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Over the past eight years, Louisiana missed out on more than 30,000 oil and gas jobs and support positions because of what are known as “legacy lawsuits” over environmental damage caused years or even decades earlier by drillers and producers, according to an LSU study.

Such lawsuits typically involve a company being sued for environmental damage caused years earlier by other, previous well operators.

“Legacy lawsuits are strongly and negatively correlated with Louisiana drilling activity,” the LSU Center for Energy Studies report says. “Increases in legacy lawsuits are correlated with reductions in conventional Louisiana oil and gas drilling.”

Some 1,200 wells were not drilled because of oil and gas companies’ fear of being hit with legacy lawsuits, the study says, resulting in a loss of $6.8 billion that would have been spent to drill those wells. Workers didn’t collect $1.5 billion in wages. And the state didn’t collect the mineral royalties the wells would have generated, the report says.

There are a lot of factors that affect conventional, or vertically drilled, well costs, said David Dismukes, the center’s associate director and author of the study.

For example, wells in Louisiana must be drilled 2,000 feet or so deeper than in any other state in the Lower 48, which adds to costs, Dismukes said. Regulations also can affect costs.

Dismukes’ model accounts for those factors and a number of others, including tax policies, oil and gas prices and reserves.

The model estimates that for each legacy lawsuit 0.8 percent fewer wells were drilled in Louisiana. So if seven lawsuits were filed in a year, drilling activity would be 5.6 percent lower.

In years where there were lots of legacy lawsuits filed, drilling activity was reduced by as much as 25 percent, Dismukes said.

The lawsuits mushroomed after a 2003 state Supreme Court ruling, which said cleanup costs weren’t limited to the value of the polluted property. The case began in 1992, when landowners sued Shell Oil Co. and other firms over the pollution on 320 acres of property in southwest Louisiana. Shell and the other defendants said the property was worth around $108,000. A Lake Charles jury awarded $33 million to the landowners. By the time the Supreme Court ruled, the judgment had grown to $80 million, with legal interest and attorneys’ fees.

Seven legacy lawsuits were filed in 2003, according to the state Department of Natural Resources.

By 2011, 271 lawsuits had been filed, naming more than 1,500 defendants, said Don Briggs, president of the Louisiana Oil and Gas Association. There’s no way to sue that many companies for that amount of money — Exxon was hit with a $4 billion judgment in one case — without it affecting where those companies want to drill and put their money, he said.

“In no other state in the United States do they have lawsuits like this — no other producing state,” Briggs said.

Briggs described the lawsuits as “court-sanctioned extortion.”

This year, for the third time in nine years, the energy industry will attempt a fix through the state Legislature. The proposed change to Act 312 allows an oil company to say it’s responsible for the regulatory cleanup without admitting it’s responsible for any private claims.

“In other words, if the cows don’t give milk or the trees don’t grow or any private claims you may have like that, that is separate and you (the landowners) pursue those separately,” Briggs said.

Mary Lee Orr, executive director of the Louisiana Environmental Action Network, said the law shouldn’t be changed.

“This is really the only deterrent that we have left,” Orr said.

With all the use of water and chemicals in hydraulic fracturing going on, it’s scary to think the only thing holding the oil and gas companies accountable is the oil and gas companies, Orr said. The results of the energy industry’s self-monitoring have not been good.

Yet the industry constantly tries to reduce its responsibility in pollution issues, Orr said. This approach harms everyone in Louisiana, including the industry, she said.

“It seems to me that there’s been a legacy of the oil and gas industry trying to get out of being responsible for the destruction they’ve made to our environment,” Orr said.

Stuart Smith, a New Orleans plaintiff attorney who has argued the lawsuits for 23 years, said the oil and gas industry is doing a good job at spinning the issue.

The industry came up with the “legacy lawsuit” label and now says its smaller members are being harmed by the lawsuits, Smith said.

The truth is that the pollution comes from oil and gas operations that have taken place for decades and are still continuing, he said.

In the late 1980s, the major oil and gas companies decided to sell their domestic onshore operations for economic reasons, Smith said.

Independents could operate the properties more efficiently.

In every one of the sales, the seller disclosed the environmental issues involved, and the buyer agreed to clean the property, Smith said. But when it came time to do the cleanup, the new owners didn’t want to spend that money.

Now the industry wants to get the state Legislature to pass a law that further reduces cleanup costs, Smith said.

Briggs said plaintiff attorneys don’t want the law changed because they’re making “millions upon millions of dollars” through the lawsuits.

Mike Stag, a partner with Smith, said the state Department of Natural Resources isn’t making the oil companies clean the properties, and the oil companies aren’t doing it voluntarily.

The only way landowners can get something done is to file a lawsuit, Stag said.

Stag discounted the LSU study and Dismukes as “bought and paid for” by the oil and gas industry.

“Where’s the economic analysis of the cost of the pollution or the damages to the people who own the property and are left holding the bag?” Stag said.

The study doesn’t mention the people injured or poisoned or the cost to taxpayers who, decades from now, will still be paying for cleaning these polluted sites, Stag said.

Dismukes said the study wasn’t funded by anybody.

The Center for Energy Studies did the work internally, updating a 2005 study commissioned by the state departments of Natural Resources and Economic Development, Dismukes said. That study looked at the economic impacts of lower drilling activity.

One of the things the original study mentioned was legacy lawsuits, Dismukes said.

At the time, the study only had two years of lawsuits to consider.

Natural Resources tracks those lawsuits, and when that data was entered into the model, the impact on drilling really stood out, Dismukes said.

Dismukes said he doesn’t have an agenda.

“The numbers say what the numbers say,” Dismukes said. “I’m not necessarily saying anything pro or con about legacy lawsuits and their merits or demerits. The only thing I’m saying is there is a statistical relationship between those cases being filed and the decrease in drilling activity.”

The reduction in conventional wells was greater in north Louisiana than south Louisiana, the study shows. Over the eight-year period, 952 fewer conventional wells were drilled in north Louisiana, while 377 fewer wells were drilled in south Louisiana.

Conventionally drilled wells tend to be ignored because people focus on all of the unconventional, or horizontal wells, drilled in the Haynesville Shale in northwest Louisiana, Dismukes said. Although the state has benefited from all the Haynesville wells, those gains have not offset the rapid declines in production from conventional leases statewide, the study says.

That decline will not reverse itself without new drilling activity, which is unlikely until the uncertainties created by legacy lawsuits are addressed.

In fact, the study says, Louisiana probably faces rapidly falling mineral revenues for three reasons:

Energy companies’ preference for unconventional plays that produce oil as well as natural gas.
Louisiana’s rapidly contracting resource base.
Legacy-induced reductions in new conventional drilling activity.
Dismukes said Louisiana is also missing out on opportunities for conventional drilling sparked by activity in shale plays.

In Texas’ Permian Basin, both conventional and unconventional wells are being drilled, Dismukes said. When the industry began drilling horizontally in shales, people took a second look at conventional opportunities.

But that’s not happening in Louisiana, Dismukes said.

From 2000 through 2007, natural gas prices increased 230 percent and crude prices rose 242 percent. The number of drilling rigs nationwide rose by 126 percent.

“The notable exception,” the study says, is south Louisiana, where drilling stagnated during the same period.

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Legacy lawsuits, long a subject of disagreement between oil-industry advocates and landowners, are headed for another round of debate in the Legislature during a session that starts Monday.

It’s become a perennial battle in the Legislature, engaging environmentalists, trial lawyers and government bureaucrats as well.

Landowners sometimes use the law sue oil companies that have leased and drilled on their property to clean up pollutants. They’re called “legacy lawsuits” because wells have often traded hands many times over generations, and the list of defendants may reflect decades of corporate lineage.

Environmentalists argue that legacy suits hold oil companies accountable for groundwater and soil contamination, while business advocates are concerned they create a litigious environment that unfairly punishes the oil industry and stifles the state’s economy.

How these oilfields should be cleaned and how liability is resolved are at the heart of the matter, said Rep. Gordon Dove, R-Houma. Proposals that address the issue will likely be navigated through the Natural Resources committees, for which Dove serves as House chairman.

The Legislature first got involved with the issue in 2003 after the state Supreme Court affirmed a $33 million damage award in Corbello v. Iowa Production.

Some lawmakers saw what they described as a disturbing trend in the judgment — landowners were not required to use the money for cleanup, and huge awards could endanger the business climate.

As a result, the Legislature adopted what was then referred to as the “Corbello bill,” which required the parties to work out their differences with the state Office of Conservation if possible. Once a plan and damage figure are brokered, money is placed in a court registry and used solely for cleanup. Anything left over goes back to the oil company.

The biggest problem from the oil-and-gas industry’s perspective is that companies operating a site that was contaminated by a previous user are being pulled into the system. Oil companies argue that landowners have been awarded multi-million-dollar judgments over the years, but nothing forces them to clean up the sites.

They also argue that it’s hindering activity. A study released earlier this year by the LSU Center for Energy Studies says all of the related lawsuits have stopped 1,200 wells from being drilled. Environmentalists call the study flawed.

To date, more than 270 legacy lawsuits have been filed in Louisiana.

Don Briggs, president of the Louisiana Oil and Gas Association, said just one lawsuit can have a chilling effect, especially considering all of the money spent on defense attorneys, an expense that kicks in before any cash is dropped on cleaning up land.

“While some of the larger oil-and-gas corporations have strong defense attorneys and sizeable budgets, it is the independent oil-and-gas companies that will potentially be forced out of business due to these suits,” Briggs said.

The state Department of Natural Resources started regulating cleanup efforts related to legacy suits in 2006.

New Orleans consultant Cheron Brylski, who opposed the oil-and-gas industry during last year’s debate on behalf of environmentalists, landowners and others, said the system is too favorable for oil companies and the state doesn’t have the power to make oil companies pay up like the courts can.

“There is no agreed-upon process, even when orchestrated under the direction of Big Oil’s friends at the Louisiana Department of Natural Resources,” Brylski said. “Big Oil seeks one thing: a return to the days that caused these legacy sites: no rules, no requirements for cleanup and no process for ensuring that landowners and citizens will be treated responsibly and fairly.”

Dove, who is preparing legacy legislation this session, said the oil-and-gas industry should be able to address cleanup plans without admitting responsibility, which sometimes causes an avalanche of other lawsuits.

“But this needs to be fair. We don’t want to take away the right of landowners to sue,” Dove said. “We really need to get a bill out of committee this year.”

Dove’s House Bill 655 adds new powers to DNR’s oversight and authorizes the agency’s chief to “require a responsible owner to investigate, test, and remediate an oilfield site found to be a danger to the environment or a potential orphan site.”

While legacy sites are largely located in south Louisiana, local lawmakers say there aren’t many to speak of in Terrebonne and Lafourche parishes.

Still, it’s an issue attracting attention from local lawmakers.

Rep. Joe Harrison, R-Napoleonville, has introduced House Bill 897, which appears to have mechanisms that mirror Dove’s proposal.

Freshman Sen. Brett Allain, R-Franklin, said he will soon file a bill as well, and he insisted that it wouldn’t favor oil and gas only.

“I’m not only a landowner, but I’m also vested in the oil-and-gas business,” Allain said. “I hope to be a catalyst in this debate for compromise.”

It’s unknown, however, what impact the locally sponsored bills might have.

Jimmy Faircloth, an attorney representing landowners, recently told independent journalist John Maginnis that property owners are seeking a compromise through legislation that will be introduced by Sen. Gerald Long, R-Natchitoches, chairman of the Senate Natural Resources Committee.

Briggs, meanwhile, is working on bills that will be sponsored by Sen. Robert Adley, R-Benton, and Rep. Jim Morris, R-Oil City.

The Legislature’s regular session is scheduled to begin at noon Monday at the state Capitol and must end by 6 p.m. June 4.

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“Over the past four years, the Haynesville Shale has brought thousands of direct jobs and created billions of dollars in new business sales for the state of Louisiana,” said Don Briggs, Louisiana Oil and Gas Association president. “The Haynesville Shale is responsible for stabilizing the state economy during a trying financial climate in the United States. While the rig count has split in half from its peak of 139 in 2010 to now around 60 rigs in north Louisiana, we will see certain companies remain in the Haynesville for years to come.”
Parishwide sales tax collections during fiscal year 2010-11 zoomed past $120 million, blasting the previous year’s collections of $84 million. To date this year, more than $68 million has been collected, which is about $9 million less than this time a year ago.

DeSoto schools officials already are working behind the scenes on the 2012-13 budget, and because it’s early in the process, they don’t know fully what effect the slowdown in the Haynesville Shale will have on the bottom line.

But with anticipation of less revenue, the school system is working in a “downward trend mode in relation to expenditures,” schools Superintendent Walter Lee said.

The result may be lower supplemental payments to employees and the elimination of a half-dozen teaching positions.

The school district is far from broke, however. The DeSoto School Board has been able to sock away more than $44 million into an employee benefits trust account and earmark $14 million in the general fund reserve account.

An additional $22 million is in the bank to cover proposed construction of a new central office and a career academy, although plans for the latter are on hold until school leaders learn the extent of any effect from proposed statewide school reform measures.

However, since the Haynesville Shale’s presence was made public, there’s always been a warning: the explosion of leasing and drilling would slow down one day. And that time appears to have arrived.

This month marks the fourth anniversary of the shale’s announcement, and it is expected to mark a significant turn in activity.

Record low natural gas prices because of an abundant supply from shale plays and an unusually mild winter have oil and gas companies scurrying to oil and natural gas liquids plays that will produce greater profit margins.

That doesn’t mean the Haynesville will be ignored. Companies such as Chesapeake, EnCana and Shell are slicing their rig counts in northwest Louisiana, but they continue to service the thousands of wells already drilled here.

Industry officials predict once gas prices rise and stabilize, the dry gas fields like the Haynesville will be hot again, especially as markets are developed overseas for liquefied natural gas.

He added: “The rig decline and low natural gas prices are due to a simple national supply and demand issue. However, we are encouraged that as the price of natural gas stabilizes, a massive amount of shale gas remains for exploration and production. With the recent talk of exporting LNG, the Haynesville Shale will play a critical role in this process.”

Dry gas retreat

Announced cutbacks from oil and gas companies started earlier this year.

Chesapeake Energy, the largest leaseholder in the play, started the trend and in its quarterly report said the rig count in dry gas plays would be cut from 75 nationwide to 24, which includes 12 rigs in the northeastern part of the Marcellus Shale and six each in the Haynesville and Barnett shales.

“The challenge we face is to find the right balance given the current price of natural gas and like our fellow operators in the Haynesville, Shell has scaled back its drilling program,” said James Blanton, operations manager at Shell’s DeSoto Parish office. “Interestingly enough, our 2012 plans are consistent with the level of activity we were at when we first entered the play or a bit better based on the number of wells drilled.”

To elaborate on what Paul Goodfellow, vice president of development, said in early October, the reduction in rig count may cause some to be concerned, but the number of wells being drilled is a better gauge, Blanton said. Shell has about 200 wells.

“Again, Shell enters these plays with a long-term view, which enables us to adeptly modify when necessary, so we can continue to manage a reasonable drilling program,” he added. “Our employees are focused on production and the Haynesville play still remains an active asset in Shell’s North American onshore portfolio.”

EnCana Oil & Gas boasted of one of its “best operational years ever,” said Randy Eresman, president and chief executive officer. But those accomplishments are overshadowed by the oversupply of natural gas.

“Although a litany of factors has caused the oversupply, it is abundantly clear that a continued reduction of drilling activity will be required to restore market balance,” Eresman said in a prepared statement. “For the industry as a whole, near-term natural gas prices are at levels below what it costs to add most new production, and in some places, may even be below what it costs to produce from existing wells.

“Although we continue to believe that the long-term future for natural gas remains promising, until we see signs of a sustainable recovery in natural gas prices, we will be reducing our pace of natural gas development and slowing down production from some of our natural gas wells to preserve value.”

EnCana’s plan calls for slowing down or shutting in production from existing well bores. How long that will last is unknown.

EXCO Resources will drop from 22 to nine rigs in the Haynesville Shale this year, said Douglas H. Miller, chief executive officer.

Matador Resources, a small player in the shale, plans to allocate 6 percent, or about $18 million, of its 2012 budget to natural gas-related activities, primarily in the Haynesville Shale. The company does not plan to drill any operated Haynesville wells this year, according to a company report.

Comstock Resources said last month that it was exiting the Haynesville this month to focus on the oil-rich Eagle Ford Shale in south Texas. Half of its revenue is expected to come from oil this year instead of dry gas, which was the opposite a year ago.

Leveling off

DeSoto Parish tax collection agencies anticipate a leveling off of sales taxes at some point, but no one knows what the level will be.

With new restaurants, businesses and hotels dotting the parish, revenue is projected to be greater than the pre-shale days. Factored into that, of course, will be the fact that less money will be spent locally because of the exodus of oil and gas workers.

For now, parking lots at the three new hotels in Mansfield remain full, and lunch and supper hotspots still are popular. Noticeable is a slight decrease in truck traffic, and more slots are open at the various RV parks that popped up to meet the demand of the itinerant work force.

For the School Board, which collects 2.5 cents on every $1 spent, that equates to $41 million so far this year, a $6 million drop over a year’s time.

“It’s been going down for the last two or three months. But for the last month “» it’s down but very little compared to last year at this time,” Lee said. “So it’s too early for us to tell if it is going to level off and where it’s going to level off. We don’t know if it’s leveling off now or if this is an unusual month or if we will drop off at a higher rate next month.”

School Board Finance Director Steven Stanfield said the amount shifted into the state-mandated employee post employment trust varies annually because it is dependent upon sales tax collections. Once collections meet operations, then 20 percent of the additional funds go into the trust.

Pay supplements, which are not guaranteed income, are only handed out when excess funds accumulate. DeSoto’s employees were fortunate to receive $8,500 in supplemental payments last year, which cost the system just more than $4 million.

Lee anticipates the May check may be trimmed to $2,500, compared to $5,000 in December. “But we’ll see how it looks in another month or two. That will help us determine if need to make other plans.”

As for overall expenditures in the wake of declining sales tax revenue, “We’re watching it, and we’re just making sure as we need to cut back we will.”

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The Environmental Protection Agency said Thursday it plans to re-test the water in Pavillion, Wyoming, after releasing a report last year suggesting that the region’s water supplies had been contaminated by natural-gas production and the drilling method known as hydraulic fracturing.

In a statement Thursday, the EPA said it was partnering with the U.S. Geological Survey and Wyoming officials to take new samples and “to clarify questions about the initial monitoring results.” The EPA said it was also delaying a review of its earlier findings in order to conduct and examine new samples.

Encana Corp. (ECA, ECA.T), which owns the gas fields in Pavillion, said it welcomed the EPA’s efforts to re-test the water. “Today’s announcement really demonstrates that EPA’s draft report was rushed … that the assertions weren’t supported by the data,” Encana spokesman Doug Hock said.

The EPA attracted controversy in December when it released a draft report saying that water samples in Pavillion contained chemicals “consistent with gas production and hydraulic fracturing fluids” and that detected levels were “well above” drinking water standards.

The agency, which had been asked by Pavillion residents to examine the water, said results were particular to Pavillion, where natural gas production differed from other parts of the country. Its tests still served as a flashpoint in a broader debate over natural gas drilling.

Environmental groups seized on the results as evidence that hydraulic fracturing has the potential to contaminate drinking water, reviving calls for heightened scrutiny and tougher standards.

The oil and natural gas industry disputed the findings. Encana released a lengthy reply in which it said the EPA’s findings “are conjecture, not factual and only serve to trigger undue alarm.” Encana said natural gas was known to exist in Pavillion’s groundwater before natural gas production got underway.

The EPA said in a statement Thursday that it was committed to collaborating with state and local leaders and that “use of the best available science are critical.”

President Barack Obama has endorsed the production of natural gas, found in ample amounts in the U.S. after recent advances in drilling technology. He has acknowledged that the industry creates jobs and that natural gas burns cleaner than coal. But lingering questions over the safety of “fracking” has forced the president to consistently confirm his commitment to safe drilling practices.

The EPA is currently studying the potential impacts of fracking on drinking water and the results of that review should be released in 2014.

Hydraulic fracturing involves the use of water, chemicals and sand to break open seams in the earth and extract natural gas.

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This week, Dr. David Dismukes with the LSU Center for Energy Studies released a report on the impact of Legacy Lawsuits on conventional oil and gas drilling in Louisiana. Legacy Lawsuits are court-sanctioned extortion taking place at the expense of companies that drilled on a piece of property with little or no proof from the landowner or plaintiff that any environmental damage to the property even exists.

Legacy Lawsuits find their name from, according to Dr. Dismukes, “cases based on claims in which the purportedly damaging actions were taken not recently, but several decades into the past.”

Vast majorities of the Legacy Lawsuits have taken place in south Louisiana. Trial lawyers do not agree with the oil and gas industry on the massive impact the Legacy Lawsuits are having on the people of Louisiana. To date, more than 270 Legacy Lawsuits have been filed with more than 1,500 defendants. You cannot sue that many defendants without having an impact on where companies explore for oil and gas. The LSU study estimates that Legacy Lawsuits have led to the loss of nearly 1,200 new wells in Louisiana, translating to an astonishing $6.8 billion in lost drilling investments. The study also shows how Louisiana has lost more than 30,000 jobs as a result of these suits.

David Russell, president of McGowan Working Partners, said within the last year, he sought to obtain “contamination insurance” for his Louisiana oil and gas properties. Each carrier he contacted declined to write him a policy directly due to Legacy Lawsuits.

However, the insurance companies said they would write policies for his properties in Arkansas, Mississippi and Texas. Russell continued by saying, “At a recent prospect expo, I sat down with investors willing to spend hundreds of millions of dollars to explore for oil and gas deals, but when they heard we were from Louisiana, they would not even speak with us due to the Legacy Lawsuits.”

Independent producers like McGowan Working Partners face not only time consuming lawsuits, but are forced to spends hundreds of thousands of dollars to defend their case before the first dollar is spent on any land remediation. While some of the larger oil and gas corporations have strong defense attorneys and sizeable budgets, it is the independent oil and gas companies that will potentially be forced out of business due to these suits.

In 2006, the Louisiana Legislature passed ACT 312, which would hopefully solve the Legacy Lawsuit problems. However, a recent study conducted by the Louisiana Department of Natural Resources for the House Natural Resources Committee revealed data showing that 210 of 270 cases were brought to the courts with no environmental data submitted to the Louisiana Office of Conservation, which is required by ACT 312.

While the Legacy Lawsuits seem to have no end in sight, the burden on oil and gas companies will continue to grow until this problem is corrected.

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GE GE +0.27% and Chesapeake Energy Corporation CHK +0.17% today announced a collaboration to develop infrastructure solutions that will help accelerate the adoption of natural gas as a transportation fuel. This groundbreaking technology and services project marks a significant milestone toward increasing energy independence in the United States through the increased use of natural gas–an abundant, reliable and cleaner-burning source of energy for both consumers and commercial users.

To formalize the agreement, GE and Chesapeake have signed a memorandum of understanding on a product and services development partnership, representing a multi-year collaboration between the two companies to develop and bring to market compressed natural gas (CNG) and liquefied natural gas (LNG) transportation and natural gas home-fueling solutions. By improving access to CNG, which is most commonly used in light- to medium-duty vehicles such as pickups, vans, SUVs, taxicabs, transit buses, refuse and delivery trucks as well as consumer vehicles, along with LNG, which is commonly used for heavy-duty industrial purposes, dependence on foreign energy sources can be reduced while simultaneously lowering fueling costs and vehicle emissions.

The collaboration is designed to leverage GE’s global Oil & Gas technology portfolio with Chesapeake’s expertise in developing innovative fueling solutions to lower the ownership and operational costs of natural gas vehicle (NGV) fueling stations. With the development of shale resources dramatically increasing the amount of low-cost natural gas in North America, the GE-Chesapeake collaboration can help incentivize operators to put more NGVs on the nation’s highways.

As part of today’s announced collaboration, beginning in the fall of 2012 GE will provide more than 250 modular and standardized CNG compression stations for NGV infrastructure. These units, also known as “CNG In A Box(TM),” have gone through GE’s rigorous ecomagination-qualification process and will provide the core infrastructure to enable expanded access to CNG at fueling stations and other designated installations.

A vehicle using CNG can reduce annual fuel costs up to 40 percent, assuming 25,700 miles per year driven, gasoline priced at $3.50/gallon and CNG at $2.09/gasoline gallon equivalent. This represents savings totaling as much as $1,500 per fleet vehicle per year. In total, for each fleet vehicle using fuel provided by CNG In A Box instead of gasoline, a fleet operator can reduce CO2e emissions from fuel combustion by about 24 percent, or 2.2 metric tons per vehicle annually, assuming an average fleet vehicle travels approximately 25,700 miles per year.

“Both GE and Chesapeake are known for taking on tough energy challenges and putting the best minds and technologies to work to develop solutions,” said Aubrey K. McClendon, Chesapeake’s Chief Executive Officer. “The partnership announced today between GE and Chesapeake’s affiliate, Peake Fuel Solutions, combines Chesapeake’s natural gas expertise with GE’s extensive global manufacturing capabilities and will bring transformative products to industries and individual consumers across the U.S. These products and services will allow customers to enjoy the clear advantages of clean, affordable and abundant American natural gas at about half the cost of gasoline.”

Said GE Energy President & CEO John Krenicki, “GE is fundamentally committed to natural gas–our technologies help extract it, move it and turn it into power, whether it’s highly efficient gas turbines delivering electricity at the utility scale or, in the near future, a vehicle at a refueling station. What makes this project particularly exciting is that it paves the way to taking the immense reserves of natural gas being discovered in the U.S. and using them right here in the U.S. That paves the way for faster economic growth, energy security, more jobs and reduced environmental impact.”

This CNG technology will be brought to market by Peake Fuel Solutions–a Chesapeake affiliate–which has extensive experience with natural gas vehicles, vehicle emission controls and natural gas market dynamics. Chesapeake also brings considerable in-house expertise in CNG market development to the GE collaboration, including retail station relationships, fleet outreach and education programs and policy engagement.

CNG In A Box takes natural gas from a pipeline and compresses it on-site at an industrial location or at a traditional automotive refilling station to then turn it into CNG. A CNG vehicle, such as a taxi, bus or small truck, can then refill its tank using a traditional fuel dispenser, much like those used for diesel or gasoline refueling.

Key features include:

– The gas compression, storage, cooling, drying and controls are easy to ship and maintain due to its compact “In Box” design.

– The units come in two configurations: an 8 foot x 20 foot container or 8 foot x 40 foot container, depending on the site’s need.

– Its modular and intuitive design makes it “Plug & Play” on-site.

– The offering includes GE Wayne branded dispensers with credit card capability and provision for “Point Of Sale” interface.

– The fuel dispenses at a rate of about 7 gasoline gallon equivalent per minute.

Other elements of the new collaboration include:

– Aftermarket services for natural gas fueling infrastructure.

– GE’s LNG fueling plants, which adapt GE’s proven large-scale LNG liquefaction technologies to smaller-scale operations. Using LNG as a substitute for diesel or fuel oil can reduce combustion emissions up to 25 percent.

– Development of home refueling technologies.

– Co-marketing of products and services resulting from the partnership.

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You may have heard or read about a Rolling Stone magazine article that appeared last week regarding the natural gas industry and, specifically, Chesapeake Energy Corporation.

When Chesapeake was informed that the story was in progress, the company decided to work closely with the reporter. He was given access to our drilling rigs and corporate campus, including three days of briefings with senior managers, including CEO Aubrey McClendon.

Unfortunately, the article that appeared included misleading information and inaccuracies. Chesapeake stands by its position on the abundance of natural gas in the U.S. and its practices as a responsible operator that provides great benefits to the communities in which it operates.

Chesapeake has provided a page on its website that provides the complete picture on some of the most egregious misrepresentations and inaccuracies in the Rolling Stone piece. Please visit the page to find out the truth about natural gas drilling and Chesapeake.
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Oil and gas drilling in southern Louisiana is lagging behind some other states in part from the threat of so-called “legacy” lawsuits, in which landowners who have leased property for drilling later sue for alleged contamination from oil-field wastes and saltwater, according to a report released this week by an Louisiana State University professor.

Industry officials point to a 2003 lawsuit over site contamination that led to a $54 million award, when the land was worth about $108,000, as having spurred more landowners to file claims for damages.

In some cases, the suits have been filed decades later, and the drop-off in conventional drilling activity has cost the state billions in mineral revenue collections, according to the report by David Dismukes, professor and associate executive director of LSU’s Center for Energy Studies

The study updates work originally included in a 2005 report produced for the state Department of Natural Resources and the Department of Economic Development that assessed Louisiana drilling activity and the economic impacts of decreased activity.

The new report estimates that over the past eight years, legacy lawsuits have led to a loss of about 1,200 new wells, costing the state about $6.7 billion in drilling investment, not counting on oil and natural gas production, and the mineral revenues generated by foregone production.

Last year, the House Natural Resources Committee rejected a measure that would have stripped primary jurisdiction over the lawsuits from local courts and given it to the Louisiana Department of Natural Resources.

Oil and gas representatives told lawmakers that the House bill, sponsored by Rep. Page Cortez, R-Lafayette, would expedite cleanups of oil fields that are now the subject of the lawsuits. Supporters of the measure say the history of the suits and the threat of new torts hamper business. Opponents framed the Cortez bill as a way to shield oil and gas firms from liability.

Under the proposed legislation, state officials would have been responsible for overseeing the cleanup and have had more authority over the claims process, including those already filed but lacking an approved plan to evaluate potential environmental damage.

A 2006 law that governs legacy lawsuits essentially held that damages awarded to a landowner for oil-field surface damage did not have to be tied to the land’s value and that the landowner was not required to use the settlement payments to clean up the effects of the damage.

Industry officials lauded the report this week and decried the lasting impact felt by the lawsuits. Don Briggs, president of the Louisiana Oil and Gas Association, called the suits “court sanctioned extortion, where there is no need for remediation in most cases.”

“The study strips away any doubt about what is going on: Louisiana’s poor legal climate toward the oil and gas industry is causing the state to lose out on substantial conventional drilling opportunities and thousands of well-paying jobs to other states, most notably Texas,” said Chris John, president of Louisiana Mid-Continent Oil and Gas Association. “I hope the study is analyzed in its entirety, so that the full magnitude of this problem can be understood.”

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