An administrative law judge last week upheld charges by the Federal Energy Regulatory Commission initially brought in August 2013 that four BP Group entities manipulated the price of natural gas in the Houston, Texas area from September 18 through November 30, 2008. The four BP entities are: BP Americas, Inc.; BP Corporation North America Inc.; BP America Production Company; and BP Energy Company. FERC enforcement staff had charged that the four entities engaged in manipulative conduct to benefit from a pre-existing spread position involving short index exposure to the price of natural gas at the Houston Ship Channel (HSC) and long index exposure to the price of natural gas at the Henry Hub facility in southern Louisiana near its gulf coast. Prior to September 18, the value of BP’s spread position had increased significantly, after Hurricane Ike struck Texas on September 13, and caused HSC prices to decrease “sharply” compared to Henry Hub prices, noted the ALJ. Enforcement staff had claimed – and the ALJ agreed – that, subsequently, BP engaged in activities to artificially suppress the price of HSC natural gas to further benefit the value of its spread position, including making uneconomic gas sales at HSC. The ALJ concluded that BP’s manipulative conduct was also proved by express conversations between two BP traders. In a 2013 statement, BP claimed that FERC took these conversations totally out of context, claiming “[t]he recording does not support any allegation of wrongdoing.” (Click here to access BP’s full statement.) The ALJ indicated that, under applicable statute, BP could be liable for a penalty of up to US $48 million and disgorgement of profits for its conduct. The actual penalty to be paid by BP will be decided by FERC at a later time. In 2007, BP Products North America settled with the Commodity Futures Trading Commission and the US Department of Justice regarding allegations the firm manipulated and attempted to manipulate the price of propane deliverable in Texas in 2004, among other matters. (Click here to access details of this settlement.)