ProPublica.org puzzled out more information on how a company named Chesapeake Energy managed to reduce its payments to rural landowners from whom it was leasing fracking rights. One Pennsylvanian farmer saw his monthly check go down from ~$5000 to ~$500 for the same volume of gas, for example.
While there are federal laws to prevent gouging on interstate gas pipelines, this did not apply to the small feed lines Chesapeake built in rural areas which were the only ways for many landowners’ fracked gas to get to market.
In 2011, when Chesapeake Energy needed cash, they essentially created a pipeline company with those rural gas pipelines and sold it to a competitor oil firm for ~$5 billion, with the promise that Chesapeake would continue to hire its old pipelines to transport a lot of gas for the next decade and would pay the new company, Access Midstream, enough in fees to cover the ~$5 billion sale price plus 15% for their pains.
“That much profit was possible only if Access charged Chesapeake significantly more for its services,” said ProPublica. The extra costs were billed to the landowners as expenses.
“An executive at a rival company who reviewed the deal at ProPublica’s request said it looked like Chesapeake had found a way to make the landowners pay the principal and interest on what amounts to a multi-billion loan to the company from Access Midstream.”
(Tronz POAH t mon oh POLE shtell oong.)