Pennsylvania Attorney General Sues Chesapeake Energy for ‘Deceptive’ Gas Leases

• Joe Wertz
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  Joe Wertz was a reporter and managing editor for StateImpact Oklahoma from 2011-2019. He reported on energy and environment issues for national NPR audiences and other national outlets. He previously worked as a managing editor, assistant editor and staff reporter at several major Oklahoma newspapers and studied journalism at the University of Central Oklahoma.

Joe Wertz / StateImpact Oklahoma

Chesapeake Energy's Oklahoma City headquarters.

Pennsylvania Attorney General Kathleen Kane filed a lawsuit Wednesday against Chesapeake Energy, seeking millions of dollars for landowners who leased land to the Oklahoma City company, our partners at StateImpact Pennsylvania report.

From Marie Cusick:

The Oklahoma City-based driller is one of the most active in Pennsylvania. It was an early adopter of fracking and touts itself as the nation’s second largest producer of natural gas. It’s also been widely accused of unfair business practices – including using below-market gas prices, making improper deductions from royalty payments, and misreporting gas production data.

Kane spokesman Jeff Johnson says the lawsuit could affect more than 4,000 Pennsylvania landowners who signed leases with the company.

“It could conceivably be in the tens of millions of dollars,” he said.

Chesapeake spokesman Gordon Pennoyer said the company would aggressively fight the “baseless” lawsuit. The company’s royalty payment practices are at the center of lawsuits in a half-dozen other states and a subpoena by the federal Department of Justice and U.S. Postal Service, Cusick reports.

It accuses the company of violating the Unfair Trade Practices and Consumer Protection Law. It alleges the driller engaged in deceptive practices–promising landowners royalty money it never paid.

As StateImpact Pennsylvania has previously reported, Chesapeake has been accused of self-dealing, by using affiliated companies to charge exorbitant fees for processing and transporting gas. These fees were passed along to landowners, as deductions from monthly royalty checks.