Congressman Calls on DOJ to Launch Investigation of Two Natural Gas CompaniesJul 5th, 2012 | By HV Insider | Category: Current Events
Hinchey Calls on U.S. Dept. of Justice to Launch Anti-Trust Investigation of Two Major Natural Gas Companies
Congressman Cites Report Showing Chesapeake Energy Corp. & Encana Corp. Worked Together to Dramatically Lower Market Value for Leased Land Used in Fracking
Congressman Maurice Hinchey (D-NY) Monday called on the U.S. Department of Justice to launch an anti-trust investigation of two major natural gas companies after a recent news report detailed a series of meetings and secret agreements between the two companies that led to a dramatically lower market value for land those companies leased for drilling in Michigan. Reuters reported last week that Chesapeake Energy Corp. and Encana Corp. worked together to avoid competing for the same parcels of land so that each company would have no competition when making lease proposals to landowners and therefore be able to secure a cheap price. In a letter sent to U.S. Attorney General Eric Holder, Hinchey also urged him to examine whether such anti-competitive practices took place elsewhere in the U.S.
“I urge you to review this [Reuters] report, open an investigation into whether any federal antitrust laws were violated in this case, and assess whether violations may have been committed in other oil and gas lease bidding across the country,” Hinchey wrote in his letter to Holder. “As you know, the recent boom in domestic oil and natural gas production has caused the industry to lease millions of acres for development on both private and public property. Chesapeake Energy Corp. and Encana Corp. represent two of the largest corporations in the oil and gas industry. Reuters reported Chesapeake has leased more than 15 million acres in the U.S. in the past 10 years while Encana has leased 2.5 million acres. These rivals often bid against each other for prime oil and gas rights in shale formations; however, prices and competition for leases in Michigan drastically fell after communications between these two companies began in 2010, when top executives discussed how to avoid bidding against each other in a public land auction and strategies for dealing with at least nine large private landowners.”
Reuters detailed a series of communications between high level executives with Chesapeake and Encana in which they discussed ways to keep prices down for upcoming land sales. Leading up to one such sale in October 2010, the two companies discussed “arranging a bidding strategy.” That auction resulted in $9.7 million from the leasing of approximately 274,000 acres in Michigan. In a similar auction in May 2010, prior to communications between the two companies, the State of Michigan raised $178 million from the sale of more than 118,000 acres.
Hinchey is a leader in Congress of the effort to protect drinking water and the environment from the risks of hydraulic fracturing. He is a co-author of the FRAC Act, which would mandate public disclosure of chemicals used in frack fluid before and after drilling takes place and allow the EPA to regulate fracking activities under the Safe Drinking Water Act. The congressman also authored the appropriations language that led to the current EPA study on hydraulic fracturing.