People Standing Up - Where's the Media

Samples? You want Samples? 
Taken from the Leroy blowout "event" site.

10 days have passed since the Leroy "incident" on May 19, 2012.    Media reports are scanty at best.   No follow up by the media beyond 2-3 homes vented for methane.  

Have these types of "incidents" become so commonplace that they barely merit a couple of paragraphs?  If so, then these "incidents" are more frequent and widespread - that in itself speaks volumes.

Or has our media become too frightened to report the impact on people, their homes, and communities?  

 
The Susquehanna River Sentinel is following this, and posting updates and videos of what is being found by concerned citizens.

Natural Gas Migration...again?

On the weekend of May 19, 2012, Lee Franklin of Granville Summit in Bradford County PA  noticed his drinking water well was bubbling.    Chesapeake Energy and the PA Department of Environmental Protection (PA-DEP) were contacted.

Officials said methane turned up in Franklin’s well. The gas was also discovered bubbling up in a wetland area behind his home, said officials. Even Franklin’s dad, who lives just up the road, has been affected.

“It takes a month to get the tests back, we’re not taking any chances. They want to make sure we’re okay,” said Ted Franklin.

Ted Franklin said Chesapeake has provided drinking water for him and his son and crews are installing a filter so his water is safe for showers and washing dishes.

 DEP officials said the investigation centers around this Chesapeake well pad and that several nearby homes and their wells have been tested for methane. The wells at those homes tested clear but residents including Christine Pepper are nervous.

 “Unsettling, definitely unsettling, you like to know everything you do and is surrounded by is where it should be,” said Pepper.

Pepper and her two sons showed us where specialists had looked for any signs of methane on their dairy farm. Pepper is waiting to find out if they did and if her water is okay.

The same goes for Shirley Brenchley just two doors down from the Chesapeake gas well in question.

“I’m trying to go with the flow. I wish they’d make us aware of what’s happening so we know what to do and what to plan for. Should I drink that water?” Brenchley questioned.

 April 2011 Blowout
 The nearby, Morse gas well, is located not far from the Chesapeake Energy well which blew out on April 19,  2011. 

Chesapeake said the leak was sealed on April 21, 2011 and the well was fully controlled on April 25.  Chesapeake Energy  was fined $250,000 for the April 2011 incident.   Chesapeake Energy downplayed the environmental impact of a Leroy Twp. 10,000-gallon wastewater spill, blamed a vendor for the equipment failure that precipitated it, and took issue with regulators' account of the incident.

Prior to the April 21, 2011 blowout, the PA DEP had fined Chesapeake a record $1.1 million for a series of other incidents. The fine included a $900,000 penalty for allowing methane to migrate up a faulty well in Bradford County contaminating 16 families' drinking water. The balance was a $188,000 fine for a Feb. 23 tank fire at a well site in Avella, Washington County that injured three.

Morse Well "Leak" 
News of the recent "problem" did not reach the media's attention until Monday, May 21, 2012.    DEP has sampled four private wells in the area and a Chesapeake consultant is screening all private wells within a 2,500 foot radius of the Morse pad.

Two homes were found to have methane at their private drinking water wellheads and were vented.  As of May 24, 2012, the DEP now says three homes are affected

There are reports of bubbling in the nearby stream leading to Towanda Creek, and bubbling in a surrounding wetland area.   Unconfirmed rumors have been circulating of dead fish and frogs and hissing sounds coming from a hillside.

"NATURALLY" Occurring
A spokesperson from the Pennsylvania D.E.P. has said they can't officially determine the cause of the contamination.

"The investigation is continuing and no determination has been made as to the source or sources of the methane," said Daniel Spadoni.

News media is reporting the cause as "methane gas can migrate underground when a gas well hits a pocket of naturally occurring methane gas causing the methane to seep into the soil." 

According to MarcellusGas. org: Violations per Gas Company for Leroy Township, Bradford County, PA
20 : the total number of violations in Leroy Township to date.
2 : the number of Gas Companies with violations in Leroy Township to date.
CHESAPEAKE has the highest number of violations in Leroy Township to date (17)

See Susquehanna River Sentinel for photos and more on the ground updates.

3,300 violations in four years
In February, 2012, the Times Tribune reported: Drillers cited for 3,300 violations in four years

Penn Environment found that Cabot Oil and Gas Corp. had the most violations with 412, including 161 in 2011 - the most violations by a Marcellus Shale driller last year.

Chesapeake Appalachia, Chief Oil and Gas, and Talisman Energy USA all had more than 300 violations during the four-year study period, although Talisman cut its violations from 154 in 2010 to just 30 in 2011, according to the report.

Of drillers with more than 10 Marcellus wells in the state, XTO Energy, an ExxonMobil subsidiary, had the highest rate of violations, with an average of three violations for every well it drilled.

Ms. Staaf said the study "demonstrates that Marcellus Shale gas drilling companies are either unable or unwilling to comply with basic environmental laws that have been put in place to protect the health and environment of Pennsylvanians."

NOT just Dimock
Recently,  J. Lisak of Pennsylvania Alliance for Clean Water and Air (PACWA) compiled a list of more than 200 cases which were reported by the media of people and animals who have been sicken and even died from exposure to air and water contamination associated with gas field facilities.

More than half of those on the list are Pennsylvania residents.  The List of the Harmed includes locations such as Carmichel, Hickory, Tioga County, Washington County, Lake Lynn, Clearville, Bedford County, Bradford County and Butler County to name a few.

The natural gas industry continues to maintain this is all naturally occurring contamination or the contamination was there BEFORE any natural gas industrial development happened and reports of illnesses, contamination etc are "anecdotal" .

Fracking the Frog

Leroy, PA, Saturday May 19, 2012:  PA-DEP and Chesapeake Energy are alerted to methane in private water wells, bubbling wetlands, bubbling creeks.

Homes in the area are being tested every 12 hours for methane levels.

Two private water wells are being vented and drinking water is being supplied.

Rumors of "stuff" floating down the creek, dark water, fish kills and "hissing" sounds coming from a hillside.

A year ago, the local newspapers and television news trucks would have been in Leroy throughout the weekend.   When was the first inkling that "something" was happening in Leroy - not until Monday, May 21, 2012, and just a short blurb, followed by the standard excuse of "natural occurring methane".

Well, my friends, we've reached the point where the frog has been boiled, or in this case fracked.  We are at the point where blowouts, leaks, spills, methane spurting water wells, bubbling creeks and fish kills are so commonplace that it's hardly worth coverage by the media.

From one end of Pennsylvania to the other, there are many communities and neighborhoods being adversely effected by gas drilling.  Dimock, Franklin, Leroy, Lenox, Butler, and Hickory are among the many others with gas drilling "problems".

The lack of media coverage is disturbing enough, but the fact these things have become so commonplace is even more disturbing.  

Where's the outrage?  What is it going to take to wake people up?  Sadly, it's going to take a huge disaster to get people to jump out of the pot of boiling frack water.

Aubrey and Ralph - BFF

Aubrey McClendon, CEO of Chesapeake Energy and Ralph Eads III, the Chairman of Jefferies Energy Investment Banking Group go way back in their association.




McClendon and Eads were Sigma Alpha Epsilon fraternity brothers at Duke University.


Prior to joining Jefferies, Eads was Co-President of Jefferies Randall & Dewey.   In February 2005, Jefferies acquired Randall & Dewey, which became Jefferies' Energy Investment Banking Group.  Eads was President of Randall & Dewey.


His career includes being the Executive Vice President of El Paso Corporation, where he was responsible for El Paso’s unregulated businesses. Previously, he was Managing Director and head of the Energy Group at Donaldson, Lufkin & Jenrette. He has held investment banking positions at S.G. Warburg, Lehman Brothers, and Merrill Lynch.

Eads is the Board of Trustees for Duke University.   Also on the Duke Trustee board is Xiqing Gao, the Vice Chairman, President and Chief Investment Officer of the China Investment Corporation (CIC), China's sovereign investment fund.  CIC has minority interest in Chesapeake Energy's CHK-Utica in Ohio.
 





McClendon started his first oil and natural gas investment company, Chesapeake Investments in 1982.  He co-founded Chesapeake Energy Corporation with the company's former president Tom L. Ward, currently the CEO of Oklahoma City-based Sandridge Energy Corporation, in 1989 with a $50,000 initial investment.  They took the company public in 1993.

McClendon and Eads are partners in Clos Dubreuil, a winery in Bordeaux, France.

Jefferies Energy Investment Banking Group, acting as financial advisor, has assisted Chesapeake Energy with many of it's recent ventures which include CNOOC Ltd of China, Hopu Investment Management Co. Ltd. of China, Statoil of Norway, and Total SA of France.  While Chesapeake Energy is not the sole client of Jefferies, Chesapeake is a substantial client in comparison.

In the past few months, Chesapeake Energy has taken a beating.   Shares are in the $14 range, and have hit a 52 week low of $13.32.   The "Aubrey problem" has contributed to the lack of enthusiasm from various market analysts and the recent S&P downgrade of Chesapeake to BB- rating hasn't helped.

While many market analysts have downgraded Chesapeake from "Buy" to "Hold", or "Hold" to "Sell", the analysts at Jefferies are defending their "BUY" rating. 

Jefferies said that the sale of some of the company’s assets in the Marcellus Shale should help bridge the 2012 funding gap. Commenting, the analyst noted that “Progress along this front should result in the stock reflecting more of the upside embedded in CHK’s asset base. An update on the Utica JV should be imminent.”

Regarding the recent $4-billion dollar loan to Chesapeake, a May 18, 2012 Bloomberg article described it as:

McClendon is depending now on his Jefferies confidant at an even more crucial moment. Falling gas prices, combined with the buying binge, is forcing Chesapeake to unload assets to keep the company afloat. Along with Goldman Sachs Group Inc. (GS), Jefferies bankers are seeking buyers for oil-rich prospects and lending Chesapeake $4 billion in the meantime.

“Without Wall Street, Chesapeake wouldn’t be able to do what it has done,” said Phil Weiss, an analyst at Argus Research in New York who rates the shares “sell.”

Eads and New York-based Jefferies declined to comment.

“Ralph Eads and Jefferies have unmatched expertise in the E&P business and have added enormous value to Chesapeake’s business and its shareholders over many years,” Chesapeake said in a statement, referring to the exploration and production industry. “We deeply value our long-term relationship.” 

Surprised?  You shouldn't be - that's what friends are for......

Where's Carl?

On Monday, May 14, 2012, Chesapeake Energy watchers and marketeers were all a twitter about the possibility of Carl Icahn, Corporate Investor, riding to the rescue with tons of cash. 

During a Special Conference call on 5/14/12, Aubrey McClendon was asked about Icahn re-entry into the Chesapeake fold:

McClendon noted that Icahn briefly invested in the company in 2010 with good results.

“He made over $500 million and called to thank me when it was over,” McClendon said. “If he comes in (again), I’m pretty confident he’ll make a lot of money.”

Icahn didn’t return a call for comment.

Since then, no one has seen Icahn.  Rumors of his whereabouts include that this was all a rumor, or that he's in negotiation with Chesapeake Energy, or he's waiting for Chesapeake Energy to fall even more before swooping down and gobbling up the remains.




It's now early Friday morning, May 18, 2012, and we are all asking "Where's Carl?".



Late afternoon, on Friday, May 11, 2012, Chesapeake Energy announced they have secured a $3-billion dollar loan to cover their "revolving credit facility",  by Monday (5/14/12), the amount increased to $4-billion.

The loan increase, Icahn rumors, nor McClendon's special conference call did much to calm the jitters. Initially, on Monday, 5/14/12, stock increased and then closed down.  Rest of the week showed a slow downward dribble, with Chesapeake hitting a new 52-week low of $13.32 on Thursday, 5/17/12.  The news of T. Boone Pickens dumping his remaining Chesapeake interests did not help.



(With regards to Pickens, we like to note he has dumped ALL natural gas stock, not just Chesapeake holdings. )

By Wednesday, (5/16/12), more rumors surfaced about circling sharks.  Although speculation and theories of the whereabouts of Icahn persist, corporate names were being dropped.

Anadarko and Chevron were mentioned as possibly taking a few big and small bites.   Other candidates could include France-based Total, BHP Billiton of Australia, Devon Energy, Apache Corp. and Occidental Petroleum Corp.  Exxon-Mobile was also mentioned earlier this month.




To further add to Chesapeake's woes, S&P lowered Chesapeake Energy Corp.'s $4 billion senior unsecured term loan due Dec. 2, 2017 to a "BB-" rating and stated "rating outlook is negative."

Standard & Poor's lowered the ratings on Chesapeake on April 26, 2012, and again on May 15, 2012. The downgrades reflected a confluence of factors,including turmoil over revelations about its CEO's personal financial transactions and increased funding risks stemming from weak internal cash generation and very heavy capital expenditures.

This week a group of Chesapeake Energy Corp. investors asked a judge to postpone the company’s annual shareholders’ meeting so they can gain additional disclosure of Chief Executive Officer Aubrey McClendon’s compensation.



The custodian of a group of New York City pension funds is calling on Chesapeake Energy Corp. shareholders to vote against two board members, saying they failed to monitor financial activities of the company's chief executive that have engulfed the natural-gas giant in controversy.   

The City of New York Office of the Comptroller, representing pension funds that own 1.9 million shares of Chesapeake, is opposing the only two directors up for election, who both serve on the company's audit committee: V. Burns Hargis, president of Oklahoma State University, and Richard K. Davidson, former chief executive of Union Pacific Corp.




And credit worries continue to mount.

The reports have come as Chesapeake grapples with a 2012 funding shortfall of $9 billion to $10 billion as natural gas prices remain at their lowest in a decade. The company managed this week to tap the capital markets for a $4 billion bridge loan -- but investors are still worried. 

"They need too large of an asset sale over too short of a time, otherwise they are going to have a liquidity crisis," said Marc Gross, portfolio manager at RS Investments' high-yield and floating-rate bond funds. 

"All of the problems they are having today is because they didn't expect $2 gas, and it's hurting them a lot more than they are letting on. The company is under stress," he said. 

The cost of insuring Chesapeake bonds against potential default jumped on Thursday after hedge fund manager T Boone Pickens dumped 71,000 of its shares. 

Five-year credit default swaps were last trading 26 basis points wider at a record wide of 887, surpassing the previous historical wide of 828 seen in Jan, 2009. 

That means it costs $887,000 a year for five years to insure $10 million of debt.

Will Chesapeake need bigger loans or will Carl appear to "save" them?  How many more shoes will drop?   Is this the end of Aubrey?  And what of Chesapeake employees with their stock investments? Is Chesapeake another Enron waiting to happen? Stay Tuned.

Pickens Burning "Bridge Fuel"?

Bloomberg has reported T. Boone Pickens dumped Chesapeake Energy Shares. 

 

Pickens began dumping Chesapeake shares during the first quarter, when his Dallas-based BP Capital Management LP fund sold 71,000 shares, or 12 percent of its stake, according to a May 15 filing. The remaining 499,055 shares were sold by May 10, when Pickens said he no longer owned any stock.

“We got out of the natural-gas stocks and Chesapeake was one of them,” Pickens said on CNBC yesterday. Even after selling the shares, Pickens said "..people shouldn’t bet against McClendon despite potential conflicts of interest that have caused shares to plunge and triggered Internal Revenue Service and Securities & Exchange Commission probes.

Two things to note about Picken's Statement:

1.   "..people shouldn’t bet against McClendon despite potential conflicts of interest that have caused shares to plunge and triggered Internal Revenue Service and Securities & Exchange Commission probes."

This is like saying people shouldn't have abandoned the Titanic because of hole in the side and it was sinking.  And BTW - Chesapeake Energy hit a new 52 week low this morning (Thurs 5/17/12) at $13.62/share.

2.  “We got out of the natural-gas stocks and Chesapeake was one of them,” Pickens said.
Ignore the part about Chesapeake and focus on "We got out of the natural-gas stocks..."  and keep in mind T. Boone Pickens is the founder and pusher of the PICKENS PLAN. 

 This is the face of Natural Gas, the flag waver for "breaking the oil habit",  horn tooter for fleets of NG vehicles zooming across our nation's highways and he "...GOT OUT OF NATURAL GAS STOCKS"???
The obvious answer is he's not making money or enough money on natural gas stocks.   If this is the reason, then what does is say about his support for American Natural Gas for Americans?  Is this no longer a priority, thrown aside because his real priority is to make more money for himself?

Why would Mr. Natural Gas dump ALL natural gas stock?   Where's his confidence in the natural gas and his own plan for that matter?  The Pickens Plan touts natural gas as bridge fuel to take us from using oil to using wind/solar.   Does it mean Pickens has burned the bridge?

Wear Hip Boots - Bring Shovels

A note to township supervisors for meetings with Natural Gas Industry representatives - please advise residents to wear hip boots and bring shovels.   The manure piles up pretty fast and high.

Dallas, PA: Beginning on  May 1, there have been a 5 pipeline blowouts, spilling more than 6,000 gallons of drilling mud at two different Dallas Township sites: Leonards Creek on Kunkle Road, and Upper Demunds Road and Goodleigh Road. 

Dallas Supervisors were contacted on May 3, (two days after the first blowout), by a resident requesting information about the blowout.

PA Department of Environmental Protection (PA-DEP) stated they were notified by Chief Gathering of the blowout when the first blow out happened and PA-DEP responded that day.    It did not ocurr to them to perhaps.... notify town officials?  This was one of many questions asked at the Wednesday, May 15, 2012 town meeting.

The small meeting room was filled with local residents concerned about the mud blowouts, especially since the incidents were in or near a public water supply, residential artesian wells and sensitive wetlands.  Also present were representatives from PA-DEP, Chief Gathering (a subsidiary of Chief Oil & Gas), and their contractor, Southeast Directional Drilling.

Chief Gathering and PA-DEP had requested they be placed first on the meeting agenda and to keep discussion at a minimum.   They were first on the agenda, but the discussion was anything but "minimal".

For a little over an hour, representatives from Chief, PA-DEP and Southeast were peppered with questions.  Their answers were less than satisfactory and comprised of the Natural Gas industry's talking points, and spin.  If it weren't for the absence of television cameras, I would have thought a natural gas TV commercial was being made before our eyes.

Three of the choicest bits from the meeting:

1. PA-DEP spokesperson said it wasn't a mud spill or mud blowout... ready for this? It was an "inadvertent return to surface".   Does calling it an "inadvertent return to surface" make it less of a hazardous situation?   The information the repesentatives from PA-DEP were not especially helpful or informative and were perceived as condensending.   One PA-DEP representative was caught smirking when local Dallas residents were expressing concerns about their drinking water.


2. Chief representatives were grilled about the Bentonite recipe they are using.   No big surprise that Chief played down the health risks, and mentioned that bentonite is used in many food products as a binding agent or used to drill water wells.  Crickets were heard when they were asked if they would drink a glass of water with bentonite in it.

One Chief spokes-parrot piped up and said bentonite is also used as a laxative....

 ooooooooo-kaaayyyy.... be that as it may, I don't know about you but I don't want my drinking water dispensing laxatives.  


3. Chief should know better than to send an inexperienced spokes-parrot to these type of meetings - especially the Dallas town meetings where we have several people quite well informed on fracking and related activities.

As this part of the town meeting was winding down, Chief was asked what their purpose in coming to the meeting was about as it was obvious it wasn't to answer questions and address concerns.

Chief's spokes- parrot stated they were there to educated the public so they can but it behind them, complete the job and get out of town.

Uhhhhh...yeah. Do good neighbors drill, contaminate water and run?

"You have to please understand the skepticism we have," resident Jim DeMichele said. "We're new to this. We're here. They're getting done and they're getting out of here."

I agree with Mr. DeMichele with one correction - the word skepticism is too nice,  distrust would be better.   

We do not trust Harrisburg legislators and the current occupant of the governor's mansion to do what's best for the people of Pennsylvania.   We do not trust the PA-DEP, one wonders which "environment" are they really protecting?  The air, land and water belonging to the people of Pennsylvania, or the business environment for the benefit of the Natural Gas Industry?  And we certainly do not trust the Natural Gas Industry when their priority is to get the job done and get out.

American Dream American Nightmare

"We can put light where there's darkness, and hope
where there's despondency in this country.
And part of it is working together as a nation
to encourage folks to own their own home." 
- President George W. Bush, Oct. 15, 2002

While the Marcellus Shale Coalition, Energy-in-Depth and similar allies of the Natural Gas Corporations cherry pick through reports and tout how well the economy is doing because of gas drilling or how many jobs are being created because of the gas drilling industry, families waking up to a different reality.

It's not necessary to have a property with frack contaminated water, nor for the property to have been exposed to a blowout or leak - just having a gas well on the property or nearby is enough to be denied their American and turn it into an American Nightmare.

The Smiths live across the street from the new gas well. They applied for a new mortgage on their $230,000 home and hobby farm, and Quicken Loans congratulated them on their conditional approval.

"They said all the paperwork will be done by the end of the week and we'll be able to close," Brian Smith said. "Somewhere in there, they called us and said, 'Your loan got denied.'

 "While Quicken Loans makes every effort to help its clients reach their homeownership goals, like every lender, we are ultimately bound by very specific underwriting guidelines. In some cases conditions exist, such as gas wells and other structures in nearby lots, that can significantly degrade a property's value. In these cases, we are unable to extend financing due to the unknown future marketability of the property."

Two other national lenders also turned down Brian Smith's application.    How many others have been similarly denied either to refinance or to purchase a new home?

As this story gains traction, expect Kathryn Klaber, Executive Director of the Marcellus Shale Coalition, and others to hunker down into damage control mode.   There will be several "press releases" and blog postings and ads to pooh-pooh this.  

The question we all need to ask is simple "How much would you pay to live next door to this?"

Chesapeake Energy: "THE DOTS"

The Salazar loophole

Drillers Would Disclose Chemicals After Fracking Under Rules - Katarzyna Klimasinska, Bloomberg News

Oil and natural gas companies won't be forced to disclose chemicals used in hydraulic fracturing until work is completed, under a proposed U.S. rule issued today that drew opposition from environmental groups.

The proposal lets gas producers exclude trade secrets and confidential information, Interior Secretary Ken Salazar said today on a conference call. It would add about $11,833 in costs per well in 2013, according the Interior Department.

Another gift to the gas corporations?  You bet it is.  Let's call it the Salazar loophole.  

This is a Poison First - Tell Later proposition.  Each gas driller may use several different recipes and sources for the frack chemicals.  There isn't any "one cocktail fracks all" recipe.   Cost of fracking chemicals and/or geological considerations will determine which recipe is used.    Gas wells within a relatively short distance of each other may use different cocktails, and the same would be possible for each horizontal bore and frack from the same well pad.

The oil and gas industry and trade groups are quick to point out that chemicals typically make up just 0.5 and 2.0% of the total volume of the fracturing fluid.  When millions of gallons of water are being used, however, the amount of chemicals per fracking operation is very large. For example, a four million gallon fracturing operation would use from 80 to 330 tons of chemicals

In 2011 Rep. Henry Waxman of Los Angeles, the ranking Democrat on the House Energy and Commerce Committee, joined byEdward J. Markey (D-Mass.) and Diana DeGette (D-Colo.) sent a letter to the Environmental Protection Agency. The letter said two companies had erroneously reported usage of diesel fuel in fracking fluids.

More than 32 million gallons of diesel were used from 2005 to 2009 by 12 companies employing fracking in states including Texas, Oklahoma, Louisiana, Colorado, Wyoming, North Dakota, West Virginia and Pennsylvania, among others.  The amount of diesel under-reported was about 500,000 gallons.

The gas corporations are still allowed to hide "trade secrets and confidential information".    One of the talking points the gas corporations frequently repeat is these chemicals are the same ones that are contained in "stuff under your kitchen sink".   I ask, when was the last time you drank a glass of Windex?  Greased up a baking pan with Pledge furniture wax?  How about a couple of teaspoons of Comet in your coffee?

Many fracturing fluid chemicals are known to be toxic to humans and wildlife, and several are known to cause cancer.  Potentially toxic substances include petroleum distillates such as kerosene and diesel fuel (which contain benzene, ethylbenzene, toluene, xylene, naphthalene and other chemicals); polycyclic aromatic hydrocarbons; methanol; formaldehyde; ethylene glycol; glycol ethers; hydrochloric acid; and sodium hydroxide.

People are having water tests done BEFORE any gas drilling activity begins to establish a base line and provides some small amount of evidence should there be a question of contamination in the future.  Typically, after suspected contamination happens, more water tests are done.   Even when the presence of KNOWN chemicals or other naturally occuring hazardous materials (lead, arsenic, strontium etc) are found - the gas corporations maintain contaminates were there BEFORE drilling/fracking occurred and therefore are not responsible. 

No water test exists which will test for ALL the possible chemicals at once.   Many of the frack chemicals - that we know about so far - require specific tests to detect them.   If you are not looking for a specific chemical, you won't find it.   Disclosure AFTER the frack provides the gas corporations with "plausible denial".  If a test was not done for Chemical-X BEFORE the frack, and Chemical-X was found AFTER the frack, gas corporations will use the excuse that Chemical-X was present in the water BEFORE any drilling/fracking was done.

Food that we buy in stores are required to be labeled with the ingredients.   We are able to see what is in the box of Mac'n'Cheese before purchasing it and before we eat it.  Shouldn't the same requirement be made of the water we drink as a box of Mac'n'Cheese?

More Damage Control at Chesapeake Energy

Chesapeake Energy has circled the wagons and is firing up the spin machine.   They have "retained George Sard, the CEO of Sard Verbinnen* .    Sard was described as a "spinmeister of the apocalypse" by Portfolio magazine in April 2009, because he has worked as a PR consultant for so many high-profile clients in moments of utter, humiliating public collapse."

Sard's clients have included the Madoff brothers (Ponzi scheme), Eliot Spitzer (prostitution), Martha Stewart (insider trading), former Lehman Brothers CEO Dick Fuld (Ponzi scheme), and AIG (Ponzi scheme). His firm was also on the scene during the Enron collapse -- JPMorgan hired him to beat back accusations that the bank was complicit in the Enron fraud (it eventually paid $135 million to settle SEC charges).

----Gee, those worked out really well, didn't they?  EPIC FAIL

McClendon told investors he's "deeply sorry" that his personal finances have come under scrutiny as shares fell the most in three years.

"I'm deeply sorry for all of the distractions of the past two weeks," McClendon, co-founder of Oklahoma City-based Chesapeake, said on a conference call to discuss first-quarter results today. McClendon said the company may have to sell more assets than planned to cover a gap between cash flow and revenue if natural-gas prices remain depressed. These sales won't interfere with debt-reduction targets or plans to boost oil production, he said.

----He's sorry about distractions, but not about the funny loans?

When all else fails - Blame the media.
Chesapeake Energy Corp shares fell sharply on Wednesday morning, even as Chief Executive Officer and Chairman Aubrey McClendon, under fire over investigations by Reuters into his personal financial dealings, criticized many of the reports as "misinformation."

"There's been enormous and unprecedented scrutiny of our company, and of me personally. And a great deal of misinformation has been published, and uncertainty created," McClendon told an earnings conference call on Wednesday.

He declined to offer specifics, and analysts did not press him on the Reuters reports that showed he had taken out as much as $1.1 billion in personal loans on ownership stakes in wells the company had given to him. Analysts and academics have said those stakes posed potentially serious conflicts of interest

* Per Sard Verbinnen & Co

Sard Verbinnen & Co (SVC) is a leading strategic corporate and financial communications firm. We provide communications counsel and services to clients including multinational corporations, smaller public and private companies, investment firms, financial and professional service firms, and high-profile individuals.

The firm’s highly experienced senior professionals provide sound, objective advice and execution support to clients across a broad spectrum of industries. Our work encompasses corporate positioning, media relations and investor relations, transaction communications, litigation support, crisis communications, and other special situations.

We are regularly cited as one of the top M&A and crisis communications advisors in North America.

More on the "Aubrey Problem"

Last week we asked if there were more shoes to drop on Chesapeake Energy and the "Aubrey problem".

This morning - Reuters dropped a huge shoe.


Special Report: Inside Chesapeake, CEO ran $200 million hedge fund
By Joshua Schneyer, Jeanine Prezioso and David Sheppard
NEW YORK | Wed May 2, 2012 8:03am EDT

Excerpt:

Behind the scenes, a Reuters investigation has found, McClendon also ran a lucrative business on the side: a $200 million hedge fund that traded in the same commodities Chesapeake produces.

On Tuesday, two weeks after Reuters reported that McClendon has taken up to $1.1 billion in loans against his stakes in Chesapeake oil and gas wells, the company stripped McClendon of the chairmanship and reiterated that it's reviewing details of the loans. A statement quoted McClendon, who will stay on as CEO, saying that the move will enable him to focus his "full time and attention on execution of the company's strategy."

Excerpt:

During that time, said a veteran trader who helped run McClendon's private hedge fund, the Chesapeake executive engaged in "near daily" communications and "exhaustive" calls to help direct the fund's trading.

The fund, Heritage Management Company LLC, was started by McClendon and Chesapeake co-founder Tom Ward. The hedge fund listed Chesapeake's headquarters in Oklahoma City as its mailing address, documents show. Heritage's staff included an accountant who was simultaneously employed by Chesapeake. The fund also earned McClendon and Ward management fees and a cut of profits from outside investors.

For more information regarding Heritage, Tom and Aubrey see Aubrey McClendon: Chesapeake Energy’s Little Problem Connecting the Dots: The Marcellus Natural Gas Play Players–Part 6

As we asked in a previous blog post, we will ask the question again. 

Is Aubrey TOAST?

TUNE YOUR COMPUTER to ForwardBlitz on BlogTalkRadio this Saturday May 5,  8pm-10pm est

Meet the 1st Lady of Fractivism: The Woman Who Connects the Dots!  Dory Hippauf 

Meet the 1st Lady of Fractivism: The Woman Who Connects the Dots!

Dory Hippauf with Sydney, 4 yr old rescue Great Dane

Meet the 1st Lady of Fractivism: The Woman Who Connects the Dots!
By CommonSense2 Editor  May 1, 2012

Aubrey McClendon: Chesapeake Energy’s Little Problem

Aubrey McClendon: Chesapeake Energy’s Little Problem
By Dory Hippauf
Connecting the Dots: The Marcellus Natural Gas Play Players–Part 6