Fracked: How energy companies, particularly Chesapeake, profiteer | Arkansas Blog

Thursday, March 13, 2014

Fracked: How energy companies, particularly Chesapeake, profiteer

Posted By on Thu, Mar 13, 2014 at 9:34 AM

click to enlarge SHALE CHEERLEADERS: Legislators like Jason Rapert remain undeterred by reports of questionable practices by major energy producers.
  • SHALE CHEERLEADERS: Legislators like Jason Rapert remain undeterred by reports of questionable practices by major energy producers.
The Arkansas legislature just passed a piece of unconstitutional legislation sponsored by Sen. Jonathan Dismang to cut an energy company's cost of business in Arkansas by $4 million by relabeling the sand injected underground for fracking as tax-exempt "equipment." It's symbolic of the shafting written much larger in shale gas plays around the country, led by the likes of Chesapeake Energy.

Got time? You'll want to read the Pro Publica report in Daily Beast on financial funny business in the shale.

It's a story of stiffed royalty owners, of questionable expense practices, of corporate accounting subterfuge, A key is gouging royalty owners for unregulated local, as opposed to interstate, pipeline charges.

The article focuses mostly on exploration elsewhere, but there was this:

Nine out of 10 of the top producers in Colorado, Texas, Arkansas and Oklahoma—including ConocoPhillips, Chevron, BP and Chesapeake—had used subsidiaries to sell their gas for significantly more than the amount they reported to landowners, according to the report. They inflated their expenses, too—at least according to the six companies that provided that level of detail for the report—charging landowners, on average, 43 percent more than what they actually paid to handle the gas. (Neither Chevron nor Chesapeake provided information about their expense deductions.)

Remember this the next time an energy company cheerleader in the legislature begins the crocodile tear chorus for oil patch profiteers. Remember, too, that energy companies, with Gov. Mike Beebe's help, already rigged the  severance tax in such a way as to minimize income from new production here.

The Times has been down the road with property owner complaints about a non-responsive Chesapeake, by the way. Such as here. I also recall when some retrograde legislators, yes, including Jason Rapert, filed a bill, nominally about private property protection, that specifically protected pipelines.

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