NY Attorney General Schneiderman Subpoenas Shale Drillers

New York’s anti-drilling Attorney General, Eric T. Schneiderman, continues to target the shale gas industry. On May 31, he filed a lawsuit in federal court seeking to force the federal government to conduct a full environmental review of hydraulic fracturing before the Delaware River Basin Commission be allowed to permit drilling in its jurisdiction (see MDN’s story here). The federal government has since asked the judge in the case to toss out the lawsuit.

Now, based on a questionable article that appeared in the New York Times, written by anti-drilling author Ian Urbina (who used an intern as one of his main sources for the article), Schneiderman is using (misusing?) the considerable power of his office to target energy companies involved with shale gas drilling by sending them subpoenas for documents to “prove” their statements on shale gas reserves are accurate. The Times article claimed energy companies knowingly overstate the production of gas wells, understate how much it costs to get the gas, and intentionally inflate numbers for how much natural gas exists in shale formations.

The state attorney general has sent subpoenas to three energy companies as part of an inquiry into whether they gave investors an accurate picture of the profitability of their natural gas wells, a person briefed on the investigation said Thursday.

The person, who spoke on condition of anonymity because subpoenas are not public documents, confirmed that Attorney General Eric Schneiderman wants documents related to claims the companies made about drilling costs and long-term productivity of their shale gas wells.

Subpoenas were sent to Range Resources Corp., based in Fort Worth, Texas; Goodrich Petroleum Corp., based in Houston; and Cabot Oil & Gas Corp., also based in Houston. The person said Schneiderman also asked Chesapeake Energy Corp., based in Oklahoma City, to respond to similar questions. New York’s pension fund has more than $45 million invested in the four companies, which are active in the gas-rich Marcellus Shale region underlying New York, Pennsylvania, Ohio and West Virginia.

Goodrich released a statement Thursday acknowledging it had received fact-finding subpoenas from the attorney general and the Securities and Exchange Commission requesting information relating to its gas wells and reserves in the Haynesville Shale of Louisiana and eastern Texas. The company said that there was no allegation of wrongdoing and that it was cooperating fully with the requests.

"All of Goodrich’s annual proved reserve estimates have been prepared in accordance with all applicable SEC regulations by an independent petroleum engineering firm," the company said.

A spokeswoman for Schneiderman declined to comment. The other companies didn’t immediately return calls seeking comment. The investigation was first reported by The New York Times.

The person briefed on the investigation said the subpoenas were sent in response to documents made public in a series of Times articles in which industry insiders questioned whether companies were misleading investors about how much gas their wells will produce and how much it will cost to extract it.

Schneiderman has the power under the state’s Martin Act of 1921 to subpoena virtually any document from any business operating in the state and can keep his findings secret or make them public.*

*R&D Magazine/AP (Aug 18, 2011) – AP source: NY seeks financial docs from gas firms

  • Anonymous

    “sending them subpoenas for documents to “prove” their statements on shale gas reserves are accurate.”

    What’s your problem? If their statements are accurate, what have they got to be worried about?  

    The higher the numbers, the higher the stock price. If there is no public scrutiny, why wouldn’t these companies overstate the numbers? Can you think of an easier way to make a buck?

  • My “problem” Bob is that he’s on a fishing expedition to try and find the least little thing he can to blow out of proportion. And it will take time and money for these companies to comply. And at the end of the day, as you say, it will show their statements have been accurate all along. All to appease the political grandstanding of a (for you) fellow anti-driller. I’m sure you’re glad you voted for him.

  • Anonymous

    These lame tactics Attorney General Schneiderman is trying, are desperate attempts in a losing battle, When you have to stoop to this level for the ” Special Interest Groups” (Anti’s) shows that the gas companies have their ducks in a row and that there is not too much more that can be done. I’m sure he will be out of office soon enough anyway. 

  • Let’s hope so!

  • Anonymous

    Face it folks, the current AG is just building his platform to run for Governor so when the current Gov is drafted (after Biden retires?) or runs in 2016, he will have a resume. They all do it Repub or Dem, just a shame for all our boys and girls fighting in the middle eastern “oil wars” . Tell the politicians enough is enough, we need a National energy policy that puts all our resources on the table.

  • Anonymous

    Attorneys representing criminals say exactly that any time anyone with subpoena power starts an investigation. It’s just a fishing expedition. And then they always say stuff like “And at the end of the day, as you say, it will show their statements have been accurate all along.”  (Only I didn’t say anything of the sort. You did”.)

    Defense attorneys always say their clients are totally honest and innocent and that the facts will prove this. They are paid to be SURE, even before they know anything at all about the facts.

    Are you paid? You sure sound like it. 

  • I am not paid Bob. Not a dime for this website (although I wish I were!). I’m just pointing out the obvious. I say let the AG do his investigation–he’s going to anyway. Oh, and when he doesn’t prove anything, the innocence of these companies won’t make the front page, and his office won’t issue any kind of statement. It will all just fade away…but the damage will be done. The impression left that that these companies are somehow criminal and hiding something, as you imply. But that’s OK, right? No harm done, right?