Senate committee adopts changes to abandoned-well fund trigger, hears DEP official on backlog

The Senate Energy, Industry and Mining Committee on a voice vote adopted a strike-and-insert amendment to the engrossed committee substitute for House Bill 53 98 and voted to report the measure to the full Senate with a recommendation that it pass as amended.

Committee counsel told members the bill would change the statutory trigger that reduces a severance tax on certain oil and gas extracted from specified wells from 2.5% of gross value to 0 for the ensuing year, move the balance-determination date from June 1 to September 1, and require that amounts above $6,000,000 in the oil and gas abandoned well plugging fund be encumbered by binding contracts. Counsel also said the total fund balance may not exceed $9,000,000 and that the Department of Environmental Protection would be required to publish an annual report detailing revenues, year-end balance, wells plugged, average plugging costs and funds under contract.

Jason Harmon, sworn to testify before the committee, described the program’s funding history and operational challenges. "So, our abandoned well plugging program used to be funded only by a surcharge that was applied to oil and gas well work permits. It was a $150 a permit," Harmon said. He told the committee that permit counts fell with the rise of horizontal drilling and that, by around 2020, the program’s annual permit-derived revenue had dropped to roughly $140,000. Harmon said subsequent legislation brought additional state funding and that the program plugged 94 wells with state funds in calendar year 2025. He estimated the state’s database shows at least 6,300 orphan wells but said the true number is unknown.

Harmon told senators the timing of receipts and expenditures creates operational pressure because money received in October must be spent, invoiced and paid by the following June. "This bill, our proposed changes would move that date to September to allow us three extra months to spend that money," Harmon said, adding the change would also give credit for work that has been awarded under contract but not yet completed.

Committee members then moved and adopted a strike-and-insert amendment as explained by counsel, adopted a title amendment, and voted to report the engrossed committee substitute to the full Senate with a recommendation that it pass as amended. Votes were taken by voice; the transcript records the chair announcing the ayes carried.

The committee also acknowledged that the strike-and-insert incorporated provisions of Senate Bill 935 that, according to counsel, would remove the business-and-occupation tax exemption for coal-fired power plants that neither buy in-state coal nor supply electricity to West Virginia homes or businesses.

The committee adjourned after completing the agenda items.