Good Sign: Large Number of Abstractors Return to Wheeling, WV
If you’re in business, you’ve no doubt heard of “leading indicators” and “lagging indicators.” Example: When it comes to employment, a leading indicator would be an increase in work at temporary agencies (a rapid ramp-up in new employees), which means the economy is about to heat up and do better. A lagging indicator would be the official unemployment numbers–higher unemployment means an economy doing worse, lower unemployment means an economy doing better. When it comes to drilling activity, MDN has long used two metrics as leading indicators–that drilling activity is about to pick up. One is new permits issued. Drillers don’t spend big bucks to apply for permits they don’t intend to use–and use soon. However, there’s another, even earlier leading indicator, a predictor that more drilling is on the way in the next 6-12 months. That indicator is packed record halls at the local county clerk’s office. Before lease deals are signed, sealed and delivered, drillers must first ensure there is a clear title–that the person who says he/she owns the mineral rights for a given property, actually does. That’s where abstractors come in. Abstractors research deed records at the county clerk’s office. In the past we’ve noted there are some counties where there is a waiting line to get in to access records (see Tyler WV Courthouse Overrun with Abstractors – Drilling Signal?). When the price of natural gas crashed and drilling slowed, the large number of abstractors disappeared. Guess what? They baaaaack! At least in Wheeling, WV…
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Forced pooling legislation in West Virginia has been put forward five times in the past seven years–and each time it has failed to win enough votes in the WV legislature. In its most recent incarnation (last year), forced pooling would allow drillers to form a “unit” for drilling (typically one square mile, or 640 acres) from a group of properties where at least 80% of the mineral rights owners have signed a lease (see 
In December MDN reported on the huge West Virginia Supreme Court decision against driller EQT that disallows EQT from deducting post-production expenses from royalty checks, even with signed contracts in place (see 
World Oil calls itself “the premier trade publication for the international upstream industry.” Perhaps it is–who are we to say otherwise? The folks at World Oil have done us all a favor. They surveyed the upstream (i.e. drilling) oil and gas industry to find out what drillers are planning for 2017. Overall, they find drillers plan to drill 18,552 wells in North America this year–a big 26.8% jump from last year. In releasing a summary of the results, Wold Oil outlines region by region in the U.S. what they predict will happen this year, based on survey results. The northeast section caught our eye. World Oil predicts Pennsylvania will see a 29% increase in new well drilling this year (total of 774 new wells drilled). Ohio will see an increase of 19.1% in new well drilling (380 new wells). And West Virginia will see a big 21.9% increase (245 new wells). Here’s the full summary from World Oil…
It’s the end of an era in West Virginia. Due to term limits, Gov. Earl Ray Tomblin (Democrat) could not run for reelection this past November. Jim Justice (also a Democrat) won that election. Upon assuming office this month, Justice appointed a new head of the WV Dept. of Environmental Protection–Austin Caperton. It’s only natural for an incoming governor to pick his own team, even if the outgoing governor was from the same party. And, we suppose, it’s only natural that the new head of a department (Caperton) would want his own team too. In a move that appears to have generated some controversy, Caperton has given the boot to the leader of the DEP’s Office of Environmental Advocate, Wendy Radcliff, as well as the DEP’s communications director, Kelley Gillenwater. Radical anti groups like the West Virginia Highlands Conservancy, West Virginia Sierra Club and the Ohio Valley Environmental Coalition were up in arms over the firing of Radcliff. Which must mean it was a good move…
A West Virginia law professor and one of his students (who went on to become a trial attorney with the U.S. Dept. of Justice), have just published a research paper on the topic of surface and mineral rights in the Mountain State. The paper, titled “Horizontal Drilling Vertical Problems: Property Law Challenges from the Marcellus Shale Boom” (full copy below) discusses property law challenges that can impede business development and negatively impact landowners and mineral owners in shale regions, with a focus on the West Virginia Marcellus. The paper explains the horizontal drilling and hydraulic fracturing process. A widespread problem in WV is that (because of coal) in many cases the owners of the mineral rights under the ground are not the same people who own the property on the surface. The paper makes the point that while courts can handle one-off cases, the WV legislature should develop better “large-scale policies” to deal with an ongoing, contentious situation…
In April 2015 the Obama administration’s U.S. Fish and Wildlife Service (USFWS) did a disservice to not only the drilling industry, but the wind industry, farmers and the construction industry. USFWS listed the northern long-eared bat as “threatened” under the Endangered Species Act (see 
Is it April Fool’s Day? Wait, no, it’s January 4th, not April 1st. But honestly, we thought it must be a joke to read that scientists doing “research” claim that living close to a fracking site will make you sick. Not from air pollution. Not from water pollution. But from noise pollution. Yep, loud noises nearby cause things like “stress” and “annoyance” and even diabetes (!) according to Physicians, Scientists and Engineers for Healthy Energy (PSEHE) and Michael McCawley, the interim chair of the Occupational and Environmental Health Department at West Virginia University. The study, titled “Public health implications of environmental noise associated with unconventional oil and gas development,” goes for the jugular–making a case for stricter regulations and larger setbacks (i.e. less drilling). Yet, the researchers don’t do any of their own in-the-field research! They rely on out-of-date research done by others. And they show no causal link between health impacts and shale drilling in the “study”…
A significant court case was decided last week in West Virginia. The WV Supreme Court ruled in a gas royalty case that not only has significant implications for WV landowners (and drillers), but also may reverberate across the border into neighboring Pennsylvania where the same issue has been a long and contentious fight–what we call a civil war between landowners and drillers. Like all such cases, this one is complicated and not easy to summarize, but we’ll do our best. The WV Supremes have just handed down a decision that says, in essence, that EQT (and by extension other drillers) cannot deduct post-production expenses when calculating royalty payments to landowners. Specifically, the justices in their ruling said that drillers can “not deduct from that (royalty) amount any expenses that have been incurred in gathering, transporting or treating the oil or gas after it has been initially extracted, any sums attributable to a loss or beneficial use of volume beyond that initially measured or any other costs that may be characterized as post-production.” Yikes! That is fantastic news for landowners who now have a case to recoup money deducted from their checks–and really bad news for drillers who will owe that money. The big winners are, of course, the lawyers who will litigate this for years to come. However, hold on to those briefs–EQT has just appealed the decision, asking the WV Supreme Court to reconsider their decision, gently chiding the court for erring in their interpretation of state law on royalties…
The legal beagles at global law firm Norton Rose Fulbright continue to do us all a huge favor. Researchers at the law firm issue a quarterly legislative action update looking at bills and laws previously voted on, and new bills/laws introduced, affecting the oil and gas industry in Pennsylvania, Ohio and West Virginia. The “Quarterly legislative action update: Marcellus and Utica shale region” for 4Q16 (full copy below) begins with a quick listing by state for existing or new laws introduced, with descriptions for each bill/law. This is, in one place, pretty much everything you need to know about what new laws (i.e. regulations) are coming down the pike that will affect the Marcellus and Utica Shale drilling industry…
Based on a recent uptick in new permits issued in PA, OH and WV, a writer for the Daily Caller says “a wave of new fracking is about to hit Appalachia.” We agree! Recent trends all point to an increase in drilling–which is good for landowners, jobs, taxes and the environment (more gas lowers CO2 emissions, if you believe in man-made global warming). Here’s a startling statistic: Fracking is estimated to have generated 4.6 million new jobs and $3.5 trillion in new wealth–in just three years (see today’s companion story). Surf’s up! Here’s the evidence that a new “wave” of fracking is on the way in our neighborhood…
The GoMarcellusShale Forum where landowners and others interested in shale drilling hang out and swap messages back and forth was recently updated to become 
EQT is feeling bullish about natural gas drilling in the northeast for 2017. The company has just released its 2017 operational forecast. What do we notice? First off, they plan to spend $1.5 billion next year, most of which ($1.3 billion) will be used to drill and complete new wells. That’s a whopping 50% increase from spending $1 billion this year. The next thing we notice is what type of wells they intend to drill: 119 Marcellus wells (76 in PA and 43 in WV); 81 Upper Devonian wells, which will be drilled on the same pads as deeper Marcellus wells, but only in PA; and 7 “deep Utica” exploratory wells. EQT also reworked a midstream deal with Williams in the Ohio Valley. Below are the exciting details of what’s ahead for EQT in 2017, including a second announcement from EQT Midstream about what’s ahead for the pipeline subsidiary, including details on how much they plan to spend on the Mountain Valley pipeline project in the coming year…
Although shale drilling slowed over the past 18 months or so, you wouldn’t know it by the amount of tax revenue the industry contributes in West Virginia counties located in the northern area of the state. Wetzel County will collect an estimated $24 million in tax revenue from shale drillers in 2016. Marshall County will take in $14.9 million. Ohio County will get $9 million and Doddridge County around $8.1 million. Tally it all up across the entire state, and the Marcellus industry will pay more than $134 million in property taxes for 2016…
As we do each year, we take great pleasure and pride to let you know that Ben Franklin Shale Gas Innovation and Commercialization Center (SGICC) has launched yet another Shale Gas Innovation Contest. In fact, this is the 6th annual such contest. The Shale Gas Innovation Contest awards a $20,000 prize to three companies ($60,000 purse) for the “best shale energy-oriented innovations, new product ideas, or service concepts that are either in the development stage or recently launched.” Here’s the details on who your company can participate…