Here’s something we didn’t know: In West Virginia there’s a regulation on the books, put there decades ago (pre-shale), that stipulates wells targeting “deep” formations including the Utica Shale must be at least 3,000 feet apart.
In today’s modern shale-drilling world, multiple wells are drilled on a single pad–within a few feet of each other. But in WV, that’s not happening with Utica wells. At least, not without filing for an exemption from this arcane old regulation, a process that costs drillers about $25,000 in legal and regulatory fees. Hence, there’s very little Utica drilling in the Mountain State.
That may change this year. A bill is advancing through the WV legislature, House Bill (HB) 2834, which would change the spacing restrictions for deep Utica wells and allow multiple wells on the same pad. The West Virginia Oil & Natural Gas Association (WVONGA) says HB 2834 is it’s “top priority” during this year’s 60-day session of the WV legislature. And for good reason. There’s a lot of great Utica locations in WV.
With the goals of making West Virginia more competitive with our neighboring shale states, decreasing the environmental footprint and protecting the rights of others, the West Virginia Oil & Natural Gas Association (WVONGA) strongly supports House Bill 2834, legislation to modernize the minimum spacing provisions for the drilling of horizontal deep wells.
“To encourage investment in our state’s natural gas industry and keep us competitive with surrounding states, deep well spacing requirements must be modified to account for the technological advances that have been made in horizontal well development,” said Anne Blankenship, executive director of WVONGA. “Modifications in West Virginia’s statute, like those proposed in HB 2834, will enable future growth in the Utica Shale formation and allow operators the ability to embrace modern, safe technological advances that reduce environmental impact.”
Blankenship said West Virginia continues to operate on outdated laws that discourage investment, particularly regarding oil and natural gas development in the Utica Shale. The Utica Shale lies below the Marcellus Shale formation and is the “next frontier” in natural gas development in the state.
Deep wells (which are defined to include wells drilled in the Utica Shale) are regulated by the Oil and Gas Conservation Commission (OGCC). The statute and regulations were created decades ago for vertical wells and do not reflect the technological and geological advancements associated with horizontal well development, including multi-well pad development.
Multi-well pad development produces oil and gas more efficiently and reduces the environmental footprint of production. However, the current deep well spacing laws require 3,000 feet between each well which discourages multi well-pad development for wells drilled in the Utica Shale formation.
An operator drilling a multi-well Utica pad must seek an exception from these requirements from the OGCC, prolonging the well development process. This process is time-intensive, requires a hearing for every Utica well pad, and can cost more than $25,000 per hearing for outside legal fees and internal resources.
“Our industry looks forward to working with state policy makers to update and modernize our deep well spacing laws so that all stakeholders in West Virginia’s natural gas industry benefit,” said Blankenship.*
The most current version of HB 2834, as amended and changed by the House Energy Committee:
In addition to HB 2834, WVONGA is also promoting the following two bills:
HB 2673 – Creating the Oil and Gas Abandoned Well Plugging Fund
WVONGA supports HB 2673 as it helps resolve the issue of funding the plugging of abandoned and orphaned wells. The bill exempts low volume oil and gas wells from a portion of the severance tax and provides for a special use fee on sales from oil and gas wells which produce more than 5,000 cubic feet of natural gas or one-half barrel of oil per day but less than 60,000 cubic feet of natural gas or 10 barrels of oil per day. The special use fee would be used by the Secretary of the Department of Environmental Protection to plug abandoned oil and gas wells.
HB 2661 – Relating to Natural Gas Utilities
WVONGA supports HB 2661 as it promotes the continued production of natural gas from local wells and provides for the natural gas utility to recover costs, including of converting customers to alternative fuel sources. The bill permits a natural gas utility to make a request for proposal for incentivized gas drilling where dependable, lower-priced supplies of natural gas are not readily available. The bill also permits a natural gas utility to recover the cost reasonably necessary to convert a customer to an alternate fuel source when gas service to that customer has been abandoned. (2)
(1) West Virginia Oil & Natural Gas Association (Feb 10, 2019) – Natural Gas Industry Calls for Changes to Deep Well Spacing Laws
(2) West Virginia Oil & Natural Gas Association (accessed Feb 14, 2019) – WVONGA 2019 Priorities
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