Marcellus Shale Profiles: Chesapeake Energy Corporation
by Cecilia K
MSD Staff Writer
Modern day gas exploration has expanded over the years, with many companies falling by the wayside. While company names may have changed, people have not. Meet one of the game changers heading one of the larger companies involved with the shale gas extraction in the Marcellus Shale region in New York, Aubrey K. McClendon. As CEO of Chesapeake Energy Corporation, Mr. McClendon is no stranger to hard work and determination.
It doesn't take one long to understand he brought a package of assets with him beyond the $50,000 he invested in 1989 when he co-founded Chesapeake Energy. He brought a set of old-fashioned values to his new company right from the get-go: hard work, integrity and dependability. Over the years, he has continued to spearhead an ongoing drive to deliver a much needed answer to the gas and job shortages threatening the US economy.
Recently, Mr. McClendon, at 52, made the keynote speech at the 2011 Shale Gas Insight Conference held in September in Philadelphia. In his speech he stressed the importance of dealing with facts and not opinions, quoting a U.S. Senator from New York and an Ambassador to the United Nations, Daniel Patrick Moynihan. Moynihan, reportedly said, "Everyone is entitled to his own opinion, but not his own facts."
Mr. McClendon then cited several impressive facts about his company's involvement as a Marcellus Shale jobs creator and Chesapeake's improvements.
"The company that I lead, Chesapeake Energy, is the most active driller in the Marcellus and the most active driller in the United States, by a factor of more than two. We employ over 12,000 Americans directly and almost 100,000 indirectly," Mr. McClendon said. "We have been horizontally drilling and hydraulically fracturing wells since I co-founded the company in 1989. Our company has performed this process 16,000 times - the most of any company in the world. And we are getting better at it with every well. Not only are we getting better economically, we're getting better in terms of protective barriers, water management, wastewater recycling and air quality improvement."
Mr. McClendon also delved into the question of whether hydraulic fracturing, also known as fracking, was damaging to the environment. Fracking is used in the Marcellus Shale region to extract the natural gas from rock beneath the ground. It consists of pushing water and other chemicals into crevices deep underground to push gas to the surface.
"The natural gas exploration and production industry has an excellent track record of safety and environmental integrity. Over 1.2 million wells have been fracked by our industry since 1949," Mr. McClendon said. "Against that track record of over 1.2 million frack jobs performed by the industry, our critics can only find one or two instances of alleged groundwater pollution. And having examined those few instances ourselves, we don't agree that fracking had anything to do with the alleged groundwater contamination."
Mr. McClendon touched on a now-solved problem with a casing design that occurred in Pennsylvania covering the past three years. He said only a couple of dozen homeowner's claims were affected, but the incidents weren't related to fracking. They were related to "issues of casing design."
"The industry worked closely with Pennsylvania DEP officials to implement an updated and customized casing system that has been effective in preventing new cases of gas migration. Problem identified. Problem solved. That's how we do it in the natural gas industry," Mr. McClendon said. He also noted this was an isolated incident which occurred in northeastern Pennsylvania, and had not occurred anywhere else in the country.
Steady as America's appetite for an ever-increasing need for gas, Mr. McClendon is determined to hold true to the values his company was built on.
Chesapeake Energy has a powerful base in the men and women running it, a group made ever stronger by the leadership of its CEO.
The Marcellus Shale is located in the terminus of many existing pipelines, which can carry natural gas from the Marcellus region to other parts of the US as other gas- producing areas decline.
McClendon continues to work with the local people in the Marcellus Shale region to create jobs. According to McClendon, Chesapeake's #1 goal was to work with local populations to use readily-available resources to ease the nation's dependency on foreign oil. Local and state citizens are given a chance to tap into ready sources of revenue in order to offer them a better lifestyle through the creation of much-needed jobs and state revenue. His vision led the way to literally and figuratively giving many citizens in the Marcellus Shale region the answer to their employment problems, and it lay right beneath their feet.
In doing so, Chesapeake's created thousands of jobs and billions of dollars of landowner wealth -all created by drilling in the area. With people losing the American dream in the form of their homes and their jobs, Chesapeake Energy offers an increasingly environmentally-friendly approach to extracting natural gas, with an added bonus of delivering jobs.
Strong potential
What is the overall potential for gas extraction in the Marcellus Shale region? Terry Engelder is a geologist with the University of Pennsylvania.
"There may be as much as 4,359 trillion cubic feet of natural gas trapped in the formation. Of that approximately thirty percent may be recoverable. This alone could supply the natural gas needs of the US for twenty years or more," Engelder said.
Thomas Alva Edison said, "Many of life's failures are people who did not realize how close they were to success when they gave up."
With Aubrey K. McClendon at the helm of Chesapeake Energy, the folks of Marcellus need not bother themselves about his lack of perseverance.
It took Chesapeake Energy to formulate a plan of action in the Marcellus Shale region and it took work from the local and state government and its people to come full circle with Chesapeake Energy. What we see today is the result of all their efforts.
And what are the results of these simultaneous efforts?
In the Marcellus natural gas development alone, those efforts generated $11-billion in value-added to the regional gross domestic product in 2010. In 2011 that number rose to $13-billion, and will reach a staggering $17-billion in 2015.
Who benefited from this joint venture? Certainly not Chesapeake Energy alone, as noted by McClendon, who stated that, "Chesapeake paid out almost $2-billion in lease bonus and royalties to famers, families and townships across Pennsylvania."
As for creating jobs in the Marcellus Shale region, Mr. McClendon is very proud of Chesapeake's impact on local economies.
"Direct and indirect employment from this economic boom has already surpassed 140,000 jobs. Chesapeake alone has about 2,100 employees in the Marcellus and about 1,700 of them were hired regionally," Mr. McClendon said. "According to Penn State, further development of the Marcellus will support 216,000 jobs in 2015. That's a jump of nearly 80,000 jobs in four years."
We live in an ever-changing world. We, as a nation, must depend on men and women with vision to see us through, men like McClendon and his support team at Chesapeake Energy.
At this point, you may be asking yourself: Why Natural Gas? Why are companies like Chesapeake Energy necessary?
According to the website NaturalGas.org, natural gas is a far healthier alternative to fuels such as coal and oil.
"Natural gas, because of its lower carbon content produces 30% less carbon dioxide per unit of energy than oil and 43% less than coal. With virtually no ash production and smaller qualities of volatile hydrocarbons, carbon monoxide, and nitrogen oxides in its combustion than that of oil or coal, natural gas is most likely to become the dominant global fuel early in the next century," the website reads.
Couple this with the observations made by the Worldwatch Institute, which predicts: Natural gas will account for almost one-fifth of the world's energy needs, producing almost one-half of its total carbon emissions by 2030. Noting too: The role natural gas will ultimately play is one of a transition fuel establishing a bridge from the fossil fuel to the solar and hydrogen era. (185)" See: Profiles in Power.
However, even in bridging the gap between fossil fuel to the renewable era, in the near-term, wind and solar will only provide about 15% of our national power requirements; the rest will need to be made up elsewhere, and Marcellus Shale natural gas is 100% American made.
Adding to Chesapeake Energy's successes in the Marcellus Shale region are thousands of producing gas wells in:
- Arkansas
- Colorado
- Kansas
- Louisiana
- New Mexico
- Oklahoma
- Pennsylvania
- North Dakota
- Texas
- West Virginia
- Wyoming
A Continued Push Towards Energy Independence
Natural gas is buried one to two miles beneath the surface. From the time natural gas is discovered and recovered until it reaches the consumer, the flow is a continuous process.
Chesapeake Energy and McClendon continue to push toward US energy independence.
"We are convinced of the economic attractiveness of energy independence that we are redirecting approximately 1 to 2% of Chesapeake's annual drilling cap-ex over the next 10 years, or at least $1.0 billion in total, to stimulate market adoption of CNG, LNG and GTL fuels," Mr. McClendon said. "Putting up a billion dollars of our own money is what I like to refer to as an All American Action Plan!"
According to Mr. McClendon's Wikipedia page, Chesapeake is the largest leasehold owner in the US with approximately 14 million net acres under lease, and owns a Top 2 position in each of the Barnett, Haynesville/Bossier, Marcellus and Utica natural gas plays and in each of the Granite Wash, Cleveland, Tonkawa, Mississippian, Avalon, Wolfcamp, Bone Spring, Eagle Ford, Niobrara and Utica oil and natural gas liquids plays.
Chesapeake Energy will soon be available to anyone wishing to purchase its stock. According to the Wall Street Journal, as reported by Ryan Dezember, 16 November 2011, Mr. McClendon sees a bright future for Chesapeake's oil services division as a publicly traded entity.
"Chesapeake Energy Corporation plans to spin off its oil-field-service business next year in a public stock offering to establish the value of the unit to investors and boost the share price of the parent company," Mr. McClendon said. "Chesapeake recently installed a management team for the collection of service business it has built over the years and plans to retain a majority stake -perhaps around 80% --in the company after it goes public."
Aubrey K. McClendon learned the value of hard work and planning at a tender age growing up in Oklahoma. He makes a huge contribution to the company he runs, its investors, and the thousands of people who profit from his efforts. McClendon inherited his True Grit attitude from his father who worked for Kerr- McGee Corporation, a large independent exploration and production company. It's to all our benefit he's kept the young entrepreneurial spirit alive.
Bibliography
Jerry Brown and Rinaldo Brutoco, foreword by Ralph Nader, Profiles in Power: The Antinuclear Movement and the Dawn of the Solar Age, Twayne Publishers, Simon & Schuster Mcmillian, New York, 1997.
Webliography
NaturalGas.org - Processing Natural Gas
NaturalGas.org - Natural Gas and the Environment
NaturalGas.org - Processing Natural Gas
NaturalGas.org - The Market Under Regulation
NaturalGas.org - Natural Gas Distribution
Center For LNG - About LNG, Overview
Center For LNG - About LNG, FAQ
Federal Energy Regulatory Commission - Liquefied Natural Gas (LNG) in the US
http://www.star-telegram.com/2011/10/10/3434134/chesapeake-range-among-top-producers.html