A bill providing an expedited permitting process for oil and gas wells and another creating an Oil and Gas Abandoned Well Plugging Fund may be taken up again in the upcoming legislative session.
The two proposed bills were presented to the Joint Standing Committee on Energy in its Monday morning meeting.
The first bill, which would allow expedited permits by paying an additional permit fee, is similar to Senate Bill 665 — which died in the House the last day of the 2019 Regular Session. Under the bill, operators would pay a $20,000 expedited permit fee for the first horizontal well drilled and another $10,000 for additional horizontal wells drilled on a single well pad at the same location.
The West Virginia Department of Environmental Protection secretary would issue permits in 45 days – or no fewer than 30 days if the secretary decided to reduce the permit time – providing that the permit is not denied or more information is not needed.
Additionally, permits could be modified for an additional $5,000 fee for any horizontal well drilled and the permit would be issued within 20 days of submission.
Deep wells are excluded from this bill.
Half of the fees would go to the Oil and Gas Operating Permit and Processing Fund, which would be earmarked for DEP staffing costs to review permits. The other half would go to the Oil and Gas Reclamation Fund, which would be earmarked to plugging oil and gas wells.
Jason Wandling, DEP general counsel, said the agency needs to hire one or two more people to handle the proposed expedited process. Wandling said the agency may need to explore additional funding options for enforcement. He said the funding for enforcement currently is sufficient but it is fueled by permit fees.
“There has been a reduction in permit applications over the last couple of years,” Wandling told the committee. “It is down significantly from last year and the year before.”
Another bill presented to the committee would create a fund for addressing orphaned wells. This bill is similar to House Bill 2673, which was vetoed by the governor following the last legislative session.
The proposed bill makes a few changes from the previous session’s bill. This bill would decrease the cap of the fund and extends time periods for the DEP regarding the fund balance.
The bill would reduce the severance tax of low-producing wells and would plan to use money to plug orphaned oil and gas wells. The bill would reduce the severance tax from 2.5% from 5% for natural gas operators producing between 5,000 and 60,000 cubic feet of natural gas per day or between a half and 10 barrels of oil per day.
The bill creates a new fund called the Oil and Gas Abandoned Well Plugging Fund, which would be administered by the DEP to plug orphaned wells. When the fund reaches $6 million, severance tax would drop to 0 until June 1 the following year and the DEP could spend below the $6 million cap. This bill lengthens the amount of time for the DEP to spend the money below the $6 million cap. The previous bill allotted for a year or less.
The bill also would require the DEP to report to the governor and Legislature on the balances in the fund, and the number of wells plugged, along with a five-year plan for plugging wells.
