Monthly Archives: June 2015

Forced Pooling is not Dead in West Virginia

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forced_pooling_cartoon

The Joint Standing Committee on Energy is meeting today in the House Chamber down in Charleston.  On the agenda, “Study of unitization of interests in horizontal well drilling units.”  Also, presentations from WVONGA, WVROA, Joe Hatton who is an Agribusinessman, and a Study of Royalty Payments by Kevin Ellis from Antero Resources.  Doesn’t look like the opposition to forced pooling was invited today.

Oh, there’s also Miscellaneous Business on the agenda.

Time to start calling legislators again, it seems.

While we’re fans of development, we’re not fans of eminent domain being used to force leases onto West Virginia mineral and surface owners.  It’s just not right.

Post-Production Costs in West Virginia

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DocumentHere’s an excellent quick article by Byron C. Keeling about the differences in how royalties are supposed to be calculated (by law) in many of the oil and gas producing states.  Note that in West Virginia a producer has to calculate payment from the first point of sale, and can’t deduct any costs up to that point.  The only exception to that rule will be if the lease specifically lists post-production costs that can be deducted.  Even then, they may not have gone far enough according to the West Virginia Supreme Court of Appeals, which said that there also has to be a method of calculating those costs.  See Tawney v. Columbia Natural Resources.

Stonewall Gas Gathering Pipeline Project

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Gas Pipeline PipesThe Stonewall Gas Gathering Pipeline has been in the works for a while, and if you drive around certain parts of West Virginia you’ll see stacks of big green pipe sitting just off the highway.  For some time, trucks have been bringing pipes in.  Just today I saw trucks taking pipes away.  I’m assuming that means that they are starting to lay pipe in the ground.

This article from last week says that the pipeline should be completed by the end of this year.  It will take gas away from the Doddridge and Harrison county areas and put it into an interstate pipeline down in Braxton County.  Hopefully this will ease some of the congestion we’ve got around these parts, and hopefully the cost to transport gas out of here will ease up some.  If it does, some royalty owners will be looking at bigger checks.

How to Use Natural Gas: Methanol

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methanol-plant

One recent study, reported on by Marcellus Drilling News, suggests that building methanol plants would be an excellent use for the prolific natural gas production taking place in the Appalachian region.  The plants are comparatively quick to build, don’t need infrastructure such as pipelines, and use lots of natural gas to produce methanol, which is widely used.

The low price of natural gas is a concern.  Per BTU, it’s quite a lot cheaper than oil.  Finding ways to put natural gas to use should be a high priority for anyone interested in this region.  Building methanol plants sounds like one excellent solution.

Why We Need Pipelines

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Gas Pipeline Construction West Virginia

Somewhat Reasonable, the Heartland Institute’s blog, has an excellent post which shows just why the pipeline projects which are criss-crossing West Virginia right now are so important.

To sum it up, lack of pipeline capacity hurts the price of gas in the Marcellus shale region, which means lower royalty payments to owners; and lack of pipeline capacity means that more oil is being moved by rail, with more spills as a result.

We agree that pipelines are necessary.  We want pipelines.  We just want people to know what they’re getting in to when they agree to a pipeline crossing their property.  Informed property owners will make better decisions and be happier with the results than uninformed property owners.  Informed property owners may refuse a pipeline across their property.  That’s their right.  Either way, it needs to be an informed decision, not a knee-jerk reaction.

Pipelines and Compressor Stations: How to Live with the Noise

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Compressor Station

When we talk with people about pipelines we make sure to discuss noise.  Most people don’t realize that there could be a lot of noise associated with a pipeline.  The pipeline itself won’t make noise, but the associated machinery could.  The gas needs to be compressed for transportation, and if you’ve signed a pipeline agreement you may have given them the right to put a compressor on your property, too.  Compressors make a lot of noise.

As you could see in that video, a lot can be done to muffle the sound of the compressor station.  Make sure when you negotiate for pipeline or compressor station rights of way that you address the noise issue.  You’ll be sorry if you don’t.

 

Pipelines and Eminent Domain in West Virginia

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BullyIt appears that an oil and gas company is trying to push landowners around a bit, again.  The Mountain Valley Pipeline (MVP) sent workers out to survey the proposed route of the pipeline, but some landowners have turned the surveyors away.  Those landowners have gotten letters from MVP threatening legal action if they didn’t allow the surveyors onto their property.  Some of those landowners have checked with attorneys (not this one) and decided that MVP doesn’t have any basis for legal action.

The MVP cited West Virginia’s eminent domain statutes, which are located at 54-1-1 et. seq. of the West Virginia code.  The trouble is, the company seems to have misrepresented the law in its letter to landowners.

While there is apparently a lot of grey area in West Virginia’s code, and I haven’t seen a copy of the letters that were sent out, it’s still upsetting that an oil and gas company can feel like it can get away with these kinds of tactics.  This is the kind of thing that gives lawyers a bad name.  Sure, you’re supposed to represent your client zealously.  But you’re not supposed to bully, harass, and take advantage of people either.

There is a better way.  It costs more initially, but saves money in the long run.  Hire a landman who knows how to work with people.  Pay people a little money.  Ask them where they think a pipeline would best be run on their property.  Go around tracts if you need to.  It’s hard work, but it’s worth it.

Compressed Natural Gas for Your Home?

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A company called Compass Natural Gas Partners is trying to use pressurized containers to deliver natural gas to rural homes.  Instead of running pipelines to each location, a truck would deliver a tank to the location, and fill the tank up on location.  It’s exactly how propane works now, just cheaper.

This is great, as more natural gas use means more royalties for West Virginia mineral owners.  Once they have this available in Pennsylvania, maybe they’ll bring it here.

New CNG Station Opens in Washinton County, PA

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CNG StationExcellent news!  A company called Energy from US opened a new compressed natural gas station in Bentleyville, PA.  It’s open to the public, so it’s not just for fleet vehicles and the like.

We’d like to see a lot more of this kind of infrastructure being built.  Natural gas is cheaper than gasoline, cleaner that gasoline, and comes out of the ground ’round these parts.  The more people use compressed natural gas to fuel their cars, the more the price of natural gas will go up, and the more royalties we’ll get paid.