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WV Legislature Interims: Committee on Manufacturing and Energy hears presentation on governmental trends, coal development industry

WV Press Staff Report

CHARLESTON, W.Va. – The West Virginia Legislature’s Joint Standing Committee on Manufacturing and Energy, on Monday, heard a presentation from  Coal Association President Chris Hamilton regarding governmental trends and the overall market of the coal development industry.

Hamilton began by thanking legislators for “all the pro-coal legislation and policies” implemented throughout the last three legislative sessions. 

“We have a lot of things going on within our business – some good, but most bad today.” Hamilton said. “Most of the bad is coming out of Washington, D.C. Mostly good comes out of West Virginia, and the West Virginia Legislature.”

Hamilton referred to West Virginia as a “safe haven,” noting that state lawmakers “understand energy.”

“You understand the benefits of coal-fired electricity, which we have plenty of here,” Hamilton added. “You know it has no parallel. Unfortunately a lot of countries are finding that out today, as it relates to base-load – continuous power – day in and day out, 24-seven.”

“And frankly, we think the U.S. EPA (Environmental Protection Agency) and White House aren’t getting it, but are hearing it more and more,” Hamilton said.

According to Hamilton, coal plants nationwide are being closed too quickly and too frequently to sustain the nation’s need for energy consumption, adding that federal regulators are “not considering the danger this puts our country in.”

“There are concerns over potential rotating brown-outs and black-outs,” Hamilton noted. 

Hamilton referenced the nearly $8 billion invested into West Virginia’s energy production in recent years as evidence of the state’s position as an industry leader.

“We believe we have a strong future in the state,” Hamilton said. “Particularly with individuals like yourselves sitting here, working hand-in-hand with the industry to see how we can make a better deal for West Virginia energy-producers.”

Although Hamilton explained that West Virginia’s coal is used for the manufacturing of 63% of the nation’s steel, and responsible for 500,000 jobs with that industry, the export of the state’s coal remains an area of opportunity. 

“We have a complete portfolio of fuels herer that are desired the world over,” Hamilton said.

W.Va. Department of Environment Protection (DEP) General Counsel Jason Wandling spoke next, telling committee members, “The first of the year, we took 77 final actions on Article Three permits – those are permits that are within the exclusive jurisdiction of the State of West Virginia.”

Wandling explained that the DEP is broken into three regions throughout West Virginia, and the 77 final actions represent the statewide total.

“This is work that’s getting done for the industry in this state, and isn’t getting held up in Washington,” Wandling noted.

According to Wandling, the biggest year for surface mine applications of the past five years was 2019, when a total of 30 applications were submitted. 

“Since then, those numbers have dwindled a little bit,” Wandling noted, citing the COVID-19 pandemic and regulatory changes as the reasons for the decrease in applications.

Next to present was Charlie Burd, executive director of the Gas & Oil Association of West Virginia. 

“You folks understand us,” Burd began. “I think where our greater challenge is mainly in Washington, D.C. with some of the programs that they would like to implement that would phase us out – you all understand the difficulty in doing that.”

According to Burd, approximately 73,000 West Virginians are currently employed within the oil and gas industries, with another 50,000 working in coal.

“That’s a lot of folks that rely on fossil fuels as an industry,” Burd said. “But there’s 1.8 million people that rely on the products that we give them everyday. We give them the ability to flip a switch and have lighting, and flip a switch and have heat or cooling.”

“We have a passion for what we do in this state,” Burd continued. “Our passion equates to all the great services and products that you get to have as citizens.”

Burd, who has worked within the oil and gas industry since 1973, said that the state’s transformation with energy production is “almost too phenomenal to comprehend.” 

“The largest natural gas processing facility in the world is located in Doddridge County,” Burd noted. “That’s one of about three or four that are here in the state. That’s hundreds-of-millions of dollars in investment. There’s 4,500 horizontal wells that average $8-$10 million per well. You’re looking at billions-of-dollars when you look at all the investment that we make.”

Eric Vir, chief financial officer of Pillar Energy, LLC., then echoed Burd’s remarks, saying, “Pricing for the next five years looks a little bit healthier.”

“That’s supply and demand economics,” Vir added.

Chief James Martin from the DEP’s Office of Oil and Gas was the day’s final presenter. Permitting and well-plugging, Martin explained, have been the focus of significant legislative discussion in recent years. 

“New well and horizontal [applications], that’s where most of the activity has been,” Martin said. “That’s a consequence of this great transformation.”

Much as Wandling noted, Martin said there has been a decrease in applications over the past several years.

“Applications are down a little this year compared to some prior years,” Martin noted. “In fact if you go back earlier than 2019, you’ll see numbers in the 400’s and 500’s. The record number was in 2014, actually, with 771 applications that we received for these kinds of operations.”

Alternatively, Martin explained, application numbers for well-plugging have increased.

“Plugging numbers are up,” Martin added. “I don’t think that’s a surprise to anybody with the funding numbers we’ve seen.”

The Joint Standing Committee on Manufacturing and Energy will meet again during next month’s Interim Session, scheduled for Nov. 12 – 14 in Wheeling.