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Board denies Buchanan and Diversified petitions to reconsider Pocahontas pooling orders after debate over jurisdiction, royalties and reimbursed costs
Summary
The Virginia Gas and Oil Board denied petitions for reconsideration by Buchanan Energy and Diversified Production, after hearing arguments that the board lacks jurisdiction over surface easements and that prior contracts and reimbursed costs should be honored; Pocahontas/CNX defended the orders, saying pooling and royalty provisions follow the 1990 Act and the operator will pay royalties on sold gas.
The Virginia Gas and Oil Board on Dec. 16 denied petitions by Buchanan Energy and Diversified Production LLC seeking reconsideration of pooling orders the board entered in October affecting several units tied to longwall mining panels.
Tom Pruitt, speaking for Buchanan Energy, told the board the petitions raised two principal jurisdictional objections: that surface easements tied to the coal estate cannot be repurposed for gas harvesting and that the board cannot, under the statute, override or impair existing private lease payment provisions. "The granting of any applications that would allow the drilling through the Canada energy surface for the purpose of harvesting gas would be a trespass," Pruitt said, urging the board to refer contract disputes to circuit court and to revisit alleged "phantom well costs" and the treatment of destroyed methane/carbon‑credit revenue.
Pocahontas/CNX counsel Mark Schwartz responded that the Virginia Gas and Oil Act of 1990 authorizes forced pooling and that the board's orders were consistent with statutory purpose. He disputed the surface‑rights framing and said the operator would not trespass on surface owners. "We don't intend to trespass," Schwartz said, and he testified CNX plans to sell produced gas and pay royalty on sales, not simply claim carbon‑credit revenue without royalty payments.
Diversified counsel Ben Street asked the board to amend or stay orders and to pause election deadlines because Coronado Coal will reimburse Pocahontas for certain well costs; Street said forcing Diversified to post millions in participation costs while appeals proceed would be unfair. Board counsel and staff cautioned that late‑filed modification requests raise notice problems under 4VAC25‑160‑30 and that the board has limited authority to act without adequate notice to affected parties.
After extended deliberation the board voted to deny the reconsideration petitions and to adopt written responses prepared by staff (votes recorded by roll call, with some abstentions noted). The board emphasized the administrative record did not include evidence that would require it to alter the October decision on pooling orders; contract and trespass disputes were described as matters for civil court.
Why it matters: The decisions uphold recent pooling orders that reorganize ownership and payment rights in coal‑associated gas units and determine which operator—Pocahontas in this instance—may develop gas resources; they also set the immediate procedural posture for appeals and election deadlines.
Next steps: The parties retain appeal rights in the appropriate court; the board indicated it will accept properly filed motions or applications on its next docket but will not hear untimely modification requests without notice.
