Bill Text: WV HB2931 | 2018 | Regular Session | Introduced
Bill Title: Authorizing shut-in of oil and gas wells in West Virginia
Spectrum: Partisan Bill (Republican 1-0)
Status: (Introduced - Dead) 2018-01-10 - To House Energy [HB2931 Detail]
Download: West_Virginia-2018-HB2931-Introduced.html
WEST virginia Legislature
2017 regular session
By
[
to the Committee on Energy then the Judiciary.
A BILL to amend the Code
of West Virginia, 1931, as amended, by adding thereto a new section, designated
§22-6-33a, relating to authorizing shut-in of oil and gas wells in West
Virginia; providing for payment of shut-in royalty or shut-in payments; and providing
for deferment of certain charges or fees in certain circumstances.
Be it enacted by the
Legislature of West Virginia:
That the Code of West
Virginia, 1931, as amended, be amended by adding thereto a new section,
designated §22-6-33a, to read as follows:
ARTICLE 6. OFFICE OF OIL
AND GAS; OIL AND GAS WELLS; ADMINISTRATION; ENFORCEMENT.
§22-6-33a. Shut-in of
oil and gas wells to prevent waste.
(a) The Legislature
finds and declares that:
Beginning in the early
1800s when oil was first produced in West Virginia, oil and gas production has
been an important part of the history and economy of our state;
West Virginia oil and
gas producers provide, and for many years, have provided, valuable oil and gas
resources and jobs for West Virginians;
Oil and gas production
and the long term viability of oil and gas producers is vital to the West
Virginia economy and energy supply;
Oil and gas wells in
West Virginia often supply consumers with natural gas to heat homes and small
businesses, and those consumers would suffer if oil and gas wells were
prematurely plugged and abandoned;
Due to the volume of
natural gas produced with recent technological advances, abundant gas supply
from horizontal wells has lowered the market price of natural gas to a level
below the costs of commercially producing many wells otherwise capable of
production, which encourages producers to prematurely plug and abandon oil and
gas wells, many of which provide necessary heat for consumers; and
It is in the public
interest to prevent the premature plugging of wells that can produce natural
gas. With respect to wells capable of commercial production but not economic at
lower market prices, it is in the public interest to restrict production to the
amount of production necessary to serve consumers entitled to receive gas from
those wells.
(b) As used in this
section:
“Economic production” or
“economically produced” means production of an oil and gas well when the
revenue realized from producing the well pays all transportation obligations
related to the well or natural gas produced from the well, plus the costs of producing
and operating the well. The cost of producing and operating the well does not
include any recovery of the costs of drilling the well, but includes all the
costs of operations and administration.
"Operator"
means any owner of the right to develop, operate and produce oil and gas from a
well that produces oil or natural gas.
"Person" means
any natural person, corporation, limited liability company, partnership,
receiver, trustee, executor, administrator, guardian, fiduciary or other
representative of any kind, and includes any government or any political
subdivision or any agency thereof.
“Pipeline company” means
any person that transports natural gas or natural gas liquids and charges one
or more fees, takes a portion of the amount of natural gas delivered thereto in
connection with transportation, withholds payment with respect to some or all
of the natural gas delivered thereto, or processes natural gas.
“Shut-in” means turning
or installing a valve so that natural gas does not flow from a well.
“Waste” means and
includes physical waste of oil and gas and economic waste from producing an oil
and gas well when the net revenue realized from that well exceeds the total
cost of operating the well, or the plugging, before the end of its useful life,
of any oil and gas well that can produce economically at other times when the
revenue realized from production justifies commercial production of the well.
(c) Oil and gas wells in
West Virginia otherwise capable of producing at least one thousand cubic feet
of natural gas per day shall be shut-in when the well cannot be economically
produced. A well shut-in pursuant to
this provision is not considered a nonproducing or abandoned well and need not
be plugged pursuant to section nineteen, twenty-three or twenty-four, of this
article or other applicable law or rule. At least fourteen days before a
shut-in pursuant to this section, the well operator shall provide written
notice to: (1) Any pipeline company which transported natural gas from the
shut-in well prior to the exercise of the shut-in right provided by this
section, (2) any known consumer that received natural gas from the well before
gas from that well is delivered to a pipeline company, and (3) any party which
purchased natural gas produced from a well to be shut-in.
(d) If a consumer
legally entitled to receive natural gas and who actually consumes natural gas
from a well shut-in pursuant to subsection (c) of this section is unable to
receive sufficient natural gas supply because of the shut-in, then the consumer
can demand that the shut-in well be placed in production to the extent
necessary to supply the consumer or to the extent of the normal operating flow
of the well, whichever is less. If a
well is placed in production pursuant to this section, that well shall
nevertheless be and remain a well shut-in pursuant to subsection (c) of this
section.
(e) Notwithstanding any
agreement or requirement to the contrary, upon shut-in pursuant to subsection
(c) of this section all purchase, sale and transportation obligations related
to a well shut-in pursuant to that subsection or natural gas therefrom shall be
suspended until the well can be economically produced by the well operator. A
well shut-in pursuant to subsection (c) of this section is considered a well
producing in paying quantities for all purposes. No person may assert
forfeiture, breach, damages, failure to produce, or penalty as a result of or
in connection with any shut-in pursuant to subsection (c) of this section.
NOTE: The purpose of this bill is
to prevent waste of oil and gas. The bill provides for payment of shut-in
royalty or shut-in payments and for deferment of certain charges or fees in
certain circumstances.
Strike-throughs indicate language
that would be stricken from a heading or the present law and underscoring
indicates new language that would be added.