WV Amendment Creates New $100/Yr Unplugged Well Tax
Conventional (and maybe shale) oil and gas drillers in West Virginia need to be aware of a late-breaking amendment that will create a new fee (we’d call it a tax) of $100 per year for unplugged wells producing 10 Mcf (10,000 cubic feet) of natural gas. According to the amendment’s sponsor, Sen. William Ihlenfeld II (D-Ohio County), roughly 13,000 wells statewide fit that classification and would generate an extra $800,000 per year for the Department of Environmental Protection’s Office of Oil and Gas.
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We have to confess we’re not impressed with West Virginia U.S. Senator Joe Manchin (Democrat). We had hoped he might be somewhat independent from the radicals in his own party and provide some balance to an out-of-control leftist agenda being pushed by Chuck Schumer and Joe Biden. Manchin is failing in that regard. He’s just another toady for his party. (We’re not surprised.) The latest evidence that Joe Manchin is not the “man of the people” and “conservative/moderate” Democrat he claims to be comes from his opposition to WV Gov. Jim Justice’s plan to phase out the state income tax–which does have implications for the shale industry.
In February West Virginia Gov. Jim Justice announced a plan to eliminate the state’s personal income tax. Who wouldn’t love that idea? But in order to replace the $2.1 billion received annually from the personal income tax, Justice would raise other taxes, including a tiered system that potentially raises the state’s oil and gas severance tax (see 
Shale and conventional oil and gas drillers in West Virginia listen up: If you file for a modification to a previously filed permit request, it’s going to cost you $2,500. Currently, it costs nothing. Senate Bill (SB) 404 passed the Senate last week unanimously. On Wednesday the House of Delegates approved it by a vote of 77-22. We expect Gov. Jim Justice will sign it.
Last week MDN brought you news of a new forced pooling bill under consideration in this year’s West Virginia legislative session (see 
As sure as the seasons change and our long winter is finally turning into spring with the first crocuses popping up through the soil, you can count on another sign of spring: a forced pooling bill will pop up in the 60-day West Virginia legislative session. And so it has. The WV legislature is currently considering two bills, Senate Bill (SB) 538 and House Bill (HB) 2853, called “unitization bills” which is just another word for forced pooling. This time West Virginia University is providing support for forced pooling in the form of a new study claiming forced pooling will “jump-start” a new era of natural gas development.
The pandemic did its best to shut the world down, and maybe it succeeded in shutting down other countries–but not here in the US of A. Against an onslaught of shutdowns (particularly in “blue” states), people staying home, businesses closing, anarchy and chaos in large Democrat cities…and against an onslaught against fossil fuels by environmental Nazis seeking to destroy the economies of the world via bans of oil and natural gas and coal…U.S. natural gas production decreased by just 1 percent last year. Can you believe it? That’s a victory in our book!
A few weeks ago during his “State of the State” address, West Virginia Gov. Jim Justice announced a plan to eliminate the state’s personal income tax. Who wouldn’t love that idea? We sure would! But in order to replace the $2.1 billion received annually from the personal income tax, Justice would raise other taxes, including a tiered system that potentially raises the state’s oil and gas severance tax. We don’t like that idea so much. However, the reaction to Justice’s proposal by the Gas and Oil Association of West Virginia (GO-WV) may surprise you.
Yesterday the country’s largest natural gas producer, EQT Corporation, released its 4Q and full-year 2020 update, holding a conference call with analysts to discuss the results. The update shows the company produced an average of 4.45 million cubic feet per day (MMcf/d) of natural gas in 4Q. Although there was plenty of “free cash flow” for the year, on paper the company lost $967 million in 2020, which is an improvement over the year before when it lost $1.2 billion. Perhaps the biggest news (for us) coming from yesterday’s update is that in 4Q EQT turned its drilling attention to the West Virginia Marcellus. EQT plans to do much more drilling in WV this year too.
West Virginia is represented by one Republican U.S. Senator, Shelley Moore Capito, and one Democrat, Joe Manchin. Manchin is tolerable (just) because he advocates for coal and oil/gas. Manchin is also the new chairman of the powerful Senate Committee on Energy and Natural Resources. Manchin, to his credit, is pushing back against Joe Biden’s ill-advised cancelation of the Keystone XL oil pipeline. In fact, both Biden and Capito are loudly supporting Keystone and (important for us) the Mountain Valley Pipeline (MVP) project, which runs through WV.
Last year the West Virginia Dept. of Environmental Protection (WVDEP) fined the Mountain Valley Pipeline (MVP) project $265,972 for erosion and sediment issues related to constructing the 303-mile pipeline (see 
Life is full of unsung heroes. The West Virginia Geological and Economic Survey (WVGES) is one such hero in the Mountain State. WVGES plays a vital role in the state’s shale gas/oil industry. How WVGES determines where and how much natural gas, oil, and NGLs are located under the crust of WV. They also determine how best to take advantage of those natural resources.