Pennsylvania

Energy. Environment. Economy.

Chesapeake Energy pulls up stakes in PA and Ohio

Workers move a section of well casing into place at a Chesapeake Energy natural gas well site near Burlington, Pa.Workers at a natural gas site in Bradford County.

AP Photo/Ralph Wilson

Workers move a section of well casing into place at a Chesapeake Energy natural gas well site in Bradford County.

Chesapeake Energy, one of the state’s largest gas producers with more than 800 active wells in Bradford and Susquehanna counties, has stopped drilling new wells in both the Marcellus and Utica Shale plays. The Oklahoma based oil and gas producer, which also operates in Texas, Louisiana and Wyoming, announced Wednesday a net loss of $14.8 billion in 2015.

It put just three new Marcellus wells on production last year, compared to 25 new wells in 2014. Chesapeake also plans to cut its capital expenditures by more than half in 2016 and sell off between $500 million and $1 billion in assets. The company divested $700 million in assets in 2015.

In Pennsylvania Chesapeake has racked up about $1.4 million in fines with 428 violations. It’s also facing allegations of cheating Pennsylvania leaseholders out of royalties. While the company denies this, Attorney General Kathleen Kane has filed a lawsuit. The company is the subject of several class action lawsuits and was also recently subpoenaed by the U.S. Department of Justice, seeking information about its royalty practices.

Comments

  • Kim Triolo Feil

    but…the gov will bail them out cause we signed those 20 yr LNG contracts…by Oct 2016 we will have a gas shortage and by mid 2017 we will be a net exporter of LNG

    • James

      The government is definately not bailing out chesapeake. However the looming shortage of nat gas towards the end of 2016 due to the massive reduction in capital expenditures by all companies will spike the price. Free market price movements will save chesapeake and nothing else.

      • Daniel Postellon

        Free market? They are government subsidized!

        • James

          By that lame definition of subsidy everyone in the us is subsidized that takes any tax credit or deduction.

  • Rob

    This is why Wolf is mistaken in his effort to derive income from PA oil and gas extraction. Once the tax is enacted, the “projected” revenue will justify increased spending. When the revenue goes away when drillers pull up stakes, the spending stays forever, requiring more tax burden on PA residents.

    • Tony Paulinsky

      the people deserve what they voted for…

    • Brian O’Neill

      That’s not really smart thinking but I have seen it a lot. Maybe some logic will help your misconceptions:

      You really think that a company would leave an area with lots of oil and gas because of taxes? Just let it sit in the ground? Really?

      If you bothered to look at the price of gas on a sign at any gas station, you would see that gas prices are low. If you bothered to take an extra step and see what industry leaders are saying, you would see that cheap gas is predicted to last for some time.

      This means that it is less economically viable for companies to spend the extra money using more expensive extraction methods which are needed to get the resources within Pennsylvania via fracking.

      When gas costs $3.50 a gallon, it makes sense to spend more to get the stuff that’s hidden away in the cracks of shale. When it’s $2 less than that, it doesn’t.

      They are leaving for the same reason that a millionaire won’t bend down to pick up a nickle: It’s not worth it to them.

      The fact that the company has racked up safety violations and other shenanigans doesn’t exactly make me sad to see them go. Hopefully if gas prices make it more viable to try and get to Pennsylvania’s gas and oil, it will be with companies who don’t have such a blemished record for safety and crooked bookkeeping.

      • johnyy

        Brian you don’t understand what was said. Rob said that wolf wants to tax something that is not a Shure thing. If wolf gets used to that money and it stops where then are you going to get the money from.

      • Stephen Hiller

        Brian – your conceptions of the Marcellus shale play in PA are incorrect. The region referenced in the article above, northeastern Pa, is a dry gas area. The wells Chesapeake is drilling produce natural gas and, depending on the area, some NLG’s. In other words, gasoline prices have no bearing on the economics of these wells. Rather, it is the price that these producers can fetch on the open market for natural gas. That market has been far more discounted for far longer than crude oil has been.

        Your ascertation that a millionaire won’t bend down to pick up a nickel because it isn’t worth it to them is asinine hyperbole. The average cost to drill a Marcellus well today is between $7MM-$10MM. At current gas prices over the last 52 week period, the net back on an average produing well based on historical data at that cost versus prices is roughly 2-3 years. There are several other plays (Eagle Ford, Permian, Devonian) with lower cost to completion, better transportation infrastructure to get the production out of the region and to market and a larger product spread (natural gas, NGL’s and light to heavy crude oil) than Marcellus. It is completely reasonable for them to sell their assets in this play and use that cash in hand to finance operations in areas they deem more economic.

      • Rob

        You missed my point totally. See johnyy below.

    • http://www.protectingourwaters.com/ Iris Marie Bloom

      Rob is correct. Projections of tax income based on revenue from shale gas drilling operations create budget instability. The “bust” part of every “boom” cycle in this volatile industry is inevitable, especially since shale gas wells decline 50% to 90% within their first two years of operation. Further, deriving income from shale gas fracking is ethically unsound due to the scientifically validated public health harms. As to Pennsylvania’s waterways — both surface waters and aquifers have been harmed by Chesapeake’s fracking, which involved spills literally 24/7. I know because I interviewed CHK workers who operated the equipment that sucked up some of the spills, some of the time — and those workers said that what was cleaned up was a small portion of the toxic fluids that spilled. The damage done by Chesapeake Energy, especially in Bradford County, is incalculable and it is wonderful to see them go. Dollar for dollar, renewable energy and energy efficiency fields create three times as many jobs as dangerous fossil fuel industry jobs, especially shale gas fracking which has a high accident, injury, illness and death rate. Therefore the most rational response to seeing CHK go is to triple our efforts to rapidly transition to energy efficiency, passive solar construction, zero net energy homes, and increased use of renewables.

  • Michael Stephani

    Kim Triolo Feil must be one of Trumps “Low information voters” because she CLEARLY doe not understand a thing about politicians and money and balanced budgets.
    Glad I’m not on the hook for HER credit cards!

  • David McWilliams

    So what if pennsylvania doesn’t have a extraction fee like other dtates, we have an impact tax that no other state has.

    • wayne rogers

      Which is about 25% of what a extraction fee would be.

      • bill

        Not at today’s nat gas prices. It would bring in about $200 million. Not the Billion Wolf promised.

  • MadMaxx63

    All of this is moot…these companies got so greedy they came at this Marcellus gig with motivation for greed in high gear and brains in neutral. What did they think was going to happen when they flooded the market with gas? Simple supply and demand economics.
    Corbett had his campaign backed by these guys which is why it was “allowed” to happen; especially without certain laws and fines on the books. Any one with half a brain knew this wasn’t going to last the 20-30 years he and they claimed it would.
    Then Wolf takes over, and well, he’s just a special kind of failure for this state.

    • Wayne

      Sorry but they moved in when Rendell was governor. He was the one who instituted the Impact fees rather than severance tax!

      • MadMaxx63

        That’s true Wayne, but I was referring to the mass flocking of gas/oil personnel.

  • wayne rogers

    They pretty much folded their tents 2-3 years ago.Hopefully Cabot will be next.They are good for one thing spreading VD.

  • wayne rogers

    BTW the half ass gas frackers are being sued in federal court for poisoning water wells.They settled with 100s of residents but the two suing now want the facts to come out along with the millions in compensation.Nothing but carpetbaggers

    • bill

      I suggest you read about the Dimock lawsuit trial going on now against Cabot. The residents “facts” are rapidly becoming fiction during their sworn testimony in open Court.

  • transmitterguy

    Good! GET OUT!

  • Bob

    This is exactly what the Saudis want for U.S.drilling to stop and these companies to go out of business. Oil will then go back up past $100 a barrel and gas increase too. We need to be independent of the Middle East oil. They can pump it out for less than $20 a barrel. U.S. companies can’t do that and make money. As long as oil stays around $30 a barrel the Saudis make money. They are running everyone out of the business.

  • southernhippy

    So they milked the land, poisoned the water, and then bailed when things get tough, how corporate of them….

    • randall22000

      Spoken like a true socialist/anti-capitalist. And what is your resume’??

      • scottvideo

        If you think its good what they did, well man, I feel sorry for you.

        • LastinLine 2

          If you think its good that revenue is leaving Pa without replacing it ?
          well man, you must have voted for Wolf…
          This is just another problem for us in Pa we don’t need right now in a long list of problems the Governor is causing.

          http://www.ptcc.us/stories.htm

      • The_Seeker929

        *you’re

        • johnyy

          They brought a lot of jobs to Pennsylvania.

          • wolfmanwon

            And a lot of cancer to Pennsylvania

          • bill

            Source for that statement?

        • LastinLine 2

          well played !

      • Colonel_Bob

        Good retort. Let me guess . . . you were an English major.

        Companies are not going to drill when cost of extracting gas > market prices. Economics 101.

    • http://www.protectingourwaters.com/ Iris Marie Bloom

      Exactly.

  • crystalpoint

    Wolf finally got what he was told would happen, if, the Commonwealth of Pa., continued to lay unnecessary regulations, and undeserving fines on the Gas industry!!!

    crystalpoint

    • http://www.protectingourwaters.com/ Iris Marie Bloom

      Actually, the fracking industry has been continuing to get away with murder under Wolf: the lack of regulation, reporting, and enforcement, and the lack of appropriate fines, are extraordinary. However, the damage done during the Corbett years was even more extreme. All in all it is a great day for Pennsylvania to see this irresponsible, polluting, exploiting, spilling company pack its bags and go away. It’s just too bad that former Chesapeake Energy CEO Aubrey McClendon bankrolled Corbett’s campaign for Attorney General AND for Governor, because that resulted in even more damage to even more people, waterways and communities. Goodbye and good riddance, Chesapeake Energy! May all the people you have harmed — residents and workers — recover, and may the state of Pennsylvania and our nation invest in a sustainable future so that safe and sane energy may be supported, instead of undermined, in Pennsylvania and beyond.

  • scottvideo

    Good riddance Chesapeake, I hope you stay gone. You’ve bilked Pennsylvanians for enough and ruined many a property. I will say “thank you” for the lighting of the tap water scene I was lucky enough to tape to help show the world just what a terrible thing fracking is for our country. You can Google “water on fire fracking” to see it.

    • bill

      Water’s been catching fire in Northern PA and Southern NY for decades. Long before fracking was even thought of. There’s even a village named Burning Springs in NY

      • scottvideo

        Trees have been falling over for millions of years, but if your neighbor takes a chainsaw and cuts down his tree in his yard and it lands on your house, who’s responsible? That is exactly what is happening with gas drilling. The drilling process is causing problems. Experts know this, fools deny this and use the “they’ve been lighting water on fire for decades” excuse. You might be able to fool the weak minded, but not us. https://youtu.be/i01hvSdPHvw

        • John R. Marshall

          Of course you know that homeowners in this area have had methane separation units on their water wells for 40-50 years, long before any drilling was done in the area. The methane is naturally occurring, and comes from organic deposits and coal beds within the aquifers themselves, and has nothing to do with drilling in the area. More likely, it is coming out of solution due to drawdown of hydrostatic pressure in the aquifer caused by increasing population, overuse, and lack of recharge (short term droughts) in the area. If you were there and talked to residents you probably know this already and to spout otherwise is disingenuous on your part. Or you could just have something wrong with you.

          • AlgalMan:Brad Couch

            https://www.linkedin.com/pulse/two-more-scientific-examinations-affirm-fracking-safe-brad-couch? Flaming water = fear mongering! NY EPA, SAB reaffirms fracking is safe. Three year UC study shows no contamination from fracking, but yet to biogenic methane in water. Quite spreading non-truth.

          • scottvideo

            Whether its biogenic or thermogenic methane contamination from gas drilling, it’s still contamination.Please read the damned reports.

          • John R. Marshall

            I guess you missed my point. Whether it is biogenic or thermogenic, doesn’t matter. All the rocks at the surface now were buried deep at one time (most are Devonian age). Some gas is thermogenic, some is biogenic, but all of it resides in the aquifer. It’s being released by the water wells themselves, not by “gas drilling”.

          • AlgalMan:Brad Couch

            Scott … are you simple? The isotope difference clearly delineates the methane source as either modern decomposition breakdown or fossil oil. The two are distinctly different that way. And only the fossil source is what drillers are involved. Clearly, even the New York Science Advisory Board has come out to say fracking does not contaminate groundwater … YOU are the one in denial. Or are you among those that make a living through fear mongering fracking? I did read the reports. I also read this weeks court reports where in the opening statements the plaintiffs for Dimock suing Cabot said there is NO scientific evidence of water contamination. https://www.linkedin.com/pulse/breaking-news-dimock-plaintiffs-admit-court-scientific-brad-couch?trk=pulse_spock-articles

          • http://www.protectingourwaters.com/ Iris Marie Bloom

            This issue was laid to rest a long time ago both by Hanger when he was Secretary of PA DEP, and by the Duke University study in May 2011. The Duke study showed, definitively, that the average methane content in water was 17 times higher within 3,000 feet of drilling than water farther away. Denialists use a lot of words to uphold their denial, just as those who deny the global scientific consensus about global warming do. But the reality is that more words don’t change reality. The reality is that methane leaks from shale gas drilling throughout the entire process, which is what makes fracked gas even worse than coal for climate, especially over the next 20 crucial years. As people in the Pacific Islands, Louisiana, Alaska and elsewhere are already rapidly losing their land to sea level rise, and as storms of greater intensity batter populations along with increased droughts, wildfires, heat waves and lost sea ice, we can hardly afford to keep our heads in the sand for one more minute. The stakes are too high. Denial is too expensive, in addition to being just plain wrong.

          • scottvideo

            John, I gave you proof and testimony from John Hanger who was in charge of the DEP during that part of the Dimock issue. I believe him and the DEP’s statement that Cabot is responsible, not your opinion. If you want to hang with the denying knuckle draggers, be my guest. http://www.washingtonpost.com/wp-dyn/content/article/2010/09/30/AR2010093003417.html

          • John R. Marshall

            Once again, you misunderstand. And what I expressed was not opinion, but science based fact. Have you visited the outcrops, seen the source rocks at the surface (that extend/continue into the subsurface aquifers)? And I noticed you didn’t address my statement about the methane separators on water wells that are 40-50 years old, some so old and plugged that they weren’t venting the methane properly and were allowing methane to enter into the houses. This, by the way, long before drilling in the area. I realize that what I’m saying pokes holes in your video business, but it’s the truth. Not as fun as attacking oil and gas companies, but much more accurate.

        • bill

          1.You first said fracking was the problem. Now you say the “drilling process” is causing the problem. Which is it?
          2. Private water wells require ZERO permits and are totally unregulated by anyone. Improperly drilled (and vented)water wells are subject to all sorts of contamination.
          3. Is that the same John Hanger who just bailed out of PA & headed back to Massachusetts?

        • bill

          http://www.rural.palegislature.us/documents/reports/Marcellus_and_drinking_water_2011_rev.pdf

          2 percent of private water wells included in the sample set were hand-dug

          13 percent lacked any visible casing above ground

          80 percent of the wells surveyed had no sanitary well cap visible in place

          8 percent of all wells sampled lacked a grout seal designed to keep out unwanted contaminants

  • Ken Snyder

    Not a big deal. When gas and oil prices rebound, they will be back.

  • Tom Coffman

    Its all boom and bust, just like housing. The weak players will go under, while the wealthy ones will take over.

  • dolfan1

    It’s a known FACT that “fracking” is responsible for the large increase of earthquakes. Ask Oklahoma about that. Something I’ve talked about to others, but have not seen addressed in Media about fracking, is it’s impact on BEDROCK. Fracking, fractures rock layers, allowing gases and oil to leak out. Large, and tall buildings (Skyscrapers, etc.), Industrial Plants (including chemical), Smoke stacks, bridge and elevated highway piers, and more, are all sitting on BEDROCK, to support their weight.
    Huge holes are drilled, or excavated, to SOLID bedrock, they are filled with steel rebar (reinforcing steel rods), and concrete. What does anyone suppose would happen to any structure relying on “bedrock” support, should “fracking”, or earthquakes caused by fracking, fractures (cracks) the bedrock supporting any of these structures? Anyone guess?

  • William Smith

    Hello Patriots,
    Regardless of why Major Party is running the State and the Show,,the tax payers of Penna always lose . These two parties only take care of themselves and their party. Its all about them and the hell with the tax payers.
    WHY DO YOU THINK WHY WE HAVE ALL THESE MASSIVE FINANCIAL PROBLEMS ?
    W.B.Smith, Tea Party

  • Karl Sparn

    TOM WOLF, what have you done to Pennsylvania? The loss of jobs, companies, corporate headquarters, manufacturing, and taxes has been staggering! All in the last year. Rite-Aid, Wilbur Chocolate, Kraft/Heinz, U.S.S., ALCOA, G.E. Locomotive, Lord Corporation, Drilling Companies, Gas/Oil Exploration, Pipeline/Transmission Crews, Coal Mine/Miners, Local/National Railroads, Trucking Companies, Power Companies/Power Plants, Merchant Shipping, the list goes on…and now: Trader Horn and Warehouse Sales, and just this past week: J. C. Penney Co., in Cranberry, PA, Venango County, Johnson Controls. No WAL-MARTS in PA…yet, but Tom’s working on that now. Strand people on the “State Toll Road” for 24-30 hours, then blame empty trucks, and drivers; then fine them. Now, ‘Kennemetal’ pulls out of it’s Hazelwood Project. “INCOMPETENCE…Plain and Simple!” ~k.e.s., jr.

  • lk1066

    It’s time for the people and the politicians of both parties in PA to finally realize that natural gas is NOT the energy or economic savior it was sold as, but rather was a short-term boom in a the now increasingly busted fossil fuel industry. PA needs to let it go, let it die, and start investing in its future by developing, manufacturing, and using renewable energy and repairing the damage the fracking industry has caused, to the extent it is possible.
    This includes reforestation of millions of acres of old-growth trees for future generations and reclamation of what farm land can be saved. In a blink of an eye, life-giving, flood-preventing, temperate climate giving trees were destroyed in the search for quick profits that were falsely masked as being “clean” energy that would support PA’s economy and energy needs for many decades–or more.
    PA leaders of both parties were suckered by the fossil fuel industry. Admit it and move to better things while we still have a chance to control and recover from the damage done.

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