MORGANTOWN -- The latest permit fees that West Virginia legislators have proposed for Marcellus Shale gas wells would be the highest in the region and would hinder the state's ability to compete, the leaders of two industry groups said Tuesday.
Corky DeMarco, executive director of the West Virginia Oil and Natural Gas Association, said he and his members were blindsided last week by the proposal that they pay $10,000 for the first well on a site and $5,000 for each subsequent well.
"The last discussion was $5,000 and $1,000 for additional wells," DeMarco said. "This is a concern for us."
Charlie Burd, executive director of the West Virginia Independent Oil and Gas Association, said his group has long supported reasonable increases, but the current proposal "certainly caught us a little off guard."
"These numbers <t40>...<t$> seem excessive," he said. "They dramatically hurt smaller, independent operators who are trying to maintain viability in the current market."
Operators now pay just a few hundred dollars for a permit. That leaves the state Department of Environmental Protection's Oil and Gas office -- whose inspection program is funded through the permit fees -- with a $1 million budget shortfall. The proposal from the special House-Senate panel could generate $2.5 million a year for the DEP, enough to hire up to 15 additional staffers.
During interim meetings in Charleston last week, state Sen. Doug Facemire indicated the proposal had industry's support.
Facemire didn't immediately return a telephone message Tuesday, but DeMarco said no one on the legislative committee asked him what he thought of the new rates.
In neighboring Pennsylvania, he noted, operators pay $3,000 to $4,000 a permit.
"If that was the level that was suggested for West Virginia, I don't think we'd have a problem," he said. "<t40>...<t$> To make us less competitive creates some real angst among my members."
The DEP needs money for more inspectors, DeMarco acknowledged, but he suggests that instead of relying on permit fees, legislators consider funding those jobs with some of the $90 million a year the gas industry pays in severance taxes.