The natural gas industry offers benefits for many

The recent series on the natural gas industry in Virginia was one-sided and focused on a very small aspect of our industry. With an eight article series totaling almost 15,000 words, I kept waiting for an article discussing the many benefits of the natural gas industry here in Southwest Virginia. That side was never presented.
Here is what I had expected to read. The natural gas industry has made a huge economic impact on the region. Thousands of high paying jobs have been created in a region of the state where jobs are greatly needed. The natural gas industry also generates hundreds of millions of dollars in royalties and taxes, most of which stay right here in the economy of Southwest Virginia. These taxes not only provide money for local government services, but also one portion is specifically earmarked to build and repair roads while another is allocated to the Virginia Coalfield Economic Development Authority. VCEDA estimates that since 1988, the severance tax from gas and coal has created 12,000 jobs by funding 200 economic development projects throughout the region.
In addition to the benefits to our state, drilling wells here in Southwest Virginia helps the United States gain energy independence by providing clean, domestic energy that reduces our dependence on foreign oil. Natural gas is the cleanest burning fossil fuel and 85 percent of the natural gas consumed in our nation is produced right here in the United States. In contrast, more than 65 percent of the oil used by Americans is imported. Last year alone, we spent more than $500 billion dollars buying foreign oil. Can you imagine the effect on the economy if those dollars had been spent drilling natural gas wells here in the United States?
Obviously, the Bristol Herald Courier series did not print this viewpoint. Instead, the series focused almost exclusively on the escrow account. Certainly this is an important issue but the articles failed to present the whole perspective even on this one issue.
Since 1990, natural gas producers in Virginia have paid an estimated $600 million in royalties to gas owners. The $24 million that is in the escrow account is approximately 4 percent of the total royalties that have been paid since the Virginia Oil and Gas Act was enacted. Clearly the Act is functioning as it was intended as the vast majority of the royalty owners have been allowed to harvest their resources and be compensated for it. The Virginia Legislature was forward thinking in 1990 when it undertook the task of rewriting the regulations for oil and gas development. The purpose of the legislation was, among other things, to “foster, encourage and promote the safe and efficient exploration for and development, production, utilization and conservation of the Commonwealth’s oil and gas resources” and “to recognize and protect the rights of persons owning interests in gas or oil resources.” This is exactly what it has done.
The 1990 Act allowed for the forced pooling of interest which the paper correctly reported “is designed to prevent a scenario in which one person with a fractional interest in a unit refuses to lease his or her gas rights, denying every other owner in the unit the ability to receive royalties from gas production.” However, the article neglected to mention that the forced pooled acreage represents only a small fraction of the total developed acreage in Virginia. The article also neglected to point out that forced pooling has legal precedent and is widely implemented in other states. Most importantly, the article neglected to state that the process of forced pooling was recently upheld by the Attorney General of Virginia.
The natural gas industry certainly is not minimizing the $24 million in the escrow account and clearly, if there are any errors in these accounts, these should be corrected.
However, it is not the gas well operator’s decision to escrow these funds; the producers are simply abiding by existing state law. Most natural gas producers would like to see the question resolved as to the ownership of coalbed methane so that the rightful owner could be paid.
As Virginia and our nation struggle to reduce its dependence on foreign oil, the natural gas industry continues to provide a domestic, clean energy source that creates jobs and provides revenue to local governments for the benefit of all residents in our region. At the very least, this perspective should have been a part of this eight article series.

Jerry Grantham is the president of the Virginia Oil and Gas Association. He is a native of Southwest Virginia and has 25 years of experience in the natural gas industry.