Chesapeake Energy 2011 Annual Report Download - page 16

Chesapeake takes very seriously its mission
of finding and producing clean-burning, domes-
tic energy for all Americans while protecting and
improving the environment. At the same time, we
are facing criticism from a vocal minority of ex-
treme “environmentalists” who claim that the de-
velopment and production of natural gas is some-
how dangerous. I have read many outrageous
and factually incorrect statements about natural
gas development, especially the completion tech-
nique known as hydraulic fracturing, or “fracing,”
which has been used successfully and safely by
the industry more than 1.2 million times since 1948
(and 45,000 times last year
alone) and approximately
13,000 times by Chesa-
peake since 1989.
The fact is more than
90% of new American nat-
ural gas wells employ the use of fracture stimula-
tion to enhance productivity. The most extreme
of the claims against us — that fracing harms
humans and livestock, causes cancer, pollutes
groundwater and waterways, causes earthquakes,
etc. — are absurd and troubling, because they are
recklessly reported over and over in the news
media. I’m concerned that many people, perhaps
solely from sheer repetition, may come to believe
the inaccurate and unsubstantiated statements
that are in the news media.
I have learned over the years that a number
of our most inflexible detractors believe the age
of fossil fuels — oil, coal and natural gas, which
collectively provide approximately 86% of the
world’s energy at present — should end in the
next 10 years, and that everyone will be able to
live in some utopian world powered solely by the
wind and the sun (and perhaps the moon and
stars as well). Increasing consumption of natural
gas has luckily disrupted the dangerous fantasy
that modern life can co-exist with the elimination
of fossil fuels from the world’s economy. Such
beliefs ignore the obvious and inconvenient truth
that wind and solar power constitute less than 2%
of America’s total energy production and pro-
duce electricity at a cost two to five times more
than natural gas.
Our response has been low key, measured and
fact based. We have provided transparency about
the products that we use (see www.fracfocus.org),
remained dedicated to lowering water consump-
tion further (even though the industry accounts
for less than 1% of total water consumption in ev-
ery state where we operate), reduced our
use of chemicals whenever possible (even
though these chemicals are safely used
6,000–15,000 feet below the ground, and
most of them can be found in the average
American home or backyard) and contin-
ued to decrease fugitive gas emissions.
In April 2011, Chesapeake issued an
environmental principles statement (see
www.chk.com/environment/commitment)
that guides us in all our operations. We are proud
of our technological and environmental leadership
in the industry and of our industry’s overall track
record. We will strive to do even better in the years
ahead, but please recognize there will be a number
of advocates for competing fuels and ideologies
who will continue to denigrate Chesapeake and
our industry for reasons related to the shale gas
technology that we have successfully employed in
the marketplace — a technology that is rapidly im-
proving the U.S. economy and improving the lives
of millions of Americans through lower home heat-
ing bills, lower electricity prices, lower food prices,
lower cost of manufactured goods and, someday,
sooner than you may believe, lower transportation
costs as well.
CONCLUSION
I am very proud of our distinctive, innovative
and hardworking company and the many keen
insights we have developed that have guided
our bold moves over the past 20 years. More im-
portant, I am profoundly excited about the big
future that lies ahead for Chesapeake, our share-
holders and our country.
14 | Letter to Shareholders
I am very proud
of our distinctive,
innovative and
hardworking
company.