After Coal, W.Va. Push For Natural Gas Trust Fund
Natural gas production in the big Marcellus Shale formation underlying parts of West Virginia and other nearby states has been rising even faster than energy experts had predicted. That production in West Virginia alone nearly doubled in the last five years and could nearly double again in coming years, they say.
Tapping it can require an unconventional horizontal drilling method as well as hydraulic fracturing. Also known as fracking, that process relies on water drawn from area sources that's mixed with chemicals and sand and then pumped into wells to crack the rock.
As a result of the production boom, natural gas severance tax collections in West Virginia are expected to surge.
But despite the welcome news, some are taking a wait-and-see approach.Corky DeMarco, executive director of the West Virginia Oil and Natural Gas Association, said the proposal to divert money into a fund that's untouchable for years comes at a time of a shrinking state budget. "In theory, I'm not sure how anyone could not support leaving something for their children and grandchildren," he said. "The problem is that we are looking at budget deficits in West Virginia." The Legislature agreed in April to cut ongoing spending by $28 million and expects to face more budget pressures next year. The oil and gas industry worries that talk of creating a permanent fund could veer onto another subject, such as tax rates, DeMarco said. Kessler said his legislation would not increase severance tax rates. Boettner estimates that an oil and gas trust fund started now could accumulate $2 billion to $4 billion by 2040, if it wasn't tapped. But that wouldn't be politically practical, he said, adding that the fund would probably need to be accessible within five to 10 years to build public support. West Virginia House Speaker Tim Miley said some form of a Future Fund "carries great potential." He and Kessler, along with the House and Senate Finance committee chairmen, plan to meet with other legislators who visited North Dakota as they prepare for next year's session.
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