A Washington-based public integrity group accused natural gas producers who shut in production in response to low prices of manipulating those prices and on Tuesday demanded the US Department of Justice launch an inquiry.
While a lawyer for Citizens for Responsibility and Ethics in Washington admitted the group has no direct evidence that producers -- Oklahoma City-based Chesapeake Energy and Houston-based ConocoPhillips were named in their letter to DOJ -- were acting in concert, they want the department to look into their allegation, CREW's Chief Counsel Anne Weismann said.
CREW wants DOJ to investigate gas producers "that are conspiring to limit their production of natural gas in order to raise the demand for, and increase the price of, their product."
Both ConocoPhillips and Chesapeake have announced cuts in natural gas production because of low prices.
"Gas companies appear to have entered horizontal agreements to restrict their output of natural gas in order to raise gas prices above their current, historically low prices," CREW said.
Weismann said one piece of evidence for CREW's charge is that while gas producers are complaining about low prices, they continue to pursue leasing on sensitive federal lands to drill for more gas. Weismann singled out a 3,675-well Utah project by Houston-based Anadarko which recently received US government approval as an illustration of CREW's theory.
"They are pushing to get more to drill, which is absolutely inconsistent with the notion they are getting by on the seat of their pants," Weismann said.
Spokesmen for both Chesapeake and ConocoPhillips had no comment.
The price of the June NYMEX natural gas contract lost 44% or its value between this year and 2011.
