by Rodney White, as published in Platts Gas Daily, June 28, 2011
Used with permission of Gas Daily Copyright© 2011. All rights reserved.

A West Virginia-based drilling company has alleged in a lawsuit that the city of Morgantown violated the state’s Constitution by enacting an ordinance that prohibits drilling for gas within a mile of the city limits.

In a suit filed last week with the Monongalia County Circuit Court, Northeast Natural Energy contended that only the state’s Department of Environmental Protection has the authority to regulate drilling in the state. The two-year-old Charleston company wants the court to declare the ordinance “unconstitutional and unlawful,” the suit said.

But if Morgantown should prevail, Northeast Natural attorney Jim Walls said Monday that the city “will have to pay Northeast a lot of money for the takings.”

Under the Fifth Amendment of the US Constitution, governments are prohibited from taking private property for public use without compensation, he noted. “The city loses in the long run because we think this project is valued at $40 million. I don’t think the council understands that. If they do, they owe an explanation to the citizens of Morgantown.”

The company has a DEP permit to drill two gas wells in the Morgantown Industrial Park, which is within a mile of Morgantown and sits atop the Marcellus Shale. Northeast Natural has already spent $7 million on the project and is in the process of horizontally drilling the first well.

Walls pointed out that a neighboring town, Westover, is contemplating an ordinance that would ban drilling within its city limits — but permit it within a mile of the city if hydraulic fracturing is shown to be safe. “If the legislature doesn’t act, or if we don’t get an injunction to stop these things, our wells are going to be regulated by three different sets of rules that are irreconcilable,” he said.

The lawsuit noted that the Morgantown Utility Board, which regulates the city’s water and sewer services, told the City Council May 18 that the drilling company agreed to build additional safeguards that could affect water intake on the Monongahela River. Despite the assurances, the council enacted its drilling ban June 21.

“As Morgantown officials well know, Marcellus Shale natural gas wells cannot be completed without fracking, and the Morgantown ordinance is a death blow to Northeast and every other individual or business with an interest in Marcellus Shale natural gas in this area,” the lawsuit said. “The ordinance will totally deprive countless people ... of his or her property rights” and the city “has no intention of compensating these people for their loss.”

The suit said the well’s mineral rights are owned by Enrout Properties LLC, Morgantown Industrial Park Associates, George A. and Heather H. Finley and Pennsylvania Lines, LLC. Upon completing the well, Northeast Natural said it would sell the gas to Dominion Hope Gas, the local distribution company.

Morgantown city officials declined to respond to requests for comment.