MORGANTOWN – Significant revenue shortfalls have led the state Department of Environmental Protection’s Office of Oil and Gas to cut more than a third of its staff – including inspectors.
Agreeing with DEP that this public health and safety challenges, Delegate Evan Hansen, D-Monongalia, and Sen. Bill Ihlenfeld, D-Ohio, are spearheading a legislative effort to solve the problem and provide a permanent funding source.
The Ohio Valley Environmental Coalition held a Thursday press conference, featuring Hansen and Ihlenfeld, to explain issue.
There are three possible solutions, Hansen said, but the best one is a $100 annual fee on all active wells and he’ll co-sponsor a bill to put that in place. The 2021 legislative session starts Wednesday.
The Dominion Post first reported on this problem in June. James Martin, chief of Oil and Gas had told DEP’s Environmental Protection Advisory Council about the severe drop in income due to pandemic related cutbacks in oil and gas production.
OO&G revenue was $3.4 million each in Fiscal Year 2017 and 2018, he said; $3.3 million in FY 2019; only $1.6 million in FY 2020, which ended June 30, Martin said.
That means staff downsizing staff from 40 to 25 and a search for other money sources, he said.
OO&G is entirely dependent on one-time permit fees, he said then. The office typically sees 35 to 40 permit applications per month. May and June saw only 16 applications.
The downsized staff, including inspectors and permit review staff, were moved to different divisions and offices within the DEP with existing vacancies.
On Thursday, West Virginia Surface Owners Rights Organization co-founder Dave McMahon said 40 staff members wasn’t really enough. It meant one inspector for every 3,500 wells; at 25, there’s one for every 5,000.
But OO&G is the only DEP permitting agency that doesn’t get federal money to help it run, he said.
One-time permit fees are unreliable, he said, because the industry is naturally cyclical with booms and busts. And inspectors aren’t just needed during drilling, but for the life of the well, which can last decades.
McMahon and Hansen outlined the three propsed solutions that the Legislature will consider this session. One is a budget improvement package that would transfer money from the General Fund to OO&G. But it’s a one-time partial fix that would simply prevent further staff cuts.
The second is devoting 1.5% of current severance tax income to OO&G to restore staffing to 40. But this still poses the cyclical problem for new well drilling, and doesn’t increase staffing.
McMahon also said SORO doesn’t support diverting severance money that could go to other good causes to this one.
So he suggested the $100 annual fee for every active well in the state. This has several advantages, he and Hansen said. It’s a permanent fix. And it’s equitable: companies with water and air permits pay annual fees; oil and gas companies are the only ones that don’t.
“We’re asking the Legislature to act this session for a permanent longtime fix, about what has now become a very difficult, nearly disastrous problem,” he said.
Hansen said, “It’s a public health issue.” Among the potential hazards of slackened inspections, there are 1,000 wells with waste tanks close to and upstream from drinking water intakes.
Hanson also said that the industry deserves to have regulatory certainty. Regulation needs to be right and fairly enforced.
He said $100 isn’t a significant fee and should be affordable. McMahon added that if one of the old vertical wells is producing so little gas that $100 a year is unaffordable, it may time to cap it.
The fee income, Hansen said, would not only beef up staff but help get old orphaned and abandoned wells capped.
Ihlenfeld said well explosions don’t occur often but they do occur. There was a recent one in his district.
He first learned about the problem last session and realized the full impact last summer when an inpsector contacted him about the staff cuts and the potential consequences.
Ihlenfeld wrote to then-DEP Secretary Austin Caperton, he said; he and DEP have remained in regular contact to discuss solutions.
“I don’t think that the public realizes the dangers that are posed by this situation,” he said. There are 55,000 active wells, 12,000 inactive and 4,500 abandoned and orphaned wells.
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