Columnist Joe Hoey breaks down both sides of the fracking debate and Aubrey McClendon’s role in the issue.
I remember the first time I heard about fracking. I was sitting in the Student Center as a freshman and there was this pretty smelly guy yelling different cliché slogans replacing a less-than-socially-acceptable word with “frack.” Completely confused and slightly taken back, I decided it was important that I looked into what this guy was going on about. After looking into what fracking – short for hydraulic fracturing – was, it turned out I already knew “what the frack” he was talking about, I was just confused by the jargon.
In the years that followed, I became more concerned with what fracking means for me. I like the rivers, creeks and well-water of my native Pennsylvania home, but I could not even imagine being able to set my tap water on fire, as I had seen in the haunting 2010 fracking documentary, “Gasland” But, I never considered the business behind fracking until recently.
For the past few years, the fracking debate has become increasingly polarized along with other political issues of the day. The left has snappy posters with slogans like “no fracking way” or “don’t frack with our water,” while the right has engaged in smear campaigns claiming that peer-reviewed legitimate scientific studeis are biased. The lines in the fracking debate have been drawn, and it has largely become a battle between industrial money and grassroots environmentalism. Natural gas industry groups spend considerable amounts of money every year flooding the airwaves and Internet promoting natural gas extraction as a solution to everything, from terrorism and energy dependence to global warming and unemployment.
Meanwhile, environmentalists and fracking victims engage in acts of protest, muckraking and grassroots organizing in an attempt to raise awareness of the environmental woes fracking has caused, and likely will continue to cause.
Environmentalists have focused on the impact fracking has had on sites, often highlighting soil issues and water contamination that has led some water supplies to have methane levels high enough to create “firewater.” However, few have focused on the actual business practices of fracking companies.
In fact, I was shocked to see a piece on the incredibly risky business practices of fracking entrepreneur Aubrey McClendon in the most recent issue of Rolling Stone magazine. I had heard about McClendon in the past, but mostly in reference to his hypocritical assaults on the coal industry.
McClendon is the current CEO of Chesapeake Energy, the second biggest natural gas producer in the United States, behind ExxonMobil. His firm is renowned for its aggressive ability to locate and obtain leases for natural gas extraction. Chesapeake Energy so often stresses its lease acquisition that it will acquire land leases for natural gas production years before it plans to extract anything.
Chesapeake Energy’s long-term lease strategy is troublesome in that it means that Chesapeake is often paying to have leases on land that is not actually providing them with anything of value. In fact, according to a Forbes report on McClendon, it would take Chesapeake approximately 30 years to drill the 600,000 leases and nine million acres of land it currently holds.
Chesapeake Energy’s risky business practices are kept afloat through aggressive borrowing. In fact, Chesapeake’s debt-to-capital ratio as of October 2011 was 40 percent, a high percentage among its peers. Chesapeake also hides much of its debt by utilizing rare technical off-balance-sheet-debt, making Chesapeake appear to have less debt than it really does. According to Rolling Stone’s Jeff Goodell, Chesapeake has been running at a loss since 2003.
While Chesapeake Energy may not be the be-all-end-all of the natural gas industry, concerns about the sustainability of its practices should not be overlooked. Of course, there is some double meaning there.
Hydraulic fracturing is a highly understudied practice of which much environmental concern has been raised. Even as the natural gas industry has attempted to market its product as a “cleaner” alternative to coal with less impact on climate change, studies continue to contest even the most modest claims frackers make.
Unfortunately, it likely will be “too hard” for our government to assess the risks involved in hydraulic fracturing until it is too late. Similarly, it probably will be too late for investors and landowners with stakes in Chesapeake if and when Chesapeake goes down. Because of its relation to gas prices and its relationship with so many American families, Chesapeake’s fall will likely leave a gash in our economy when it falls, not unlike the gashes its extraction practices have been known to make.
The important lesson to take from the controversy revolving around Chesapeake is that there is often more than one angle. While the fracking debate has largely become a conflict between “Gasland”-watching enviro-nerds and industrial drill-hards on impact issues, it is vital to look at the actual business practices that give us fracking and natural gas.
Most importantly, we should know not to trust people who give us expensive wine and send us packing, as is a signature public relations stunt of McClendon. After all, should McClendon’s self-destructive business fall after trashing our water supply, his expensive wine could be cheaper than both clean water and oil, assuming anyone has a job to buy it.
Joe Hoey can be reached at
joe.hoey@temple.edu.
Joey, I appreciate the concern you’ve expressed over a complex topic that has been thrust into the forefront of the public’s attention by multiple parties with different motives. The reactions from so many in the media, government, industry and citizenry adds to the confusion. I too read the Rolling Stone article as well the New York Times article that it essentially follows. The NYT article was strongly condemned by many in the industry and scientific community, and exalted by Environmentalists and Anti-Fracking groups. What is interesting to note is the article written by another Editor of the NYT the next day who strongly criticized the journalistic writing of the author of the article, citing numerous errors and ommissions that led to implied facts bringing a question to the journalists motives. On the Anti-Fracking side everyone keeps referring to comments made by just a few people (So Called Experts) whose credibility has been seriously tarnished by statements they have made that showed bias in their analysis, outright lies and ommissions, but when confronted with strong evidence refuse to change their views. On the industry side, they have failed to answer questions early on and have displayed a very real dismissive attitude to real questions people and groups have had that have alienated many leaving questions. Media is full of bias and promoting their views and sensationalizing the issues, and Politicians play their cards to get votes and fail to do real work and find out the truth. Governements like to manipulate to promote their agendas. The EPA has come under question for their motives and seriously questioned by those in State Governments as to self-serving motives for things they have said and are doing. I saw this in happen for years in California leading to the “Brown Outs” in the early 2000 years, and the people suffered. Truth is real, it can be discovered, but it does require you seek it out and dig through the junk. When you know the truth it is easy to discern when manipulation and lies occur, and when you know the truth it will set you free.
With this in mind, I look at your article. You took things you read and are now merely reporting them with your interpretive twist. Journalist do the public a favor when they have the tenacity, courage and desire to get behind the fluff and stuff to discover the truth, and then report the truth with as little bias as possible, that is unless you have an agenda your promoting and the Rolling Stone article merely provided ammunition to move your agenda forward. Chesapeake is merely doing what it can to create profits for its investors. Big things CEO’s must do is keep their cash flow healthy. Fracking’s success has led to huge production gains and the 4th warmest winter on record reduced demand and now the laws of supply and demand have kicked in big time, causing all energy companies to scramble to make up cash flow. One way to do that is sell assets and focusing on higher revenue products to make up lost revenues, which is what Chesapeake is doing. They have done this without laying off employees or moving manufacturing overseas, which is what most US companies do and everyone suffers. I live in Georgia and like most of the people in the US I have enjoyed lower heating bills the last 2 years due to what all these Oil and Gas Companies are accomplishing. Making sure they do what they do safely and environmentally correct is a must, and that is where Government comes in, and the media to slap those who make mistakes.
So Joey, look at your comments and how you now personally attacked someone you’ve never met. Would you want someone doing this to you? Would it be right and fair? The world is full of people who do not think and continue to pass on their opinions and stuff they’ve heard as facts. Please at least take the time to mine out the truth and be gracious toward others, and when they prove themselves that they are suspect and cannot be trusted, then you have something to work with. Also, be careful your sources, even those you trust you still need to verify, otherwise you may again be ,the promoter of things that may not be accurate. Did you notice I did not tell you whether Fracking was good or bad, nor did I analyze the “Fracking Debate”, which is what your aticle title is. Question for you, did you really “Analyze” the Fracking Debate?
Sorry Joe that I called you Joey.
We should also consider our environment when discussing the issue of fracking, and I mean the *human* environment. Does fracking make our lives better or worse? Does it provide value or subtract value overall? For many people–many, many more than the mainstream media would have you believe–the answer is clear: fracking is incredibly important. To hear from these folks and to hear the truth about fracking, visit http://www.fracknation.com.
DannyMac brings up some good points. What are your thoughts Joe?
To be sure, it’s a heated and politicized debate.
Much is at stake, but the facts are bearing out that the cement casing construction – is the *potential failure point that needs (and will get) standardization. Technologies are around the corner that can clean the fracking brine. Both will create jobs and opportunity, while addressing environmental concerns.
Bottom line, free enterprise and capitalism continues to work and innovate.