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  • dgoinfo@dmme.virginia.gov

DIVISION of Gas and Oil

Natural gas & surface owner rights in virginia

Introduction

Whether you own the surface or the gas or both, you have rights in Virginia.

Much has changed over the years in Virginia state law governing surface owner rights in Virginia. At one time, under the “rule of capture”, common law provided no protection for correlative rights. A mineral owner had no right to complain of trespass or receive compensation for gas drained by another well operator. Changes to the Virginia Gas and Oil Act addressed these issues by establishing natural gas production units.


The Virginia Gas and Oil Act of 1990 provides a comprehensive program to protect public safety and the environment from risks associated with exploration and development of natural gas and oil. The laws and regulations govern activities including planning, well site construction and drilling and the final plugging and reclamation of the well site once production has ended. The Act also governs the installation and operation of gathering pipelines.


The Department of Mines, Minerals and Energy’s (DMME) Division of Gas and Oil (DGO) administers these requirements which include well permit approval, worker safety and environmental compliance at all oil, natural gas and coalbed methane well sites.


DGO inspectors review all gas well and gas pipeline permits. The permit review process places special emphasis on protecting water, erosion and sediment control and protecting the public from possible safety hazards associated with gas resource development. Once the applicant meets all requirements, DGO’s Division Director approves and issues the permit.


DMME’s mission is to enhance the development and conservation of energy and mineral resources in a safe and environmentally sound manner, in order to support a more productive economy in Virginia.


Important Gas Ownership Questions


Which ownership makes me eligible for royalties?
Fee ownership would include:
• Surface
• Coal
• Minerals (gas)


What options and rights do gas owners have?
• A gas owner can come before the Virginia Gas and Oil Board and be designated as a unit operator. The gas owner can develop, produce, transport and sell their gas.
• A gas owner can negotiate private lease terms with a major gas producer.
• Where conflicting claims for gas ownership exist, the owner may be forced pooled and provided options within a Board order.


Frequently Asked Questions About Natural Gas and Surface Rights


Who owns the natural gas?
Ownership is found in the terms of any deeds or leases governing the property. In some cases, ownership of surface, minerals and coal is severed—meaning different people could own each.


What are correlative rights and unitization?

If you own the natural gas you have a right to produce your share and to do so without being required to drill wells that are unnecessary or incur expenses to recover the gas. These rights are known as correlative rights.


Unitization refers to the designation by the Virginia Gas and Oil Board of a given unit on which a gas well can be located and drilled. This process provides for maximum recovery of the gas while protecting the correlative rights of all parties who have been voluntarily or force pooled.


What are field rules?

The location of natural gas is referred to a field (for example: the Nora Field, Oakwood, Middle Ridge, etc.) Field rules designate a common pool of gas and address such things as how far apart wells should be and whether there should be any limits on the rate that gas can be produced. Field rules result in less waste of resources from drilling too many or too few wells and ruining a pool of gas or oil by producing it too fast. Field rules also affect the spacing between wells and the size of drilling units.


How are ownership interests affected if a company wants to develop gas or oil on or near my property?
When natural gas is produced, the gas comes from underground areas in and around the well. So, the property housing the actual well is not the only property affected. The interests of people owning the gas or oil in this area must be pooled together to ensure that all of the owners are paid for the gas they own. This is drilling unit. Some people voluntarily agree to pool their gas by selling it or by entering into a lease, joint operating agreement or other contract with the operator of the well and other owners.


What if I do not voluntarily agree with the well operator?

One owner cannot keep others from producing their gas around a well by refusing to participate in the drilling unit. If the other owners produced the gas, then the gas under the one owner would be drained and the owner would not receive his or her share of the proceeds from the sale of the gas. To overcome this problem, state law gives the Virginia Gas and Oil Board the right to force pool all owners into a drilling unit.


What if more than one person believes they own coalbed methane gas?
Coalbed methane comes from the coal seam but is a gas. While there have been individual decisions rendered by courts in Virginia and other states, previously there has not been a common understanding of who owns coalbed methane gas. However, on July 1, 2015, a law was enacted which set out ownership of the coalbed methane gas and in most cases, ruling the gas owner will receive royalties. For further information, please see 45.1-361.22:2. Release of funds held in escrow or suspense because of conflicting claims to coalbed methane gas.


Does a well operator have the right to use the surface of the land if the gas is owned by one person and the surface is owned by another?
If the terms of a deed or lease do not describe how the surface may be used, then the gas owner has reasonable use of the surface to produce the gas.


The Virginia Gas and Oil Act provides the surface owner with the right to object to a well if:
• he or she believes erosion and sediment controls are not adequate,
• additional measures are needed to protect groundwater,
• the proposed work would constitute a safety hazard, or
• the location would unreasonably infringe on the surface owner’s use of the surface.


If the Virginia Gas and Oil Board approved a forced pooling order to produce natural gas, then the operator does not automatically have the right to use the surface. The operator must reach an agreement with the surface owner regarding use of the surface to produce the gas or to construct roads, pipelines or other related facilities.


How is a landowner’s property protected under the state law?

The Act provides for domestic water well replacement if the well is contaminated or interrupted by a coalbed methane well operation within 1,320 feet of the water well. Surface owners’ rights are addressed in common law and would be enforced in judicial (court) proceedings.
Who should I talk to for more information?


You may wish to contact the well operating company or an attorney specializing in surface and mineral ownership issues. You may also contact the Department of Mines, Minerals and Energy, Division of Gas and Oil at P.O. Box 159, 135 Highland Drive, Lebanon, VA 24266; (276) 415-9650; Fax: (276) 415-9671 or DgoInfo@dmme.virginia.gov with questions concerning the Virginia Gas and Oil Act or the Virginia Gas and Oil Board.

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