Woman wants more money for natural gas

By Kelly Holleran | Jun 4, 2009

BLUEFIELD – A Monroe County woman is seeking more than $1 million after she says she has not received enough money from natural gas entities, even though her land is not producing natural gas.

BLUEFIELD – A Monroe County woman is seeking more than $1 million after she says she has not received enough money from natural gas entities, even though her land is not producing natural gas.

In the complaint she filed April 29 in federal court, Ada Jane Bailey, also known as Jane Patton Bailey, claims Atlantic Hydrocarbon and Unconventionals also failed to tell her natural gas drilling would pollute water on her land.

"The lawsuit in question arises from a veritable land or 'natural gas land rush' in the past several years by representatives of natural gas producers in West Virginia, Pennsylvania and New York in an attempt to tie-up farm land by use of 'landmen,' such as the one used by defendant Atlantic here, at unconscionably low prices at a fraction of their real value," the suit states.

Bailey, who is 88 years old, entered into a natural gas lease with Atlantic in May 2007. In the lease, she allowed for Marcellus shale gas drilling on parts of her 236 acres of farm lands for removal of natural gas.

Even if no natural gas was found, the lease document promised a delay rental payment of $5 per acre per year for a period of at least five years and continuing indefinitely, Bailey claims.

Before she signed the lease, Bailey met with Atlantic's representative, who told her she should receive a monthly royalty of $5,000 to $10,000. He handed her a document that showed purported calculations of up to $15,000 per month, the complaint says.

"She does distinctly remember that she thought at that time 'I will get big money' which could help with her farm," the suit states.

Bailey, who was heavily medicated and recovering from a heart attack and colon surgery at the time of her meeting, says she relied on the representative's statements as to the royalties she would receive.

However, Bailey says she has not received nearly as much money as promised.

She was not informed of a unitization formula standard, according to the complaint.

"They did not disclose to her that the 'unit' would consist of combining leaseholds for as much as one square mile of property for its producing unit," the suit states. "They failed to disclose and explain to this elderly woman that if her property were only a small fraction of the 'unitization' area her unitization rights could be reduced to a tiny fraction of royalty or effectively ZERO royalty rather than the 12.5% royalty called for in the purported lease and the fraudulent statements of up to $15,500 per month."

On July 5, 2007, Bailey received a bonus payment of $1,180, according to the complaint.

Unconventionals claimed it sent her another $1,180 check on March 16, but Bailey has no records of receiving the check. Even though the company offered to send her another check, Bailey declined the offer, the suit states.

Bailey's land is not producing gas, but Bailey was still supposed to receive more delay rental payments on April 5, 2008, and April 5 of this year. She has not received them, according to court documents.

Bailey is not the first to file suit against members of the natural gas industry. In fact, about 100 landowners filed a class action suit in United States District Court against The Keeton Group, according to court records.

Public meetings were held in Monroe County in 2008 to warn residents of serious problems related to the leases, including problems with the alleged one to six million gallons of water used to drill one well, the suit states.

About 40 percent of the water injected into the well returns to the surface with the gas, residents learned at the meeting. Now, some environmentalists have concerns about the effects of drilling on drinking water because of the possible presence of radioactive gas and other contaminants in the water, according to the complaint. In fact, the New York State Department of Environmental Conservation has ordered a moratorium on Marcellus shale gas drilling.

Bailey claims that before she signed the lease, she was not warned of the potential hazardous effects of the drilling on her water supply, which is abundant on her land.

"Water from the Union Cave tunnel passes under the property," the suit states. "There are at least three springs on her property. Her entire property is honey-combed with caves and sink holes on top of fragile limestone karsts, with substantial springs and underground cave streams."

Bailey also uses the farm to raise cattle and was not told about the possible risks to her cattle, the complaint says.

The companies failed to disclose that operation of a natural gas well on her property would entail at least 300 tank loads of water brought onto her property for insertion into the well and would entail at least an additional 200 tank loads of water being removed from her property.

"Given the fact that it is well known that Monroe County is geologically unique and a principal area in the United States in which the underground is 'karst,' limestone structures well underground, with some 289 caves in the county, the serious risk of sink holes and collapse of Plaintiff's land should have been disclosed to her, with all the probable weight on her property and pumping water in and out of the karst under her property," the suit states.

In fact, the only disclosure of which Bailey was made aware was that a road may have to be constructed on her farmland, according to court documents.

"Plaintiff clearly stated to defendant Atlantic's representative, one Charles P. Workman, that she did not want to damage her farmland or have any operation interfere with her farm operation," the suit states. "Defendant's representative assured Plaintiff that there would be no risks of damage to her property and that 'we are easy to work with,' or words to that effect."

Eventually, Bailey's lease was assigned from Atlantic to The Keeton Group without her knowledge, according to the complaint. However, The Keeton Group is not authorized to practice law in West Virginia. Therefore, Bailey says the lease should be determined unlawful, invalid and void.

Bailey is asking the court to declare the lease automatically terminated because of non-payment of delay rentals for more than 24 consecutive months.

In the three-count suit, Bailey is seeking damages in excess of $75,000 with actual damages likely to exceed $708,000 and punitive damages of $1 million, plus other relief the court deems just.

Henry D. McCoy II of Peterstown will be representing her. William J. Akers of Princeton will serve of counsel.

U.S. Federal Court case number: 1:09-462

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