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Virginia Gas and Oil Board approves Key Rock Energy’s Bluejay No. 1 drilling unit and location exception; related modification continued
Summary
The Virginia Gas and Oil Board approved Key Rock Energy LLC’s petitions to create a sealed drilling unit for Bluejay No. 1 and to allow a well-location exception for the same well in a unit identified in the record as DeepMind 26. A related modification petition was continued to the March 18 docket for re-notification.
The Virginia Gas and Oil Board on Feb. 18 approved petitions from Key Rock Energy LLC to create a sealed drilling unit for Bluejay No. 1 and to allow a well-location exception that would permit the well to be drilled at the location shown in the application.
Board members voted by roll call in favor of both orders. The board also continued a separate Key Rock petition to modify a pooling/production order for a related unit to the March 18, 2025 docket so the applicant could re-notify owners after revisions to the petition.
Key Rock representatives described the Bluejay No. 1 proposal at the hearing. Freddie Bowens, representing Key Rock Energy LLC, said the company seeks formation of the sealed drilling unit and asks to be designated operator. Geologist Morgan Page testified that the proposed unit is located in an area the record identifies as DeepMind 26 and that Key Rock holds leases covering the majority of the acreage the company identified in the application. Counsel and company witnesses confirmed a blanket bond was on file with the division and that an AFE (Exhibit C) estimating the well and dry‑hole cost was included with the filing.
Bowens told the board Key Rock planned to drill, produce and meter gas from Bluejay No. 1 and to sell verified carbon credits generated from that gas. Page identified the producing seam as the lower Vanderpool seam and said the applicant seeks to pool interests and offer standard lease options to parties listed in the application.
Board members questioned specific cost line items in the AFE during the hearing. Witnesses acknowledged a line-item discrepancy and said they would correct the AFE figure before final insertion into the record; the application’s AFE as filed lists an estimated dry‑hole cost of about $115,000 and the applicant later discussed a corrected figure near $97,000. Board staff confirmed shut‑in payment language and payoff schedules were included in the proposed order.
On the location exception, Key Rock representatives said the requested location is needed to efficiently drain the targeted portion of the coalbed methane reservoir and that moving the location significantly farther (to about 1,000 feet) would require crossing a railroad and would add substantial cost. The company requested the board enter an order to permit drilling as shown on Exhibit K.
The board’s action on the sealed drilling unit (docket 25‑0216‑4302) and on the well‑location exception (docket BGOB25‑0218‑4303) named Key Rock Energy LLC as operator and found, on the record, that the orders would prevent waste, promote conservation and protect correlative rights. The separate petition described as a modification to the M‑26‑1 order (document referenced in the record) was continued to the March 18, 2025 docket for re‑notification of the revised petition language and additional service.
Votes at the hearings were recorded by roll call; members present recorded “yes” votes for the Key Rock orders. The board did not record opposition or abstentions on those motions in the hearing record.
The board’s approval allows Key Rock to proceed under the terms laid out in the orders, subject to any corrections to the AFE and to the filing of required corrected notices for the continued modification item.
