Despite Virginia law, $25 million in natural-gas royalties still stranded

A new law may have resolved the 20-year-old conflict that has stranded more than $25 million of natural-gas royalties in escrow accounts. But the state board responsible for diverting those royalties into escrow cannot apply that law to release the money to mineral owners, the state’s top energy official said yesterday.

Speaking at a Virginia Gas and Oil Board hearing in Southwest Virginia, the director of the state Department of Mines, Minerals and Energy said the twin bills that clarified coal-bed methane ownership did not give the board the authority to determine ownership.

“The bills do not suggest that the board take on a role in determining ownership where there are conflicting claims,” Stephen A. Walz told board members. “These bills, I think, were trying to set in law the grounds upon which ownership can be determined. They did not directly change the authority, the powers and the duties of the Gas and Oil Board.”

The legislation is modeled on a 2004 Virginia Supreme Court decision that declared landowners who sold only coal from their property retained the rights to coal-bed methane gas. Sponsored by Del. Clarence E. Phillips, D-Dickenson, and Sen. Phillip P. Puckett, D-Russell, the bills aimed to release royalties from escrow by ending the dispute between landowners and coal companies who both have claimed Virginia’s most abundant natural gas.

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