VOGA Facts

“Companies and individuals working together to develop Virginia’s oil, gas & coalbed methane resources in an environmentally responsible manner for the benefit of all Virginians.”

The Virginia Oil and Gas Association (“VOGA”) represents all aspects of the natural gas industry from the operator’s wellhead to the consumer’s burner tip.  Producers of natural gas, oil and coalbed methane (“CBM”); gas transmission and storage companies; local gas distribution companies, service and supply companies are all represented by VOGA.

The 2005 hurricanes created national supply disruptions and brought to the forefront the importance of a reliable regional supply of natural gas.  Although VOGA members have no control over commodity pricing, we can positively impact supply in Virginia with increased drilling, transportation and storage of natural gas.

 

Natural Gas Development in Virginia.   647 new wells were drilled in 2006 which represents an increase of 8% over 2005 levels.   In addition to drilling, several major pipeline (Jewell Ridge Lateral) and storage expansion projects (Saltville Storage) will also contribute to increasing the natural gas supply in Virginia. With these increases in activity, the volume of natural gas produced in Virginia since 2004 has been sufficient to meet the needs of all the 1 million residential gas customers in the state.

Where is the gas and CBM production in Virginia found? Almost exclusively, this production is found in the southwest region of the Commonwealth. The majority of the gas and CBM is produced in the six Virginia counties of Buchanan (56%), Dickenson (23%), Wise (8%), Russell (7%), Tazewell (5%), Scott (1%), and Lee (<1%). 

• Conventional Natural Gas – typically produced from formations 3,000 – 6,000 ft.
• CBM – natural gas in coal seams; typically produced above 3,000 ft.

 

Oil, gas, and CBM in Virginia are regulated by the Department of Mines, Minerals and Energy, specifically the Division of Gas and Oil. Each year the Division of Gas and Oil publishes an annual report of the production of oil, gas and CBM in Virginia. The following significant statistics are contained in the 2006 Annual Report:

• Total gas production – 102.9 Bcf (15.7% increase from 2005, new record for VA)
• 5179 wells produced during the year

 

Financial Benefits to the Counties and State.  A 3% severance tax on conventional gas and CBM is paid to the producing county.  The amount of severance tax has increased 230% over the past 4 years:

• $6.9   Million - July 1, 2002 – June 30, 2003
• $9.6   Million - July 1, 2003 – June 30, 2004
• $12.4 Million - July 1, 2004 – June 30, 2005
• $18.3 Million - July 1, 2005 – June 30, 2006  
• $16.1 Million- July 1, 2006-  June 30, 2007

 

In addition to the severance taxes, the producing counties and Commonwealth benefit from gas development by:

• The creation of local jobs
• Revenue from real estate taxes of approximately $5.0 Million annually
• Revenue from payroll taxes
• Revenue from sales taxes
• Trickledown effect in the local economy

 

Natural Gas is Environmentally Friendly.   Natural gas is the cleanest of all the fossil fuels and produces the lowest level of greenhouse gases. Composed primarily of methane, the main products from the combustion of natural gas are carbon dioxide and water vapor, the same compounds we exhale when we breathe.

 

 

Another environmentally friendly aspect of natural gas is that it is transported safely and efficiently through underground pipeline systems thereby not creating additional congestion or pollution from our road or rail systems.

 

Responsible Development of a Resource.  In undertaking the development of Virginia’s natural resources, VOGA members are always mindful of the goal of the 1990 Virginia Gas and Oil Act: “To foster, encourage, and to promote safe and efficient exploration for and development, production, utilization and conservation of the Commonwealth’s gas and oil resources.”

 Our nation and our Commonwealth are vitally dependent upon clean, abundant and efficient sources of energy. Natural gas, both produced from conventional and CBM formations, is an important part of this energy equation and significant reserves exist in Virginia. The members of VOGA feel that we can positively impact supply in Virginia with increased drilling, transportation, storage and distribution of natural gas. This can be accomplished in Virginia with an economic and regulatory environment that fosters the development of resources within the Commonwealth and without adverse effects on the environment or the health, safety or welfare of its citizens. 

Natural Gas/CBM development in Virginia is a win/win for all involved by providing jobs and revenue to local economies, creating a local “home grown” gas supply and providing an environmentally friendly fuel to the consumer.