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Producer Gets Court OK for Appalachian Basin Interconnect

The Virginia Supreme Court has vacated a lower court's temporary injunction barring producer GeoMet Inc. from completing an interconnect to attach its Appalachian Basin coal seam gas production to East Tennessee Natural Gas LLC's Jewel Ridge lateral, the company said.

Virginia's high court set aside a January ruling by the Circuit Court of Tazewell County, VA, which halted GeoMet's construction of a portion of a 12-mile pipeline being built to interconnect production from its Pond Creek field in the Appalachian Basin to the 32-mile Jewell Ridge pipeline, which went into service in November. The line provides Appalachian producers with access to new markets in the Southeast and Mid-Atlantic regions.

As a result of the ruling lifting the injunction, GeoMet's pipe interconnect is expected to be completed and fully operational in advance of the potential termination of the company's existing gathering agreement with an affiliate of producer CNX Gas Co. LLC on April 30. CNX Gas is one of the largest producers in the Appalachian Basin, and operates a large gas gathering network in the region. CNX may continue to pursue damages or a partition of the 32 acre property in dispute in the Tazewell court proceeding,

Production from the Pond Creek field accounts for approximately 60% of GeoMet's gas production. Currently, gas production from the field is being gathered under an agreement with Cardinal States Gathering Co., a CNX affiliate, for redelivery into the Columbia Gas Transmission interstate pipeline system.

In related action, Houston-based GeoMet on Wednesday filed a complaint against CNX Gas Co. LLC and Island Creek Coal Co. in the Tazewell County circuit court, seeking damages arising from alleged violations of Virginia's antitrust laws. "We think the suit is totally without merit," said CNX spokesman Daniel Zajdel.

The lawsuit calls for $561 million in compensation for CNX's alleged attempts to dominate and maintain control over the market for production and transportation of coalbed methane gas from the Oakwood Field in Buchanan County, VA, and for allegedly conspiring and acting in concert with Island Creek Coal and others to control the market.

The complaint further alleges that CNX has intentionally interfered with GeoMet's existing and prospective third-party business relationships to harm GeoMet and improve CNX's position and corporate and financial interests.

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