The land grabs behind fracking

Reuters has been killing it lately in its investigation of fracking finances, specifically the various deals done by Chesapeake, a major player in the fracking industry, and the company’s high flying CEO Aubrey McClendon.

Special Report: Chesapeake and rival plotted to suppress land prices

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Their latest piece looks at land deals and fracking. Protecting landowners from predatory leases or behaviors on the part of land companies has become one of the chief concerns raised about fracking in North Carolina. The image portrayed in the hearings – and one I’m sure pushed by the oil and gas industry – is that there are a few bad actors in the business and they can be dealt with by adding more protections in lease requirements, mineral rights purchases, land buys and so on.

But what if there’s something bigger than just a few unscrupulous landmen? What if the two biggest players in the industry get together to suppress land prices in an entire region? What if the bad actors are playing the lead role?

In emails between Chesapeake and Encana Corp, Canada’s largest natural gas company, the rivals repeatedly discussed how to avoid bidding against each other in a public land auction in Michigan two years ago and in at least nine prospective deals with private land owners here.

In one email, dated June 16, 2010, McClendon told a Chesapeake deputy that it was time “to smoke a peace pipe” with Encana “if we are bidding each other up.” The Chesapeake vice president responded that he had contacted Encana “to discuss how they want to handle the entities we are both working to avoid us bidding each other up in the interim.” McClendon replied: “Thanks.”

That exchange – and at least a dozen other emails reviewed by Reuters – could provide evidence that the two companies violated federal and state laws by seeking to keep land prices down, antitrust lawyers said.

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