FUND(S):

3323 Oil and Gas Operating Permits

Sources of Revenue:

Special Fund

Legislation creates:

Neither Program nor Fund



Fiscal Note Summary


Effect this measure will have on costs and revenues of state government.


    HB401 enhances the regulations and oversight of the oil and gas industry. An additional 14 positions are needed in the oil and gas program of DEP to handle the increased volume of work due to the Marcellus Shale horizontal drilling activities in West Virginia. The annual cost of these 14 positions is estimated to be $1,344,623. The bill includes increased permit fees on horizontal drilling resulting in estimated annual special revenue of $2,400,000. The increase in permit fees received is projected to cover the cost of additional staff and to cover a current deficit in the program of $1,055,377.



Fiscal Note Detail


Effect of Proposal Fiscal Year
2011
Increase/Decrease
(use"-")
2012
Increase/Decrease
(use"-")
Fiscal Year
(Upon Full
Implementation)
1. Estmated Total Cost 0 1,344,623 1,344,623
Personal Services 0 1,032,982 1,032,982
Current Expenses 0 311,641 311,641
Repairs and Alterations 0 0 0
Assets 0 0 0
Other 0 0 0
2. Estimated Total Revenues 0 2,400,000 2,400,000


Explanation of above estimates (including long-range effect):


    DEP has estimated that the increased cost to the Office of Oil and Gas for fourteen additional staff people would be $1,032,982 for wages and benefits. Current expenses are estimated at $311,641 - which includes vehicle expenses, uniforms, office expenses, training costs, and supplies - bringing the total cost for fourteen additional staff people to $1,344,623. This is expected to be an annual ongoing cost.



Memorandum


    Please be advised that the Office of Oil and Gas currently operates at a deficit of approximately $1,055,377 per year. This current operational deficit, coupled with the additional $1,344,623 impact this measure will have on the costs of State government, means that a funding mechanism that will raise approximately $2,400,000 is necessary in order to implement HB401.



    Person submitting Fiscal Note: Kenna M. DeRaimo
    Email Address: Kenna.M.DeRaimo@wv.gov