Aubrey McClendon, America's second-largest producer of natural gas, has never been afraid of a fight. He has become a billionaire by directing his company, Chesapeake Energy, to blast apart gas-soaked rocks a mile underground and pump the fuel to the surface. "We're the biggest frackers in the world," he declares proudly over a $400 bottle of French Bordeaux at a restaurant he co-owns in his hometown of Oklahoma City. "We frack all the time. What's the big deal?"
McClendon dominates America's supply of natural gas the same way the Tea Party-financing Koch brothers control the nation's pipelines and refineries. Like them, McClendon is an influential right-wing power broker – he helped fund the Swift Boat attacks against John Kerry in 2004, donated $250,000 to the presidential campaign of Rick Perry, and contributed more than $500,000 to stop gay marriage. But unlike his fellow energy czars, McClendon knows how to tone down his politics and present a friendlier, less ideological face to the public. He secretly gave $26 million to the Sierra Club to fight Big Coal, and built a Google-like campus for Chesapeake's 4,600 employees in Oklahoma City, complete with a 63,000-square-foot day care center, a luxurious gym and four cafes manned by cook-to-order chefs. He even voted for Barack Obama because he thought the country needed "an inspirational figure."
At 52, McClendon still looks like the whip-smart accountant he once aspired to be – crisp white shirt, polished shoes, a toss of white hair. To hear him tell it, the cleaner-than-coal fuel he produces will revive our faltering economy, free us from the tyranny of foreign oil and save the planet from global warming. "I have a fossil fuel that makes other fossil fuels obsolete," he boasts. By McClendon's estimate, the industry has drilled more than 1.2 million wells nationwide, yet so far there have been only a few confirmed cases where things have gone wrong – despite dire warnings from scientists and environmentalists that fracking pollutes rivers and streams, contaminates drinking water and turns large swaths of farmland into industrial moonscapes. "Where is the mushroom cloud?" McClendon asks. "Where are the dogs with one leg? Where are the people that have been maimed or hurt?"
He sips his Bordeaux; his own private wine cellar once boasted more than 10,000 bottles. It's a good riff, with some truth to it. But what McClendon leaves out is the real nature of the business he's in. Fracking, it turns out, is about producing cheap energy the same way the mortgage crisis was about helping realize the dreams of middle-class homeowners. For Chesapeake, the primary profit in fracking comes not from selling the gas itself, but f
According to Arthur Berman, a respected energy consultant in Texas who has spent years studying the industry, Chesapeake and its lesser competitors resemble a Ponzi scheme, overhyping the promise of shale gas in an effort to recoup their huge investments in leases and drilling. When the wells don't pay off, the firms wind up scrambling to mask their financial troubles with convoluted off-book accounting methods. "This is an industry that is caught in the grip of magical thinking," Berman says. "In fact, when you look at the level of debt some of these companies are carrying, and the questionable value of their gas reserves, there is a lot in common with the subprime mortgage market just before it melted down." Like generations of energy kingpins before him, it would seem, McClendon's primary goal is not to solve America's energy problems, but to build a pipeline directly from your wallet into his.
As recently as a decade ago, many energy experts believed that America was nearly pumped out – that the only oil and gas left here at home was too difficult and too expensive to get out of the ground. Until we can ferment synthetic fuels with genetically engineered yeast or develop solar cells as cheap as Frisbees, the argument went, we would be stuck buying oil from the Arabs.
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