Op-ed: Smarter development would benefit West Virginia’s economy
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Today, West Virginia natural gas powers millions of American homes and businesses, and natural gas has been very good for our economy. We can do better. Taking a few commonsense steps now would lead to increased production that would be a powerful and much-needed economic boost for the Mountain State, with vast upside potential to support job creation and growth.
West Virginia can leverage this tremendous resource right under our feet, and we can do so by modernizing our property laws.
The challenge we face is that a motherlode of proven natural gas reserves -- with owners eager to cash in on their property rights -- lies undeveloped because of outdated restrictions on producers' ability to combine leases into units, which makes more efficient development possible. In fact, a single out-of-state landowner or a minority of landowners can block a majority of other West Virginians from reaping the economic benefits of their mineral rights. This is simply unfair, and we should protect those individuals and strengthen the property rights of those wanting to make a deal.
Legislation has been introduced that will give individuals the opportunity to develop their minerals. It's based on fairness, protecting property rights, and helping move West Virginia forward. The basic approach is to treat a shale formation as one resource unit. This allows production of the entire unit with far less surface disruption due largely to today's advanced drilling techniques. It also means that a majority of mineral rights owners who want to reap royalty payments can exercise that right, which is how it's done in Ohio, Pennsylvania and other states.
The good news is this wouldn't just help property owners -- it would also be a huge economic boost for our state at a time when we desperately need it. A new report from West Virginia University shows that this plan would help create nearly 2,000 new jobs and our state economy would grow by up to $2.45 billion, close to 3.3 percent of GDP. Royalty payments to landowners paid by natural gas companies would increase by up to $167 million. And tax revenues paid by these companies would increase $30 million. That revenue can then be used to fund programs or services that benefit all West Virginians.
This idea is popular with Mountain State voters. A recent poll found that almost 9 of 10 likely voters support more natural gas drilling in the state. Nearly 7 out of 10 agree with the basic arguments for modernizing property laws. And most importantly, 6 in 10 agree that "there is a growing political movement in the United States to completely ban the use of natural gas in the near future, so it is important for West Virginia to tap into those resources now."
Some disagree. They claim this is a land grab by natural gas companies who want to get something for free, or that it hurts property rights ("Forced Pooling Bills Should be Rejected," Scott Windom, 3/15/21).
Please allow me to assure you -- nothing could be further from the truth. The natural gas companies would more than fairly pay for this gas with millions of dollars that will flow to West Virginia residents, small communities and our entire economy. And this approach strengthens property rights because it ensures a majority of West Virginians decide what's best for them and their families.
This also makes us more competitive with our neighbors in attracting new high-paying jobs. Right now, in Pennsylvania there are 6,000 workers building a petrochemical plant. If we update our property laws, we can position ourselves to attract similar investments that drive job creation. From mineral owners to downstream manufacturers to construction workers to restaurants and businesses on Main Street, ALL West Virginians stand to gain.
Finally, this approach is good for our environment. Better property laws will minimize surface disruptions as fewer well pads will be needed. It will also streamline logistics and accelerate land restoration. And it will reduce truck traffic and wear and tear on our roads.
Our state has been through one of the biggest crises in history. Let's work together on good ideas that will help move us all forward.
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Charlie Burd is executive director of the Gas and Oil Association of West Virginia.