WV Senate energy panel approves another bill to boost state oil and gas oversight funding as first bill's prospects dim

The legislation, Senate Bill 613, was previously shelved by the committee in favor of SB 480. The latter legislation is estimated to raise $1.3 million per year by imposing a $100 annual oversight fee for unplugged wells that produce 10,000 cubic feet or more of gas per day.

But committee Chair Sen. Randy Smith, R-Tucker, said Thursday there was no interest in advancing SB 480 in the House of Delegates after it passed the Senate Monday, prompting him to turn to SB 613 as a means of bolstering Office of Oil and Gas funding. SB 613 was not on the committee’s agenda for its Thursday meeting.

SB 613 takes a different approach to boosting Office of Oil and Gas revenue. It would dedicate a 1.5% oil and gas severance tax to the Office of Oil and Gas starting July 1, 2022.

The office needs $1.3 million more annually just to get back to previous staffing levels that well safety proponents say were already inadequate, a shortfall driven by its main revenue pipeline — permit fees — drying up amid oil and gas industry struggles.

The Office of Oil and Gas is responsible for monitoring and regulating oil and gas drilling, storage and production, and manages the state’s abandoned well-plugging and reclamation program.

DEP Deputy Secretary Scott Mandirola told the committee that in 2020, the agency reduced the size of the Office of Oil and Gas from about 45 to 25 staff members due to a lack of funding, including an inspection staff reduction from 18 to nine.

Mandirola noted the majority of the office’s funding comes from permit application fees, and that the office doesn’t collect revenue from annual oversight fees like the DEP’s other divisions.

There are 75,000 wells throughout the state, including roughly 6,000 orphaned wells, that inspectors are responsible for, Mandirola said.

Mandirola told committee members the projected $1.9 million boost from SB 613 would allow the Office of Oil and Gas’ inspection staff count to double back up to 18.

“Is 18 enough?” Sen. Charles Clements, R-Wetzel, asked Mandirola.

“Enough is a difficult question to answer,” Mandirola replied. “I can certainly say that I don’t believe nine is enough.”

Not getting back to the office’s former complement of 18 inspectors would result in well drillers and citizens with complaints both having to keep waiting longer than they should for inspector responses.

Mandirola said there were six phases of well drilling in which an inspector must be onsite when drilling occurs.

West Virginia Rivers Coalition Executive Director Angie Rosser said her organization was glad to see the Senate to take action to address what she called a severe lack of oil and gas inspectors, but is concerned the legislation doesn’t go far enough to provide effective well oversight.

“We need to get to a level where oversight actually has a deterrent effect on preventing environmental harms, not just have the minimum in place to respond to problems after they have occurred,” Rosser said in an email. “It’s in the industry’s interest and it’s in the public interest to solve this staffing crisis.”

West Virginia Surface Owners’ Rights Organization cofounder David McMahon has suggested the office needs about 40 inspectors. He called for an annual $100 fee for operators of all wells — or essentially anything that will increase the Office of Oil and Gas’ number of inspectors above what it was before downsizing.

For the second straight year, the Legislature has ignored House Bill 2725, which would institute a $100 annual oversight fee for all wells.

McMahon has cited a 2018 study of West Virginia well sites published in the peer-reviewed journal Science of the Total Environment that found active conventional wells are a significant source of methane emitted to the atmosphere.

The study estimated that each active conventional well loses roughly 9% of production.

The Energy, Industry and Mining Committee referred SB 613 to the Senate Finance Committee.