CHARLESTON — Oil and gas production is one of West Virginia’s fastest-growing and most successful industries, easily outpacing other sectors of the economy.
“Oil and natural gas production in the Mountain State has increased exponentially over the past decade, and we are just scratching the surface,” said Anne Blankenship, West Virginia Oil and Natural Gas Association executive director.
“What an exciting time to be involved in this thriving industry, with so much more to come,” she said. “With the advancements in technology that have allowed us to access the enormous oil and natural gas reserves in the Marcellus and Utica shales, production is going up and new ideas for end uses of natural gas are emerging.
West Virginia’s natural gas industry is booming. Just how big is that boom? A few statistics help answer that question:
Gas production in West Virginia has steadily increased for the past 13 years.
Jobs in the industry: 38,311.
Total wages: $2.02 billion.
The oil and gas industry is the top-paying employment sector in West Virginia with average annual wages of $84,103 per worker.
Employment in the natural gas industry is expected to grow approximately 55 percent by 2022.
FY 2017 property tax distributed to counties: $96.2 million. The amount of property taxes the industry pays has more than doubled since 2005. That’s money that goes directly into our local communities and helps fund our public school systems.
FY 2017 severance tax distributed to the state and counties: Nearly $125 million.
Fifty-three of West Virginia’s 55 counties have oil or natural gas operations, and all 55 counties benefit from the taxes the industry pays each year.
And there’s no sign the current boom is going to end any time soon.
According to a recent study by West Virginia University, there will be at least 7,000 new West Virginia jobs created due to the impact of the Marcellus and Utica Shale development.
At the 2018 session of the Legislature, the oil and gas industry was finally able to see enactment of a long-awaited “co-tenancy” bill, which is expected to hike future production.
Until now, a gas company had to get 100 percent approval from all owners in a tract of land before drilling could take place. That was difficult and sometimes impossible if all the landowners couldn’t be located.
In the past, bills dealing with natural gas drilling and property rights had fallen apart, either failing to balance the rights of the various parties or being weighted down by a maze of inter-related issues.
Until passage of the new legislation, West Virginia was one of only three states without co-tenancy regulation.
Passage of the new legislation was the culmination of years of negotiations between farmers, land and mineral owners, royalty owners, surface owners, the oil and gas industry and the state’s elected officials to make West Virginia’s mineral developments laws more competitive with other mineral producing states.
“The bill will lead to increased production, increased severance and property tax revenues, increased payments to mineral owners and increased employment,” said Charlie Burd, executive director of the West Independent Oil and Gas Association (WVIOGA)
“Given that the bill is brand new, it’s going to take the industry some time to evaluate their leases and see what impact the bill will have on them,” he said. “I suspect we won’t see any real impact from it until the first quarter of 2019.”
Burd, who has served a director of WVIOGA since 2002, says increased natural gas production is going to remake the future of West Virginia.
The region’s Marcellous and Utica shell basin provides an abundance of ethane and other Natural Gas Liquids (NGLs), including propane and butane, which are the feedstock of the petrochemical industry.
Backers of the proposed underground storage hub say it will keep those liquids from flowing out of the state. “All the stuff from West Virginia now goes to Texas to be processed. We need to keep it here,” Burd said. “The hub literally will be the sparkplug that’s going to fire off this economic engine.”
The Appalachian Development Group, the hub’s development group, says it’s just taken a big step closer to making it a construction reality. In an Aug. 29 news release, the group announced it had contracted with the Parsons Corp., a technology-focused defense, security and infrastructure firm headquartered in Pasadena, Calif., to collect data and information that the multi-billion-dollar project needs if it’s to move forward.
“We’re talking thousands and thousands of good-paying jobs over time,” Burd said of the hub. “That’s something that unheard of here in West Virginia. It’s not going to happen overnight, But over the next 5 to 10 years the landscape of West Virginia has the potential to change dramatically.”