Reuters Drops Another Chesapeake Energy Bombshell: Sayonara, Property Rights

Categories: Biz

Aubrey_McClendon.jpg
Chesapeake CEO Aubrey McClendon
Chesapeake Energy, one of the shale boom's biggest players, has amassed the rights to drill on acreage roughly equal to the size of West Virginia. It's a shrewd strategy -- tie up all the land you can using outrageous sums of borrowed cash (more than $30 billion), freeze out your competitors, then drill it or sell it at a premium.

And wouldn't you know, they've used some downright underhanded tactics to accomplish this massive land grab, according to the latest report from Reuters.

Meet the Bhandaris of Arlington, who weren't particularly keen on leasing the minerals beneath their home to Chesapeake. The couple is opposed to drilling in urban and suburban areas. They said no to potentially thousands of dollars, but that wasn't anywhere near the last word on the matter. Chesapeake got what's known as a Rule 27 37 exception from the Railroad Commission of Texas, Reuters reports, which allows the company to take the minerals beneath the property against the Bhandaris' will. It amounts to what one law scholar describes as the involuntary "transfer of private property."

It's more common than you might think. The Railroad Commission apparently doles these exceptions out like candy, with Chesapeake as the most frequent taker. Out of the more than 3,500 exception applications since 2005, Chesapeake has applied for some 1,600 of them. The Railroad Commission granted all but five.

If the apparent deprivation of Texans' supposedly sacrosanct property rights isn't enough, Reuters also discovered Chesapeake has been signing leases it has no intent to honor, simply as a way to tie up the land and horn competitors out. The resulting lawsuits are merely one of the accounted-for hazards in this strategy.

This story is the latest in a bang-up series that began with the discovery of a clear conflict of interest in Chesapeake CEO Aubrey McClendon's personal investments in oil and gas. He was replaced as chairman of the board, though he remains at helm of the company.


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4 comments
StayPuffyKarlRove
StayPuffyKarlRove

Gotta love them pro-business, pro-drilling, pro-spilling, pro-killing Republicans and their 'secret capitalist' rules over at 'Cheat-and-leak Energy.'

 

They got a million of 'em, but they ain't giving any of them millions to you or me.

kimfeil
kimfeil

I guess the "minus well take the money its gonna happen anyway" didn't work with them as it did to the rest of us that were told that. How ironic that those not even close to drilling have gotten sickened by Chesapeake's stale flowback operations back in March just sitting an a redlight. Chesapeake needs to pony up and put scrubbers on those open hatch flowback tanks especially when they leave frack fluids stuck in the earth for several months before flowing back their wells. Paramedics had to tend to Jean Stephens from one of their flowback operations in Arlingotn TX. The upcoming Cowboy Stadium "stench event"  is feared now because Chesapeake fracked three wells last month, yet won't be flowed back for a few months at least. 

MushMouth1
MushMouth1

No chance that the five exemptions granted could possibly be tied to certain people who have connections to Railroad Commission members, right?

 

And please let's do away with the myth that conservatives are all about less invasive government. Both parties are only interested in being the lapdogs of corporations.

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