Tuesday, May 1, 2012

Natural gas pioneer speaks out on fracking, climate change, and Keystone pipeline

Aubrey McClendon, CEO of Chesapeake Energy and a pioneer of the natural gas revolution, speaks about fracking, climate change, and the consequences of the Keystone pipeline rejected by President Obama:

The Politically Incorrect CEO   WSJ.COM


Not that he fears a temporary ban [on fracking natural gas wells] in any case. "You want to go ban fracking for a year? Knock yourself out. It would be marvelous for our share price," because the limit on supply would send gas prices soaring. "Essentially every well in the U.S. is fracked," he continues, and therefore a ban on gas production would eliminate the energy on which utilities and their customers rely. "You'll kill tens of thousands of people, freeze them out. You'll starve them out. It's completely unthinkable."
Mr. McClendon promotes natural gas as a carbon-light fuel, but that doesn't mean he's convinced that man is really changing the climate. "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."
These days the CEO saves his particular scorn for the occupant at 1600 Pennsylvania Avenue. Asked about President Obama's decision to reject the Keystone XL pipeline that would carry crude oil from Canada and the Western U.S. to the Gulf Coast, he says: "I'm not surprised that this president made that decision. I'm surprised that president made that decision. But knowing what I know about the sway that environmentalists have . . ."
He doesn't complete the sentence. But he's not done talking about the president and "the environmentalist groups that he hangs out with."
Says Mr. McClendon, "I get mad at the New York-based environmentalists because if you were truly environmentalists you wouldn't have a storm surge system and a sanitary system hooked together here that requires you to close your beaches 10 times a year. You'd hire an army of people to pick up plastic bottles off the street and newspapers off the street and it wouldn't all go into the rivers. But you know, these are people who have a great deal of influence with the president and I think he had lost some of their confidence and he needed to do something to deliver a victory for environmentalists."
The CEO has been thinking about the message the president should have delivered in January when he rejected the pipeline. "What he should have said is: 'OK, so we're not going to build Keystone and you the American people, I just want you to know that this will result in higher gasoline and diesel prices for you for the rest of your lives because I just woke Canada up from a 50-year slumber and I slapped them in the face and they will now build a pipeline to Vancouver. And the Chinese today are celebrating. And as a consequence prices for oil in the U.S. will be higher.'"


  1. I think the impact of the Keystone XL pipeline on the price of oil in the US will be a lot less than people think. Canadian crude does not get world prices because it cannot easily get to markets. The Keystone XL pipeline will deliver the heavy crude to the refineries in the gulf and the refined products are likely to be exported to both the eastern and western hemisphere after the expansion of the Panama Canal. Canad will benefit tremendously but central US will likely lose its price differential

  2. One only needs to examine the historic price differential on WTI and Brent oil futures, I believe, to confirm that McClendon is correct.

  3. Get a pipeline map (there are several available at various places on the Internet, a Google search will reveal a few) and notice how many pipelines already cross that "sensitive" region both North/South and East/West. I don't want to point anyone to a specific map because I don't want to be accused of "cherry picking". The point is that one more pipeline that would actually *remove* a couple of older ones from service is not an environmental hazard.

    Secondly, the oil that would be shipped through that pipeline is currently shipped over the surface via Burlington Northern railroad. Burlington Northern is owned by a political supporter of President Obama (Warren Buffett) and building that pipeline would result in loss of substantial revenue to that railroad.

    Shipping the oil by rail actually increases the chances of an environmental impact due to spillage. Trains derail a lot more often than pipelines leak.

    There is nothing "environmental" about this decision, it is crony capitalism.

  4. Interesting...I was unaware of the Buffett connection