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Energy producer reaches $5M settlement with state

May 7, 2014
| By AP |
TAGS Encana
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Energy producer reaches $5M settlement with state
Encana’s headquarters is in The Bow tower in downtown Calgary, Alberta. Photo via wikimedia.org

LANSING — An energy company has agreed to pay $5 million to Michigan to resolve charges of bid rigging in public auctions for oil and gas leases.

Encana case

Encana Corp. subsidiary Encana Oil and Gas USA settled Monday with Attorney General Bill Schuette over allegations the Calgary, Alberta-based company conspired with Chesapeake Energy Corp. in Oklahoma City to avoid bidding wars in 2010.

Schuette has said the collusion is suspected of depressing the per-acre cost of leases from $1,510 in May 2010 to less than $40 in October 2010. He filed criminal charges against the companies in March.

"Allegations of bid rigging are taken seriously, and today's settlement with Encana is a good result for taxpayers," Schuette said.

Encana entered a no contest plea for one count of criminal anti-trust violations. Michigan agreed to delay the misdemeanor charge by 11 months and dismiss another. The delayed charge will be dismissed if Encana upholds the plea agreement.

Half of the settlement money will go to Michigan's Department of Natural Resources, and the other $2.5 million will fund anti-trust enforcement in the state.

The settlement Encana filed with Ingham County Circuit Court includes a four-year corporate integrity agreement to increase the transparency of Encana's future oil and gas lease bids.

The Associated Press left a phone message with Encana on Monday.

Encana lists its Collingwoood/Utica Shale site in Michigan as one of its "base assets" for energy production, according to its website. 

Chesapeake Energy case

Schuette's case against Chesapeake is ongoing in Cheboygan District Court.

Chesapeake spokesman Gordon Pennoyer said the state's charges have "no merit," and the company is "vigorously contesting" them. He said Encana's action "changes nothing for Chesapeake."

A preliminary exam in the Chesapeake case began Monday and is expected to end Thursday, when Judge Maria Barton will say if there's sufficient evidence to proceed to trial.

The charges carry a penalty of up to two years imprisonment for individuals and a fine of up to $1 million for corporations.

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