On July 12 2011 West Virginia Governor Ray Tomblin issued Executive Order 4-11, regulating oil and gas exploration in the Marcellus Shale formation. The executive order extends the effective date of certain Office of Oil and Gas prohibitions and requires the West Virginia Department of Environmental Protection (WVDEP) to take certain actions and issue emergency rules. The governor's action appears to be the result of highly publicised concerns related to hydraulic fracturing, a drilling process which involves injecting a mixture of water and chemicals deep into the ground to release gas deposits.

The executive order recognises that the legislature is working on reforms related to exploration and production activities in the Marcellus Shale, and anticipates the results of that legislative work while operating as a short-term stop-gap measure in the interim:

"The economic and environmental issues associated with the development of the Marcellus Shale are so significant to the future of West Virginia that they warrant my immediate attention while the Legislature also works to formulate and advance its proposal over the coming months."

Easing some of the uncertainty related to regulation of the industry is expected to encourage further drilling in the state: "West Virginia must take steps to encourage businesses to make the capital investments necessary to ensure the long-term success of our natural gas industry."

The executive order generally concerns issues such as public notification, environmental impact on groundwater and chemicals used in the drilling process, while requiring the WVDEP to promulgate regulations regarding development of the Marcellus Shale, noting that accidental spills of fluids used in the drilling and completion of wells, improper construction of drilling and production-related infrastructure and other possible environmental incidents can have significant and harmful effects. Specifically, the executive order:

  • continues the effectiveness of an Office of Oil and Gas memorandum prohibiting land application of return fluids from well completion activities until otherwise provided;
  • requires the WVDEP to take steps to prohibit disposal of return fluids into any publicly owned wastewater treatment plant, unless approved by the WVDEP;
  • requires the WVDEP to take steps to increase regulatory oversight of practices and equipment such that no pollutants are disposed of or discharged into waters of the state in violation of any applicable state or federal water quality standards or effluent limitations;
  • requires the WVDEP to enact emergency rules that require:
    • certified erosion and sediment control plans to be submitted with applications for well work permits involving well sites that disturb three acres or more;
    • applications for well work permits for sites that disturb three or more acres to be accompanied by a site construction plan certified by a registered professional engineer;
    • applications for well work permits for sites that disturb three or more acres to estimate the volume of water that will be used and, if in excess of 210,000 gallons during any month, file a water management plan, which must include at least six categories of information;
    • applications for well work permits for sites that disturb three or more acres to include a well-site safety plan for the protection of those on the site, as well as the general public and the environment, which must be provided to local emergency planning committees at least seven days before earth disturbance;
    • by various prescribed rules, that well work permittees protect the quantity and quality of water in surface and groundwater systems both during and after drilling operations and during reclamation by following at least four mandates; and
    • well operators which withdraw specified quantities of water to adhere to various prescribed requirements concerning quantity, methodology, identification, recordkeeping and transportation;
  • requiring the WVDEP to mandate that all "drill cuttings" and associated "drilling mud" be disposed of in an approved solid waste facility or managed on site in a manner otherwise approved; and
  • ordering the WVDEP to evaluate its overall regulatory authority over drilling activities related to horizontal wells and to identify additional areas of critical regulatory concern.

West Virginia officials have said that they expect the WVDEP to issue the emergency rules within 30 days.

For further information on this topic please contact Jeremy A Mercer at Fulbright & Jaworski's Canonsburg office by telephone (+1 724 416 0400), fax (+1 724 416 0404) or email ([email protected]). Alternatively, contact Cecil C Kuhne III at Fulbright & Jaworski's Dallas office by telephone (+1 214 855 8000), fax (+1 214 855 8200) or email ([email protected]).