Coal and Energy Commission
October 14-15, 2001, Richlands
The Coal and Energy Commission's second meeting was limited to the issue of coal owner consent to stimulating a coal seam for the operation of coalbed methane wells. The business meeting was followed by a tour of Consol's Buchanan 1 Mine in Buchanan County.
Staff presented an overview of bills from the 2001 Session addressing coalbed methane. All of these bills were introduced in the House and were referred to the Mining and Mineral Resources Committee.
None of the bills was reported from the committee, pending study by the Coal and Energy Commission.
Virginia currently has 3,631 active coalbed methane well permits, with 388 new permits granted last year. Wells remain under permit until they are abandoned, but if an operator does not build a well within two years of receiving the permit, the permit expires. All operators are required to be under a bond. The application must include the names of all parties who require notification of the proposed well, proof of notification, consent to stimulate the coal seam, the method of stimulation, a map of the entire disturbed area, and a sworn statement indicating the well operator's right to do these operations. Applicants also need a fluid disposal plan, since water has to be removed from the coal to get the gas to move. The number of permit applications for drilling into active mines is small, but any operator of a well that will penetrate an active mine has to have a plan on how to drill while keeping the mine safe. DMME has internal agreements between departments to cooperate and ensure safety in any coal seam stimulation.
The Virginia Coal Association had three speakers representing their concerns, the first of whom expressed the Coal Association's frustration with and opposition to proposed changes to the Gas and Oil Act. The Coal and Energy Commission studied this issue at great length in the 1980s, and the act that passed represented an agreement among all parties. Every year since then, there have been attempts by the oil and gas industries to modify that agreement.
A Consol representative presented a comparison of coal and coalbed methane resources, stressing that the most valuable resource in coal mining is the miners themselves. Since the methane must be removed before the coal can be mined, Consol tries to collect as much of the gas as possible, but it has never been profitable in removing it. Consol has spent a lot of money on research and development to make sure gas removal is done safely, and anyone else mining the gas needs to be equally safe. Consol's position is that the current law works as is, and the company sees no need for change.
A Jewell Smokeless Coal Company spokesman also briefed the commission. He stressed that it is important to maintain coal operator consent for well drilling. Coal operators have to know exactly where the well is going to be; otherwise, a miner might hit a well, which could result in a fatal explosion.
The commission heard from representatives of the Virginia Oil and Gas Association, who stated that safety is the primary concern of VOGA as well. VOGA is not seeking to limit the ability of a coal operator to restrict the stimulation of a coal seam where there is an issue of safety. VOGA is merely seeking a limit on unilateral well rejection where a legitimate safety issue does not exist. In the past year, more than 250 wells were not drilled because of the coal owner veto, resulting in more than $700,000 in lost severance tax revenue. In some cases, the veto has been used by a coal owner to veto wells of the owner's lessee.
Coal Seam Stimulation
The commission then began a discussion of the complexities surrounding stimulation of a coal seam. Members noted that the hydraulic fracturing (or "fraccing") used to move the gas can damage the roof of a mine, but any damage might not be apparent until the coal is actually mined, which could be years later. VOGA is asking for a hearing to determine whether denial of consent for a well is legitimately based on safety concerns, but members discussed that without federal or state "fraccing" standards, the actual safety risk caused by "fraccing" may be indeterminable. The two industries may have to get together to come up with standards that protect safety, meet contractual obligations, and protect royalties.
The chairman noted that the commission will continue its study of this issue and try to work on a compromise solution. The next full commission meeting will be November 18 at 7:00 p.m. in Richmond. Additional information about the commission and any meeting materials may be obtained at http://dls.state.va.us/cec.htm.