Transportmonopolstellung

Transport monopoly.

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.)

Brutto nicht netto

“Gross not nett,” what rural U.S. landowners should try to take their ~12.5% royalty from if signing an agreement to let oil and gas companies frack their land. Previously, landowners had to worry about drillers’ resistance to the ethical challenges arising from the fact that it’s the driller who measures and reports the yields produced. Technology is also presenting drillers with ethical challenges: it’s now possible to drill sideways underground much farther than you’d think, for example.

Now ProPublica.org has reported drillers and/or pipeline owners have been using “creative accounting” in the office to reduce how much they say they owe farmers and other rural people whose land they are fracking, from Pennsylvania to North Dakota.

For example, “But some companies deduct expenses for transporting and processing natural gas, even when leases contain clauses explicitly prohibiting such deductions. In other cases, according to court files and documents obtained by ProPublica, they withhold money without explanation for other, unauthorized expenses, and without telling landowners that the money is being withheld. … In Oklahoma, Chesapeake deducted marketing fees from payments to a landowner – a joint owner in the well – even though the fees went to its own subsidiary[.]” The companies have also sold the product to subsidiaries at artificially low prices on which they paid farmers’ royalties, then resold at the higher market value.

Natural gas is apparently priced by volume, yet in pipelines it can be compressed and subjected to other processes the drillers and transporters call “proprietary” and won’t describe. Ownership of pipelines is not only becoming obscure, it’s a new field for innovative financial trading: Transport pipelines are being sold off to multiple third parties. Fracking rights purchased from farmers are being divided up and sold off to other companies in dribs, drabs and perhaps even tranches. One of the more “cutthroat” drillers has also been found to consistently report getting lower sale prices for its harvested gas on the market than e.g. the Norwegian partner firm Statoil selling similar products in the same markets at the same time.

A fierce debate is raging in Germany about whether to allow fracking to harvest its “Schiefergas,” shale gas or slate gas.

(BRUTE oh   nichh t   NET oh.)

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