WV Coal Industry Continues to Fight NatGas Electric Plants

West Virginia has a long, proud history as a coal producer. And according to West Virginia Coal Association President Bill Raney, some 95% of the electricity produced and used in the Mountain State comes from coal-fired plants. However, natural gas burns cleaner than coal, and frankly, natgas is now cheaper than coal. Yet WV still has not permitted or allowed a single new gas-fired plant to be constructed. Why not? The obvious answer is because Big Coal is pushing back and pushing back hard. Last September WV’s Secretary of Commerce, Woody Thrasher, admitted publicly that his beloved state is unfriendly to new natgas-fired electric plant projects (see WV Sec Commerce Says State Unfriendly to Gas-Fired Power Plants). In a speech before state legislators, Thrasher said while Ohio has built 19 new gas-fired power plants, and Pennsylvania has built 22 new gas-fired power plants, WV has built NONE. Zero. Nada. Even though perhaps a dozen such projects have now been proposed. When will the situation change? If Big Coal has its way, it won’t…
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Atlantic Coast Actual Pipeline Construction Begins in WV

On Friday, the Federal Energy Regulatory Commission (FERC) issued Dominion Energy permission to begin construction of the actual pipeline for the Atlantic Coast Pipeline (ACP) project–in West Virginia. ACP is a (now) $6.5 billion project, up from a projected $5 billion due to delays from regulatory agencies and frivolous lawsuits filed by Big Green groups, that will run from WV through Virginia and into North Carolina–almost to the border with South Carolina. Until now FERC had allowed prep work, like tree cutting. But now actual pipeline construction can begin, which is a momentous occasion, worthy of celebration!…
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Mountain Valley Pipe Continues to Get FERC Approval for Construction

Despite all of the media attention on a handful of protesters who sit in the tops of trees or on top of a poll in order to block construction of the Mountain Valley Pipeline (MVP), the pipeline nonetheless continues to receive regular new permissions from the Federal Energy Regulatory Commission (FERC) to construct the actual pipeline and (yes), even to cut trees past the March 31 deadline. The good news is that MVP is on track to be completely built and flowing Marcellus/Utica gas by the end of THIS YEAR! Despite the best efforts of radical protesters and multiple lawsuits by Big Green groups. Recent FERC permissions for MVP include: (1) allow MVP to cut trees in Jefferson National Forest past the March 31 deadline; (2) build parts of the pipeline in Roanoke and Franklin Counties, VA; (3) work 24/7 on building a compressor station in Wetzel County, WV; and (4) build pipeline in Jefferson National Forest, on both the VA and WV sides…
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WV DEP Lifts Block on Rover Pipeline Construction

The vast majority of Rover Pipeline is done, and most of it is now up and running (see FERC Allows Rover Pipeline Startup in Michigan, Close to 100% Done). But there are a few spots here and there where small sections are still not complete. One of those is in West Virginia. In March, the WV Dept. of Environmental Protection (WVDEP) slapped Rover with a “cease and desist” order, stopping all construction of Rover in the state, because of inspections that found 14 violations of water pollution regulations (see WV DEP Orders Rover Pipe to Stop Construction for Violations). The violations occurred in Doddridge, Tyler and Wetzel counties. Violations ran the range of leaving trash behind at construction sites to improper perimeter controls (no erosion devices installed) to failure to clean up the roads they used. The good news is that last Wednesday, WVDEP told Rover they can now resume construction…
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WV’s Thrasher Says Tariffs “Shouldn’t” Derail China Shale Investment

West Virginia Secretary of Commerce, Woody Thrasher, once again addressed the issue of an ongoing trade war with China at yesterday’s West Virginia Oil and Natural Gas Association (WVONGA) conference at Oglebay Park. Last November Thrasher signed a memorandum of understanding with the Chinese government, an agreement in which the Chinese pledged to spend $83.7 billion over the next 20 years in WV’s shale and petrochemical sectors (see China Agrees to Invest Amazing $83.7 BILLION in WV Shale, Petchem). So far, six months later, not one red yuan has been invested. And since that time, a trade war has erupted. President Trump told a number of countries, including China, that the U.S. has had enough of being screwed over in trade deals. It’s time to emphasize “fair” instead of “free” when it comes to trade. China (and other countries) have a history of “dumping” steel in our country–selling it at far below the cost of producing it. Such practices result in our steel companies closing their doors, sometimes permanently. Later on, when a country has the market cornered, the price goes up. Trump recently slapped China with a 25% steel tariff and 10% aluminum tariff. China isn’t happy. The question becomes: Will China use their promised $83.7 billion investment in WV as a bargaining chip in the trade war? Will China slow, or even cancel, their investments in WV’s shale industry? Back in April Thrasher, at another industry event, said he doesn’t think so (see WV’s Thrasher “Hopeful” First Chinese Project Announcement Soon). At yesterday’s WVONGA event, Thrasher reiterated that he believes there will be a flurry of announcements “soon” about the first projects China will invest in, and that China will not cancel their promised WV investments…
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Will New WV Exec Order Speed Up Gas-Fired Power Plant Projects?

WV Gov. Jim Justice

Yesterday West Virginia Gov. Jim Justice issued a new Executive Order (EO)–the third of his tenure thus far. The new EO cuts through regulatory red tape and instructs all WV governmental departments that issue permits to prioritize “permits for projects of critical economic concern.” That would include permits for Marcellus/Utica Shale projects. The EO requires agencies to issue written reports to the permit applicant, the executive director of the state Development Office, and to the Governor, explaining why they haven’t gotten off their rear-ends and acted on a given critical permit. As we read about this interesting development, it immediately struck us that we hope the EO also affects the permitting process for new natural gas-fired electric plants. Last September WV Secretary of Commerce, Woody Thrasher, admitted publicly that his beloved state is unfriendly to new natgas-fired electric plant projects (see WV Sec Commerce Says State Unfriendly to Gas-Fired Power Plants). In a speech before state legislators, Thrasher said while Ohio has built 19 new gas-fired power plants, and Pennsylvania has built 22 new gas-fired power plants, WV has built NONE. Zero. Nada. Even though perhaps a dozen such projects have been proposed. The first sliver of light in that respect came in February of this year when finally the very first such project in WV was approved by the Public Service Commission (see Brooke County WV Power Plant Wins State Approval). So when we read about the new EO signed by Justice, our thoughts didn’t jump to permits for shale wells, our thoughts turned to permits stalled for new electric power plant projects–which use Marcellus/Utica shale gas…
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EQT Sues WV for Passing Minimum Royalty Law re Flat Rate Leases

Earlier this year the West Virginia legislature passed Senate Bill (SB) 360, which Gov. Jim Justice subsequently signed into law (see WV Gov Justice Signs Bill to Guarantee 12.5% Minimum Royalty). SB 360 overturns a ruling by the WV Supreme Court in Leggett v. EQT Production, a case in which the Supremes (in a very unusual move) reversed their own previous decision and allowed EQT to deduct post-production expenses in an old flat rate lease. In essence, SB 360 guarantees rights owners/landowners a 12.5% minimum royalty, regardless of post-production deductions–but only in flat rate leases. A flat rate lease is a lease in which a company pays a regular (in EQT’s case, annual) payment, regardless of how much oil/gas is produced. Traditionally drillers don’t deduct post-production expenses because the payments they make aren’t all that much anyway. But then EQT began to claim deductions, prompting a lawsuit that went all the way to the Supreme Court. The legislature aimed to “fix” what they considered an error in the court’s ruling. EQT claims the new law is unconstitutional and last week filed a lawsuit (copy below) asking a judge to block implementation of the law, set to take effect on May 31…
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WV’s Thrasher “Hopeful” First Chinese Project Announcement Soon

Yesterday the seventh Marcellus and Manufacturing Development Conference was held in Morgantown, WV. The event keynote speaker was Steve Winberg, the U.S. Dept. of Energy’s Assistant Secretary for Fossil Energy. He talked about the relationship between manufacturing and shale production. Fortunately for us, Winberg (part of the Trump Administration) said the DOE’s attitude is to not interfere with the shale miracle. Other speakers included Brian Anderson, director of the WVU Energy Institute. However, it was a brief comment made by WV Secretary of Commerce, Woody Thrasher, that really caught our attention. Last November Thrasher signed a memorandum of understanding with the Chinese government, an agreement in which the Chinese pledged to spend $83.7 billion over the next 20 years in WV’s shale and petrochemical sectors (see China Agrees to Invest Amazing $83.7 BILLION in WV Shale, Petchem). So far, five months later, not one red yuan has been invested. What’s the holdup? For one thing, there’s a developing trade war (see Will Trade War with China Affect $83.7B Investment in WV Shale?). Thrasher said yesterday he doesn’t think the trade war will interfere with China’s WV investment (if wishes were horses…). Thrasher also said he’s “very hopeful in the near future that we’ll be able to announce the first project” using Chinese money. Now that is definitely good news–perhaps the biggest news coming from yesterday’s event…
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WV’s Severance Tax Rate at 5% is Already Too High; Don’t Raise It

It appears Pennsylvania is not the only state in the Marcellus/Utica region facing pressure to kill the drilling industry with high severance taxes. West Virginia is now facing a fight of its own. WV already has the highest severance tax among the three M-U producing states. Ohio’s effective severance tax rate is 1.3%. Pennsylvania’s effective severance tax rate (called an impact fee, roughly the same thing), works out to be around 2.9%. WV’s severance tax is an already-high 5%–yet in WV (like PA) teacher’s unions are pressuring politicians to raise the severance tax. In WV they want a boost to a “modest” 7.5%. It would make WV the highest severance tax in the lower 48 if it went to 7.5%. WV is rattled following an extended teacher strike, looking to prevent a future strike. While we’ve not read of any specific new proposals (bills) to increase the severance tax, folks from the drilling industry are worried enough that a past president of IOGAWV penned the following editorial on the topic…
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Columbia Asks FERC to Approve OH/WV Buckeye XPress Pipe Project

Buckeye XPress Pipeline map – click for larger version

In January 2017, TransCanada’s Columbia Pipeline subsidiary launched an open season for the Buckeye XPress (BXP) pipeline project (see Columbia Pipeline Launches Open Season for New M-U Project). BXP will expand service along the Columbia Gas Transmission pipeline from Ohio (and PA and WV) to send even more Marcellus/Utica gas to the Gulf via the interconnection at Leach, Kentucky. Columbia launched a non-binding open season to gauge interest in the project, which will use looping and beefed up compressor stations to increase capacity another 700 million cubic feet (MMcf) per day along the existing pipeline Columbia pipeline system. The open season (time when shippers express interest and sign contracts) was a success. But these things take time. On March 26, a year and two full months after the open season, Columbia filed an application with the Federal Energy Regulatory Commission (FERC) seeking permission to build the project. The project includes building 66 miles of new pipeline to replace old pipeline in Ohio’s Vinton, Jackson, Gallia and Lawrence counties, as well as pipeline replacement in West Virginia’s Wayne County. Below is the lowdown on the BXP application…
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WV Royalty Transparency Law Sheds New Light Beginning June

Back in January MDN told you about West Virginia House Bill (HB) 4270, a bill that provides more transparency for landowners on their royalty statements (see WV Co-Tenancy, Royalty Transparency Bills Make Progress). The good news is that the bill passed and was signed into law by Gov. Jim Justice on March 27th. For far too long royalty statements have been loosey-goosey. Landowners (technically royalty owners) get no specifics on how much gas (or other hydrocarbons) were produced, what deductions were made, and why those deductions were made. HB 4270, which goes into effect on June 8, will fix all that. Here’s more details on what is being called the “Check Stub Bill”…
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WV DEP Launches Information Website for Major Pipeline Projects

You’ve got questions about major pipeline projects planned or under construction in West Virginia? The WV Dept. of Environmental Protection has answers. WVDEP has just launched a website to help residents learn more about five major interstate natural gas pipeline projects: Atlantic Coast Pipeline, Mountain Valley Pipeline, Mountaineer Gas Eastern Panhandle Expansion Project, Mountaineer Xpress Pipeline, and Rover Pipeline. The website includes maps of pipeline routes, a searchable database for information such as inspection and enforcement actions and permit modifications, public hearing transcripts, and news releases. It’s all in there! Head on over to this page to get your questions answered…
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Will Trade War with China Affect $83.7B Investment in WV Shale?

Chinese moo goo gai pan

Last November President Trump and assorted state officials, including West Virginia State Commerce Secretary Woody Thrasher, visited China as part of a trade delegation. On that trip, China agreed to invest a total of $250 billion in American (mostly energy) projects, $83.7B of which (a full third!) will go to investments in West Virginia (see China Agrees to Invest Amazing $83.7 BILLION in WV Shale, Petchem). It was all sunshine and flowers and butterflies. But now there’s a big, black cloud on the horizon (perhaps we always knew it was too good to be true). Following a seven month investigation into Chinese theft of American intellectual property, last week President Trump told the U.S. trade representative to levy tariffs on $50 billion worth of Chinese imports. China is threatening to impose tariffs on U.S. products in return. A good, old-fashioned trade war. The question has been raised, What about that promised $250 billion of Chinese investment in Uncle Sam? Will China move forward with those investments, or perhaps withhold them? According to one global energy expert, “The Chinese are going to see these things [the promised investments] as bargaining chips.” Which points out the problem with relying on an enemy’s investments…
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One MVP Radical Protester Arrested, Another Goes Up a Pole

Click image for larger version

First they went up trees to try and stop the Mountain Valley Pipeline (MVP) from getting built (see WV Judge Refuses to Eject Tree Sitters Blocking Pipeline Work). Now they’re illegally erecting poles for crazies to sit in. That’s what paid, radical protesters do these days: think up the most freakish, idiotic, outlandish stunt they can pull (or pole), in an effort to get publicity for their misguided cause. Not far from where radicals built tree houses in the Jefferson National Forest, a group of protesters gathered on a gravel access road, erected a 50-foot pole (held in place with ropes to nearby trees), and one of the crazies scampered up to the top to sit there (and is still there) in an attempt to block construction vehicles from passing down the road. The protesters on the road near the pole were ordered to move by the police. Most did, although one of them was arrested. As for the woman up the pole, she’s sitting in a makeshift shelter up there and refuses to reveal her name, nor will she come down…
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FERC Won’t Extend Atlantic Coast Pipeline Tree Cutting Deadline

Two weeks ago Dominion Energy asked the Federal Energy Regulatory Commission (FERC) for permission to extend tree cutting/felling season by an extra 45 days, from March 31 to May 15, in West Virginia, Virginia and North Carolina (see Atlantic Coast Pipe Asks FERC for More Time to Cut Trees). Due to restrictions for species like the threatened Indiana bat, tree cutting season is limited–from November 16 to March 31. ACP said it couldn’t meet the March 31 deadline due to a late start following state bureaucratic delays. In a presentation Dominion gave to North Carolina environmental officials a few months back, the company said if “we cannot start [pipeline construction] in time to ensure a full and efficient construction season and have to delay service by one year, the impact would be $1 billion.” Dominion maintains that worst case scenario has not yet happened. Following the FERC decision to deny extending the date for tree cutting, Dominion said they’ll shift things around and can still meet their contractual deadline of getting ACP up and running by the end of next year…
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The Critical Role of Subcontractors in WV Shale Industry

Charlie Burd, IOGAWV

A recently published interview with Charlie Burd, executive director of the Independent Oil and Natural Gas Association of West Virginia, yields new insights into the current status of the oil and gas industry in the Mountain State. One of those insights is the importance of subcontractors–what we call the supply chain–to the oil & gas industry in WV (and elsewhere). We often refer to producers or exploration and production companies as “drillers.” To be honest, it’s almost always a hired subcontractor that does the actual drilling. And subcontractors do a host (most of) the other pieces of getting a well up and running–everything from water deliveries for fracking to fencing around well pads to hauling away drill cuttings and brine. Burd talked about the key role subcontractors play in the process. He also said that 99.9% of the small, “mom and pop” independent producers (conventional drillers) that have been around for the past 150 years are now out of business in WV, since the rise of shale drilling. That’s a pretty startling statistic. Oh! And Burd explained the difference between “major” oil and gas companies, like Exxon and Chevron, and “independent” companies like Antero Resources and Cabot Oil & Gas. We always wondered what earned the biggies their name “the majors,” even though there are some “independents” nearly as large (in revenue) as the majors. We now know the difference…
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