Corporations Stole Billions Of Dollars Of Gas From Landowners

Energy companies were supposed to compensate rural Virginians for the billions of dollars worth of gas they sucked from their land, but a local newspaper’s Pulitzer Prize-winning investigation found that the money has instead been diverted into escrow accounts for over 20 years. If the landowner even knows the money is there, it’s nigh impossible to get it out, and in any event, the companies have only been putting in a fraction of what they’re supposed to. A rubber-stamping regulatory board that hadn’t done an audit for a decade only compounded the problem. I drink your milkshake, indeed.

1. Money made from Southwest Va. gas wells isn’t reaching people it should
2. Siphoning natural gas profits from under the feet of landowners
3. Captive assets: conflict over gas rights traps royalties in escrow accounts
4. Coal companies block efforts to access natural gas royalties
5. Natural gas escrow fund bleeding money
6. Underfoot, Out of Reach, Part Six: Where are the gas royalties?
7. Underfoot, Out of Reach, Part Seven: An audit long delayed
8. Southwest Virginia’s Natural Gas, Underfoot, Out of Reach, Part 8: Sue, split or do nothing

UNDERFOOT, OUT OF REACH [The Bristol Herald Courier]

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  1. goodpete says:

    “Billions of Gas”?

    Wow, that’s a lot of, um, gas.

  2. Tim says:

    That reporter taught me much of what I know about investigate journalism when I interned there. He’s a little stuck up, but hey, he just won a Pulitzer, so I guess it’s okay.

    Ben, you’ve got the description off a little. Natural gas companies in Virginia can take your natural gas without your permission, as long as they put compensation into an escrow account. First of all, it’s nearly impossible to get your money out of that account, assuming you know it’s there. Worst, the companies haven’t even been putting all the money into the accounts that they were supposed to.

    Good story, and it caused the legislature to make some changes to the laws.

    • sullivanftw says:

      I’m a petroleum engineer.

      Looks like the companies wanted to drill wells and the mineral owners didn’t want to play ball. The State told the companies that they could drill, but in order for the owners to get paid, they have to accept the terms on the lease that was put forth by the State. The owners aren’t “giving up” royalties, they are reassigning royalties to the company because they actually invested dollard and exploited the minerals from the coal seam.

      • thisistobehelpful says:

        That should really be a case of the state overstepping their bounds. If they’re not doing a full eminent domain seizure for it then they shouldn’t be able to touch private property.

        • tsumeone says:

          Virginia isn’t a state, they’re too good for that. They’re a “commonwealth”

        • drizzt380 says:

          Its called an easement.

          And I could see how a lawyer could argue that getting natural gas from underneath a property did not interfere with the owner’s use of property to the point that it constitute a regulatory taking. Especially since some people didn’t even know it was happening.

          Now, this is slightly different. Of course, the owners should get fair value for their mineral rights. However, this escrow fund is pretty much for “We see a bunch of natural gas, but we can’t figure out who owns it.” So, when someone does finally claim it, the money is right there.

          Its also for the argument, “Well, 100 years ago when we didn’t know how to use coalbed methane, my family just sold you the coal. You still owe us if you want the methane.” “What, no we bought both. That methane is ours!!” This stems from the Supreme Court ruling. And this is why the size of the escrow account has tripled in 5 years. Because, the owner still has to prove that they own the rights. In court. Against giant corporations.

          This is where the forced giving up of your mineral rights come in to play. They can keep taking and you don’t get a penny until you prove they owe you. Its like guilty till proven innocent. And when some people know they would maybe get $500 dollars from even winning, it just sits there in the escrow account.

          So, the taking of gas I’m fine with. The major government fuck up in regulating this and not putting an unnecessary burden on the true gas owner is where I have a problem.

  3. maraa01 says:

    Not a fan of natural gas drilling. It came to our area around 5 or 6 years ago. Many residents were forced to switch from private wells, that had no problems for decades, to town supplied because wells died off. No-one is allowed to go after the gas companies for that. Other people had wells contaminated by methane. It is still up in in air whether they will be given compensation. People who do not want to lease their rights are being forced to if other landowners around their property have done so. Roads are destroyed and costing towns thousands of dollars to be repaired. I could go on and on…..

    • sullivanftw says:

      As far as “costing towns thousands of dollars to repair”….

      …I assure you the town’s income from severance and ad valorem taxes far outweighs the expenditures for road repair. The rest of your comments–please, keep watching “Gasland” and believing the hype.

      • DH405 says:

        The gas extraction might not be in the town, so the town might not get a penny.

      • maraa01 says:

        As far as believing the hype, I find that most people saying that do not deal with this every day. I am living with it and seeing what is happening with my neighbors. I am believing what I am experiencing. Lets talk about the spills that have happened in this area. Spills traced right back to a drilling site that company tries to fight. By traced, I mean that you could actually walk and follow the trail of the spill to the site. Multiple trucks being fined every week for safety violations. But, that’s ok….its only hype.

  4. evilpete says:

    polluted water wells and no money

  5. DanRydell says:

    Is it too much to ask for a brief (but honest and impartial) summary?

    • drizzt380 says:

      First, Virginia became very liberal about how a gas company could get gas from private property in about 1990. There is an escrow account. There are two situations where natural gas companies must put money in this account.

      1.) They take gas and they can’t track down who it belongs to.

      2.)(Stemming from a 2005 court ruling) There is contention on whether when someone sold the coal rights to a company 100 years ago, that also included the rights to the coalbed methane. When there is contention, the companies. This has caused the fund to triple since 2005.

      There are several problems with this:

      1.)Poor regulation. There have been lapses in paying into this fund and mismanagement of the account itself.

      2.)Difficultly in receiving money from the account.

      For those who have money in the escrow account based on the coalbed gas dispute, they are only allowed to receive the money when they prove that they had rights to the gas. This usually requires a court order. Which requires them going to court against a corporation. This is not exactly easy or cheap to do and boils down to what I see as a form of guilty till proven innocent. So, owners are faced with the decision of losing money in court, letting it lie, or agreeing to split the money with the gas companies. This seems to be an untenable position that places an unnecessary burden on the true owner of the gas.

  6. Angry JD says:

    Now you know how Native Americans feel.

  7. UltimateOutsider says:

    Way to head off all the Daniel Plainview references off at the pass!

  8. c!tizen says:

    I’m shocked I haven’t seen the “I make my own natural gas at home” guy yet.

  9. galm666 says:

    And to think, people think corporations don’t need oversight.

    • craptastico says:

      i don’t think i’ve ever heard anyone say they don’t need any oversight, just that they’re against OVER regulation, but go ahead and make up your own argument if it makes you happy

      • FrugalFreak says:

        I have, just about every pro capitalism horn tooting republican tea bagger. Business is always right in their opinion and corporations and businesses can dictate themselves without government input is what they claim.

      • Duke_Newcombe-Making children and adults as fat as pigs says:

        Simpler “conservative/tea partier/Republican”: Over-regulation=regulations beyond “We can’t summarily execute you in the streets and rifle your pockets”. Got it.

  10. cvt2010 says:

    Interesting. When we bought our house in Denver, we were specifically told that any minerals or resources under our property did not belong to us. I think it is standard home purchasing contract language here.

    • Ihaveasmartpuppy says:

      I’ve never understood that. We were just discussing this last night. If I find anything of value on my land, I’m keeping it. Do I plan on mining? Hell no, and I seriously doubt this poor land has anything in it that anyone would want. But I wouldn’t let anyone else come in my yard to get it.

      • drizzt380 says:

        Thats the problem. They don’t have to sell the mineral rights. They can choose to only put up the other rights. You can take it, negotiate a different deal, or walk away. Its always your choice. In some cases, the mineral rights may not even belong to the current land owner. They may have been sold long ago.

    • Sudonum says:

      Most developers of subdivisions keep the mineral rights for themselves. Just in case. But I have seen some nation wide home builders get mineral rights when they bought lots from a private developer. That home builder then turned around and transferred the rights into a separate, privately owned subsidiary. So that in the end, the home buyer still didn’t get the mineral rights.

  11. Eat The Rich -They are fat and succulent says:
  12. dolemite says:

    First I’ve heard of this, and I live in the area. Makes you mad that a corporation can swoop in, influence (ahem kickbacks?) lawmakers and steal from poor landowners who don’t have millions of dollars to fight the legal battle to get their rightful compensation. Where’s Erin Brockovich?

    • tsumeone says:

      I live in JC and read this story as it came out on Tricities.com. I was appalled that none of the mainstream media picked up on this.

  13. ellemdee says:

    I wonder if the gas companies get to write off the escrow payments as “donations”.

    They definitely don’t want to make it easy for those who are owed money to find out about it. I own mineral rights to some coastal land in TX, and it’s next to impossible to even determine which department handles mineral rights or compensation to those who hold those rights. The last my family was able to determine, this was now allegedly handled by the railroad commission, though no one there seems to know who I need to contact to check into seeing if minerals were ever extracted from the land (I don’t own the land itself). It’s a long shot, but worth checking out…if I can ever find the right person/department.

    • sullivanftw says:

      The county generally has the mineral right title.

      The Texas Railroad Commissions website should list wells and production on said mineral rights.

      You could also hire a Professional Petroleum Engineer to do the research for you.