AG has kept gas owners from their money

Long-time public observers of the Virginia Gas and Oil Board have a saying to describe the attorneys for some of the gas operators who routinely represent and even testify before the board. That is: “You can tell when they are lying because their lips are moving.” Attorney General Ken Cuccinelli appears to fall in that class. While those attorneys tend to be skilled in Machiavellian tactics, Cuccinell, as reflected in his comments to The Roanoke Times, is either ignorant or assumes that his audience is (“Cuccinelli wants to change state’s gas royalties policy,” June 26 news story).

While he claims, “I want to get the money out of escrow and into the hands of the people it belongs to,” his actions suggest just the opposite. Cuccinelli and his underlings have done everything possible to hinder the class action lawsuits that represent the best (if not only) opportunity for all gas owners not only to obtain their money from escrow but obtain what should have been placed in escrow.

He and his office, in concert with gas operators, have thrown numerous obstacles and used delay tactics in an attempt to prevent these cases from progressing. They have done this by trying to make severance deeds seem far more complex than they are. It would seem that if Cuccinelli or his staff took the time to look at the orders of the board, they would observe that the alleged conflicts, asserted by the gas operators, are between the “gas owner” and the “coal owner.”

The Harrison Wyatt v. Ratliff case, decided by the Supreme Court of Virginia nine years ago, concluded that coal bed methane was a gas (the methane part sort of gave it away) and a deed that conveyed the coal and not the gas did not convey the coal bed methane. OK, so if the coal owner does not own it, then the gas owner would. The gas operators have continued to list the coal owner and gas owner as being in conflict in its applications to the board. The board could have asked for proof of conflict, but in his 2010 opinion to the board, Cuccinelli stated the board had no authority to do so. As a result, the orders continued to show conflicts that do not exist.

After the 2004 Ratliff decision, the AG’s senior adviser, staff of the Division of Gas and Oil, coal owners and gas operators advocated split agreements (whereupon the gas owner agrees to convey up to 50 percent of the amount in escrow and all future royalties and rights to the coal owner) as a fair way to settle the “conflict.” I would guess that more than 95 percent of the gas owners who have received money from escrow have obtained it by signing a split agreement.

To my knowledge, not one gas owner has received an accounting of the monthly amount of gas produced, the price the gas was sold for or the amount deducted from the royalty that was paid into escrow. There are probably just as many gas owners who have never had money escrowed because when they signed a lease, the gas company landman asked them to sign a split agreement in order to be paid for their gas.

The AG’s office has reviewed the results from the escrow audit and should know that there are major issues with accounting — yet this does not seem to bother Cuccinelli, nor has he recommended an accurate accounting for each disbursement made as required by the act and regulations. What has gone on here (under the eyes of our so-called attorney general and his staff) is reprehensible.

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