WV Makes a New Push for Forced Pooling Using New WVU Study
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.
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West Virginia House Bill (HB) 2581 is rapidly advancing through various committees. The bill changes how the State Tax Department values producing oil and gas wells for property tax purposes. It also creates a new appeals process for all property taxes in WV. Provisions in the bill allow expenses from “lifting, processing, transportation and other industry activities” to be subtracted from a well’s income. Question: Do these new post-production deductions also apply to royalties?
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.
In the closing hours of the 2014 West Virginia legislative session, the legislature passed SB373, the Aboveground Storage Tank Act (see 
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.
The West Virginia Office of Oil and Gas (part of the Dept. of Environmental Protection) reports there are some 60,000 active and 15,000 abandoned oil and gas wells in the state. Staffers at Oil and Gas respond to complaints and do the inspection for all those wells. Currently, there are just 14 field staffers with three moving to other positions leaving just 11 staffers who are in the field to monitor all those wells.
On Joe Biden’s first day in occupying the White House, he signed an Executive Order (EO) suspending new oil and gas leasing while the Interior Department reviews existing leases and permitting practices for 60 days. The aim is to make the federal lease ban permanent. However, some permits on existing leases will continue to be issued during the 60-day review period. You may think Biden’s federal lease ban does not affect the Marcellus/Utica region. You would be wrong.
Equitrans Midstream’s Mountain Valley Pipeline (MVP), which stretches 303 miles from Wetzel County, WV to Pittsylvania County, VA, is backed into a corner by anti-fossil fuelers. The project is 92% complete and in the ground, yet somehow antis have successfully blocked an Army Corps of Engineers Nationwide Permit 12 (NWP12) that allows the project to cross creeks and rivers and mud puddles. Antis have convinced three leftist judges on the 4th Circuit Court of Appeals to overturn the NWP12 permit–twice. But, MVP has just outmaneuvered the antis.
EQT Corporation, the largest natural gas producer in the United States, is asking West Virginia officials to remove two judges from hearing cases brought by landowners against the EQT relating to royalty disputes for alleged improper deductions. EQT wants Judges Timothy Sweeney and David W. Hummel Jr. to be disqualified from at least three cases (that we know of).
The Enverus U.S. oil and gas rig count slipped by one to 406 over the past week. The Marcellus play stayed even with 32 active rigs. However, in a good sign, the Ohio Utica picked up 2 new rigs to close the week with 8 active rigs (total of 40 active rigs in the M-U).