Michigan Attorney General files criminal charges against 2 energ - Beckley, Bluefield & Lewisburg News, Weather, Sports

Michigan Attorney General files criminal charges against 2 energy companies over oil, gas prices

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Michigan Attorney General Bill Schuette has filed criminal charges against two energy companies he says conspired to keep oil and gas lease prices low in his state – Chesapeake and Delaware-based Encana Oil & Gas USA – though both companies deny wrongdoing.

Schuette alleges the two companies decided in 2010 to collaborate in order to avoid bidding up prices for drilling rights for public and private properties in the state's Collingwood/Utica shale plays.

In Michigan, public auctions of state-held oil and gas leases are held twice a year – in May and October – by the state's Department of Natural Resources. Both Chesapeake and Encana purchased natural gas leases during the May 2010 public auction, paying $1,510 per acre. But in October, just five months later, Schuette said they paid only $40 an acre.

Then, in 2012, Reuters news agency released emails it had obtained that suggest executives of the two companies discussed divvying Michigan counties up to avoid driving prices up through a bidding war.

On Wednesday, March 5, Schuette's Corporate Oversight Division charged each company with one count of antitrust violations relating to a contract or conspiracy in restraint of commerce, a high court misdemeanor punishable by up to two years and/or $10,000 fine for an individual or up to $1,000,000 for a corporation, and one count each of attempted antitrust violations, a misdemeanor punishable by up to one year and/or $1,000 fine.

Representatives from both Chesapeake and Encana are scheduled to be arraigned Tuesday, March 19 in Cheboygan County's 89th District Court.

Chesapeake spokesman Gordon Pennoyer called the charges "disappointing," adding that no agreement was ever reached between Chesapeake and Encana. Pennoyer also said a "thorough investigation conducted by independent counsel retained by Chesapeake's Board in 2012 concluded that Chesapeake's activities in Michigan did not violate antitrust laws."

"This action has no merit and we will vigorously contest it," he said in a written statement.

Encana, likewise, issued a prepared statement that it will "vigorously defend the charges," saying its board also undertook a comprehensive investigation into "the allegations of collusion with competitors relating to land transactions in Michigan, and concluded that Encana did not engage in such conduct."

"The independent investigation completed by Encana's Board, as well as all evidence provided by Encana to the Michigan Attorney General, clearly show that no agreement was reached and no violation of antitrust law occurred," the company said in its prepared statement. "Such charges have no merit."