Commentary — Two Kinds of Truth for Your Consideration

Truth is elusive with consequences

Written by S. Tom Bond, Retired Chemistry Professor & Resident Farmer, Lewis County, WV

Observers have been amazed with the division of attitudes toward modern high volume, horizontal, hydraulic fracturing which has come into use since the year 2000. It is as though one party says something is yellow and another, looking at the same thing, says it is blue. The obvious answer is, “Who is making money from it and who is paying a price?” That goes for people actually in contact with it, but what about the millions who form opinions in spite of no contact?

I think that is related to two kinds of truth, which I hope to distinguish. What is needed is to sort out a general idea, truth, and how one arrives at “truth.”

As the Stanford Encyclopedia of Philosophy says, “Truth is one of the central subjects in philosophy. It is also one of the largest.” So I must define truth to begin with: Truth is a belief which serves as a basis for individual action. If you believe something, that is your mental map of what is. Truth is one’s understanding of the real world, the guide for ones action.

Most works on philosophy include several definitions of truth. Almost all of them have one which has to do with verifiability. That means the ability to check, item by item, the contents of the verbal map of reality. Lets call this verifiable truth.

A second kind of guide for action is to respond to authority. If you believe some authority, it is a kind of truth. This may be a King, a religious leader, or simply “the boss,” who in our era (and many others), is whoever controls pay for your labor. This we will call authoritarian truth. Such a believer’s action is determined by a mental map provided by the authority.

What does this have to do with the understanding of the nature of fracking? A lot, really.

Concerning fracking the general public (including officials) must choose between the claims of the banks and the drilling companies on the one hand , and the cries from the injured on the other. The individual who is not directly affected, and cannot see what is going on, must choose what to believe.

Those in the field can see what is happening. People are hurting, and loosing what is theirs. For some who gain even a slight advantage it is easy to ignore another’s pain. That is also a human attribute. It makes possible wars, racism and genocide. It also makes it possible for some to be rich while others are poor. Those who aren’t seriously affected can adopt the authoritarian truth as a psychological defense.

One of the principal characteristics of authoritarian truth is that it is not constrained by verifiability. It offers an explanation, and suggests a course to follow for the believer’s advantage. It causes an expected reward for action. It may, and often does, involve deception about verifiability, however. Left out details don’t exist for the authoritarian believer. It is received truth.

Verifiable truth comes from direct sensory experience of the phenomenon, or from observers judged by the individual to be reliable. Who is reliable? Direct observers who don’t have an advantage by being untruthful and are able to understand what effects them. Simultaneous changes are a strong key to understanding.

If one thinks rural people are willing to lie about what affects them, or are too dumb to understand, or are people whose interests aren’t a significant part of the commonwealth, the economic whole of our state and nation, you might adopt such a view. You might be more willing to adopt a story put out by some authority.

In a situation where people need to act, people who are not where they can observe facts themselves, perhaps by voting or by buying, it becomes a considerable labor to decide what action they should take – in other words who to believe. We humans have a long history of cooperation with each other. Frequently it has been the best path to simply follow some leader, rather than to try to go it alone or join a minority. Most of our past has involved a choice between leaders without reference to verifiability of claims, or perhaps no choice between leaders at all; the choice is simply the degree or enthusiasm with which we follow some designated leader of our group. Consequently, we humans have developed no easy way to distinguish which kind of truth one is following. It is a labor and a learned skill not necessary for survival of the human race.

Because of this bit of human nature, those who can form belief on the basis of our own observation, and the observation of people we trust because we understand them, must aggressively present the story of what is going on to the wider public, who invest, who vote, and who regulate the world we live in.

“Reality is that which, when you stop believing it, doesn’t go away.”

>>>>>>>>>>>>>

Fact to fiction — A twisted tale of how good research became bad information

By Elizabeth Miller, Boulder Weekly, November 20, 2014

The philosophy that University of Colorado research associate E. Michael Thurman applies to scientific research, he says, is: “You can sort the error from the truth if you work hard enough.” This week, that task became far more difficult as Thurman and his research associates came under fire for apparently declaring the fluid used in hydraulic fracturing operations to be harmless.

But it wasn’t true. The researchers never said anything like that, nor did they intend to. Like the children’s game of telephone, as word spread from one mouth to the next, the truth got so mired in errors it was nearly invisible by the end.

So how did a study designed to analyze traceable components of fracking fluid so potential contamination in groundwater could be identified get transformed into a headline that declared fracking fluid safe? The answer is poor communication and bad journalism.

…… the details are in the Article on hydraulic fracturing ……

Representative Gas Well Depletion Curves

Part 4. The future expense(s) to investors, to drillers, to government, and to you!

Original Article by S. Tom Bond, Retired Professor of Chemistry and Resident Farmer, Lewis County, WV

The drilling treadmill. This is a name given to the result of rapid decline in production of shale wells. Most shale wells produce substantially for a year, then rapidly decline thereafter. Thus if a field is to maintain production, another well must be drilled in three to five years, then another, then another.

The “drilling treadmill” was first recognized by David Hughes, a prominant geologist in Canada after studying 65,000 different wells from 31 different unconventional shale rock formations. He “warned that shale gas and tight oil operations shared four big challenges: escalating capital costs, uneven performance and a growing environmental footprint, all followed by rapid depletion.” And “Shale gas can continue to grow, but only at higher prices and that growth will require an ever escalating drilling treadmill with associated collateral financial and environmental costs — and its long term sustainability is highly questionable…” This study was done in 2012.

Geological consultant Arthur Berman has seconded that analysis and expanded it. In an article published in March of this year he says ” On the gas side, all shale gas plays except the Marcellus are in decline or flat. The growth of US supply rests solely on the Marcellus and it is unlikely that its growth can continue at present rates.”

On oil, ” The idea that Texas shales will produce one-third of global oil supply is preposterous.” He also says, “Oil companies have to make a big deal about shale plays because that is all that is left in the world. Let’s face it: these are truly awful reservoir rocks and that is why we waited until all more attractive opportunities were exhausted before developing them. It is completely unreasonable to expect better performance from bad reservoirs than from better reservoirs.” And “None of this is meant to be negative. I’m all for shale plays but let’s be honest about things, after all! Production from shale is not a revolution; it’s a retirement party.”

The Telegraph of London Calls the fossil fuel industry the “subprime danger of this cycle. The article begins ” The epicentre of irrational behaviour across global markets has moved to the fossil fuel complex of oil, gas and coal. This is where investors have been throwing the most good money after bad.” Then “Data from Bank of America show that oil and gas investment in the US has soared to $200 billion a year. It has reached 20 % of total US private fixed investment, the same share as home building. This has never happened before in US history, even during the Second World War when oil production was a strategic imperative.”

One of the world’s premiere financial newspapers, it says, “A large chunk of US investment is going into shale gas ventures that are either underwater or barely breaking even, victims of their own success in creating a supply glut. One chief executive acidly told the TPH Global Shale conference that the only time his shale company ever had cash-flow above zero was the day he sold it – to a gullible foreigner.”

Energy Aspects, a consulting firm which also publishes material on the web at www.energyaspects.com, in an article entitled “The other tale of shale” has this to say about shale: “The very nature of shale wells, which exhibit high decline rates, results in the need to constantly allocate capital towards exploration drilling in order to maintain and grow production volumes. As a result, the average capital expenditure spending of the 35 companies analyzed to serve as a guide to the industry has amounted to a staggering $50 per barrel of oil equivalent (BOE) over the last five years, at a time when their revenue per BOE has averaged $51.5. For these same companies, free cash flow has been negative in almost every quarter since Q2 07.” (Free cash flow is the money a company has to distribute to investors, assuming they don’t want to use it to grow.)

This sort of explains why your friends who have royalties haven’t been getting them lately – in effect they have been making a forced loan to the driller that doesn’t cost him interest, and one he can take out without going to the bank. I know of one family suing for retained royalties in the amount of $8,000,000! And others.

Continuing damage.  As long as wells are drilled more damage is going to be done. Land use will be converted, roads broken, people made sick, future production of food and timber prevented, out door recreation destroyed, retirement possibilities for out of state couples denied, and living in the drilling field made unpleasant to impossible.

Pennsylvania state inspection records, no less, show compromised cement and/or casing integrity in up to 9.1% of the active oil and gas wells drilled since 2000, with up to a  2.7-fold higher risk in un-conventional wells drilled since 2009 relative to conventional well types. Hazard modeling suggests that the cumulative loss of structural integrity in wells across the state may actually be slightly higher than this, and upward of 12% for unconventional wells drilled since January 2009.

A recent investigative report of water contamination cases confirmed PA-DEP determination letters and enforcement orders indicating that at least 90 private water supplies across the state were damaged due to subsurface gas migration between 2008 and 2012.

Keep in mind that water in an aquifer may move very slowly. It may take years or decades for contamination to reach some water wells. Hydraulic cement decays over time. So it is not unreasonable to expect water wells will continue to be contaminated by shale drilling for a long indefinite time.

There is no formal provision for plugging shale wells. The permits only cost $25,000 and plugging is not in the leases. Plugging would cost something like $100,000. West Virginia has 51,000 abandoned wells. Can you expect history to repeat itself? I am predicting here that most shale wells that will be plugged in the next 100 years will be done at public expense.  Mark Twain is supposed to have said “History doesn’t repeat itself, but it rhymes.” I think we can anticipate this, unless we can get our citizens to intervene.

Live Forum: Economics is the Achilles Heel of Fracking

Announcement by Stefanie Spear, EcoNews, December 13, 2013

This Monday, Dec. 16 at 5 p.m., EcoWatch will feature a live briefing and conversation with Richard Heinberg and Deborah Rogers as they explore how the anti-fracking community can turn the fracking industry’s biggest weapon into their greatest vulnerability.

Hosted by Americans Against Fracking, Energy Policy Forum, Post Carbon Institute and Stop the Frack Attack, the forum will address how the fracking industry has used the so-called “shale revolution” to justify the massive spread of drilling, despite strong environmental concerns and community opposition. The industry claims the U.S. is undergoing an energy revolution, leading the country to energy independence with huge economic benefits to communities. Heinberg and Rogers will poke holes in the industry’s promise of plenty and reveal fracking as a “short-term bubble, leaving communities with little gain and a whole lot of pain.”

Richard Heinberg is senior fellow of the Post Carbon Institute and is widely regarded as one of the world’s foremost educators about the need to urgently transition away from fossil fuels. He is the author of 11 books including The Party’s Over, The End of Growth and Snake Oil. He has given hundreds of presentations and media interviews around the world and his award winning animations have been viewed by more than 1.5 million people.

Deborah Rogers is founder of Energy Policy Forum and is recognized as an outspoken expert on the financials and economics of the shale gas/oil industry. A former Wall Street investment banker, Rogers has written extensively about the role of investment banks in the shale gas boom. She has spoken widely in communities around the country, and has been featured in The New York Times, PBS, MSNBC, NPR and elsewhere.

Come back on Dec. 16 at 5 p.m. Pacific/8 p.m. Eastern and watch this provocative forum.

Latest Evidence on Leaky Gas Wells – Dr. Ingraffea

The science of shale gas: The latest evidence on leaky wells, methane emissions, and implications for policy. A.R. Ingraffea Ph.D, P.E.; M.T. Wells, Ph.D, Cornell University; R. Santoro, R. Shonkoff, Ph.D, Physicians, Scientists and Engineers for Healthy Energy, Inc. Butler Community College, Butler Pa, November 21, 2013.

Roman Bath, Bath, UK

Expert Raises New Fears Over Effects of Fracking

Bath Chronicle, England, UK, December 27th

A Bath university expert has expressed concerns about the wider environmental implications of a controversial gas extraction method, shale fracking.

Dr David Packham, senior lecturer in materials science at the Claverton Down university, has spoken out about the impact that fracking could have if it was given the go ahead in Bath and north east Somerset or on the Mendips. He said very little was known about what exactly would happen to Bath’s hot springs and he was concerned about the wider impact on the environment generally.

The Government has put its full support behind fracking, while at the same time trying to reassure communities that the necessary regulations will be in place to protect the environment. It has allowed drilling to resume at a site near Blackpool which had been blamed for minor earth tremors.

However, both Bath and North East Somerset Council and Bath MP Don Foster have said they are worried that any local drilling could have a devastating impact on the thermal springs. The nearest site being eyed for drilling is at Hick’s Gate at Keynsham.

Dr Packham said: “Certainly environmental damage has occurred in the past in the vicinity of wells and drilling sites, and could occur again. “This would be local, but in my opinion, a greater environmental threat is the acceleration of climate change which the large scale use of shale gas would produce.

“Government scientific advisers have been emphatic in issuing this warning. This to my mind is very serious indeed. “It opens the way for climate change to approach the point of no return, leading to an environmental domino effect where in a volatile and unpredictable dynamic, things such as melting ice and the release of carbon from the planet’s surface are set to feed off each other, accelerating and reinforcing the warming effect.”

These concerns have been echoed by Alex Hart, from Frack Free Somerset, who said the public was being sold a myth about the potential benefits of fracking. She said Prime Minister David Cameron should think again: “It is utterly depressing that the country’s leader is demonstrating such a lack of imagination and proving how short-sighted he is.

“Cameron and other fans of ‘natural gas’ are using a lower prices myth to sell a toxic product. Prices will only ever go up as wells produce rapidly falling amounts of gas.

“Shale gas and coal-bed methane supporters are also ignoring one (among many) glaringly obvious fact; all wells leak eventually. “So, regardless of whatever regulatory mechanisms, licenses or permits that the government put in place, prevention of pollution can never be guaranteed.

WV DEP’s Office of Oil and Gas is proposing a set of “Design and Construction Standards for Centralized Pits” that natural gas production operations can use to store wastewater (e.g. drilling or hydraulic fracturing fluids, sometimes referred to as flowback water).

The following summary was prepared by the West Virginia Environmental Council.  Many other comments have been prepared by the WV Surface Owners Rights Organization.

• The use of such pits poses an unnecessary risk to human health and the environment, no matter how well designed or constructed.

• This risk is unnecessary because there are much safer alternatives available to handle this waste stream.

• The alternatives include closed containment (tanks) and closed-loop drilling systems.

• These alternatives have long been in use by drillers nationwide, and are currently used throughout this region by responsible operators.

• The alternatives are affordable, and can even save money for the operator.

• The Division of Oil and Gas has the authority to mandate the use of these alternatives, rather than authorizing the construction of centralized pits.

• As proposed, the “Design and Construction Standards for Centralized Pits” will be difficult and costly for the agency to administer and enforce.

We urge the Office of Oil and Gas to set aside their proposal and, instead, mandate the use of alternatives such as closed containment (tanks) and closed-loop drilling systems. The streams and rivers of West Virginia are already high in TDS in many cases.  And, given, lower flows predicted for the future, it is essential that both inorganic and organic chemicals do not work their way into our waterways, and into our drinking water.

Comments are being accepted until Thursday, April 12, 2012 at 5 p.m.  The turnaround time is short. However, submitting comments by email is quick and easy.

Comments may be submitted in writing by email to dep.oogcomments@wv.gov or through the U.S. Postal Service to: John Kearney, Office of Oil and Gas, 601 57th Street SE, Charleston, WV 25304.

The complete “Design and Construction Standards for Centralized Pits” proposal can be found here.

Duane G. Nichols, WV/PA Monongahela Area Watersheds Compact

Danny and Sharon Kinney’s well water is contaminated with arsenic and lead.  The couple believe that the gas drilling next door is responsible for the contamination and for structural damage to their home.  The well water was tested by the drilling company, was found to have elevated and unsafe levels of arsenic, yet no agent of the company notified the Kinney’s of this finding according to the Kinney’s interview.

Full story on WBOY News

Extended video with Kinney’s available on Facebook.

I read about the death of  Carl Stiles yesterday.  Thank you, Dory Hippauf, for sharing that very sad link on the FrackCheckWV Facebook wall.  Here’s the link. I’ve added this tragic tale to The Human Story page (under the Impacts tab) on this website along with the other stories that are coming out in a steady stream from all the states where fracking occurs.  How many stories are we not hearing about because gas companies are paying for the silence of their victims with cash settlements including confidentiality agreements?

In a nutshell, fracking occurred near the home of Carl and his wife, Judy, of Bradford County, PA.  The household water supply in the Stiles home was contaminated with heavy metals and radioactive elements.  Carl and Judy drank and showered in the toxic water and were  exposed to high levels of radioactivity in their home before testing related to their illnesses (severe abdominal pain, muscle tremors, dizziness, racing heart)led to of the finding of contaminated water.  Both were told by a physician that they would likely die within 2 years due to leukemia related to their exposure to toxic compounds.  The radioactivity level in their home was almost 7 times the EPA standard limit.  The Stiles were forced to abandon their home and all the possessions in it.  Carl died of intestinal cancer on January 26, 2012.   Click here for the letter from the Stiles that tells the story in their own words.  You Tube of Carl Stiles and fiance Jude (1 minute)

I wonder if the Stiles had their water tested prior to the fracking activity commencing in their neighborhood.  When victims of water contamination have not had water testing done in advance to document that their water is free of contaminants, it has been successfully argued in law suits that it cannot be proven that the water was not contaminated before drilling was done.

Of course many people relied on the assurances of no risk of water contamination made by landsmen and by corporate spokespersons, and thus did not have their water tested.  They were shown a graphic of a mile of rock separating the gas producing zone and the aquifer.  Those corporate promoters did not mention that water contamination has occurred with faulty well casings, leaky pits containing flowback water, and well blowouts and spills into streams and rivers providing public water.

I think hearing first-hand the heart-wrenching testimony of Stacey Haney of Washington County, PA heightened my sensitivity to the grave injustices of fracking.  Ms. Haney gave personal testimony at a WV/PA Watersheds Compact meeting in spring 2011.  The Haney family suffered from arsenic poisoning due to contamination of their well water; Stacy’s son nearly died of liver failure.  The source of contamination is suspected to be a leaky wastewater pit on a neighboring tract.

Life is precious. Health is precious.  The loss of one life or injury to the health of one person is too high a price to pay for irresponsible natural gas development.

People must take action to accomplish change.  Here are some options for action:

1.  A donation in the memory of fractivist Carl Stiles may be made to the Gas Drilling Awareness Coalition (Luzerne County based).  There is a  GDAC-hosted concert coming up on Feb 19 in Plains, PA at the River Street Jazz Cafe.

2. In West Virginia, contact WV Sierra Club Outreach Organizer Chuck Wyrostok (wyro@appalight.com).  Chuck can connect you with others in your community to learn how to work for stronger state regulation.  You may find friends to carpool with to Charleston on February 8th for the West Virginia Environmental Council’s annual E-Day.

In Pennsylvania, here is the link to the PA Sierra Club.

3. Sign a petition to the EPA.  It takes but a minute.

4.  Write a Letter to the Editor of your local newspaper.  (Click here for a assistance.) Demand that the law must be changed to make drilling companies responsible for paying for the testing of water of residents within a prescribed radius of a hydraulically fractured gas well.  This should simply be part of the cost of doing business rather than putting the burden on the residents.

Also, the law must be changed to prohibit confidentiality agreements as part of legal settlements of lawsuits involving water contamination or air pollution. This is allowing gas companies to pay off victims and hide as much evidence of public health threats as possible.

5.  Contributions to local organizations that are working hard, mostly under volunteer steam, to call for stronger legislation can always use donations to fund expenses.

6.  Become an educated voter.  Vote for representatives that will fight for changes in the law to protect you and your family from harm due to irresponsible gas industry practices.  There are many other changes to be made to protect surface owners and the public health.

Getting ready to sign a gas lease?  Better check with your bank or mortgage lender first.  They may have something to say about it.   The mortgage holders recognize that there is risk of negative impacts to property value associated with fracking.  The idea of an acre-sized pit that holds toxic frack water situated on your land does not thrill them.  Nor the idea that your well water may go all pop and fizzy with methane contamination.  You may be reaping royalties, but you are endangering the value of the property from the banker’s perspective.

This subject was brought up in a New York Times story on October 19th entitled Rush to Drill for Natural Gas Creates Conflicts with Mortgages, by Ian Urbina, the same reporter that raised questions about the radioactivity of shale and the issue of whether or not the value of gas reserves on the company books were being overstated.  A follow-up story in the New York Times appeared on November 24th, Officials Push for Clarity on Oil and Gas Leases. In that story, Urbina writes:

“Leases often allow certain activities, like storing hazardous waste on a property, that are expressly forbidden by mortgages because they can harm  resale values. Such activities also violate rules set by institutions like Fannie Mae, Freddie Mac and Farmer Mac, which buy mortgages from banks.

Banks have become increasingly reluctant to give mortgages for properties with gas leases on them. Lenders have predicted that the conflicts between leases and mortgage rules are not likely to lead to foreclosures, but are likely to result in new rules from local banks and additional hurdles to getting a home loan or refinancing an existing mortgage.”

Fast on the heels of the Oct. 19th New York times story, Maryland’s  Attorney General Douglas F. Gansler warned landowners that signing a mineral rights lease could conflict with some requirements of their federally-approved home or farm mortgage.

Morgantown’s Dominion Post reporter David Beard has been the point person on Marcellus stories for that paper.  He explored to find out if West Virginia banks are experiencing this issue in the story Gas leases affect mortgages elsewhere, reprinted on insurancenewsnet.com.

“The problems may be creeping closer to this area, but haven’t arrived yet, local bankers say.

The reported effects — banks denying mortgages on gas-leased property, denial of title and homeowner insurances, property appraisals and assessments, and more — are complex and intertwined.”

It must be karma of some kind.  West Virginia and billionaire wildcatter Aubrey McClendon, CEO of Chesapeake Energy Corporation, have been involved in a dance that has been fraught with tensions since they met.   This history bodes poorly for the chances of a cooperative and respectful partnership going forward, and recent events reinforce this pessimistic conjecture.  Despite smooth rhetoric from company spokepersons regarding jobs and economic prosperity, and the denial of certain environmental risks, McClendon has an axe to grind with West Virginia.

Chesapeake, the biggest shale player in West Virginia, owns  275 producing Marcellus wells which yielded more than 42.6 billion cubic feet of natural gas and 111,160 barrels (a barrel is 40 gallons) of oil according to the Fort Worth based Star Telegram. This is based upon WVDEP’s production records from 2005 to 2010.

The Tawney Case

Chesapeake Energy acquired Columbia Natural Resources in fall of 2005 which expanded Chesapeake’s assets from it’s western domain into the northeast shale states.  Things went sour between Chesapeake and West Virginia shortly thereafter.   In May 2006, the West Virginia Supreme Court ruled in favor of 8,000 plaintiffs in the class action Tawney vs. Columbia lawsuit. The mineral rights owners claimed that they had received insufficient royalty payments as Columbia had attempted to deduct post-wellhead production costs in the calculation of the royalty. The WV SOROS website has a very good review of this case and all the gory details.

In 2008, the West Virginia Supreme Court voted to refuse to hear the appeal of a $404 million Roane County jury verdict in the Tawney case which included a punitive damages award of $270 million. Per a Steptoe and Johnson newsletter, this was the third largest verdict in the US in 2007.   The defendants were NiSource Inc., Columbia Energy Group, and Chesapeake Appalachia LLC.  Columbia was a subsidiary of NiSource until 2003.  It became Chesapeake Appalachia LLC, a subsidiary of Chesapeake Energy after the 2005 acquisition.

The defendants filed for appeal of the case to the US Supreme Court, but the case was dropped when a settlement was reached of $380 million.  The  punitive damages were eliminated in the settlement.  NiSource assumed liabililty for $340 million and Chesapeake was then responsible for the remaining $40 million.  (See October 2008 The Record story.)

Slashing 215 Jobs in Charleston

Retribution came swiftly.  The Record reports that “Earlier this year, Chesapeake Energy announced that it would not build a $35 million state-of-the-art headquarters for its Eastern operations in Charleston, citing the state Supreme Court’s refusal to hear the appeal.” A February 2009 Chesapeake news release stated that the reorganization which downsized the Charleston office from a regional corporate headquarters to a regional field office involved 215 of the 255 employees.  Those positions were either eliminated or relocated to Oklahoma City, the home of Chesapeake and it’s CEO.

Pipeline Plans Chill Prospects for an Ethane Cracker Plant

I want to use this handy segue to stay on point about jobs in West Virginia.  An ethane cracker plant has been held out as a glittering economic engine.  A plant costs $2-4 billion to build and could provide 500 full-time high paying jobs and 10,00 construction jobs per Keith Burdette, state Commerce Secretary.  The Marcellus Drilling News blog says, “Building a cracker plant in the region would attract thousands of jobs and billions of initial investment, and billions in revenue from associated plastics industries that would sprout up around the plant. It’s like winning the biggest imaginable lottery jackpot when it comes to jobs, money and tax revenue.”

But chances of attracting an ethane cracker plant anytime soon dimmed when the pipeline deal between Chesapeake and  Enterprise Producrs Patners was annnounced a few weeks ago. WV state officials working to bring an ethane cracker plant to West Virginia were surprised and frustrated to learn of the deal Chesapeake had struck with Enterprise to pipe ethane to the Gulf.  (See Charleston Gazette story, Nov. 5)  Whether or not this deal negatively impacts the chances for a cracker plant in WV has been hotly debated. “They’re shipping out a cracker’s worth of ethane to the Gulf Coast,” (Burdette) said. “They’re shipping out gas that could support investment here.”

The Gazette story continued with this telling information.  “Burdette said Chesapeake executive Scott Rotruck, who sits on Gov.-elect Earl Ray Tomblin’s Marcellus to Manufacturing Task Force, didn’t notify state officials about Chesapeake’s plans to ship the ethane out of West Virginia and neighboring states….”The fact they didn’t tell us about this was very disheartening,” Burdette said. “It doesn’t send a very good message that this is a two-way partnership. They knew how important we feel recruitment of a cracker is to West Virginia.”

McClendon giveth and McClendon taketh away.  We observed  punitive behavior when Chesapeake withdrew its donation of $30,000 from the Wellsburg Middle school band, then restored it after the city council voted to repeal a ban on fracking in the city and a mile beyond.  In September 2011, Chesapeake withdrew from discussions regarding a pledge of $25,000 to support the pavilion project planned for the Morgantown Farmers Market.  “When the Morgantown City Council approved their ban on drilling and fracking for one mile outside the city limits, we had to decline further consideration,” said Stacy Brodak, Chesapeake spokeperson. “It is important we dedicate our company’s resources where our industry is supported.” (Story here.)  Chesapeake previously donated $15,000 to support the Farmer’s Market project.

Clearly donations by Chesapeake are not altruistically motivated.  Donations are a tool used to manipulate public policy.  Play nice with Chesapeake and riches will be showered upon you.  But a wrathful McClendon is met if his will is defied.

Verbal Slurs

This post would be incomplete if I did not remind the reader that in January 2011, McClendon slurred West Virginians by stating that 30% of those applying for employment were drug users.   He also thinks West Virginians are illiterate hillbillies. West Virginia Environmental Council lobbyist Don Garvin observed that when asked about hiring West Virginia workers, McClendon replied, “You don’t know if you have a literacy issue or what?”

“There was a day I liked West Virginia…before I had an encounter with your court system,”  stated McClendon at the January  industry conference.   Read Don Garvin’s reaction to McClendon’s attitude here (Unwanted House Guests).

The Wetzel Experience

Wetzel County is Ground Zero for Marcellus shale drilling /fracking in WV.  While restaurants and motels are doing a gangbuster business in Wetzel County, the rest of the populace isn’t faring quite as well.  Unemployment in Wetzel County was 11.9% in September, the highest of all the 55 counties in WV.  Property values have suffered due to the proximity of industrial activity on once rural ridges.  Blake Run, once a pristine headwater stream with a seasonal waterfall, was converted into a roadway for the Chesapeake truck traffic.  The stream became nothing but a muddy trough devoid of life.  The EPA finally was called in and Chesapeake was fined and ordered to make restoration efforts.

The Audacious Aubrey Compensation Package

Just to give you a bit more flavor about Aubrey McClendon, be aware that there is some  interesting biographical information about McClendon at SourceWatch.org complete with references to source documents. The blog notes that McClendon lost just shy of $2 billion when gas prices collapsed in 2008 and McClendon was forced to sell shares of Chesapeake stock that he had purchased on margin.

McClendon’s 2008 compensation package was “one of the largest for any corporate executive last year,” including “a one-time $75 million bonus, a $975,000 base salary, and $32.7 million in stock” — “even as the company’s stock price tumbled,” noted the Wall Street Journal. One investor called the Chesapeake financial document describing McClendon’s 2008 compensation a “shameful document” and “a near perfect illustration of the complete collapse of appropriate corporate governance.” One Chesapeake shareholder, the Louisiana Police Employee Retirement System, “asked an Oklahoma state court last month to force Chesapeake to turn over records of its internal deliberations about Mr. McClendon’s compensation,” as “a first step toward a possible lawsuit accusing Chesapeake’s board of breaching its fiduciary responsibility.”

As part of the contentious 2008 compensation package, Chesapeake Energy bought Mcclendon’e antique map collection. A court case later forced McClendon to buy back the art. A Forbes article states: “Most critically, he also got $75 million, over five years, toward an unusual perk that allows McClendon to invest his own capital (or in this case, the capital that the company gave him for this purpose) alongside Chesapeake for a 2.5% stake in every well the company drills.

CONCLUSION

Aubrey McClendon is a man who uses money and power to achieve his goals.  He does not necessarily play by the rules and has been involved in ethical controversy.  Forbes described him as “the most reckless, the alpha wildcatter with an off-the-charts risk tolerance.”

MCClendon simply doesn’t like West Virginia and we can assume that the WV policies of Chesapeake  will be shaped by the ill will that it’s CEO holds for the state.

Now the people and the industry are locked in a power struggle.  The governor has been asked to call a special session of the Legislature to review the draft Marcellus bill produced by the Select Committee.   Will industry be successful this year and in 2012 in capturing the loyalty of our elected representatives through campaign contributions?   Will any Marcellus legislation be stymied?  Or will the Legislature be responsive to the outcries of the people demanding protection from rapacious corporate practices?   Stay tuned.