Ban the Ban
Modernize & Unitize
We can work together to grow the state’s economy, create good paying West Virginia jobs, boost tax revenues, more payments to mineral owners and usher in a new era of manufacturing through modernizing the state’s unitization statute to include “shallow” horizontal wells.
Adopting this act would attract billions of dollars in investment from oil and natural gas companies, spur job growth, boost tax revenues and provide personal income to mineral owners. West Virginia will better compete with surrounding states, especially when it comes to building a cracker plant or storage and trading hub.
The state’s highest court recognized the lack of clarity around existing law. It said the legislature should clarify allowable deductions for property tax purposes. Natural gas producers want fair, consistent tax laws that account for the necessary costs of producing, processing, transporting and selling natural gas.
The law would honor conservation standards by promoting efficient extraction of shale resources, preventing waste and decreasing surface disturbance. The state and local communities benefit from the increased severance tax revenue resulting from an increased recovery rate. Without the addition of unitization in the Marcellus, natural gas will be stranded, leaving some mineral owners with no economic way to extract and be compensated for their natural gas.
WHAT’S THE CHANGE? | POOLING SHOULD BE PERMITTED FOR SHALLOW HORIZONTAL WELLS
1. ENHANCES UNITIZATION LAWS
The new law would allow unitization for shallow wells, including the Marcellus. Currently, one property owner can block development for any reason – including
a politically motivated one – depriving neighboring owners of compensation from shale development. Because horizontal wells go through more than one tract of land, the state needs to permit unitization.
2. ALLOWS WEST VIRGINIA TO COMPETE
Unitization has been used for years for deep wells, including Utica Shale wells. The Marcellus Shale, which is more shallow, is the main focus of horizontal drilling.
West Virginia’s lack of unitization laws for shallow wells places West Virginia’s gas industry at a competitive disadvantage to surrounding state
WHAT THEY’RE SAYING
“The industry has shown that horizontal drilling and hydraulic fracturing techniques are evolving at a rapid pace and are an economical and efficient tool for producing hydrocarbons.”
– W.Va. Supreme Court Ruling, June 5, 2019
Tax Energy Fairly
West Virginia’s property tax law, which is used to determine the true and actual value of natural resource property, is old and outdated. It needs substantial revision based upon the modernization of the oil and natural gas industry.
MODERN DRILLING TECHNOLOGY
West Virginia’s tax code doesn’t account for advances in horizontal drilling technology that enable operators to reach natural gas trapped more than 3 miles away.
FAIR, CONSISTENT LAWS
The state’s highest court recognized the lack of clarity around existing law. It said the legislature should clarify allowable deductions for property tax purposes. Natural gas producers want fair, consistent tax laws that account for the necessary costs of producing, processing, transporting and selling natural gas
MAKING WV COMPETITIVE
WV is losing the competition for good-paying, long-term jobs. Pennsylvania does not charge a property tax on oil and gas wells. Ohio’s is much less because its system recognizes all industry costs to sell the gas and oil. On the same well, operators pay almost three times as much property taxes in West Virginia as they do in Ohio.
WHAT’S THE CHANGE?
1. CONSIDERS TOTAL COST
The new law fairly accounts for the significant cost of producing and transporting natural gas to market, where it is valued and taxed for property tax purposes
2. ACCOUNT FOR MODERN TECHNOLOGY
Today’s modern wells use horizontal drilling to reach natural gas trapped in the shale formation 3+ miles away from the well head. Wells with shorter horizontal sections, which cost less to produce, will be assessed differently than longer, more costly wells.