Legislators support $10K Marcellus permit fee
CHARLESTON, W.Va. -- The permit fees oil and gas companies pay to drill in the Marcellus shale formation in West Virginia could jump to $10,000 for each new well, an increase that industry trade groups strongly oppose.
A special House-Senate legislative panel approved an amendment to a bill Thursday that would require oil and gas operators to pay $10,000 for the first well on a site and $5,000 for each subsequent well.
The increased fees would generate an estimated $2.5 million a year for the state Department of Environmental Protection, enough to hire 15 additional staffers.
"This is one of the most important things we're going to do -- provide enough funding to have a sufficient number of inspectors in the field," said Barbara Evans Fleischauer, D-Monongalia, who serves on the joint committee writing proposals to regulate drilling in the Marcellus shale. "It's important we take this up and get the people in the field."
Gas drillers now pay about $550 for each well permit. A previous proposal - backed by oil and gas trade groups in West Virginia - would have raised the fee to $5,000 for the first well on the site, and $1,000 for each additional well. The trade groups have said the $10,000 fee would hurt independent drillers.
State Sen. Karen Facemyer, R-Jackson, who voted Thursday against the $10,000 fee, said the proposal could prompt companies to take their business to neighboring states, such as Ohio and Pennsylvania. Facemyer said it didn't make sense to "lock in" a fee now because a new law to regulate Marcellus drilling likely wouldn't take effect until July.
Facemyer also noted that DEP officials don't know yet how much the new regulations will cost to implement.
She said gas companies already pay $1.2 million in state severance taxes over the life of each well.
"What is the rush?" Facemyer asked. "Why are we always assuming they - the oil and gas industry -- are the bad guys?"
State Sen. Orphy Klempa, D-Ohio, who supported the $10,000 fee, said he has fielded numerous calls from constituents who have trouble getting DEP inspectors to investigate complaints about gas drilling companies in the Northern Panhandle.
Klempa said West Virginia's severance taxes weren't hindering Marcellus shale development. Drilling has taken off as companies rush to tap the Marcellus reserves that underlie much of the state.
"This is not going to run the industry out of the Northern Panhandle," Klempa said. "The $10,000 and $5,000 fees will give people a sense of security that their health, environment and property are being protected."
The joint legislative committee plans to have a comprehensive bill that would regulate Marcellus shale drilling by the end of the year. That bill would have to go before the full Legislature for approval.
Reach Eric Eyre at email@example.com or 304-348-4869.