Last year when the Legislature was considering a bill to generate money to hire more state inspectors for oil and gas wells, lobbyist David McMahon warned that it wouldn’t be enough.
“We appreciate this bill. We think it’s not enough,” McMahon, co-founder of the West Virginia Surface Owners Rights Organization, told senators.
And now, with the legislative session just ahead again, McMahon is advocating to revisit the issue. The regular session of the West Virginia Legislature begins Jan. 10.
Senate Energy Chairman Randy Smith, R-Tucker, agreed that the support for oil and gas inspectors deserves a review.
“I think we need to revisit the well inspectors,” Smith said last week. “We need to see how many more wells were inspected last year and how many still need inspected.”
The bill that passed during last year’s session raised enough money for 20 inspectors, along with two inspector supervisors and two specialists to deal with complicated complaints.
That’s a significant increase for the traditionally underfunded Office of Oil and Gas. And the number of inspectors in that office has sometimes been as few as nine.
But their turf is sprawling, McMahon emphasized. So even 20 or more inspectors may be spread thin. He called the number “totally inadequate.”
“What the Legislature did last year was just babysteps compared to the need,” McMahon said.
The inspectors, he said, have oversight for 75,000 wells — or, potentially, about one inspector for every 3,000 wells. Plus, there are 20,000 associated tanks. And for 200 or 300 new permits applications each year that need their down-hole casing program. Then there are eight to 15 horizontal rigs running 24 hours a day, seven days a week.
“The typical way enforcement works now is … a citizen calls in and complains, the inspector calls the operator/driller, says will you deal with that and the driller does. But because the inspector didn’t go out and issue a fine, there’s no deterrent so the driller doesn’t fix the other wells that may be doing the same thing,” McMahon said in a telephone interview last week.
“I don’t mean to be critical of the individuals trying to be inspectors. They’re given way too much work with way too little authority.”
The result can have tangible effects, he said.
“The first thing that comes to mind is leaks,” McMahon said. “Roads is another issue. They can wash out and cause problems. And, of course, more active plugging enforcement.”
A couple of options are possible for increased funding, McMahon said. One is fees on wells. Another is to dedicate a portion of severance tax, which is the tax imposed on the privilege of extracting natural resources such as oil, natural gas and coal.
Last year’s discussions, McMahon said, were complicated by some financial and political factors.
One was the dominant discussion of income tax cuts backed by the Justice administration. There was a clear incentive to show the state’s current tax base could support the cut, McMahon said. And then the “no tax” pledges that some lawmakers sign is a disincentive to raise fees that could be construed as a tax increase.
“So the compromise that came out was only babysteps toward solving the problem,” he said.
“The industry never wants to pay any more money in no matter how small in connection to their gross income and the legislators have their agendas, so it will be a difficult task.”
Delegate Evan Hansen, D-Monongalia, said he believes financial support for well inspectors needs another look.
“I think it needs to be revisited this year,” said Hansen, the lead Democrat on the House Energy and Manufacturing Committee.
Generally, Hansen said, the fees that apply to wells should be broadened with some loopholes closed. Last year, he proposed a floor amendment that would have applied oversight fees to all qualifying oil and gas wells.
This year, he said he would introduce a bill with the same concept so that the fee is applied across all operators and to raise additional funds needed to hire more inspectors.
“Every well that qualifies would need to pay the fee. It’s only fair for every well that has the same production to pay the same fee,” he said.
When wells are leaking, Hansen said, harmful effects can build up.
“There’s a few potential downsides. One is related to water quality and potential impacts on drinking water,” he said. “The second is to the air quality, climate change and the methane that’s leaking out of so many wells across the state.”
