The former Chesapeake CEO died in an auto accident at age 56, one day after being indicted by the USDOJ.
Chesapeake, along with two other companies, is being sued by the Sierra Club over earthquakes believed generated by its waste disposal wells (See post bottom). Chesapeake also is said to have blocked research into impacts of fracking: https://miningawareness.wordpress.com/2015/06/05/us-epa-fracking-findings-likely-contaminated-by-industry-along-with-water/
From the US DOJ:
“FOR IMMEDIATE RELEASE
Tuesday, March 1, 2016
Former CEO Indicted for Masterminding Conspiracy Not to Compete for Oil and Natural Gas Leases
Aubrey K. McClendon has been charged by a federal grand jury with conspiring to rig bids for the purchase of oil and natural gas leases in northwest Oklahoma, the Department of Justice announced today.
The indictment alleges that McClendon orchestrated a conspiracy between two large oil and gas companies to not bid against each other for the purchase of certain oil and natural gas leases in northwest Oklahoma. During this conspiracy, which ran from December 2007 to March 2012, the conspirators would decide ahead of time who would win the leases. The winning bidder would then allocate an interest in the leases to the other company. McClendon instructed his subordinates to execute the conspiratorial agreement, which included, among other things, withdrawing bids for certain leases and agreeing on the allocation of interests in the leases between the conspiring companies.
“While serving as CEO of a major oil and gas company, the defendant formed and led a conspiracy to suppress prices paid to leaseholders in northwest Oklahoma,” said Assistant Attorney General Bill Baer of the Justice Department’s Antitrust Division. “His actions put company profits ahead of the interests of leaseholders entitled to competitive bids for oil and gas rights on their land. Executives who abuse their positions as leaders of major corporations to organize criminal activity must be held accountable for their actions.”
“The FBI is committed to investigating individuals who engage in corrupt criminal conduct,” said Special Agent in Charge Scott L. Cruse of the FBI’s Oklahoma City Division. “We will continue to work with the DOJ Antitrust Division to target those who devise schemes which create an unfair competitive advantage by way of bid rigging or other illegal means.”
The indictment, filed today in the U.S. District Court for the Western District of Oklahoma, alleges that McClendon’s conspiracy affected certain bids for leasehold interests and producing properties in northwest Oklahoma. Leasehold interests give a lessee the right to develop the land and to extract oil and natural gas from the land for a time period typically lasting three to five years. Producing properties are tracts of land where the existing lessee has drilled wells on the land and the wells are producing a stream of oil and/or natural gas. Purchasing a producing property includes not just the underlying leasehold interests to drill on the land, but also the producing wells and infrastructure already on the land.
Each violation of the Sherman Act carries a maximum penalty of 10 years in prison and a $1 million fine for individuals.
The charges contained in the indictment are allegations and not evidence of guilt. The defendant is presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.
This is the first case resulting from an ongoing federal antitrust investigation into price fixing, bid rigging and other anticompetitive conduct in the oil and natural gas industry. This investigation is being conducted by the Antitrust Division’s Chicago Office and the FBI’s Oklahoma City Field Office, with assistance from the U.S. Attorney’s Office of the Western District of Oklahoma. Anyone with information in connection with this investigation is urged to call the Antitrust Division’s Chicago Office at 312-984-7200, visit http://www.justice.gov/atr/contact/newcase.html or call the FBI’s Oklahoma City Field Office at 405-290-7770.” https://www.justice.gov/opa/pr/former-ceo-indicted-masterminding-conspiracy-not-compete-oil-and-natural-gas-leases
“UPDATE 4-Former Chesapeake CEO McClendon charged with bid-rigging of land leases
Posted:Tue, 01 Mar 2016 22:29:44 -0500 ATLANTA/WASHINGTON, March 1 (Reuters) – Aubrey McClendon, former chief executive officer of Chesapeake Energy Corp and a legend in the U.S. energy industry, was charged on Tuesday with conspiring to rig bids to buy oil and natural gas leases in Oklahoma, the Justice Department said.” http://feeds.reuters.com/~r/reuters/utilitiesNews/~3/e5VC1bR6Jg0/chesapeake-enrgy-mcclendon-idUSL2N1692H9
“UPDATE 1-Energy CEO McClendon dies in Oklahoma car crash, a day after indictment
Posted:Wed, 02 Mar 2016 20:40:01 GMT OKLAHOMA CITY, March 2 (Reuters) – Aubrey McClendon, the co-founder of Chesapeake Energy Corp who led it to become one of the world’s biggest natural gas producers before he was tarred by federal anti-trust charges, died on Wednesday in a car accident in Oklahoma City, police said. He was 56.” http://feeds.reuters.com/~r/reuters/USenergyNews/~3/WZjOuOW7ME0/story01.htm
In mid-February, the Sierra Club filed suit against Chesapeake, Devon, and New Dominion, alleging that their disposal of production wastes is causing earthquake swarms:
“62. Chesapeake has been disposing of high volumes of Production Wastes into the ground since before 2011. Figure 5. In 2011, it had a few major wells in the north central part of Oklahoma, but no earthquakes occurred near them between 2009 and 2011. Figure 7. It doubled its disposal volume in 2012, tripled it in 2013 and then reduced it slightly from 2013 levels in 2014. Figure 5. Furthermore, most of these wells are in the north central part of Oklahoma close to the Kansas border. Figure 6. In 2014, and probably other years, the bulk of this injection was into the Arbuckle Formation. Figure 8. Since late 2013, a swarm of greater than magnitude 3 earthquakes developed in this area. Figure 6. This swarm extends into southern Kansas. These earthquakes are continuing in 2016 and, as detailed above, are becoming increasingly severe. 63. Therefore, Chesapeake’s handling and disposal of the Production Wastes has contributed and is contributing to the northern swarm of earthquakes. In addition, it is probable that Chesapeake is contributing to the earthquake risk in the Cushing area. 64. Thus, Chesapeake has contributed and is contributing to the past and present handling, storage, and disposal of Production Wastes which is causing earthquakes in Oklahoma and southern Kansas that present an imminent and substantial endangerment to health and/or the environment… 30. In recent years, it has been established that the injection of Production Wastes into the ground through high rate disposal wells causes earthquakes. After much local controversy, the Oklahoma Geological Survey (“OGS”) determined in the spring of 2015 that “the majority of recent earthquakes in central and north-central Oklahoma are very likely triggered by the injection of produced water in disposal wells” and that “seismologists have documented the relationship between wastewater disposal and triggered seismic activity.” http://earthquakes.ok.gov/what-we-know/ (visited on October 9, 2015).” SIERRA CLUB, Plaintiff, v. CHESAPEAKE OPERATING LLC; DEVON ENERGY PRODUCTION CO. LP; and NEW DOMINION, LLC, Defendants, Feb. 16, 2016.