ENROLLED
H. B. 2681
(By Delegates Davis, Fantasia, Kuhn, Flanigan, Heck,
Willison and Azinger)
[Passed April 12, 1997; in effect July 1, 1997.]
AN ACT to amend and reenact sections two, four and thirteen,
article nine, chapter twenty-two-c of the code of West
Virginia, one thousand nine hundred thirty-one, as amended,
relating to terminating the oil and gas conservation
commission; continuing certain functions relating to oil and
gas resource conservation under the oil and gas conservation
commissioner; and providing that the chief of the office of
oil and gas serve as commissioner.
Be it enacted by the Legislature of West Virginia:
That sections two, four and thirteen, article nine, chapter
twenty-two-c of the code of West Virginia, one thousand nine
hundred thirty-one, as amended, be amended and reenacted to read
as follows:
ARTICLE 9. OIL AND GAS CONSERVATION.
§22C-9-2. Definitions.
(a) Unless the context in which used clearly requires a
different meaning, as used in this article:
(1) "Commissioner" means the oil and gas conservation commissioner as provided for in section four of this article;
(2) "Director" means the director of the division of
environmental protection or such other person to whom the
director has delegated authority or duties pursuant to sections
six or eight, article one, chapter twenty-two of this code;
(3) "Person" means any natural person, corporation,
partnership, receiver, trustee, executor, administrator,
guardian, fiduciary or other representative of any kind, and
includes any government or any political subdivision or any
agency thereof;
(4) "Operator" means any owner of the right to develop,
operate and produce oil and gas from a pool and to appropriate
the oil and gas produced therefrom, either for such person or for
such person and others; in the event that there is no oil and gas
lease in existence with respect to the tract in question, the
owner of the oil and gas rights therein shall be considered as
"operator" to the extent of seven eighths of the oil and gas in
that portion of the pool underlying the tract owned by such
owner, and as "royalty owner" as to one-eighth interest in such
oil and gas; and in the event the oil is owned separately from
the gas, the owner of the substance being produced or sought to
be produced from the pool shall be considered as "operator" as
to such pool;
(5) "Royalty owner" means any owner of oil and gas in place,
or oil and gas rights, to the extent that such owner is not an
operator as defined in subdivision (4) of this section;
(6) "Independent producer" means a person who is actively
engaged in the production of oil and gas in West Virginia, but
whose gross revenue from such production in West Virginia does
not exceed five hundred thousand dollars per year;
(7) "Oil" means natural crude oil or petroleum and other
hydrocarbons, regardless of gravity, which are produced at the
well in liquid form by ordinary production methods and which are
not the result of condensation of gas after it leaves the
underground reservoir;
(8) "Gas" means all natural gas and all other fluid
hydrocarbons not defined as oil in subdivision (7) of this
section;
(9) "Pool" means an underground accumulation of petroleum in
a single and separate natural reservoir (ordinarily a porous
sandstone or limestone). It is characterized by a single
natural-pressure system so that production of petroleum from one
part of the pool affects the reservoir pressure throughout its
extent. A pool is bounded by geologic barriers in all
directions, such as geologic structural conditions, impermeable
strata, and water in the formations, so that it is effectively
separated from any other pools that may be presented in the same
district or on the same geologic structure;
(10) "Well" means any shaft or hole sunk, drilled, bored or
dug into the earth or underground strata for the extraction of
oil or gas;
(11) "Shallow well" means any well drilled and completed in a formation above the top of the uppermost member of the
"Onondaga Group":
Provided, That in drilling a shallow well the
operator may penetrate into the "Onondaga Group" to a reasonable
depth, not in excess of twenty feet, in order to allow for
logging and completion operations, but in no event may the
"Onondaga Group" formation be otherwise produced, perforated or
stimulated in any manner;
(12) "Deep well" means any well, other than a shallow well,
drilled and completed in a formation at or below the top of the
uppermost member of the "Onondaga Group";
(13) "Drilling unit" means the acreage on which one well may
be drilled;
(14) "Waste" means and includes: (A) Physical waste, as
that term is generally understood in the oil and gas industry;
(B) the locating, drilling, equipping, operating or producing of
any oil or gas well in a manner that causes, or tends to cause,
a reduction in the quantity of oil or gas ultimately recoverable
from a pool under prudent and proper operations, or that causes
or tends to cause unnecessary or excessive surface loss of oil or
gas; or (C) the drilling of more deep wells than are reasonably
required to recover efficiently and economically the maximum
amount of oil and gas from a pool. Waste does not include gas
vented or released from any mine areas as defined in section two,
article one, chapter twenty-two-a of this code or from adjacent
coal seams which are the subject of a current permit issued under
article two of chapter twenty-two-a of this code:
Provided, That nothing in this exclusion is intended to address ownership of the
gas;
(15) "Correlative rights" means the reasonable opportunity
of each person entitled thereto to recover and receive without
waste the oil and gas in and under his tract or tracts, or the
equivalent thereof; and
(16) "Just and equitable share of production" means, as to
each person, an amount of oil or gas or both substantially equal
to the amount of recoverable oil and gas in that part of a pool
underlying such person's tract or tracts.
(b) Unless the context clearly indicates otherwise, the use
of the word "and" and the word "or" shall be interchangeable, as,
for example, "oil and gas" shall mean oil or gas or both.
§22C-9-4. Oil and gas conservation commissioner; appointment and
qualifications; general powers and duties.
(a) The office of oil and gas conservation commissioner
within the division of environmental protection is hereby
continued. The chief of the office of oil and gas, who shall
possess a degree from an accredited college or university in
engineering or geology and must be a registered professional
engineer with particular knowledge and experience in the oil and
gas industry, shall serve in the capacity of oil and gas
conservation commissioner without extra compensation.
(b) The oil and gas conservation commissioner is hereby
empowered and it is the commissioner's duty to execute and carry
out, administer and enforce the provisions of this article in the manner provided herein. Subject to the provisions of section
three of this article, the commissioner has jurisdiction and
authority over all persons and property necessary therefor. The
commissioner is authorized to make such investigation of records
and facilities as the commissioner deems proper. In the event of
a conflict between the duty to prevent waste and the duty to
protect correlative rights, the commissioner's duty to prevent
waste shall be paramount.
(c) Without limiting the commissioner's general authority,
the commissioner shall have specific authority to:
(1) Regulate the spacing of deep wells;
(2) Make and enforce reasonable rules and orders reasonably
necessary to prevent waste, protect correlative rights, govern
the practice and procedure before the commissioner and otherwise
administer the provisions of this article;
(3) Issue subpoenas for the attendance of witnesses and
subpoenas duces tecum for the production of any books, records,
maps, charts, diagrams and other pertinent documents, and
administer oaths and affirmations to such witnesses, whenever,
in the judgment of the commissioner, it is necessary to do so
for the effective discharge of the commissioner's duties under
the provisions of this article; and
(4) Serve as technical advisor regarding oil and gas to the
Legislature, its members and committees, to the division of
environmental protection and to any other agency of state
government having responsibility related to the oil and gas industry.
§22C-9-13. Special oil and gas conservation tax.
Owners of leases on oil and gas for the exploration,
development or production of oil or natural gas shall pay to the
commissioner a special oil and gas conservation tax of three
cents for each acre under lease, excluding from the tax the first
twenty-five thousand acres. The commissioner shall deposit with
the treasurer of the state of West Virginia, to the credit of
the special oil and gas conservation fund, all taxes collected
hereunder. The special oil and gas conservation fund shall be a
special fund and shall be administered by the commissioner for
the sole purpose of carrying out all costs necessary to carry out
the provisions of this article. This tax shall be paid as
provided herein annually on or before the first day of July, one
thousand nine hundred seventy-two, and on or before the first day
of July in each succeeding year.