After the Boom in Natural Gas

The New York Times has published an article today (Clifford Krauss and Eric Lipton) which tells another sad story related to the gas industry. What happens after the drilling is finished and the roughnecks leave town? Here is what is happening in Louisiana where the Haynesville Shale is located: Click here.

"The bust has certainly hit the Haynesville hard. Some local landowners, having spent their initial lease bonuses, are now deeply in debt. Local restaurants and other businesses are suffering steep losses now that so many drillers have left town."

At its peak, Chesapeake Energy ran 38 rigs in the region.  It has drilled more than 1200 wells into the Haynesville (Louisiana and Texas). Now only 2 rigs are in use. The drillers drilled so many wells and extracted so much gas that they have driven the price of natural gas to near-record lows.  The NYT article explains who is making a lot of money and who is suffering financially now.

Is Chesapeake Energy Abandoning the Marcellus Shale Region?

This is huge news! 
The Marcellus Shale releases dry gas (no oil mixed in).  But dry gas is so cheap that it is not economically feasible to extract and sell.  Wet gas which contains some oil is much more profitable.  The oil separated from it can be sold for $90 a barrel.  Even T. Boone Pickens has dumped his investments in Chesapeake Energy.  Wet gas is found in the Utica Shale, a formation below the Marcellus and prevalent in SW PA and Ohio. 

The June shareholders meeting of Chesapeake Energy was tense as shareholders became aware of the difference between dry gas and wet gas.  Might they have been told of this from the beginning, they asked.  They are understandably very upset and confused.  Leaseholders are wondering if they will ever get the royalties they were promised. 

The Marcellus Shale Play is still at the speculative stage.  Now the actual figures are looking quite bad in comparison to the wildly optimistic predictions that landmen made to convince landowners to sign leases.

Read the article here.

Aubrey McClendon was stripped of his chairmanship of Chesapeake.  Now some are calling for his resignation from the Board of Directors.  Chesapeake may be headed for disaster as its cash flow dwindles by the day.

Rolling Stone Responds to Chesapeake Energy on "The Fracking Bubble"

If you have read the MUST READ article in the current issue of Rolling Stone,  you will be interested in this:

http://www.rollingstone.com/politics/blogs/national-affairs/rolling-stone-responds-to-chesapeake-energy-on-the-fracking-bubble-20120306#ixzz1oPRNlpBl

Specific points addressed by Chesapeake:

• The "reality" of 100 years of shale gas
• The credibility of Arthur Berman
• Chesapeake's convoluted off-book accounting practices
• The economic benefits of cheap natural gas
• The credibility of Gasland
• Fugitive methane emissions
• The cerdibility of Deborah Rogers
• Bias in the Duke study
• Methane levels in the Vargson well
• Consequences of Chesapeake's well blow-out in Bradford County
• Fracking fluid disclosure

The Big Fracking Bubble: The Scam Behind the Gas Boom

"It's not only toxic- it's driven by a right-wing billionaire who profits more from flipping land than drilling for gas." That man is Chesapeake Energy CEO Aubrey McClendon. He dominates America's supply of natural gas the same way the Tea Party-financing Koch brothers control the nation's pipelines and refineries.....

Read more. This article appears in the March 15th issue of Rolling Stone.

Chesapeake CEO McClendon Has Harsh Words For Protestors

Chesapeake CEO Aubrey McClendon
Why is he smiling?  We know.

Billionaire Aubrey McClendon smiles because he is filthy rich.  He gets millions and millions of dollars every year for being CEO of Chesapeake Energy Corporation, a company that drills and drills and drills into our Mother Earth to get the final dribs and drabs of un-natural gas out of her before we all have to develop sustainable energy.  He minimizes Mother Earth's agony and the suffering of human beings because, well, he really is more focused on money.  Here are some of the sensitive, caring  (and inaccurate) things he said a few days ago in Philadelphia at a big gas conference:

“Looking back, was anybody hurt? Was there any permanent or even temporary environmental damage? No, no and no. Some folks were inconvenienced, for sure, and for that we're deeply sorry,” McClendon said. But he said the industry's benefits — including lower home-heating bills, tens of thousands of new jobs, and millions of dollars of landowner wealth — more than outweigh the isolated cases of contamination.

“We moved into an area that hadn't seen a lot of drilling, that had pretty unusual surface geology,” he said. “We had some problems in the beginning. We think we've got them fixed.”

“Remind me: What value have the protesters outside created? What jobs have they created? You know the answer and so do I,” he said. “So it's time that we contrast what we do for a living with what they do for a living.”

“What a glorious vision of the future: It's cold, it's dark and we're all hungry,” said McClendon, who co-founded Oklahoma City-based Chesapeake, the most active gas driller in the Marcellus Shale and nationwide. “I have no interest in turning the clock back to the dark ages like our opponents do.”

Read the article here.

Aubrey McClendon Has a Hard Time at Lecture in Boston (2010)

CEO Aubrey McClendon

Poor old Aubrey is confronted with real people about the real problems they are experiencing due to his gas drilling ventures in Pennsylvania.  Watch as he tries to stay above water.  It would be funny if it weren't so sad.

Click here to see the video.

Note:  I was recently in Pennsylvania (Bradford County) where I just happened to run into three young men who work for a company that constructs well pads.  One of the men told me that Mr. McClendon recently did a flyover of several Chesapeake well pads in a helicopter.  The men had to clean up the well sites so that McClendon would be pleased with the neatness and orderliness of the pads.  They said even a stray Coke can would be noticed.  Wouldn't it be great if McClendon would be so concerned about what he is putting in the ground underneath these beautifully kept well pads? 

Chesapeake Energy Lease Signing "Event" in Wysox, PA

Aubrey McClendon, CEO of Chesapeake Energy Corp.

Saturday is party day in Wysox, PA. Letters have gone out from Chesapeake Energy to landowners from Towanda, North Towanda, Wysox, Standing Stone, Monroeton, Asylum, Wyalusing, and Herrick, requesting their presence at the lease signing event at the Wysox Fire Hall. Chesapeake is offering 10-year oil and gas leases that would pay $5,000 per acre with a 20% royalty on gas that is extracted. What a great marketing device! Have a party, get everyone together, serve refreshments, and try to make people feel like they'd be foolish not to sign a gas lease. Brian Grove, Chesapeake spokesman, said the response has been good to the letters.

We are glad that so many in Bradford County are ready to partner with us to develop their gas rights.

Signing bonuses were higher last year, ranging from $5750-$6500. Why has the offer gone down?

This blogger would not use the word "partner" in describing the relationship between a landowner and a gas driller. In her experience, it is more like "We've got you now, sucker. Deal with it." A partnership connotes a good relationship based on mutual respect and benefits.

Here is the article from the Daily Review (3/17/2010).

Fort Worth: Carter Avenue Will Be Pipeline Alley

A top story from Fort Worth announces that Chesapeake Energy is poised to proceed with its plans to install a 16-inch natural gas pipeline along Carter Avenue, a short residential street in East Fort Worth. The proposed pipeline that Chesapeake seeks to install is not a typical domestic gas-line but a large diameter, high pressure, un-odorized, corrosive, wet gas gathering line straight from the wellhead. Its purpose is to connect two separate gas wells near I-30, aka Tom Landry Freeway, in east Fort Worth. Alternative routes are available but Chesapeake has indicated a preference for the Carter Avenue route.

If completed, the proposed Carter Avenue pipeline would be the first such pipeline of its kind in the city of Fort Worth.

The pipeline will be buried 75-130 feet beneath the front yards of more than 30 homes. It was thought to be problematic for it to be located along I-30. Why? Because there are no access roads in the area, and, if the line ever needed repairs, the entire freeway could be shut down. The residents of Carter Avenue are hard-working people who just want to live on a nice street with their families. Just last year new sidewalks and new pavement were put in there. But to Chesapeake, and perhaps even to public officials of Fort Worth, these people are secondary to the main priority of putting in a pipeline. There are more than 2,000 natural gas wells in Fort Worth at present, and companies are building pipelines and compressor stations to get the gas to market. Gas companies have formed their own pipeline companies which enjoy rights to condemn land just like a city government or utility company can do in Texas. There are no legal protections in place to help citizens avoid the destruction of their property.

Chesapeake has been busy filing condemnation suits against landowners on Carter Avenue. Some of the residents, like 72-year-old Jerry Horton, are in poor health and can hardly deal with this crisis. Seemingly oblivious to the plight of these humble citizens, Chesapeake's CEO Aubrey McClendon came to town today (10/16/2009), sporting a dashing red sport coat, to express his company's commitment to the community. He has opened a new office in east Fort Worth and donated 12 used computers to a near-by school. [Wow!] He told a gathering that he expects to invest a billion dollars a year in the Fort Worth area for years to come.

Has McClendon visited any of the people who live on Carter Avenue? If he did, would he even be capable of understanding what his company is doing to them?

People are expendable in the gas industry business. A homeowner on Carter Avenue, Steve Doeung, said,

Families are going to leave, homes are going to be put up for sale, yards are going to be unkept, and this neighborhood will become pipeline alley.

A block party was held tonight in the 2700 block of Carter Avenue. The residents are protesting and boycotting the controversial natural gas meeting hosted by Chesapeake at Texas Wesleyan University.

According to one source: The Chesapeake meeting at Texas Wesleyan University was announced on short notice, canceled, and rescheduled the same day. One resident of the affected area was notified by mail, and he is the only resident who has refused to lease his property to Chesapeake for the pipeline.

A comment from a citizen reads as follows:

"high pressure, un-odorized, corrosive, wet gas gathering line".... think about it - is that something that should be in ANY neighborhood. What happened to [Mayor]Moncrief's promise to... "WE WILL KEEP THE NEIGHBORHOODS SAFE. WE WILL PROTECT THE NEIGHBORHOODS!"

I guess Moncrief should not have made such a sensible statement before checking with Chesapeake. Maybe the new motto for the Fort Worth's City Council's should be ... "CHECK WITH CHESAPEAKE BEFORE YOU SPEAK!"

Check out these links for more information on the Carter Avenue crisis here, here, here, and here.

Texas Sharon weighs in here. "What Would Jesus Do On Carter Avenue?"

DEMAND ACCOUNTABILITY!
LEAVE CARTER AVENUE RESIDENTS ALONE!
LET THEM LIVE IN PEACE!

The New Snake Oil Salesmen: Natural Gas Lobbyists

PennFuture has published an article about natural gas lobbyists who have spent more than one million dollars lobbying the PA legislature so far this year.

The natural gas lobbyists - who have spent more than $1 million lobbying the Pennsylvania legislature so far this year to avoid a severance tax on Marcellus Shale gas drilling - have a lot in common with the snake oil sales reps of old. They are making spectacular claims about the benefits of gas drilling even as they poor-mouth about economic fragility of their industry. A look at the facts makes it clear that virtually none of the lobbyists' claims are true. Our message to state legislators - Buyer beware.

The gas industry is taking the approach that they are in a delicate position right now, being as they are in their infancy. A comment in the Philadelphia Inquirer reads:

If the natural gas industry is an infant, it was born with a silver spoon in its mouth.

The annual bonuses that the CEOs are getting really belies this argument. Cheasapeake Energy's CEO Aubrey K. McClendon got a compensation package last year of $112.5 million. Range Resources' CEO received $5 million. Atlas America's PA subsidiary paid Richard Weber nearly $2.5 million.

Claim: PA consumers will be hit with higher costs for natural gas. PennFuture says NO.
Claim: We (gas companies) already pay too much in taxes. PennFuture says NOT EXACTLY.
Claim: We're (gas companies) bringing jobs to PA. PennFuture says NO.

However, the drillers may successfully dodge the severance tax which is required in most gas producing states, and will also make "sweetheart" deals with the state to buy leases in PA state forests and parks. They will buy low now and make a killing later.

PennFuture says,

We weren't born yesterday. All of us should let the legislature and the governor (Rendell) know that this is a very bad deal all around.

Read PennFuture Facts Vol.11, No.19, here.

DEMAND ACCOUNTABILITY!
NO MORE HUGE BONUSES FOR GAS CEOS!