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W.Va. oil and natural gas groups merge into GO-WV

CHARLESTON — Two of the state’s oldest advocacy groups for natural gas and oil producers in West Virginia decided they were better off together than apart, merging into a supergroup to better promote the industry and downstream companies.

The West Virginia Oil and Natural Gas Association and the Independent Oil and Gas Association of West Virginia announced recently the merger into the Gas and Oil Association of West Virginia.

The supergroup, known as GO-WV, will include more than 600 members representing drillers, pipeline construction, distributors and other industries benefiting from oil and natural gas, such as power plants, petrochemical producers and trade organizations.

GO-WV will be headed by Charlie Burd, formerly the executive director of the Independent Oil and Gas Association of West Virginia. GO-WV’s board also will spend the next several months working on the consolidation of the two groups, branding and developing a legislative agenda for 2021.

GO-WV is the perfect acronym, Burd said.

“That sort of sets our message a bit too, in that we see ourselves as taking the state forward.” Burd said. “GO-WV: with natural gas for future power generation, production, for downstream manufacturing and petrochemical advancements, job creation and…enhanced investments in exploration and drilling and those types of things. Of course, we will be promoting the pipeline construction projects that give us outlets for the gas we produce here in the state to take it other places, particularly in the East.”

The West Virginia Oil and Natural Gas Association, formed in 1915, traditionally represented large players in the oil and natural gas industry and industries that provide support to oil and natural gas. The Independent Oil and Gas Association of West Virginia represented mostly smaller producers.

But since the advent of horizontal drilling in 2008 combined with fracking technology, Burd said the interests of both organizations began to align.

“Over the course of time, it didn’t take us long to realize that there were two organizations seeking literally the same type of regulatory, environmental, and safety considerations,” Burd said. “When you have two groups that are so locked into doing the same thing as at the Capitol and other places, doesn’t it make sense that that maybe we look to see if we can’t become one association? We were two organizations that were tracking parallel.”

According to the U.S. Energy Information Administration, West Virginia is the fifth largest energy producer in the nation and has the fourth largest natural gas reserves of any state and was the sixth largest natural gas producer in 2019, exceeding 2 trillion cubic feet in production. While oil production is a smaller part of the state’s energy portfolio, West Virginia produced 16 million barrels of oil in 2019 — the first time the state has produced that much oil since 1900.

It wasn’t until 2008, when the new technology of horizontal drilling allowed access to oil and natural gas deposits beneath the Marcellus and Utica shale formations, combined with hydraulic fracking to free the oil and natural gas from the shale, when West Virginia started to again become a major player in the natural has industry.

Greater access to natural gas helped spur growth of pipelines to transport the fuel, a resurgence of plastics manufacturing, crackers to break down the gas into byproducts and lower heating prices for consumers. Natural gas also began to replace coal as a source of combustion for electric power plants, helping reduce greenhouse gas emissions to the lowest amount in 30 years.

“From an environmental perspective, when you stop and think about how much we have reduced our emissions, it is a phenomenal phenomenally great thing that we’ve made that we’ve been able to do that,” Burd said. “It comes from better technology in emission technology, but it also comes from the fact that we are producing tremendous amounts of natural gas from much fewer wells.”

According to Burd, the natural gas industry has generated more than $2 billion in severance tax revenue to the state since 2008, as well as $2 billion paid in local property taxes. Severance tax revenue in fiscal year 2019 alone was more than $200 million along with $123 million in property taxes that same fiscal year.

Burd said GO-WV is still developing its legislative agenda, but on top of working to ease regulations to allow for more drilling, the organization also is watching what the Legislature and Gov. Jim Justice may do about tax reform. Talk has again centered around eliminating the business and inventory tax on machinery and equipment and a possible phase-out of personal income taxes.

Burd said raising the natural gas severance tax could become a tempting target. Coal and natural gas severance tax revenue has come in below estimates every month except October, which helped bring year-to-date revenue to $47.3 million, only $28,246 above estimates for the fiscal year. Depressed natural gas markets and an oversupply of natural gas has affected the amount of natural gas produced.

“We would also of course always be on the lookout for what severance or other tax considerations might be on somebody else’s mind,” Burd said. “We have heard…some statements how the state might want to approach a comprehensive tax structure with reductions of income tax and those types of things. So, we would want to be engaged in those discussions pretty early on, because if you reduce a tax someplace, then, generally speaking, you have to gain revenue someplace else.”

GO-WV also will be watching the incoming administration of President-Elect Joe Biden, Burd said.

During the campaign, Biden spoke against fracking. He later walked back those comments, but Burd said they would work to educate the Biden administration about the benefits of the oil and natural gas industry in West Virginia.

“At the national level, it’s to try to help educate that administration into the sheer importance of oil and natural gas, not just from an energy perspective, but, my goodness, for jobs and tax revenues that they generate for the country,” Burd said.

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