BP plc disclosed in a quarterly filing with the Securities and Exchange Commission (SEC) that the Federal Energy Regulatory Commission (FERC) and the Commodity Futures Trading Commission (CFTC) are investigating "several BP entities regarding trading in the next-day natural gas market at the Houston Ship Channel during October and November 2008."
BP said the FERC Office of Enforcement staff notified BP on Nov. 12, 2010 of their preliminary conclusions relating to alleged market manipulation. In November the CFTC Enforcement staff "also provided BP with a notice of intent to recommend charges" based on the same alleged attempted market manipulation. BP said it gave a detailed response to both notices, saying it "did not engage in any inappropriate or unlawful activity."
Neither agency would comment on BP's statement. Both keep investigations confidential until and unless they rise to the level of a formal complaint or full commission action in which charges are filed or a settlement announced. The enforcement arms are only empowered to make recommendations for commission action.
This is not the first time trading at the busy Houston Ship Channel hub has come under fire. FERC levied a $30 million penalty against Energy Transfer Partners for allegedly manipulating physical natural gas prices at the same point in the 2003-2005 period (see Daily GPI, Sept. 22, 2009).
On another note, BP, which is the largest natural gas marketer in North America, reported losses in trading "in both the upstream and the downstream segments" in a conference call Tuesday reporting on the company's fourth quarter and full year (see related story). BP CEO Bob Dudley said "trading was volatile...on an annual basis. 2008 and 2009 were particularly strong and 2010 was unusually weak." He said "in light of 2010 performance, there are no structural changes. We continue to efficiently capture marketing opportunities."
The company's full-year oil and gas production was 2% lower than in 2009 on the impact from losses in the Gulf of Mexico in the last half of 2010. BP's natural gas average realizations in 2010 were up 8% in 4Q2010 from 4Q2009, and they rose 22% in 2010 from 2009. Liquids realizations averaged 16% higher in the quarter and were up 30% year over year. Total hydrocarbon realizations rose 10% in the quarter and 11% for the year.
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