Pennsylvania

Energy. Environment. Economy.

Pa. attorney general investigating complaints against Chesapeake Energy

Oklahoma City-based Chesapeake Energy has faced similar allegations across the country.

Joe Wertz/ StateImpact Oklahoma

Oklahoma City-based Chesapeake Energy has faced similar allegations across the country.

State Attorney General Kathleen Kane’s office confirms it is looking into allegations of fraud against Pennsylvania’s biggest natural gas driller, Chesapeake Energy.

First Deputy Attorney General Adrian King tells StateImpact Pennsylvania the office received letters last week from state senator Gene Yaw (R- Bradford) and Governor Corbett asking for an official inquiry into allegations the company is cheating landowners out of gas royalty payments.

“We’ve put together a work group. What we’re doing right now is collecting information,” King says. “We’re looking at it very closely.”

The Oklahoma City-based company has faced similar accusations around the country.

Pennsylvania’s Guaranteed Minimum Royalty Act requires oil and gas companies to pay a minimum 12.5 percent royalty to landowners who lease their property for drilling. However, companies are allowed to charge landowners for the costs of processing and transporting gas.

These royalty deductions– known as gathering fees or post-production costs– are legal in many cases. However, Chesapeake has been accused of skimming more than other companies, selling gas to itself, misreporting production data, and violating lease terms that explicitly prohibit the deductions.

“If there’s fraud we’ll take appropriate action, but it’s a little too early to say,” King says. “At an appropriate point we’ll meet with the Marcellus Shale Coalition and Chesapeake Energy.”

The company has repeatedly declined to comment on the allegations, but its CEO, Doug Lawler, replied to Corbett’s letter on Monday.

“We take your stated concerns seriously,” Lawler wrote. “Chesapeake is aware of questions regarding royalty payments in Pennsylvania, and we are working diligently to respond to these inquires.”

Comments

  • Mr Mish

    We at Chesapeake are working diligently to ignore inquiries about royalities, to deny accusations that we have contaminated the environment, and to donate enough money to our favorite politicians that we will never be charged with any crimes.

    • Celia Janosik

      I would expect nothing less.

    • Scott

      These politicians are really something! Promote. Promote. For 5 years. Now its time to vote. For me!

  • JoAnn Meyer

    I own a very small mineral rights, and get about $14.00 a year from it. Are there other companies involved in the short changing of land owners?

  • Ave Maria Cosgriff Hurley

    They aren;t the only ones ripping off consumers~!
    “Major Energy Services” – rep came to my house last Autumn promising me 40-60% utility bill savings to sign with them as my new provider.
    Winter RESULTS My bill is +90% higher~! [ccf rates almost double!]
    Natl Fuel charges 0.532 ccf and Major Energy Services charges 0.9999900 & hid it behind a lowered levelized bill so we didnt see price difference til now~!
    Cant Atty General investigate them too and force them to reduce/refund bills to the pre – gauging rates as appear on the back of the bills?

About StateImpact

StateImpact seeks to inform and engage local communities with broadcast and online news focused on how state government decisions affect your lives.
Learn More »

Economy
Education