Chesapeake Energy's aggressive leasing for oil and gas worries even some of its contractors

Among large natural gas companies that own millions of acres of land leases in several states, Chesapeake Energy Corp. "has become the principal player in the largest land boom in America since the 1850s California Gold Rush," Reuters reports. The company has mastered the "land grab," or "an aggressive leasing strategy intended to lock up prospective drilling sites and lock out competitors." As a result, it now controls the rights to drill for oil and gas on about 15 million acres, or roughly the size of West Virginia.

Chesapeake has made land leasing the core of its business model. A Morningstar Inc. analysis shows that it spent $31.2 billion to get drilling rights over the last 15 years. In comparison, Exxon, which had 2011 revenue 35 times larger than Chesapeake's, spent $27 billion. "We believed that the winner of these land grabs would enjoy competitive advantages for decades to come as other companies would be locked out of the best new unconventional resource plays in the U.S.," the company wrote in its 2012 Securities and Exchange Commission filing.

A Reuters analysis of hundreds of internal Chesapeake emails and thousands of pages of documents showed the company is secretive about its leasing tactics, which some of its own contractors find dubious. "What emerged were approaches to leasing property that land brokers, land owners and lawyers say push ethical and legal limits. Chesapeake has unilaterally altered or backed out of leases. And in Texas and at least three other states, it has exploited little-known laws to force owners to hand over drilling rights and sometimes forfeit profits," Reuters reports. That apparently refers to forced-pooling laws, which allow oil and gas companies compensated access to the resources underlying land of owners who don't want to lease but are largely surrounded by those who have. (Read more)

Judge rejects bid to preserve site of coalfield battle

West Virginia's Blair Mountain, the site of the largest armed conflict in U.S. labor history, will remain off the National Register of Historic Places, a federal judge has ruled. The site was added to the list in 2009, but the Interior Department removed it after it was found that a majority of property owners didn't support the listing, Paul Nyden of The Charleston Gazette reports.

Coal companies may mine the area, and a lawsuit was filed in 2010 by several groups, including the Sierra Club, Ohio Valley Environmental Coalition and Friends of Blair Mountain, seeking to restore the area to the register. Judge Reggie Walton of the District of Columbia ruled that the groups had no legal standing because no coal companies had announced "immediate plans to begin mining on Blair Mountain," Nyden reports. (Read more)

Ken Ward Jr. of the Gazette's Coal Tattoo puts it this way: "The judge ruled that the citizen groups could not meet one of the requirements to show 'standing' to bring the case, that of 'redressability,' or that a favorable ruling from the court would redress their injury." As a result, the judge said in his decision "that the surface mining would be permitted on the Blair Mountain Battlefield as a result of permits that were acquired prior to the historic district's inclusion on the National Register."

In 1921, more than 10,000 union miners fought with armed company employees and contractors along the ridge along the Logan-Boone County border for a number of things, including better working conditions. The battle lasted eight days, and only ended after federal troops and air support intervened.

Pa. court narrowly strikes down law limiting localities' rights to limit oil and gas drilling zones

A drilling well pond in Derry, Pa.
(Pittsburgh Post-Gazette photo by Andrew Rush)

A appellate court panel has struck down a new law that barred local governments in Pennsylvania from using zoning to prohibit oil and gas drilling in certain areas. Marc Levy of The Associated Press reports the decision was a defeat for Pennsylvania Gov. Tom Corbett and the booming natural-gas industry, which had long sought the limitations. The governor's office said an appeal to the State Supreme Court is likely.

The Commonwealth Court panel ruled 4-3 that the limitations, in a bill regulating the gas industry, were unconstitutional under state law. The majority opinion found that the provisions upended the municipal zoning rules that had previously been followed by other property owners, unfairly exposing them to harm. Seven municipalities had sued to overturn the five-month-old law. "Among the most objectionable provisions towns cited were requirements that drilling, also known as hydraulic fracking, waste pits and pipelines be allowed in all zoning districts, including residential ones, if certain buffers are observed," Levy reports.