WVE: How do you think the new state and national leadership will affect your industry?
AB: The results of the state and federal elections are expected to positively impact our industry. New leadership on both the state and federal levels is focused on job creation and the promotion of energy production. We have already seen changes on the federal level that have removed impediments to growth in the oil and gas industry. We expect similar changes to be made on the state level that will allow us to fully develop our oil and natural gas resources, which will create more jobs and spur economic development at a time when it is desperately needed. West Virginia needs the oil and gas industry to thrive.
WVE: What is the greatest challenge you see facing your industry right now?
AB: While our oil and natural gas resources are abundant in West Virginia, we face challenges that prohibit us from fully developing them. We need to reform our current outdated legal framework to allow development to proceed in a way that makes sense and does not waste oil and gas. The other critical component is the approval and construction of pipeline infrastructure. We are lacking adequate pipelines to transport the volumes of gas we can produce. If we can’ t transport the product to market, we can’ t fully develop it. It’ s that simple.
WVE: Tell us about the major topics that were addressed in the 2017 legislative session that will directly affect your industry.
AB: Senate Bill( SB) 576 included cotenancy and joint development— two solutions that would greatly benefit our industry and would update our laws to allow for efficient production in a common sense way. Although SB 576 did not pass during the legislative session, we are continuing to make progress with stakeholders and educate our legislators, and we will continue to push for changes to our laws regarding mineral efficiency.
WVE: What is the one law or one change that would have a major positive impact on your industry?
AB: In addition to creating cotenancy and joint development laws in West Virginia, the other critical component to our industry growing is the approval and construction of pipeline infrastructure. There are a number of pipeline projects proposed to be built in and through the state. These projects represent one of the single largest private sector infrastructure investments in the state’ s history, resulting in more than $ 5 billion in economic impact, tens of thousands of jobs and significant tax receipts for local governments and the state. However, they must first be approved by the Federal Energy Regulatory Commission before construction can begin.
Once constructed, these lines provide the incentive and opportunity for more gas development in West Virginia, which will equate to more local and state jobs and taxes. The industry needs more tools in the toolbox, like pipeline infrastructure and pro-production land policies, to make the most of the opportunity in front us.
Charlie Burd
Executive Director, Independent Oil and Gas Association of West Virginia, Inc.
WVE: Give us a brief update on your industry.
CB: Statistically, there are approximately 56,000 oil and gas wells in the state. These wells drive the employment of some 17,000 West Virginia workers. These are high-paying jobs with benefits that in 2015 provided $ 1.44 trillion in wages.
Natural gas production in 2016 was more than 1.3 trillion cubic feet. Oil production from 2015 was 8.324 billion barrels. This combined production provided $ 72.2 million in severance tax payments to West Virginia and another nearly $ 135 million in property taxes that get shared back to all 55 counties. Millions more in royalty payments can be added to that.
WVE: How do you think the new state and national leadership will affect your industry?
CB: Nationally, newly elected President Donald Trump immediately took steps to undo the Obama administration’ s carbonhating agenda. Trump’ s determination to advance a platform of energy independence was more clearly defined with his recent executive order granting the permit approvals on the Dakota Access and Keystone XL pipelines. Given that West Virginia has several similar pipeline projects to provide much-needed natural gas takeaways, these actions are very encouraging for the state.
From the state perspective, the oil and natural gas industry is beginning to rebound from some very historical lows in terms of rig count and drilling activity. This increased activity will immediately create several hundred jobs across several employment sectors and provide much-needed severance tax payments to the state.
WVE: As a result of the 2016 elections, are you seeing an increase in optimism or continued uncertainty among your association members?
CB: Without question, the level of optimism within the oil and natural gas industry at the national level is at an eightyear high. In West Virginia, given the huge budget deficit that must be addressed, there is cause for deep concern that business taxes will increase. As more West Virginia companies close their doors, there will be fewer companies to absorb the needed tax revenues. Add in the uncertainty on environmental and regulatory issues, and it is reason for many to take pause at their immediate plans regarding additional investment, job creation and general anticipated company growth.
WVE: What is the greatest challenge you see facing your industry right now?
CB: The oil and natural gas industry’ s greatest challenge is the timely completion of much-needed pipeline construction to markets outside West Virginia. These natural gas pipeline takeaway projects equate to billions of dollars in investment in the
WWW. WVEXECUTIVE. COM SPRING 2017
43