News: Niobrara Shale

Pedal to the Metal

Tue, 26 Mar 2013 21:02:39 GMT

The U.S. currently has approximately 125,000 vehicles on the road that run on CNG. And with this number continuing to rise, Wyoming is poised to play a large role in meeting this growing transportation need.

During the 2013 Wyoming Legislative Session, lawmakers passed two bills through the Legislature designed to increase the use of CNG as an alternative fuel in the state. The first bill, Senate File 23, allows the state Challenge Loan Fund to make low-interest loans to gas and convenience store retailers to take out loans to install the necessary CNG infrastructure at existing gas stations. The second bill, Senate File 52, mandates that half of all state fleet vehicle purchases run on clean, affordable CNG.

“Jump starting the use of natural gas as a fuel for vehicles in Wyoming is going to take a comprehensive approach,” said Wyoming State Representative Tim Stubson. “The work of this legislative session was a solid step in that direction.”

According to Chesapeake Energy Corporation’s Natural Gas Vehicle Market Development Manager Dan Genovese, the new legislation means a solid solution to one of CNG’s biggest obstacles.

“The passage of these two companion bills is a wonderful first step in encouraging the broad and rapid adoption of abundant natural gas here in Wyoming,” said Genovese. “The benefit of having both of these bills pass together solves the chicken-and-egg dilemma that often accompanies CNG adoption by encouraging the growth of vehicles and infrastructure simultaneously.”

If a Wyoming resident drives an average of 20,000 miles a year, the cost of conversion can be realized very quickly when you figure the savings of $1.31 for CNG compared to $3.27¹ a gallon for gasoline. Currently there are four public CNG refueling stations in Cheyenne, Evanston, Riverton and Rock Springs, Wyoming.

¹Prices as of March 13, 2013, in Cheyenne, Wyoming

Chesapeake’s Senior Director – Corporate Development and Government Relations John Dill looks on with members of the Wyoming Legislature as Governor Matt Mead signs SF 23 and SF 52. From left: Paul Ulrich – Encana, Affie Ellis – Ellis Public Affairs, John Dill - Chesapeake Energy, Sen. Eli Bebout, Rep. Ruth Ann Petroff, Rep. Albert Sommers, Rep. Tim Stubson, Rep. Tom Lockhart, Rep. Nathan Winters. Front: Governor Matt Mead.

Fueling Economic Growth

Tue, 26 Mar 2013 13:05:38 GMT

Tax revenues from oil and natural gas companies such as
Chesapeake provide needed funds for local schools.

The economic benefit of oil and natural gas development can be far reaching. From creating jobs to generating tax revenues for federal, state and local communities, the energy industry is a driving force behind the country’s economic recovery.

In Wyoming operators such as Chesapeake Energy Corporation contribute to government funds by paying a number of taxes including sales, income and ad valorem. Ad valorem is a type of annual tax paid based on the estimated values of personal property or real estate. For Chesapeake this means the estimated values of its acres of leasehold, whose value increase as oil and natural gas production increases. In 2012 Chesapeake paid $3.3 million in Converse County, Wyoming, alone.

While the ad valorem payment is dispersed to several different county groups and amenities such as police and fire departments, most of the money will benefit the Converse County School district where it will help pay teacher salaries and be used to provide books and school supplies.

“Converse County has been a great partner in Chesapeake’s activity in Wyoming. We are dedicated to the community, and I think that’s shown in the dramatic increase in our activity,” said Chesapeake’s Coordinator - Corporate Development and Government Relations Kelsey Campbell. “We look forward to more energy production and even more economic growth for the county in the future.”

Building the Base for Promising Futures

Thu, 21 Mar 2013 19:58:02 GMT

Sandy Andrew, Chesapeake Operations Manager, presents
Ashley Bright (left) and Greta Maxfield (right) with a donation
to fund after-school activities for Casper, Wyoming, youth.

Many Wyoming children don’t have the opportunity to participate in after-school activities or programs that can provide important guidance and lend a helping hand. For some students, simply finding a place to sit and complete their homework is a daunting task. That is a trend The Boys & Girls Clubs of Central Wyoming is vehemently committed to reversing.

“There are a number of young people in our community who are looking for somewhere to do something constructive outside of school where they feel valued and respected,” said Chesapeake’s Sandy Andrew, Operations Manager. “That’s why what the Boys & Girls Clubs of Central Wyoming is doing is so important.”

With help from a Chesapeake Energy Corporation donation, the Boys & Girls Clubs opened the Dick and Lynne Cheney Cowboy Ethics Teen Center. Growing from a 20-foot meeting area to a 3,500-square-foot hub, the facility now hosts approximately 50 students each day who meet to study, play games or simply relax.

Located in Casper, Wyoming, it provides youth with a safe environment and a variety of character-building tools such as the Torch Club, Cowboy Ethics program and several sports and leadership activities. Each focused on a different area of interest, these groups provide a positive support system for students as they learn life skills.

Chesapeake Releases Inaugural Corporate Responsibility Report

Mon, 18 Mar 2013 20:25:20 GMT

Developing America’s natural gas and oil resources takes the cooperation and support of numerous groups. That’s why Chesapeake Energy Corporation is committed to consistent engagement with the communities where it operates. The company works diligently with stakeholders to better understand their concerns, continuously improve its operation and create sustainability, profitable growth and value for everyone.

As part of this effort, Chesapeake has released its inaugural Corporate Responsibility Report, which provides an informative and transparent view of its operations and practices including corporate governance, environmental, health and safety, community outreach and more.

View the full report.

Child’s Play in Glenrock

Thu, 17 Jan 2013 19:26:47 GMT

The Glenrock Recreation Center’s new indoor playground
provides a fun and safe place for kids.

Although the Glenrock Recreation Center provided residents of Glenrock, Wyoming, with access to its weight room, swimming pool, adult game area, cardiovascular equipment and wellness classes, the city’s younger population found itself without an indoor place to play.

With funding from Chesapeake Energy Corporation, the recreation center recently added a 300-square-foot indoor playground specifically designed for toddlers. As Wyoming weather is not always outdoor friendly, particularly for little ones, the new space has been warmly welcomed by the community.

“The winters in Wyoming can really be brutal and last a long time,” said Chesapeake’s Kelsey Campbell, Coordinator – Corporate Development & Government Relations. “While everyone needs a place to burn some energy, we thought it was really important to provide the youngest among us with a fun, imaginative place to get out of the cold.”

Fracking critics using bad science, experts say

Fri, 30 Nov 2012 15:51:25 GMT

This article first published by The Associated Press on July 22, 2012.

In the debate over natural gas drilling, the companies are often the ones accused of twisting the facts. But scientists say opponents sometimes mislead the public, too.

Critics of fracking often raise alarms about groundwater pollution, air pollution, and cancer risks, and there are still many uncertainties. But some of the claims have little — or nothing — to back them.

For example, reports that breast cancer rates rose in a region with heavy gas drilling are false, researchers told The Associated Press.

Fears that natural radioactivity in drilling waste could contaminate drinking water aren't being confirmed by monitoring, either.

And concerns about air pollution from the industry often don't acknowledge that natural gas is a far cleaner burning fuel than coal.

"The debate is becoming very emotional. And basically not using science" on either side, said Avner Vengosh, a Duke University professor studying groundwater contamination who has been praised and criticized by both sides.

Shale gas drilling has attracted national attention because advances in technology have unlocked billions of dollars of gas reserves, leading to a boom in production, jobs, and profits, as well as concerns about pollution and public health. Shale is a gas-rich rock formation thousands of feet underground, and the gas is freed through a process called hydraulic fracturing, or fracking, in which large volumes of water, plus sand and chemicals, are injected to break the rock apart.

The Marcellus Shale covers large parts of Pennsylvania, New York, Ohio and West Virginia, while the Barnett Shale is in north Texas. Many other shale deposits have been discovered.

One of the clearest examples of a misleading claim comes from north Texas, where gas drilling began in the Barnett Shale about 10 years ago.

Opponents of fracking say breast cancer rates have spiked exactly where intensive drilling is taking place — and nowhere else in the state. The claim is used in a letter that was sent to New York's Gov. Andrew Cuomo by environmental groups and by Josh Fox, the Oscar-nominated director of "Gasland," a film that criticizes the industry. Fox, who lives in Brooklyn, has a new short film called "The Sky is Pink."

But researchers haven't seen a spike in breast cancer rates in the area, said David Lee, a professor of medical anthropology at the University of Texas Southwestern Medical Center in Dallas.

David Risser, an epidemiologist with the Texas Cancer Registry, said in an email that researchers checked state health data and found no evidence of an increase in the counties where the spike supposedly occurred.

And Susan G. Komen for the Cure, a major cancer advocacy group based in Dallas, said it sees no evidence of a spike, either.

"We don't," said Chandini Portteus, Komen's vice president of research, adding that they sympathize with people's fears and concerns, but "what we do know is a little bit, and what we don't know is a lot" about breast cancer and the environment.

Yet Fox tells viewers in an ominous voice that "In Texas, as throughout the United States, cancer rates fell — except in one place— in the Barnett Shale."

Lee called the claims of an increase "a classic case of the ecological fallacy" because they falsely suggest that breast cancer is linked to just one factor. In fact, diet, lifestyle and access to health care also play key roles.

Fox responded to questions by citing a press release from the Centers for Disease Control and Prevention that doesn't support his claim, and a newspaper story that Risser said is "not based on a careful statistical analysis of the data."

When Fox was told that Texas cancer researchers said rates didn't increase, he replied in an email that the claim of unusually high breast cancer rates was "widely reported" and said there is "more than enough evidence to warrant much deeper study."

Another instance where fears haven't been confirmed by science is the concern that radioactivity in drilling fluids could threaten drinking water supplies.

Critics of fracking note the deep underground water that comes up along with gas has high levels of natural radioactivity. Since much of that water, called flowback, was once being discharged into municipal sewage treatment plants and then rivers in Pennsylvania, there was concern about public water supplies.

But in western Pennsylvania, the Pittsburgh Water and Sewer Authority did extensive tests and didn't find a problem in area rivers. State environmental officials said monitoring at public water supply intakes across the state showed non-detectable levels of radiation, and the two cases that showed anything were at background levels.

Concerns about the potential problem also led to regulatory changes. An analysis by The Associated Press of data from Pennsylvania found that of the 10.1 million barrels of shale wastewater generated in the last half of 2011, about 97 percent was either recycled, sent to deep-injection wells, or sent to a treatment plant that doesn't discharge into waterways.

Critics of fracking also repeat claims of extreme air pollution threats, even as evidence mounts that the natural gas boom is in some ways contributing to cleaner air.

Marcellus air pollution "will cause a massive public health crisis," claims a section of the Marcellus Shale Protest website.

Yet data from the U.S. Energy Information Administration show that the shale gas boom is helping to turn many large power plants away from coal, which emits far more pollution. And the U.S. Environmental Protection Agency passed new rules to force drillers to limit releases of methane from wells and pumping stations.

Some environmental groups now say that natural gas is having a positive effect on air quality.

Earlier this year, the group PennFuture said gas is a much cleaner burning fuel, and it called gas-fired power plants "orders of magnitude cleaner" than coal plants.

Marcellus Shale Protest said in response to a question about its claims that "any possible benefit in electric generation must be weighed against the direct harm from the industrial processes of gas extraction."

One expert said there's an actual psychological process at work that sometimes blinds people to science, on the fracking debate and many others.

"You can literally put facts in front of people, and they will just ignore them," said Mark Lubell, the director of the Center for Environmental Policy and Behavior at the University of California, Davis.

Lubell said the situation, which happens on both sides of a debate, is called "motivated reasoning." Rational people insist on believing things that aren't true, in part because of feedback from other people who share their views, he said.

Vengosh noted the problem of spinning science isn't new, or limited to one side in the gas drilling controversy. For example, industry supporters have claimed that drilling never pollutes water wells, when state regulators have confirmed cases where it has. He says the key point is that science is slow, and research into gas drilling's many possible effects are in the early stages, and much more work remains to be done.

"Everyone takes what they want to see," Vengosh said, adding that he hopes that the fracking debate will become more civilized as scientists obtain more hard data.

An Open Letter to President Obama: Actions, Not Words, Will Determine Our Energy Future

Fri, 29 Jun 2012 19:06:26 GMT

This op-ed was first published by The Oklahoman on March 21, 2012

From: Harold Hamm, Aubrey McClendon, Larry Nichols and Tom Ward:

Welcome to Oklahoma, Mr. President. We hope you develop a better understanding of the oil and gas industry, one of the largest and most vibrant sectors in the U.S., during your visit. As Americans, we share a mutual desire to power our nation with homegrown energy sources. We join you in wanting to secure our energy future by lessening our dangerous dependency on imported oil.

Mr. President, no energy source can do more good for America than domestic oil and gas. Take jobs. You often mention the need for more well-paying jobs. Our companies are creating them — in particular, tens of thousands of every skill level from rig workers and truck drivers to top-flight engineers and PhDs.

The paradigm shift in American oil and gas exploration and production is the brightest spot in our struggling economy. Keeping it going requires understanding of some critical business realities:

Approval of the entire Keystone XL Pipeline should happen now — not after the election. Yes, we are pleased TransCanada decided to build a critical section of the project from Cushing to the Gulf Coast. We note this section does not require State Department approval. However, America's greatest benefit will come when we can transport oil from our best energy partner, Canada, and oil-rich North Dakota and Montana.

Private sector innovation led to the combination of horizontal drilling with hydraulic fracturing resulting in the most significant resource revolution in the nation's history. The safe and responsible application of these technologies have added new proven gas and oil reserves once inconceivable, and it has made U.S. energy independence a distinct possibility in just the next 10 years. We have now safely and successfully fracture treated 1.2 million wells in the U.S. since 1948 and more than 45,000 wells in 2011 — a safety record that would be the envy of any industry in the U.S.

As large independent energy companies, we almost always reinvest more than we receive from selling oil and gas production. Therefore, punitive tax increases such as eliminating the business deduction of drilling costs or selectively increasing the energy industry's corporate tax rate by abolishing deductions available to other manufacturers, would give us no option but to reduce our drilling programs resulting in fewer jobs and higher prices.

Our industry invests billions of dollars to ensure our operations are conducted in an environmentally responsible manner. However, with more than a dozen federal agencies in your Administration proposing, planning or implementing new regulations — for little or no environmental benefit — there is considerable risk that increased costs and bureaucratic delays will cripple America's energy production and halt the renaissance underway in our nation's steel, plastics, chemical and agricultural industries.

The newfound abundance of oil and gas in America creates for the first time in 50 years the opportunity to break OPEC's headlock on the American economy and reinvigorate America's industrial foundation.

Mr. President, your words suggest you want the economic benefits American natural gas and oil can deliver. We hope your actions follow suit — to date they have not.

The authors lead Oklahoma City-based large independent oil and gas exploration and production companies Continental Resources, Chesapeake Energy, Devon Energy and SandRidge Energy.

Chesapeake tries to pump up demand

Wed, 27 Jun 2012 20:38:36 GMT

This article was first published on April 14,2012 by The Star-Telegram.

For more than 20 years, Chesapeake Energy has been a leader in driving up the supply of natural gas. Now it's trying to spark the demand side of the equation — a reach for any player.

In the next decade, the Oklahoma City company has pledged to invest $1 billion to increase the use of natural gas in transportation. Efforts range from creating a nationwide network of truck stops to developing home fueling kits that let people fill up in their garage. And partners include 3M and General Electric, two global heavyweights whose involvement signals the potential of this market.

The country is awash in cheap natural gas, thanks to the success of Chesapeake and others in developing shale gas nationwide, including in North Texas' Barnett Shale. Chesapeake is the second-largest producer here and has a regional office in Fort Worth.

Last week, natural gas prices fell as low as $1.91 per 1,000 cubic feet, the lowest since 1999, because of the supply glut. Nationwide, production is running 5 percent ahead of last year's pace, and after a mild winter, underground stores of natural gas are 58 percent greater than the average for the past five years.

Naturally, the gas industry wants to drive up demand, whether from power plants, industrial uses, exports or transportation. Chesapeake stands apart, because it's leading the effort in such a high-profile way.

In a recent federal filing, Chesapeake said that one of its business strategies is to "transform the U.S. transportation fuels market."

That's usually the kind of goal set by a nation, not a single company. But Chesapeake and its leader, Aubrey McClendon, have always been ambitious and audacious. Today, they have reason to feel a little desperate, too.

Chesapeake is heavily leveraged and won't generate enough cash to fund all its drilling plans if gas prices remain low. In February, Moody's cut Chesapeake's rating outlook from positive to stable, affecting $11 billion in debt.

Last week, Chesapeake announced three deals to raise $2.6 billion, selling parts of holdings in Oklahoma and West Texas. For the full year, Chesapeake hopes to raise up to $12 billion from similar sales so it can plow more money into high-priced oil.

Chesapeake is the nation's second-largest gas producer, and 90 percent of its revenue came from natural gas in 2009. This year, it aims to have 60 percent of revenue from oil and natural gas liquids, and that's an expensive transition.

It stands to benefit greatly if more vehicles convert to natural gas. The stakes are high for this region, too, because drilling has fallen sharply in the Barnett and won't pick up until prices rise.

McClendon has said the transportation push isn't only about boosting the industry. Like T. Boone Pickens, he champions national self-determination, insisting that natural gas offers a path to more energy independence. And he won't simply wait for the market to develop.

"We can guarantee a natural gas demand revolution is on the way, because we are making it happen!" the company wrote in an investor presentation this month.

About four years ago, Chesapeake started considering ways to boost demand. It later announced plans to convert its 4,500 vehicles to natural gas.

"If we didn't drive with natural gas, that would be like dairy farmers not drinking milk," said Taylor Shinn, Chesapeake's senior director of corporate development.

That announcement, along with a pledge to buy from its convenience stores, was enough to get Love's to start adding pumps for compressed natural gas at some locations. Near the Chesapeake campus in Oklahoma City, Shinn said that CNG sells for as little as $1.65 for the equivalent of 1 gallon. That's far less than half the price of regular and diesel gasoline.

Chesapeake has converted about 1,400 trucks to CNG, he said, with 500 to 1,000 more expected this year. AT&T and UPS are among the local fleets that have also converted vehicles.

Chesapeake has invested about $4 million with Love's and OnCue to build out 40 new CNG stations in Oklahoma. It has pledged $50 million to outfit about 200 existing stations elsewhere in the country.

It's putting $150 million into Clean Energy Fuels Corp., a California company founded by Pickens that plans a nationwide network for long-distance truckers. About 300 stations are getting pumps for liquefied natural gas, with a goal to add the service to 1,000 more.

Chesapeake has pledged $155 million to Sundrop Fuels, a Colorado company that plans to produce "green gasoline." It will be made from natural gas and biomass waste, and Chesapeake will have a 50 percent stake in the private company.

Chesapeake also put up $10 million for a venture with 3M. The technology company is developing lighter, stronger CNG storage tanks for trucks and cars.

And Chesapeake is collaborating with GE on natural-gas-powered locomotives and kits that enable any gasoline station to easily add the fuel. The two project that at least 250 stations will buy the kits later this year, at a likely price of $500,000 to $700,000 each.

Chesapeake is working with trucking companies (two were at its headquarters last week) and an appliance firm that wants to cut the price of a home fueling station to $1,500.

Ken Morgan, director of the Energy Institute at Texas Christian University, said he hasn't seen any companies reach out in so many directions — and make such a commitment.

Chesapeake said it plans to redirect 1 to 2 percent of its annual drilling budget to ventures that can create breakthroughs in demand.

"Chesapeake could buy a lot of land leases with $1 billion," Morgan said. "But if this leads to a more sustainable company, it'll be genius."

Maybe McClendon is early. Maybe he's tilting at windmills. But he's showing how an industry leader leads.

Chesapeake Responds to the Rolling Stone Story

Tue, 06 Mar 2012 16:16:10 GMT

Dear Fellow CHK Employees and Friends:

By now, some of you may have heard about or read the Rolling Stone magazine article released this week entitled “The Big Fracking Bubble: The Scam Behind the Gas Boom.” As our company’s VP with responsibility for communications, I think it's important that you know more about the events and activities that led to this article. Also, I have included below our specific responses to the portions of the article that were most egregious in their misrepresentations or inaccuracies of our company and industry.

When we were first contacted by Rolling Stone and looked at the writer’s prior work, blog posts, and tweets, we figured we’d never get a fair shake and suggested he talk to other industry groups to get a perspective on natural gas. But when he declared his intention to write a story focused on our company and Aubrey – with or without our cooperation – we decided that providing the full transparency that the media and our critics so often demand from our industry would potentially result in a more honest and fact-based story. Although our expectations for honesty and fairness were quite low, the writer failed to reach even that low bar.

Despite giving the writer access to our rig locations and briefings from senior executives over three days, Rolling Stone has published a story that recycles the same old debunked theories of a few short-positioned analysts, activist academics and publicity-seeking litigants that have mischaracterized our company and our industry for the past five years.

There is little new in this story and much that is either half true or just flat wrong. The writer clearly chose to ignore critical information and context that addressed the false allegations he chose to publish. Despite politely listening, he had no intention of reporting facts that would have showed Chesapeake to be the responsible operator and generous corporate citizen that we are and the vast majority of observers of our company know us to be. Some examples of Rolling Stone’s selective reporting are detailed below – these mistakes and omissions would be inexcusable from a responsible journalist, but coming from Rolling Stone they are perhaps more understandable.

Chesapeake believes in openness and the thoughtful engagement with all stakeholders in the communities where we operate. We stand by our position on the abundance of natural gas in the U.S., our success in drilling and recovering natural gas in an environmentally sensitive and safe manner, and the viability and success of our business model in generating attractive returns for shareholders.

While it is painful to read such misrepresentations about our industry, company and CEO, I hope you will take pride in knowing that when faced with an expected assault on our reputation, we didn’t just sit back and take it. We engaged fully and did so because we have such great confidence in the ultimate assessment that the truth will win out and the facts will speak for themselves. That opinion was buttressed by the fact that we have the most articulate, knowledgeable, and visionary CEO in the industry and an unequaled team of senior leadership at his side. We played it straight and transparent. We treated the reporter with respect and integrity. That he chose not to reciprocate does not diminish Chesapeake or our mission. It makes us more resolved to continue to prove the naysayers wrong. I hope you will find the analysis below to be of assistance to you.

Writer’s Claim	Reality
According to Arthur Berman, a respected energy consultant in Texas who has spent years studying the industry, Chesapeake and its lesser competitors resemble a Ponzi scheme, overhyping the promise of shale gas in an effort to recoup their huge investments in leases and drilling. When the wells don't pay off, the firms wind up scrambling to mask their financial troubles with convoluted off-book accounting methods.	The reality of at least 100 years’ worth of shale gas abundance has been supported by virtually every credible third-party expert, such as the U.S. Energy Information Administration, the Colorado School of Mines’ Potential Gas Committee, the Massachusetts Institute of Technology, Navigant Consulting and the largest energy companies in the world, among them being ExxonMobil, Shell, Chevron, ConocoPhillips, BP, Total, Statoil, CNOOC, Sinopec, Reliance, Repsol, BG, ENI and many others, not to mention every major independent in the U.S., Including Oxy, Anadarko, Apache, EOG, Devon, EnCana, Talisman and dozens more. The collective market cap of these energy leaders approaches $2 trillion – ask yourself: do I believe Rolling Stone and Arthur Berman or the world’s biggest and most successful energy companies? For years, Mr. Berman has been underestimating natural gas reserves and the promise presented by the industry. Just take his ever changing position on the Haynesville Shale. In April 2009, Berman wrote that it was “difficult to imagine that the Haynesville Shale can become commercial.” Only two months later, in June, Berman had changed his tune, saying that “I now think that the Haynesville Shale reserve estimates that I presented previously were too low.” Still, in a 2010 article, Berman suggested the Haynesville numbers were “disappointing.” In March 2011, the Haynesville became the top producing natural gas field in the U.S., and now stands among the top ten producing fields in the entire world. As far as accounting practices, Chesapeake follows full-cost accounting rules to the letter and routinely have our filings reviewed by the U.S. Securities and Exchange Commission, as is typical for any public company of our size. The same holds true for the rest of our industry – our reserve accounting techniques are strong and have stood the test of time for decades.
Like generations of energy kingpins before him, it would seem, McClendon's primary goal is not to solve America's energy problems, but to build a pipeline directly from your wallet into his.	Over the past three years alone, Chesapeake has distributed over $14 billion in payments to lease and royalty owners throughout the country. The positive impact from natural gas goes well beyond the landowner. Chesapeake and its partners, for example, have invested almost $30 billion in the search for clean, abundant and affordable natural gas in just the past three years. As a result of Chesapeake's investments and those of others in our industry, Americans enjoy the cheapest electricity and natural gas prices in the industrialized world. And to the extent there is an economic recovery underway in the U.S., our company and our industry have been among the most important drivers of that recovery. According to the U.S. Federal Reserve, natural gas prices, which are at a 10-year low this month, could save U.S. consumers almost $20 billion on home energy bills this year. Total savings to the U.S. economy from low natural gas prices compared to current natural gas prices in Europe and Asia, will likely exceed $250 billion in 2012 – that’s more than a $600 million daily stimulus to the U.S. economy! Additionally, low natural gas prices have led to a renaissance in U.S. manufacturing jobs. A recent report from PricewaterhouseCoopers highlighted how affordable, domestic supplies of natural gas will save U.S. manufacturers more than $11 billion per year over the next decade, in addition to creating a million new jobs during that same period. This affordable energy supply is also projected to increase disposable income for each household in the U.S. by as much as $2,000 per year.
The Oscar-nominated film Gasland exposed the dark underbelly of fracking, interviewing residents who could literally light their faucets on fire, thanks to the gas that had contaminated their drinking water.	Many aspects of Gasland have been repeatedly and thoroughly debunked by credible third party experts, but perhaps no area of the film has proven to be more disingenuous than the now infamous faucet lighting scene. After all, according to the Colorado Oil & Gas Conservation Commission (COGCC), “Dissolved methane in well water appears to be biogenic [naturally occurring] in origin. … There are no indications of oil & gas related impacts to water well.”
[N]ew studies suggest that because of fugitive emissions of methane from wellheads and pipelines, natural gas may actually be no better than coal when it comes to global warming.	The reporter is referring to two papers produced by Cornell University Professors Robert Howarth and Anthony Ingraffea. Chesapeake shared numerous rebukes of the studies, including Carnegie Mellon University, the U.S. Department of Energy and one from a fellow Cornell Professor, Larry Cathles who concluded that the methane leakage rate promoted by the study was “unreasonably large and misleading.”
"The more land they acquire, the more capital they have to spend upfront," says Deborah Rogers, a former investment banker who learned just how precarious Chesapeake's business model was when she looked into the firm's financial statements after the company sunk wells near her property in Texas.	Rolling Stone refers to Deborah Rogers as a “former investment banker,” conveniently failing to mention that Ms. Rogers is also an active “steering committee member” of the Oil and Gas Accountability Project (OGAP), an activist group that considers natural gas to be a “filthy energy” source, and has vigorously worked in New York and Pennsylvania to institute bans on hydraulic fracturing.
He didn't point out any errors by the scientists or question their methodology. Instead, he went after their character, dismissing the [Duke] study as "more political science than physical science" and accusing them of having a bias against fossil fuels. "These guys," he tells me, "have invested their lives in the view that climate change is occurring, that fossil fuels are bad, and that natural gas is a fossil fuel, and therefore it's bad." When I ask Avner Vengosh, a geochemistry professor who served as a lead author of the study, about McClendon's letter, he laughs lightly. "I have no agenda," he says. "I am a scientist. I report what the evidence I find tells me to report." He and his colleagues visited Chesapeake's headquarters in Oklahoma a few weeks before the study was finished and shared their results with the company. They also offered to consider any data that Chesapeake might have that would challenge their results. "They offered us nothing," says one scientist who attended the meeting.	Remarkably the reporter has clearly ignored a large portion of the letter in question. After all, the second paragraph of Aubrey’s letter clearly shows the fallacy in the idea that the authors visited campus, and Chesapeake “offered us nothing” to challenge the report: “Chesapeake disputes the findings of Duke’s Nicholas School’s study entitled Methane Contamination of Drinking Water Accompanying Gas-Well Drilling and Hydraulic Fracturing. In April 2011, the authors of the study met with Chesapeake geologists, petrophysicists, environmental scientists and engineers and were shown summaries of over 7,000 data sets we have collected over the last few years in Pennsylvania which showed measureable methane in 22% of the water sources sampled prior to any of our drilling operations occurring, directly refuting the contents of the study.” No wonder the “scientist” quoted spoke anonymously. Furthermore, the author chose to ignore the many respected voices who have spoken out against the Duke study including PA DEP Secretary Michael Krancer who believes the study was, in a word, biased. “The bottom line is it was biased science from biased researchers,” Krancer says, addressing a luncheon audience during a recent conference in Pittsburgh.
Tom Darrah, a Duke geologist who has examined Vargson's well for a new study, finds that difficult to square with the facts. "Anyone who has seen the data I have and thinks this much methane in her well is from natural sources has their head in the sand," he says.	A comparison of samples taken before and after drilling indicate the quality of the Vargson water to be virtually unchanged. The Vargson’s residential water well was equipped with a venting cap predating our operations. We have advised the Vargsons to clean and maintain their existing vent cap to better accommodate its intended function of venting the preexisting methane in their water well.
Last April, a Chesapeake well in Bradford County suffered a massive blowout. It was the onshore, natural gas version of what happened to BP in the Gulf two years ago: A wellhead flange failed, and toxic water gushed uncontrollably from the well for several days before workers were able to bring it under control. Seven families were evacuated from their homes as 10,000 gallons of fracking fluid spilled into surrounding pastures and streams. Pennsylvania fined the company $250,000 – the highest penalty allowed under state law.	To compare this incident to the BP spill is both misleading and irresponsible. An independent report by SAIC concluded that: “Overall, few impacts were realized due to the release of fluids from the ATGAS well control incident. Those that did occur were localized, of short duration, and were confined to surface waters and shallow soils surrounding this site. There were no ecological impacts to Towanda Creek or the unnamed tributary; nor were any impacts noted to nearby or regional water wells or springs.” The PADEP fine for the Atgas well control event in Bradford County was $123,000 and $67,000 in expense reimbursement. In its press release, the DEP noted: “Fluids from the well mixed with rainwater and entered a nearby unnamed tributary to Towanda Creek and Towanda Creek itself. On April 20, DEP detected levels of total dissolved solids, chlorides and barium that were higher than background levels at the mouth of the tributary, where it enters Towanda Creek. Subsequent testing further downstream and on the following days showed these levels returned to normal background levels.”
It's also impossible to know what chemicals are flowing out of the wells, or how toxic they are, because companies like Chesapeake are not required to disclose the compounds they use in fracking operations. We don't know the chemicals that are involved," Vikas Kapil, chief medical officer at the National Center for Environmental Health, admitted at a recent conference. "We don't have a great handle on the toxicology of fracking chemicals."	This claim is directly rebutted by Pennsylvania DEP: “Drilling companies must disclose the names of all chemicals to be stored and used at a drilling site … These plans contain copies of material safety data sheets for all chemicals … This information is on file with DEP and is available to landowners, local governments and emergency responders.” In addition, Chesapeake and other operators voluntarily disclose hydraulic fracturing components to a publicly available chemical disclosure registry at fracfocus.org. The author was told this repeatedly while meeting with Chesapeake.

I offer thanks to EID, whose documentation and correction of many of these errors were readily available to the Rolling Stone writer at energyindepth.org. In addition, I appreciate the blog published today by John Hanger, former Pennsylvania Department of Environmental Protection Secretary, which also rebuts the article: http://johnhanger.blogspot.com/2012/03/rolling-stone-magazine-sadly.html.

I also refer you to these quotes from our CEO that were included in the article and speak forcefully and clearly to the major energy issues and challenges facing our country:

· “Why are you [top environmentalists] not focused on the amount of oil runoff from parking lots when it rains? What about the billions of tons of agricultural chemicals that run off every day into streams and rivers? That's real pollution that kills real fish, and degrades a real environment. What's worse for Chesapeake Bay? Fertilizer runoff from poultry farms? Or fracking 200 miles away for which there is no evidence that one drop has ever gotten more than 100 yards away from a well site?"

· "If you believe in a world where the wind and the sun are going to produce all our power in the future, then we've disrupted that vision of the world. On the other hand, if you dream of a world where air is cleaner, where energy is half the price it was before and we're not exporting a million dollars a minute to OPEC or having to go fight wars in Afghanistan and Iraq, then you should embrace natural gas. That's what's so troubling to me – that people are willing to turn a blind eye to the enormous, well-known consequences of what we do today and not realize that this new path is the only affordable, scalable way to something else."

· "Does that mean we maximize the use of coal? That we fill the countryside with windmills and kill all the migratory birds and double electricity prices while we do it? What's the human cost to doubling electricity prices? What's the human benefit to halving them? I think those are enormously important questions that are never imposed at the same time people say, 'Fracking is bad.'"

The Niobrara Shale

Tue, 06 Mar 2012 16:16:06 GMT

Chesapeake is committed to fueling America’s energy future. With more than 20 years experience, Chesapeake is one of the largest producers of oil and natural gas in the country, and the most active driller of new wells in the U.S.