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Chesapeake CEO: Gas a Natural for 21st Century

Natural gas shale has forever changed the energy market in North America, and the amount producers are able to pull from the rock eventually will create a practical alternative to other forms of energy, including crude oil and coal, Chesapeake Energy Corp. CEO Aubrey McClendon said last Wednesday.

"We think, in time, that natural gas will move the transportation network," McClendon told an audience at Cambridge Energy Research Associates' CERAWeek in Houston. "We think we will convince Detroit and Washington, DC, to move aggressively on this front, either directly through compressed natural gas vehicles or indirectly through plug-in hybrids."

Chesapeake claims to be the top leaseholder in half of what he calls the "big four" shale plays in the United States: the Barnett in North Texas, the Fayetteville in Arkansas, the Marcellus in the Appalachian Basin and the Haynesville in northwestern Louisiana. McClendon's estimates of the gas reserves in the four plays appeared to stun some people in the audience.

According to the Chesapeake CEO, the Barnett Shale holds "up to 75 Tcf" of gas and the Fayetteville Shale "holds at least" 75 Tcf. The Marcellus Shale, he said, "holds up to 500 Tcf" and the Haynesville "holds up to 1.5 quadrillion cubic feet" of gas.

"We think, over time, the Haynesville will become the largest gas field in the world," McClendon said, with no hint of irony.

All of that gas potential in just those four plays makes gas a natural for the 21st century, he said.

President Obama's administration, unlike former President George W. Bush's, can now "rethink its energy and environmental policies" and put natural gas at the top of the list.

"Every other administration had to think about energy in terms of natural gas being scarce," said the CEO. "Natural gas is no longer scarce in the U.S. and will no longer be scarce."

All of that gas has led to an oversupply and lowered the price. But McClendon predicted that the rapidly falling U.S. rig count will balance the market by the end of the year.

Chesapeake, considered the leading gas driller in the country, has laid down more than 25% of its rigs since the middle of 2008. Last August the Oklahoma City-based producer had 158 gas rigs in operation; it now has 119 operated rigs running. McClendon said the company will "nudge" the count even lower, to 105-110, "until gas markets rebalance."

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