property rights and the permanent damage to its investment in this project."*

*Charleston Daily Mail (Jul 7, 2011) – Gas drillers want $42 million from Morgantown