Global Traditional Energy Resources

West Virginia lies over the Marcellus Shale formation, and the far western edge of the state also lies over the Devonian Shale formation.¹ The Utica Shale formation lies below the Marcellus formation² and is just beginning to be developed in West Virginia.³ The number of natural gas wells in West Virginia has continued to rise over the past few years, although more recently there has been a sharp decline in the number of drilling permits issued in the region.⁴ The state produced 1,276,033 mcf of dry natural gas in 2016,⁵ approximately 6.6 million barrels of oil in that same year,⁶ and the industry is currently responsible for about 80,000 jobs in the state.⁷

Statutory and Regulatory Framework

Issues related to hydraulic fracturing are largely overseen by the West Virginia Department of Environmental Protection’s (WVDEP) Office of Oil and Gas.⁸

In June 2011, the West Virginia House and Senate formed a Joint Select Committee on the Marcellus Shale to study the issue and propose legislation to be considered in a special legislative session or when the legislature convened in January 2012.⁹ On December 14, 2011, in a special session, the legislature passed H.B. 401, the Natural Gas Horizontal Well Control Act (“Horizontal Well Act” or “Act”).¹⁰ The Act, among other things, established a permitting process for horizontal wells, required additional studies, and authorized WVDEP to adopt new rules.¹¹

More specifically, the Act requires a well work permit prior to commencing any well work, including site preparation, that would disturb the land.¹² The permit application must, among other things, describe the work that will be done, the depth and angle of the well, the means used to stimulate the well, and information on casing or tubing.¹³ The Act requires operators to furnish a bond in order to receive permits.¹⁴ It also established civil and criminal penalties,¹⁵ requires public disclosure of permit information on WVDEP’s website,¹⁶ and provides for compensation to surface owners damaged by horizontal well drilling operations.¹⁷

The West Virginia Legislature passed H.B. 107 in 2014,¹⁸ which amended Sections 22-15-8 and 22-15-11 of the Code of West Virginia to allow for the receipt of additional drilling waste at certain commercial solid waste facilities.¹⁹ Specifically, the legislation created an exception to the landfill intake restriction of 10,000 or 30,000 tons per month (depending on the landfill classification), provided that certain conditions are met.²⁰ H.B. 107 also established an additional $1 per ton fee for the disposal of drill cuttings and drilling waste generated by horizontal well sites,²¹ and required WVDEP to issue an emergency rule to govern the acceptance, handling, and disposal of drill cuttings and drilling waste.²² In July 2014, the West Virginia Secretary of State approved and issued WVDEP’s emergency rule, which establishes limits for various toxins associated with drill cuttings and drilling waste and requires radiation and leachate monitoring at all facilities that receive such wastes.²³ Finally, H.B. 107 also required the Secretary of WVDEP to prepare a report to the Joint Legislative Oversight Commission on Water Resources and the Legislature’s Joint Committee on Government and Finance by July 2015 that would examine, among other things, the hazardous characteristics of leachate collected from solid waste facilities receiving drill cuttings and drilling waste and the potential for the collection, treatment and disposal of such leachate to negatively impact surface waters or groundwater.²⁴ WVDEP issued its completed report in July 2015, concluding that there is “little concern” regarding leachate associated with “drill cuttings that were placed in approved and permitted landfills, once that leachate was processed through a correctly operated treatment facility.”²⁵

In 2015, the governor created a panel, called the West Virginia Commission on Oil and Natural Gas Industry Safety, to study worker safety at oil and gas sites.²⁶ The Commission issued a report on January 13, 2016.²⁷ While statistics indicate that the industry has a higher worker fatality rate than any other private industry, the Commission found that the rate of serious incidents and accidents in West Virginia had remained fairly constant over the past 15 years.²⁸ The Commission recommended adding safety practices and training to existing regulations and best practices in order to improve worker safety.²⁹ The Commission’s specific recommendations call for new legislation mandating notification for incidents, and additional best practices for first responders.³⁰ They also recommended that the Commission continue to study these issues during 2016.³¹

On March 9, 2018, West Virginia Gov. Jim Justice signed into law H.B. 4268, the “Co-Tenancy Modernization and Majority Protection Act.”³² The bill allows natural gas and oil companies to drill on land with the consent of at least 75 percent of co-tenants.³³ Previously, West Virginia required the consent of 100 percent of land or mineral owners before oil and gas companies could drill.³⁴ To protect co-tenants, the bill authorizes non-consenting owners to elect a production royalty or working interest share of production.³⁵

Issues related to the disposal of wastewater associated with fracking operations have also drawn attention in the state. In 2014, a professor at Duke University reported that water testing indicated that contaminants associated with oil and gas wastewater have migrated into Wolf Creek, a tributary of the New River.³⁶ After a hearing, the West Virginia Environmental Quality Board allowed the well operator to continue to dispose of wastewater in an underground injection well.³⁷ In response, the Fayette County Planning Commission adopted a county ordinance targeting wastewater from unconventional drilling operations.³⁸

In June 2016, the federal district court for the Southern District of West Virginia permanently enjoined the enforcement of the county ordinance enacted by the Fayette County Commission, which prohibited the storage of wastewater in an underground injection well and the temporary storage, handling, treatment, or processing of wastewater unless it is at a site operating under a permit for a conventional vertically drilled well in the county.³⁹ The Plaintiff, EQT Production Company, argued that the county ordinance effectively outlawed horizontal drilling anywhere in Fayette County by prohibiting even temporary storage at horizontally drilled wells.⁴⁰ The court held that the portions of the county ordinance regulating the storage of wastewater at conventional vertical extraction sites are preempted by the West Virginia Oil and Gas Act, and the portions of the county ordinance prohibiting permanent storage of wastewater in underground injection control (“UIC”) wells are preempted by West Virginia’s UIC program, promulgated under the federal Safe Drinking Water Act.⁴¹ The court reasoned that “the state has comprehensively regulated this area, including storage activity at drilling sites, and left no room for local control.”⁴² The court further noted that parts of the county ordinance that “prohibit disposal of wastewater in UIC wells conflict with and stand as obstacles to state law,” and were therefore void.⁴³ Fayette County subsequently appealed the decision to the U.S. Court of Appeals for the Fourth Circuit,⁴⁴ and on August 30, 2017, The Fourth Circuit issued an opinion affirming the District Court’s opinion.⁴⁵

Last updated September 2018.