Seminole Energy Affiliates to Pay $300,000, Disgorge Profits to Resolve FERC Investigation on Cheyenne Plains Open Season

Seminole Energy Services, LLC and several affiliates will pay a civil penalty of $300,000, and disgorge $271,315 plus interest, under a settlement with FERC to resolve an investigation into the bidding of multiple Seminole Energy affiliates into a March 2007 open season on Cheyenne Plains Gas Pipeline.

Seminole Energy Services, and affiliates Seminole Gas Company, LLC, Seminole High Plains, LLC, Lakeshore Energy Services, LLC, and Vanguard Energy Services, LLC neither admit nor deny violating any Commission regulation under the settlement.

FERC Staff ultimately alleged that Seminole's behavior violated the Commission's prohibition on buy/sell transactions. Staff alleged that the Seminole entities transported gas using five shares of capacity awarded on a pro rata basis by Cheyenne Plains. Seminole Energy - the parent company - purchased gas in the market and sold pro-rata shares totaling four-fifths of the gas to its four affiliates (Seminole Gas, High Plains, Lakeshore, Vanguard) at the Cheyenne Plains receipt point. The five Seminole entities then transported the gas using the capacity each had acquired from Cheyenne Plains and, at the Cheyenne Plains delivery point, Seminole Gas, Lakeshore, and Vanguard sold their gas to High Plains which in turn sold the gas back to Seminole Energy. Seminole Energy then sold all of the gas into the market.

Staff made no allegations regarding the bidding of multiple affiliates into the open season.