Roughly a decade into the fracking boom in America, the unconventional drilling process has pretty much been exposed for all the world to see. To be sure, the advances in drilling technology that allowed Big Oil and Gas to tap the fossil fuels once trapped inside shale formations has helped to lower the cost of energy in America, and created some jobs (although never nearly as many as promised). But it only took a few years for folks to see that the downsides of fracking are enormous: A swarm of earthquakes in once stable regions such as Oklahoma, polluted steams and contaminated wells, methane leaks that are making our global warming problem worse, and toxic air pollution.
If any one man was at the epicenter of the fracking frenzy, it was Aubrey McClendon, the high-flying billionaire CEO of Oklahoma-based Chesapeake Energy. A brilliant businessman, McClendon and the firm that he co-founded got the jump on everyone else in seeing the potential for tapping shale gas. Although his firm had numerous wells in the Southwest, it was arguably in Pennsylvania and the formation known as the Marcellus Shale — a region where oil and gas drilling had been rarely present for the last century — where McClendon had the greatest impact. So-called “landmen” working on behalf of the firm sold rural farmers and retirees on the virtues of leading their land to Chesapeake, and by the late 2000s McClendon’s company was the biggest fracking concern in Pennsylvania.
But the leases gave the firm just five years to drill, and as the increased supply of natural gas led to plunging prices, the company — and its ostentatiously wealthy CEO — saw its share price and its revenue fall. Many problems ensued:
Much of the pressure came from McClendon who — in the “There Will Be Blood” spirit of the oil patch — was a gambler by nature. His massive $1.9 billion share in Chesapeake was leveraged to the max, and when natural gas prices began to collapse — a predictable Economics 101 supply-and-demand result from all the gas now flowing from fracking pads across the United States — McClendon was in deep. But instead of paying the piper, he got the company’s board to boost his annual pay to $112 million, making him for a time the highest paid CEO in America. The board also spent $12 million to bail out McClendon by purchasing some of the rare maps he’d collected when the times were good.
Yet gas prices — and Chesapeake’s stock price — continued to fall, and many of the five-year leases that Chesapeake’s landmen had signed up were about to expire. The company’s drilling increased, and its environmental record went downhill. Pennsylvania regulators wrote up 428 violations against the company and fined it $1.4 million, and last November a unit owned by Chesapeake was hit with another $1.4 million fine for a 2011 landslide at a wellpad that polluted several streams in Greene County.
Also in 2011, Chesapeake workers were trying to close down a well in Avella, Pa., south of Pittsburgh, when “wet gas” that regulators say was being handled improperly burst into flames, causing five tanks to explode and injuring three workers. Residents saw an entire hillside on fire and thought that a C-130 cargo plane had crashed.
That same year, reporting on the company’s activities, I spoke to a Bradford County man named Ed Bidlack who told me that he and his neighbors had signed lease deals with Chesapeake’s landmen and had hoped to make good money from the fracking boom, but not long after a well was drilled next door, his own water turned funny — sometimes brown, sometimes fizzing like Alka-Seltzer. Chesapeake had given him a so-called “water buffalo” to replace his well water, but Bidlack still wondered whether the original tap water, tainted with methane, is what had caused his beagle Sid to quickly die from lymphoma.
Other Chesapeake leaseholders said they had a different problem with the now-cash-strapped Oklahoma company; they alleged the firm was cheating them out of royalties by claiming huge costs and then paying the Pennsylvanians next to nothing for the gas produced on their property. There are now several class-action suits against Chesapeake as well as a lawsuit by the state attorney general’s office.
In many ways, McClendon’s tale is one of classic greed. In a major investigation by Reuters that questioned some of the natural-gas mogul’s dealings, “[s]aid a contemporary who knows McClendon well, ‘If you’re competitive like Aubrey, you just always want to own more.'”
The circle soon closed in. He was ousted as Chesapeake’s CEO over his outside dealings. This week, a federal grand jury indicted McClendon over an alleged bid rigging scheme related to oil and gas drilling in the Southwest. Just two hours before he was scheduled to turn himself in on those charges, McClendon drove his SUV straight into an Oklahoma City bridge embankment at a high rate of speed and died instantly. He was just 56. It is a terrible loss for his family and his friends.
It is also a story, unfortunately, of remarkable hubris. In Pennsylvania, just one of the places where McClendon did business, the state is scarred both physically and psychological from the environmental damage and the bickering over money that the fracking boom left in its wake. The saga of Aubrey McClendon is yet another chapter to the destructive history of fossil fuels in this country.
Read more about McClendon’s rise and fall from Philly.com: http://www.philly.com/philly/blogs/attytood/The-Greek-tragedy-of-the-billionaire-who-fracked-up-Pa.html
Check out the major 2012 Reuters investigation of McClendon’s business dealings: http://www.reuters.com/article/us-chesapeake-mcclendon-profile-idUSBRE8560IB20120607
For more on the risks of fracking, check out my new book, Crude Justice: How I Fought Big Oil and Won, and What You Should Know About the New Environmental Attack on America: http://shop.benbellabooks.com/crude-justice
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