New Legislation Regulating Horizontal Wells on the Fast Track in West Virginia
After a legislative session that had, as of Wednesday, produced several proposed bills to increase the regulation of oil and gas exploration in West Virginia, and particularly the use of horizontal drilling in the Marcellus formation, only one bill, Senate Bill 424, managed to pass its house of origin by the deadline cross-over day. If enacted, Senate Bill 424 would create the Natural Gas Horizontal Well Act, West Virginia Code §22-6A-1, et seq., which would generally apply to all horizontal wells regardless of the target producing formation.
The proposed legislation incorporates large portions of West Virginia's existing oil and gas statute, West Virginia Code ?22-6-1, et seq., but also includes new provisions applicable only to horizontal gas wells, including requirements for the development of well site safety plans and water management plans for wells that will require the withdrawal of more than 210,000 gallons of water in a given month for fracturing. The bill further requires disclosure of the contents of fracturing fluids and imposes several record-keeping and reporting requirements on well operators regarding water use and water handling.
In addition, the bill includes new requirements to obtain regulatory approval for the construction of large freshwater or flow-back impoundments, and it contains reclamation requirements for multi-well pads as well as certain enhanced enforcement provisions that will apply to horizontal well operators.
The bill also attempts to address certain financial constraints within the West Virginia Department of Environmental Protection ("WVDEP"), and particularly the Office of Oil and Gas, by increasing permit fees for horizontal wells to $5,000 for an initial horizontal well and $1,000 for subsequent wells located on the same pad. It is anticipated that these increased fees will allow the WVDEP to perform its regulatory duties with regard to efficient permitting of new wells and enforcement of rules and regulations.
Notably, the bill does not contain a procedure allowing for statutory pooling of unleased interests. Although the bill, as introduced, contained such a forced pooling provision, the provision was not included in the final version of the bill.
The bill has moved on to the House of Delegates for consideration. Click here to access the legislation.