If you read nothing else today, read this article. YOU can't afford not to.
According to Arthur Berman, a respected energy consultant in Texas who has spent years studying the industry, Chesapeake and its lesser competitors resemble a Ponzi scheme, overhyping the promise of shale gas in an effort to recoup their huge investments in leases and drilling. When the wells don't pay off, the firms wind up scrambling to mask their financial troubles with convoluted off-book accounting methods. "This is an industry that is caught in the grip of magical thinking," Berman says. "In fact, when you look at the level of debt some of these companies are carrying, and the questionable value of their gas reserves, there is a lot in common with the subprime mortgage market just before it melted down." Like generations of energy kingpins before him, it would seem, McClendon's primary goal is not to solve America's energy problems, but to build a pipeline directly from your wallet into his.
"...the shale-gas boom could turn out to be an economic and environmental disaster."
"Our approach is to go in early, quietly and big," says Henry Hood, who directs Chesapeake's land purchases. "We like to get our deals signed before anybody knows what we're up to and tries to run up prices."
New laws in Pennsylvania now prohibit companies from discharging flowback into rivers and streams. Instead, operators like Chesapeake either "recycle" their water by running it through a filtration system, or haul it off to Ohio and inject it underground – a process which, some seismologists now suspect, is the reason Ohio was hit by an uncharacteristically large number of earthquakes last year.
I ask her how she feels about the promise of fracking now. "I think the industry is destroying our water resource to extract a gas resource," she says. "And in the long run, I don't think that's a very smart trade."
