Gas companies charged for conspiring on lease auctions

LANSING, Mich. (WZZM) - Michigan Attorney General Bill Schuette announced Wednesday charges against two major oil and gas companies for collaborating on bidding prices for fracking rights in the state.

Oklahoma-based Chesapeake Energy Corporation and Deleware-based Encana Oil and Gas USA allegedly collaborating to avoid bidding wars agains each other in Michigan public auctions for oil and gas leases, causing the prices to drop.

According to Schuette's office, the DNR auctions off the leases for oil and gas twice a year. During the May 2010 auction, both Chesapeake and Encana purchased natural gas leases in Michigan. In 2012, a Reuters report uncovered a possible conspiracy between the companies to split up the counties where they could each be exclusive bidders in the auctions. The alleged conspiracy may have driven the price in state-held leases from $1,510 per acre in May of 2010 to $40 acre in October 2010.

Each company faces one count of antitrust violations and one count of attempted antitrust violations. The counts are punishable for up to two years in prison and/or $10,000 fine for an individual and up to $1,000,000 fine for a corporation. Representatives from the companies will be arraigned in Cheboygan County on March 19.


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