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McClendon Stumps For Gas in Texas Power Patch

If natural gas prices stay in a range of $8-10, "we'll do fine," and so will the power industry, Chesapeake Energy CEO Aubrey McClendon told an audience of Gulf Coast power industry executives last week in Texas as he delivered his "message of optimism about natural gas supply."

McClendon spoke to the Gulf Coast Power Association spring meeting in The Woodlands, TX, and styled himself as an ambassador for natural gas. While Securities and Exchange Commission rules might preclude Chesapeake and other producers from tallying up their shale reserves as they'd like, there's plenty of gas for power generation and other uses for years to come, McClendon said.

"If you don't understand shales; if you don't understand horizontal drilling on shales, you don't understand what is unfolding today," McClendon said. The robust production of the Fort Worth Basin's Barnett Shale is expected to continue for years; the Fayetteville Shale is coming into its own, and Chesapeake recently announced a discovery in the Haynesville Shale (see NGI, March 31), at the same time it has holdings in the Marcellus Shale in Appalachia (see NGI, Jan. 7). With all that gas, McClendon has set about ensuring that there will be a market for it, particularly among power generators.

Last year McClendon and Chesapeake founded the American Clean Skies Foundation and put former Oklahoma Corporation Commission Chair Denise Bode in charge (see NGI, July 23, 2007). The organization recently published the first issue of its magazine: 72 colorful biodegradable and recyclable pages on PRO-Print extruded mineral-filled polypropylene stock, which is some kind of paper made from something other than trees.

McClendon said the next offering will be Clean Skies TV, an Internet-based television channel to be launched on Earth Day, April 22. "All we do is talk about the intersection of energy and environmental policies," McClendon said of the channel's programming.

Other activities of the American Clean Skies Foundation include newspaper and television advertising in selected markets; however, McClendon is quick to state that Clean Skies is not a lobbying organization. The impetus for the group's formation was the plan by then TXU Corp. to build 11 coal-fired power plants in Texas, McClendon said. To the Oklahoma City-based gas producer this was unacceptable, particularly considering the amount of gas his company and others have been pulling out of the Barnett Shale. Texans should be burning Texas gas in their power plants is his thinking. Chesapeake has also fought coal plants in its home state (see NGI, July 2, 2007).

Like many across the industry, McClendon said he sees natural gas as a bridge fuel until "something else" is used for power generation. He also sees gas as an enabling fuel for wind and solar generation. "We would love to see the 'alternative fuel brand' applied to natural gas," he said. As wind and solar are not always readily dispatchable power sources, natural gas-fired generation is their natural backup, McClendon said. "I'm working to get gas in a triangle with wind and solar."

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