McClendon’s death leaves legacy of profit at the expense of landowners

A shocking story out of Oklahoma tells of the death of oil executive Aubrey McClendon, who was killed in a violent car crash yesterday, just one day after he was indicted in federal court for violations of anti-trust laws.

Aubrey McClendon. Photo: Sean Gardner, Reuters

Aubrey McClendon. Photo: Sean Gardner, Reuters

While no cause of death has been declared, it appears McClendon drove his SUV at a high rate of speed directly into a wall. According to police, “There was plenty of opportunity for him to correct and get back on the roadway, and that didn’t occur.” McClendon was not wearing a seatbelt at the time of the crash.

McClendon was accused of orchestrating a scheme between two large oil and gas companies to not bid against each other for leases in northwest Oklahoma from December 2007 to March 2012, the Justice Department said Tuesday in a statement.  His “actions put company profits ahead of the interests of leaseholders entitled to competitive bids for oil and gas rights on their land”.

McClendon is a legendary figure in the fracking boom over the last decade, and we’ve written about him several times on this site. He made billions in fracking at the expense of property owners, pushing to drill every possible well with little regard for environmental impact.

Illegal deductions from royalty payments
In March of 2014, we described a scheme in which McClendon overcharged for payments to his pipeline company for the transport of gas to market, and deducted the charges from royalties due to landowners, including Pennsylvania farmer Joe Drake,

“I got the check out of the mail… I saw what the gross was,” said Drake, a third-generation Pennsylvania farmer whose monthly royalty payments for the same amount of gas plummeted from $5,300 in July 2012 to $541 last February.  This sort of precipitous drop can reflect gyrations in the  price of gas. But in this case, Drake’s shrinking check resulted from a corporate decision by Chesapeake to radically reinterpret the terms of the deal it had struck to drill on his land. “If you or I did that we’d be in jail,” Drake said.

McClendon’s death came just as jail was about to become a reality for him.

This practice has generated a flood of lawsuits across several states. Hundreds drag on in North Texas alone. One Fort Worth law firm alone filed 435 lawsuits on behalf of 22,443 plaintiffs after rounding up clients through a media blitz, the Fort Worth Star-Telegram reported last month.

Illegal price fixing of leases
In May of 2014, we described a scheme in which McClendon directed executives at Chesapeake Oil to collude with Encana Corporation to drive the price of oil leases in Michigan from $1413 per acre to just $13 per acre by reaching an agreement in which the two companies would never bid against each other for the same lease. While McClendon was never indicted for this scheme, it appears similar to the Oklahoma scheme for which he was indicted this week.

An object lesson in community preservation
The point here is not to drag a dead man through the mud. McClendon’s apparent decision to end his life rather than face the consequences of his actions is sad and requires no embellishment from me.

The point is to caution landowners that the circumstances of McClendon’s death should remind us all that oil companies care about profits, not the rights of landowners. If you want to protect your rights, it is critical to set the terms upon which drilling occurs on your property. Mechanisms exist in the law to do that, but you have to be vigilant and act together as community to make it happen.

Landowners in Carbon and Stillwater counties along the Beartooth Front are currently engaged in battles to do this. The fight is long, but the goal — long-term preservation of a way of life — is worth the effort.

Related:
Announcing the first Rex Tillerson Fracking Hypocrite Award
Announcing the second Rex Tillerson Fracking Hypocrite Award
Beartooth Front landowners present hundreds of petitions to Stillwater County Commissioners to set up oil and gas zoning district
All briefs filed in Silvertip Zone case; Montana Supreme Court decision is next
Citizen initiated zoning: a way to restore fairness to oil and gas drilling in Montana


Listen
: NPR interview with Russell Gold of Wall Street Journal on Aubrey McClendon

 

About davidjkatz

The Moses family has lived on the Stillwater River since 1974, when George and Lucile Moses retired and moved to the Beehive from the Twin Cities. They’re gone now, but their four daughters (pictured at left, on the Beehive) and their families continue to spend time there, and have grown to love the area. This blog started as an email chain to keep the family informed about the threat of increased fracking activity in the area, but the desire to inform and get involved led to the creation of this blog.
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