Fracking company with interest in NC under scrutiny

There’s been some news of interest recently about Chesapeake Energy, one of the natural-gas companies behind the push for North Carolina to lift its ban on fracking, the controversial drilling method for natural gas.

The company is facing charges of conspiring to fix land prices, and of shorting landowners royalty payments in order to keep the company afloat.

FrackingAs the Carolina Mercury pointed out last week, Chesapeake Energy was one of two energy companies indicted in Michigan this month on criminal charges of conspiring to keep property prices low in an area over a shale belt.

(The criminal charges and an ongoing federal anti-trust investigation stemmed from reporting by Reuters. Click here to read more.)

Here in North Carolina, Chesapeake Energy took legislators on fact-finding trips to Pennsylvania in 2011, as the lawmakers were considering a bill that eventually lifted the ban on fracking.

Fracking, or hydraulic fracturing involves setting of explosions deep into wells in the ground and then blasting with water and chemicals in order to extract natural gas caught in shale layers. There’s particular interest in bringing fracking to the Sandhills area of the state where a large underground shale belt straddles Lee and Chatham counties. (Scroll below or click here to see a map of shale deposits.)

The state’s Energy and Mining Commission is working to put rules in place before drilling can begin in 2015.  Many of the chemicals used in fracking have had links to cancer and other health problems, and groundwater contamination has been reported in other areas of the nation.

Chesapeake Energy has also run into financial problems because of the drops in natural gas pricing,  and apparently edged itself away from the brink of financial collapse in the last few years by cutting back on the royalties paid to landowners, according to a new report out today.

The financial bait-and-switch was detailed today in “Chesapeake Energy’s $5 Billion Shuffle,” an article published jointly by the non-profit investigative news outlet ProPublica and the Daily Beast.

Not a big surprise here, but the lower payouts to landowners has upset quite a few people in other parts of the nation.

From the ProPublica/Daily Beast article:

The losers were landowners in Pennsylvania and elsewhere who leased their land to Chesapeake and saw their hopes of cashing in on the gas-drilling boom vanish without explanation.

People like Joe Drake.

“I got the check out of the mail… I saw what the gross was,” said Drake, a third-generation Pennsylvania farmer whose monthly royalty payments for the same amount of gas plummeted from $5,300 in July 2012 to $541 last February.  This sort of precipitous drop can reflect gyrations in the  price of gas. But in this case, Drake’s shrinking check resulted from a corporate decision by Chesapeake to radically reinterpret the terms of the deal it had struck to drill on his land. “If you or I did that we’d be in jail,” Drake said.

Chesapeake’s conduct is part of a larger national pattern in which many giant energy companies have maneuvered to pay as little as possible to the owners of the land they drill.

Click here to read the entire article.

 

North Carolina map of shale deposits. Source: USGS

3 Comments

  1. Bill

    March 13, 2014 at 2:15 pm

    And here’s what the industry is doing with their radioactive waste water filter socks in North Dakota – dumping them on the road, in abandoned buildings, and on Indian reservations. If the city dump charges $1,000 for a single filter, one can only imagine how toxic they really are. Apparently hundreds of thousands of these filters are being tossed by the industry. Regulations? Who needs them? We do!
    http://www.ernstversusencana.ca/rachel-maddow-show-illegal-radioactive-dump-site-found-in-remote-north-dakota-town-noonan-mayor-angry-over-situation-with-radioactive-filter-socks

  2. Gib Brown

    March 13, 2014 at 10:04 pm

    While your concerns are rational, your conclusions are anything but. Fracking is not new. since it first began some seventy years ago, there are oceans of data to support that it is safe. Not all oil and gas companies are crooks. Most are not. They bear unspeakable financial risks in a very technology driven search for energy which has help provide the highest standard of living the world has ever known. So I urge you to exhibit the kind of journalistic professionalism as those who work in our industry.

  3. Susan Powell

    March 16, 2014 at 5:11 pm

    I lived in North Dakota during the first oil boom and the damage done to the community around Williston went beyond chemical contamination. North Dakota is not a big tourist economy but I noted that a large percentage of the employment was from out of state, crime was up, the roads were a mess, the big jobs came up from Texas while the dangerous jobs were for the local and out of state guys. Rents were unbelievable IF you could find an apartment you would put your dog in, much less your wife and family, and small businesses had to pay big wages even if they had nothing to do with oil. Oh yes, farmers had natural gas heat in their equipment sheds, hen houses and family homes while you saw the flares all over the countryside between Williston & Minot burning off the natural gas. When the price of oil droped, the oil companies were GONE and only the potholes lingered on while the horseheads quit bobbing. Not sure we can equate the economic losses in North Carolina (big tourist economy) with North Dakota.