The state Senate’s energy committee tried to gauge support for a natural gas pooling bill during a Saturday session, but couldn’t find enough common ground.
“I think the members will agree this is a huge undertaking. It’s not something we’ll settle on one Saturday afternoon,” said the committee chairman, Senator Randy Smith, R-Tucker.
“To be honest with you, we’d probably be here until Easter.”
The balancing act of what to do when a company wants to drill on a tract where some owners are unwilling or can’t be located has been discussed for years in the state Legislature.
The Senate Energy, Industry and Mining Committee discussed an originating bill addressing the issue this morning, up against a deadline to move bills out of committee two weeks from the end of the regular 60-day legislative session.
Smith sent legislative attorneys and the various stakeholders back to the drawing board, hoping to work through the summer to come closer to consensus for next year.
“Let’s get working this Monday. I’ll give you Sunday off,” he said, somewhat jokingly.
Bottom line, Smith said, “I would like to get something done so we don’t have to do this every year.”
Some of his Senate colleagues agreed.
“I know you’re going to force those parties in the room and try to come up with something everybody is comfortable with,” said Senator Mike Caputo, D-Marion.
Senator Eric Nelson, R-Kanawha, said it’s high time to reach agreement.
“I would ask that we start to put some deadlines on this,” Nelson said. “Let’s get off the pot, if we may”
Senator Mike Romano, D-Harrison, pleaded for more consideration for land and mineral rights owners.
“This makes the seventh year I’ve seen a forced pooling bill,” Romano said. “What we lose sight of every time is whose interests we represent.”
The legislation was somewhat complicated.
Once an operator has determined land it wants to constitute a unit — and has reached agreements with 75 percent of the owners with authority to make decisions under the lease while also reasonably negotiating with all owners who are known or can be located — then it can apply for a “unitization order” with the state.
The state agency that handles those applications is the Oil and Gas Conservation Commission. The agency can then determine a royalty percent and common lease terms that are “just and reasonable” based on the market for owners who have not consented.
Several organizations playing roles in balancing those interests spoke about the bill Saturday morning.
Valerie Antonette, director of business development for Bounty Minerals, said the bill had come close to satisfying all parties. She said it balanced development and economic growth with a goal of protecting the environment.
“While this isn’t the ultimate bill for every stakeholder in this area, I think this is the fairest bill to the stakeholders,” Antonette told senators.
“While we need to protect those owners we also need to protect owners who want their property developed. It’s actually probably better than the surrounding states’ bills.”
After the meeting, Antonette said she is satisfied by the willingness to keep talking.
“At least there seemed to be somewhat of mandate to get something done and I think both sides are willing to come to the table,” Antonette said.
Brett Loflin, vice president for regulatory affairs at Northeast Natural Energy, said negotiations can be complicated, citing the possibility of a 40-acre tract with 100 different owners.
“The bill as it stands now, I think is a good place to start,” Loflin said.
Work on the bill had improved it over the course of this legislative session, said Tom Huber, president of the West Virginia Royalty Owners Association. But he said it still hadn’t met the mark.
“Of course we want to develop this resource, but we want to make sure everyone benefits,” Huber said. “We should be very careful when we start messing with private negotiations in a free-market system.”
David McMahon, co-founder of the West Virginia Surface Owners Rights Organization, had questioned why the committee was taking up the complicated legislation right up on deadline. “Why now?” he asked.
He said the bill discussed today did not provide enough flexibility for property owners, including the ability to say the time is not right for drilling.
“We’re in favor of a good bill, but we haven’t seen one we like,” McMahon said.
The West Virginia Farm Bureau also described concern with the bill.
“There are some issues with this particular piece of legislation that we have some concerns with,” said Dwayne O’Dell, director of government affairs for the bureau.
He said it fails to provide adequate private property protection, falls short on transparency around payments, and could allow development at what falls below market value
“We believe this would be a significant rollback of private property rights if this bill were allowed to go through,” O’Dell said.