LEBANON, Va. – State officials, gas industry representatives and citizens on Tuesday reacted to a Bristol Herald Courier investigation revealing minimal oversight of a state-run escrow fund containing millions of dollars belonging to mineral owners, and corporations that failed to make the required payments into the fund.
Two industry representatives sharply criticized the eight-day series as biased, while citizens praised it and the chairman of the Virginia Gas and Oil Board added a nod of approval.
Gas corporations are required to pay royalties into the escrow fund whenever they produce gas belonging to people they cannot locate, or whose mineral ownership is in dispute. The fund contains more than $24 million, and is owed to thousands of Southwest Virginia landowners.
“The Department [of Mines, Minerals and Energy] and the board have and will continue to address issues related to the timely filing” of the necessary paperwork for royalties to be escrowed “and deposits into the escrow account,” Virginia Gas and Oil Board Chairman Butch Lambert said in a prepared statement.
The DMME, he noted, has designated staff to clear a “backlog” of missing orders, and the department “continues to review deposits and direct companies to fix these errors. This has been a very slow process,” Lambert said, adding that it has resulted in corrective payments into escrow.
“We wish to acknowledge the considerable and thorough research into these issues by the Bristol Herald Courier,” Lambert said.
He also thanked David Asbury and Diane Davis – the two state officials who handle virtually all of the work of monitoring payments into escrow – in responding the Herald Courier’s queries and requests for documents.
The chairman’s assessment contrasted starkly with views expressed by the gas industry.
“I was sorry to read the recent series of articles that attacked the board, the Division of Gas and Oil and the natural gas industry,” Jerry Grantham, president of the Virginia Oil and Gas Association, told board members Tuesday. “In my opinion, these articles were one-sided and in many cases inaccurate,” he said, pointing out one incorrect sub-headline in Sunday’s edition.
“I kept waiting for at least a portion of an article discussing the many benefits of the natural gas industry here in Southwest Virginia, but that side was not represented,” Grantham concluded.
Frank Henderson, president of Appalachian Energy, also criticized the articles.
“The articles made the industry, the board and the regulators out to be villains, incompetent, the whole nine yards,” he said during the public comment period.
The important issue, Henderson said, is the ownership of minerals.
“Unfortunately, that whole issue was not explained in those eight articles and 15-some thousand words. And that’s the core issue.”
In Lambert’s view, the series covered issues relating to the ownership of coalbed methane gas; the 1990 law that established the Virginia Gas and Oil Board and the escrow fund; different interpretations of a Supreme Court of Virginia ruling on coalbed methane ownership; discrepancies between gas production and deposits into the escrow fund, and the state’s management of the fund.
Harry Anderson, a North Carolina resident with 131 acres near Haysi, Va., called the Herald Courier articles a “great series, an important series” during public comment.
Expressing sympathy for board members who hold down day jobs, Anderson said, “if you can’t stand the scrutiny of the press, there’s a problem.”
Martha Guilliams, a Salem, Va., resident who has been attending board hearings for 12 years, praised the articles and vented her ongoing frustration over her inability to collect coalbed methane royalties from escrow. She noted that the Supreme Court of Virginia had already ruled that when a landowner sells only coal, he keeps rights to coalbed methane.
“The Supreme Court of Virginia has ruled on three very specific severance deeds,” Sharon Pigeon, the senior assistant attorney general who advised the board, told Guilliams.
The high court’s 2004 ruling, Pigeon explained, “only applies to those parties. We don’t know that you have the same deeds.”
Guilliams was not satisfied.
“Something has got to give. Where are we heading?”
Lambert replied, “I don’t think this board can answer that for you.”