FERC has granted BP America Inc. and affiliates a 30-day extension to reply to the show-cause order, issued earlier this month, alleging that the company gamed the physical and financial markets at the Houston Ship Channel (HSC) five years ago. The agency proposed a near-$29 million penalty for the illegal activity, which it says took place between mid-September 2008 and Nov. 30, 2008 (see Daily GPI, Aug. 6).
BP, which has disputed the charges, has until Oct. 4 to formally respond to the charges contained in the order to show-cause and notice of proposed penalties [IN13-15].
The order was based on an Office of Enforcement (OE) investigation alleging that traders on the "Texas team" of BP's Southeast Gas Trading desk traded physical natural gas at HSC in a manner designed to increase the value of the company's futures market position.
"Specifically, staff allege[d] that the Texas team traders uneconomically used BP's transportation capacity between Katy and HSC, made repeated early uneconomic sales at HSC, and took steps to increase BP's market concentration at HSC as part of a manipulative scheme. In doing so, staff alleges, the Texas team traders suppressed the HSC Gas Daily Index with the goal of increasing the value of BP's financial position..."
The complaint by the Federal Energy Regulatory Commission named affiliates BP America Inc., BP Corporation North America Inc., BP America Production Co. and BP Energy Co.
FERC's order cited violations of the Natural Gas Act in manipulating the next-day, fixed priced gas market at the HSC trading point. The affiliates have been ordered to show cause why the companies should not be assessed a civil penalty in the amount of $28 million and required to disgorge $800,000 plus interest.