The Wall Street Journal’s James Freeman published an interview with Chesapeake CEO Aubrey McClendon this weekend, and the king of Oklahoma takes a victory lap.Regarding the debate on whether hydrofracking — which has been blamed for everything from earthquakes to poisoning Spot and Fido — should be used to extract natural gas, McClendon says the debate is already over.
“Essentially every well in the U.S. is fracked.”
Banning fracking would leave thousands without power, he argues.
As for whether more regulations on fracking — especially to control the waste water that has been blamed for causing the most damage — are needed, that question, too, has now been put to bed.
“We fought that battle. I think we’ve won. I think we’re moving beyond the whole fracking controversy as [the Environmental Protection Agency] kind of systematically takes a step back from all their allegations.”
Indeed, the EPA’s first-ever rules on fracking, released earlier this month, only address air pollution; the agency appears to have punted on the waste water issue.
As of last week, the order of McClendon’s claims to fame (or now, perhaps, infamy) have been reversed to look something like this: a) being Kate Upton’s cousin through marriage b) failing to disclose details of his personal stakes in his company’s gas wells and c) running Chesapeake.
A quick review on item b: According to a report from the Pittsburgh Post-Gazette and expanded upon by Reuters, McClendon took out $1.1 billion in loans to max-out the interests available to him under Chesapeake’s Founder Well Participation program.
Under the program, McClendon could get up to 2.5% of the revenue — while on the hook for the same percentage of any losses — of any and all wells drilled by Chesapeake.
To secure the loan, McClendon put up assets from the same wells he was trying to buy into — such as business data, physical platforms and hedging contracts — as collateral.
As the Post-Gazette’s Erich Schwartzel and Elisabeth Ponsot wrote, the arrangement is a win-win for McClendon: if the wells go gangbusters, McClendon gets a windfall. If they prove unsuccessful or aren’t drilled, the only collateral is a bunch of well property.
Freeman says he conducted the interview “just as the news of his personal loans was breaking.”
So we have to cut him some slack for not leaning hard into McClendon about his response when asked of the allegations:
“American business would be run better today if there was more alignment between CEOs’ interest and the company,” says the 52-year-old Oklahoman. “For example, would the financial crisis of 2008 have occurred if the CEO of Lehman and Morgan Stanley and Goldman and Citibank had to take a very small percentage of every mortgage-backed security . . . or every loan they made?”
We’ll end with McClendon’s take on climate change.
Freeman says McClendon has always promoted natural gas as a low emitter of carbon.
So why does he say the following about climate change?
“There have been times in the past on this planet where it’s been hotter but CO2 levels have been lower. And there have been times when CO2 levels have been higher and the climate’s been cooler. . . . Would people cheat on climate science? Sure. Because all it is is a model into which there are 2,000 variables and if I want this outcome I nudge that one up a little and down a little bit and there you go.”
The answer can probably be found in a response he gives to Freeman about a campaign last spring that questioned the merits of “clean coal.”
“I think most people act in their self-interest.”
SEE ALSO: The fabulous life of Aubrey McClendon.