CHARLESTON — The House Energy Committee on Tuesday approved one bill to help natural gas mineral owners and another to help producers.
HB 2866 aims to allow mineral owners to terminate inactive leases so they can sign new ones.
HB 2834 would allow for tighter horizontal deep well spacing to account for technology vastly advanced since the rules were written in the 1980s.
Lease bill
HB 2866 is written in legalese. Boiling it down, a lessee (the oil and gas producer) has 90 days from the termination, expiration or cancellation of a lease to deliver to the mineral owner (the lessor) a notice of release.
If the producer fails, the owner may serve notice to the producer of its duty to provide the release. If the producer still fails, after another 90 days the owner may file an affidavit of termination, expiration or cancellation. Once that affivdavit is recorded, the lease is rebuttably presumed terminated.
Mineral owners have explained that sometimes producers stop producing wells but don’t release the leases, prohibiting the owner from signing a new lease to generate income. This bill will help them get their minerals back into production.
The bill passed in a voice vote with just one nay and heads to Judiciary.
Spacing bill
Current agency rules require horizontal deep wells – this would apply to Utica wells but not Marcellus, which are considered shallow – at 3,000 feet between wells operated by different operators and 4,000 feet from unit boundaries or lease boundaries.
West Virginia Oil and Natural Gas Association Executive Director Anne Blankenship told the members that these rules were written in the 1980s and technology has made them obsolete.
Producers can and frequently do go before the Oil and Gas Conservation Commission to obtain exceptions to the rules, she said. But this is cumbersome, costly ($25,000 per request for legal fees and such) and time consuming.
So HB 2834 sets in code that boundaries must be no greater than 1,000 feet between deep wells operated by different operators or require a setback of more than 500 feet from a unit boundary or lease that divides operators.
This should reduce the number of exception cases going before the commission, committee counsel said.
It passed unanimously in a voice vote and goes to the House floor.
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