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Louis Dreyfus Energy settles federal gas-price underpayment claim

Louis Dreyfus Energy Services paid nearly $4.1 million to settle federal false claims allegations that it improperly discounted the price it paid for natural gas produced from federal offshore leases, the US Department of Justice and US Office of Natural Resources Revenue jointly announced on July 3.

The agreement resolved allegations that occurred from December 2004 to March 2008, DOJ said. It said the Stamford, Conn., gas wholesaler agreed in 2004 to pay what was then the US Minerals Management Service a price for gas from Gulf of Mexico leases associated with a fixed point along a gas pipeline.

Once the contracts were executed, LDES requested and obtained a discount that the government contended applied only when there was a complete or nearly complete constraint in the pipeline that prevented the wholesaler from shipping gas. DOJ said the company applied the discount even when shipping capacity existed along the line, effectively violating the federal False Claims Act.

The settlement also resolved certain administrative claims between LDES and ONRR, which US Sec. of the Interior Ken Salazar ordered formed after spinning off revenue and royalty collection responsibilities from MMS in 2010 as one of the first steps in restructuring that agency following the Macondo deepwater well incident and oil spill. No determination of liability has been established in the settlement, DOJ said.

Contact Nick Snow at nicks@pennwell.com.


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