Well of questions: Many legal issues still surround WV drilling - Beckley, Bluefield & Lewisburg News, Weather, Sports

A well of questions: Many legal issues still surround WV shale drilling

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While significant gains have been made in tailoring the state's natural gas laws to meet unique challenges presented by drilling in the Marcellus shale and deeper gas formations, complications remain for the industry.

The State Journal talked to several attorneys who work with the industry to find out what issues remain for the drillers in the Marcellus shale gas formation. A number of regulatory and property law hurdles exist, alongside market and geographical challenges.

"The biggest challenge for industry in my mind is the plethora of regulations that are already here or potentially on the way," said Steptoe & Johnson PLLC attorney Armando Benincasa. "I think these regulations are going to have an increasing burden on the smaller operators."

Additionally, he said it may take a while before permit fee increases enacted by the Horizontal Well Act reach regulators. The act was passed by the Legislature in December and signed into law by Gov. Earl Ray Tomblin soon after.

"Those increases in the permit fees in HB 401 are going to take time to get that money to funnel into the coffers of the agencies and go out," Benincasa said. "The application is there, but the people aren't there because they haven't got the money to go out and hire people."

Increased regulatory scrutiny from both federal and state officials is compounded, Benincasa said, by gas prices hovering at $2/Mcf. The prices are at a 10-year low.

Ken Tawney, an attorney with Jackson Kelly PLLC, said new challenges are presented by Marcellus wells, which uses techniques different from conventional wells.

"There's not a lot of legal precedent for some of the way things are now done," he said. "While we have case law and statutes that apply from vertical wells where you drilled straight down, sometimes those principles haven't applied well when you start dealing with horizontal drilling."

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