Executive Summary

The Oil and Gas Conservation Commission (OGCC) was created under 22C-9-1 of the West Virginia Code. The Commission is a five member body with duties consisting of: 1) Regulating the spacing of deep oil and gas wells; 2) Making and enforcing rules regarding waste and rights of deep well owners; 3) Issuing subpoenas for the attendance of witnesses for Commission hearings; and 4) Serving as technical advisor to the Legislature, the Division of Environmental Protection and the Office of Oil and Gas on issues involving oil and gas. A major duty of the Commission is to facilitate and/or mediate hearings for well operators regarding exceptions to rules and regulations on the drilling of a new deep well.

ISSUE AREA 1: Commission Attendance has Improved Significantly Since the Previous Audit.

During the period of review from 1997 through May 2000, the Oil and Gas Conservation Commission held 14 meetings. The Commission attendance rate was 77% for this period as compared to a 40% rate for a similar number of meetings as recorded in the previous audit. Review of meeting minutes shows that only twice did the Commission fail to have a quorum present. The Commission has been consistent in having a quorum present for the past ten meetings. The review of the minutes also shows that both the Chairman of the Commission and the Chief of the Office of Oil and Gas had 100% attendance. However, the Director of the Division of Environmental Protection, who serves as an ex officio member, attended only one meeting during the three-year review period. This improvement in attendance could be due in part to a change in the statute which

gives the Commission members an active role in Commission meetings. One of these changes is the granting of voting authority to the Commission members. In addition, the number of permits has been consistently increasing since 1995, which could lead to the possibility of more hearings being requested. This would require more Commission meetings, thus indicating more need for the Commission.

ISSUE AREA 2: Oil and Gas Conservation Commission Records Show that the Agency is Meeting Mandates of its Permitting Process.

The Legislative Auditor analyzed 44 applications for deep well permits. Overall, the Commission is doing a good job maintaining the records. Only two of the applications lacked having all seven of the categories. One file was missing the certificate of consent and easement. However, it was later obtained, and a copy of it was provided to the Legislative Auditor. The other file did not have a signed and approved reclamation plan, which was also provided to the Legislative Auditor at a later time. The two missing documents were more than likely in their respective files at one time. Due to the fact that both documents were checked off on a separate check list that is kept in the files.

Another important aspect of the application process is to ensure that the wells are spaced an appropriate distance from each other and from the nearest unit boundary. Every one of the 44 applications that the Legislative Auditor evaluated specified that the well is at least 400 feet from a lease or unit boundary. Also, two of the 44 applications did not meet the 3,000 feet criteria. In both of these instances exceptions were granted after the applicable hearing.