The General Assembly returned to Raleigh last week and a controversial method of natural gas drilling – known as fracking – is already on the Republican agenda with the introduction of the Clean Energy and Economic Security Act – S820 (don’t be fooled by the title). A recent development in the gas industry may foretell the future of the most cavalier of gas companies.
Remember last fall when State Senator Rucho, State Representative Mike Hager and others took a trip quietly northward to tour fracking sites, followed by Governor Perdue in early spring. They all met with representatives from Chesapeake Energy – described by its CEO Aubrey McClendon as “the biggest frackers in the world.” (actually Chesapeake is second to ExxonMobil). Chesapeake is now having some serious financial problems and its future is uncertain.
Over the past five years, Chesapeake has signed approximately 600,000 leases, covering nine million acres in several states. Payments for gas royalties on the leases cost the company $9 billion. In only a few years, gas drillers have been like cowboys on the frontier – with few rules to regulate fracking at the federal or state level, it’s been a “get it while you can” mindset.
The result of this whirlwind pace and a warm winter has been a glut in the gas market that has pushed down prices and slowed down drilling for many companies. Yet Chesapeake didn’t seem to take notice of the shifting sands and kept right on its fever drilling pitch.
Now Chesapeake is singing the blues. It recently took a nearly $4 billion bridge loan to help calm investors. This was followed by Standard and Poor’s downgrading the company’s credit rating to a “BB-“ and then came the 14% drop in its stock value. S&P raised concerns about “mounting turmoil” in the company as well and skepticism about the company’s ability to generate enough cash to pay its debts.
Now the Securities and Exchange Commission has opened an investigation into the company’s financial dealings.
In case you were feeling any sympathy for this company, no need. According to Source Watch, in 2011 Chesapeake was a director level sponsor of the American Legislative Exchange Council (ALEC)’s annual meeting – at a price of $10,000. ALEC is a corporate lobbying group with non-profit status that works to introduce “model” right-wing legislation on many issues – from education to global warming.
Chesapeake’s greed and mismanagement is just another good reason on a long list of why communities are rightfully opposing fracking across the country.