Board approves Keyrock Energy amendment to shut‑in payment distribution for coal‑bed methane unit

The Virginia Gas and Oil Board on March 8 approved Keyrock Energy LLC’s petition to modify a prior pooling/pulling order for a coal‑bed methane unit, changing how monthly shut‑in payments are calculated and distributed.

Keyrock geologist Morgan Payne told the board the unit at issue covers roughly 815.81 acres and that Keyrock holds leases covering about 77 percent of the acreage. Payne said the company seeks an amendment to distribute shut‑in payments on a pro‑rata basis tied to ownership percentages rather than a flat per‑owner monthly amount that had been used under the previous order.

Payne described the company’s business model for coal‑bed methane production: Keyrock targets sealed areas, drills into the sealed seam to depressurize coal seams and bring coal‑bed methane to the surface, meters the gas and flares it, and sells resulting carbon credits. He said the proposed amendment would align shut‑in payments with ownership shares and avoid overcompensating some small owners while preventing undercompensation of larger owners. Payne told the board the proposed production depth for the well under discussion would be about 373 feet and estimated recoverable reserves at roughly 340 (units not specified in transcript).

Board members questioned how the change would affect unleased owners and whether some mineral owners would receive significantly less than under the prior flat payment. Payne acknowledged some owners could see monthly payments reduced to “somewhere between $5 and $50 a month” and said Enervest (identified in testimony) would have received approximately $800 of the prior $1,000 monthly payment; other owners would receive small fractions. Keyrock said the alternative—continuing flat $1,000 monthly payments to all unleased owners—would be financially unsustainable and likely lead to well shut‑ins.

After discussion, the board voted to grant the petition. Roll‑call votes were recorded as Owens — yes; Harris — yes; Jansen — yes; Gibson — no; Cochran — yes. The motion passed 4–1.

Docket and procedural details - Docket: BGOB24-0220-4280 (petition from Keyrock Energy LLC; continued from January 3) - Requested change: amend prior pulling/pooling order to implement a pro‑rata shut‑in payment calculation tied to ownership percentages - Unit acreage reported in testimony: 815.81 acres; leased acreage approximately 77% - Proposed well depth reported in testimony: 373 feet

Board action The board approved Keyrock’s petition to amend the prior order so that shut‑in payments are distributed proportionally by ownership percentage rather than as a flat per‑owner monthly payment. The board’s vote was 4–1 in favor.