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Cross-Posted from DeSmogBlog

Former Chesapeake Energy CEO and Founder Aubrey McClendon is back in the hydraulic fracturing (“fracking”) game in Ohio’s Utica Shale in a big way, receiving a permit to frack five wells from the Ohio Department of Natural Resources on November 26.

“The Ohio Department of Natural Resources awarded McClendon’s new company, American Energy Utica LLC, five horizontal well permits Nov. 26 that allows oil and gas exploration on the Jones property in Nottingham Township, Harrison County,” a December 6 article appearing in The Business Journal explained. “In October, American Energy Utica announced it has raised $1.7 billion in capital to secure new leases in the Utica shale play.”

McClendon is the former CEO of fracking giant Chesapeake Energy and now the owner of American Energy Partners, whose office is located less than a mile away from Chesapeake’s corporate headquarters.

The $1.7 billion McClendon has received in capital investments for the purchase of 110,000 acres worth of Utica Shale land came from the Energy & Minerals Group, First Reserve Corporation, BlackRock Inc. and Magnetar Capital.

McClendon — a central figure in Gregory Zuckerman’s recent book “The Frackers” — is currently under investigation by the U.S. Securities and Exchange Commission. He left Chesapeake in January 2013 following a shareholder revolt over controversial business practices.

In departing, he was given a $35 million severance package, access to the company’s private jets through 2016 and a 2.5% stake in every well Chesapeake fracks through June 2014 as part of the Founder’s Well Participation Program.

Little discussed beyond the business press, McClendon has teamed up with a prominent business partner for his new start-up: former ExxonMobil CEO Lee Raymond.

Power Mapping McClendon’s New Venture

“[Lee] Raymond has emerged as a director alongside Mr. McClendon in American Energy Ohio Holdings LLC… according to [an SEC] regulatory filing,” The Wall Street Journal reported in October.

The former Exxon CEO’s son John Raymond is the Managing Partner, Chief Financial Officer, and Chief Executive Officer of Minerals & Energy Group, currently the largest capital investor in McClendon’s start-up venture. He is also a partner McClendon’s new venture. Ryan Turner, Chesapeake’s Stock Plan Manager has alsojoined the team as a partner.

“Jefferies Group LLC gave financial advice to American Energy” for the deal,according to Bloomberg — and is listed as such on American Energy Ohio Holdings LLC’s SEC Form D.

Ralph Eads III — McClendon’s fraternity brother at Duke University — serves as Global Head of Energy Investment Banking at Jefferies Group, Inc.

“Mr. Eads…is a prince of this world,” the New York Times reported in October 2012. ”His financial innovations helped feed the gas drilling boom, and he has participated in $159 billion worth of oil and gas deals since 2007.”

Eads maintained tight financial ties with McClendon when he was at the helm of Chesapeake Energy.

High Stakes Game

In teaming up with Lee Raymond, the former CEO of ExxonMobil — notorious for its role in funding climate change denial — and his brother John, McClendon has shown he is back in Ohio ready to play ball.

But a recent Environmental Integrity Project report indicates the life-cycle climate change impacts of fracking are more severe than previously thought.

With the U.S. Navy predicting an ice-free summer in the Arctic by 2016 due to climate change, it’s a ball game with undeniably high stakes.

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Comment Preferences

  •  What does the phrase "an ice free summer" mean? (0+ / 0-)

    No ice anywhere in the world, or no ice at the North Pole, or a clear east to west shipping channel north of Canada?

    "let's talk about that"

    by VClib on Fri Dec 13, 2013 at 08:52:48 AM PST

    •  left the word arctic out of the sentence (0+ / 0-)

      "The 'Middle' is a crowded place - that is where the effective power is - the extreme right and left might annoy governments, but the middle terrifies them." Johnny Linehan

      by northsylvania on Fri Dec 13, 2013 at 09:37:44 AM PST

      [ Parent ]

      •  I hate these short term predictions (1+ / 0-)
        Recommended by:
        VClib

        Now the anti-climate change folks will use this prediction against taking action if the prediction is false.

        Would be better to just point out the the Arctic is ice free in 2016, if it occurs, to support taking action.

        The most important way to protect the environment is not to have more than one child.

        by nextstep on Fri Dec 13, 2013 at 09:42:47 AM PST

        [ Parent ]

  •  1015 permits... and growing (2+ / 0-)
    Recommended by:
    cotterperson, Ishmaelbychoice

    2015 is when "Utica really takes off" and meeting capacity. It's a mover.

    The Utica Shale is in eastern/and heading south Ohio counties (Carroll, Harrison, Belmont, Noble, Guernsey, Monroe and Washington...) and Harrison County is where McClendon is focused.

    That is only 100 miles from Columbus, 60 miles to Pittsburgh, 80 to Youngstown. And, Youngstown OH has already experienced 10 earthquakes (never experienced before now) in 9 short months in 2011. And the OH Dept of Natural Resources was so "concerned" after that 10th earthquake that it shut down the fracking disposal well in Youngstown.

    Ohio has cleared the 1,000 mark for drilling permits in the Utica shale play, driven by activity from oil and natural gas companies that has exceeded projections by the Ohio Department of Natural Resources.

    --snip--

    He also told me the best is yet to come as more oil and gas pipelines and processing plants are built in eastern Ohio, paving the way for drillers to move gas and oil from well heads to the marketplace.

    ODNR has projected 750 drilling permits will be issued next year and 1,000 in 2015.

    “That’s when you’ll really see the Utica take off,” Bennett said of 2015. “Pipelines and processing plants will be up to capacity by then.”

    Benesch’s report on third-quarter shale activity also says the unveiling of well results is redefining the landscape for several companies, including Chesapeake. It says Chesapeake seems “slightly out of target” with some of its holdings in Ohio while Gulfport Energy Corp. (NASDAQ:GPOR), with 145,000 leased acres in the Utica, is well-positioned.

    There also is the wildcard of former Chesapeake top gun Aubrey McClendon. His new company, American Energy Partners LP, is acquiring acreage in the Utica after raising approximately $1.7 billion in private equity commitments to finance operations in eastern Ohio.

    And Texans are selling their Texas holdings and moving into Ohio in the Utica Shale area because Utica has TWICE the oil/gas that their Texas wells have.

    They're building a pipeline from the Ohio River up to the Utica shale area for water. Fracking requires lots of water (wasting scarce fresh water resource). Do they also plan to pipe the disposal crap back into the Ohio like the CAFO hog farms do?


    One does not become enlightened by imagining figures of light, but by making the darkness conscious. --Carl Jung

    by bronte17 on Fri Dec 13, 2013 at 10:26:05 AM PST

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