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Ottawa, Calgary – Encana Corp. has launched an internal investigation after the State of Michigan said it is examining allegations that the company worked with rival Chesapeake Energy Corp. to avoid competing in state land auctions for shale gas.
Michigan’s Department of Natural Resources said it is working with the Attorney-General’s Office to review a series of e-mails, published by the Reuters news agency, that purport to show executives from the two companies discussing joint approaches to bidding.
“Our department is committed to ensuring the integrity of its auctioning process and to receiving fair market value for resources on public land,” Ed Golder, a spokesman for the Department of Natural Resources, said Monday. An official from the U.S. Justice Department declined to comment on whether its antitrust division is looking into the matter.
Encana chairman David O’Brien said Monday that “an investigation of this matter was immediately initiated,” and the company “takes compliance with all laws very seriously and is committed to ethical business conduct in all that we do.
In one e-mail, Chesapeake chief executive officer Aubrey McClendon is alleged to have said it was time to “smoke a peace pipe” with executives from Calgary-based Encana, Canada’s largest natural gas company and a major competitor of Chesapeake in the Michigan land sales.
The alleged revelations come just a week after Mr. McClendon was stripped of his chairman’s role at Chesapeake amid concerns that he used personal stakes in gas wells to obtain $800-million (U.S.) in loans.
Responding to questions about whether Chesapeake acted improperly in the Michigan land sales, spokesman Jim Gipson said in a statement: “While there were discussions between Encana and Chesapeake in 2010 about forming an ‘area of mutual interest’ [AMI] joint venture regarding leases in Michigan, no such agreement was reached between the parties and no AMI was formed,” Mr. Gipson said. “Nor did Encana and Chesapeake make any joint bids.”
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