BREAKING: State Alleges Natural Gas Ripoff

State Land Commissioner Ray Powell filed suits last week against Exxon Mobil, Williams Companies, Inc, Yates Petroleum Company, Chevron Corporation, Texaco and eight other oil and gas companies, alleging they breached contracts with the state to extract natural gas from leased lands by failing to pay full royalties, "depriv[ing] the State of critical funds used to pay for public education."

The complaints, filed in First Judicial District Court, allege the companies:

- Improperly deducted some of their expenses for field transport, field compression, field dehydration, treating and processing from the royalties paid to the state

- Compensated the state at a rate less than the maximum price being paid per 1,000 cubic feet "for gas of like kind and quality and under like conditions in a similar field or area"

- Derived benefits from "drip liquids," which they allegedly allowed other contractors to keep as partial compensation for their work

- Failed to disclose their methods of calculating royalties to the state

The state is seeking a permanent injunction preventing the companies from continuing to use their current methods of royalty calculation and payment, in addition to compensatory and punitive damages, and authorization to cancel the companies' leases if the allegations are proven.

The lawsuits was filed just days before royalty owners in San Juan Basin got a $9.74 million settlement from BP, who allegedly deducted processing fees and didn't pay royalties based on full market value.

The Branch Law Firm, which filed the complaints, referred all questions to the Attorney General's office. AG's office spokesman Phil Sisneros did not provide additional information immediately. A spokesperson at Yates Petroleum Company's office in Artesia declines to comment at this time; a Williams Corporation spokesman hasn't responded to an inquiry yet, and Powell has not returned a call for comment.

Santa Fe Reporter