Gov. Justice Reiterates Support For W.Va. Natural Gas Drillers As Industry Struggles

Jan 22, 2020

West Virginia’s top official says the state is prepared to do “anything” to help the state’s struggling oil and natural gas industry. 

Speaking at the annual winter meeting of the Independent Oil and Gas Association of West Virginia on Wednesday, Jan. 22, Gov. Jim Justice told the crowd of drillers and producers that his administration believes the industry is vital to the state’s economic health and that he’s in lockstep with the industry in supporting legislative relief. 

“I can't be any more sympathetic,” Justice said. “I do really believe that we're doing things to make things better.”

Justice assured the audience he intended to sign House Bill 4091. The bill, which creates an expedited permitting process for drillers, passed in the House and is under consideration in the Senate. 

He also expressed support for H.B. 4090, which reduces the severance tax on low-producing wells and siphons some of the proceeds toward plugging orphaned wells. Justice vetoed a version of the bill that passed last session.

The governor urged natural gas producers to ride out the current record-low gas prices. 

“If you can survive for two or three more years, the opportunity to the upside for you, for this is off the chart. It's off the blooming chart,” he said. “Because the stars have aligned. Now, it maybe took me a little while to catch up, but I'm there. I'm all in.”

Justice was light on specifics. He mentioned recently speaking with President Donald Trump and representatives from China regarding energy issues and reiterated his support for bringing downstream manufacturers to the region. Last fall, Justice signed an executive order creating a task force aimed at bringing petrochemical manufacturers to the state.

Justice, a businessman whose family operates coal companies across Appalachia, also dismissed the notion the “coal guy” didn’t support the state’s natural gas industry. 

“In some way I’ve been painted into this thing that ‘Well, Justice is a coal guy, he doesn’t really care about gas,’” he said. “It's so ridiculous. It's unbelievable.”

He also urged drillers to take their concerns to the Legislature. 

“There are things that are going through our Legislature today. There are things that will help,” he said. “But the biggest thing that you have got, and I will help you in every way, is we have got to convince them of the number of opportunities, jobs and everything that are at stake and how close on the bubble you are to an economic catastrophe.”

Drillers paid $146 million in severance taxes to the state in 2019. Projections for 2020 are $98 million, according to the state tax department. 

‘Running For Our Life’

Some of the state’s largest oil and gas producers also presented at the meeting. Top of mind: low natural gas prices.

“There are days I wonder if I’m working for Blockbuster and don’t know it,” said Al Schopp, regional senior vice president for Antero Resources.

He said in the current low gas price environment, Antero is banking on growing its liquid natural gas exports. He praised the Legislature’s previous work on co-tenancy and urged lawmakers to drop the severance tax on low-producing wells entirely. 

“That’s how we’ll keep the state strong,” he said. “That’s how we keep working.”

Derek Cutwright, senior vice president for Southwestern Energy, expressed similar dismay over the tough economics facing the industry, but said Southwestern is focused on becoming more efficient to stay competitive. 

“The analogy that we’re running for our life in this price environment is pretty accurate,” he said. “It looks grim, but we’ve made progress as an industry.”