The Big Fracking Bubble: The Scam Behind Aubrey McClendon's Gas Boom

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Grove, an affable guy in a Chesapeake shirt, also points out that the entire length of the well bore is encased in heavy steel, to prevent gas from leaking into the drinking water. What's more, he adds, the top 750 feet of the well, where it's most likely to pass through aquifers, gets a triple layer of steel – a precaution the company took after it had some problems with methane near the surface getting into drinking water. In short, he suggests, the fluids and gas traveling up the well bore are completely isolated from the surrounding earth by up to three layers of heavy steel. "It's a closed system," he says. "Done right, drilling and fracking does not pollute drinking water." This, in essence, is the mantra at Chesapeake: Everything we do is safe and environmentally responsible. Trust us.

One afternoon, Grove drives me out to the Nomac 7 rig, which is drilling about 15 miles east of Towanda. I climb up into the operations box on the rig and watch as the driller guides a bit a mile down into the earth through an eight-inch hole. Once the drilling is finished, millions of gallons of fracking fluid – water and sand, mixed with a host of chemicals that make the water "slippery" – will be injected deep into the well to fracture the underground shale. The wastewater, known as flowback, will then be pumped out, and gas production will begin.

The problem with all sophisticated technology, of course, is that things inevitably go wrong. Last April, a Chesapeake well in Bradford County suffered a massive blowout. It was the onshore, natural gas version of what happened to BP in the Gulf two years ago: A wellhead flange failed, and toxic water gushed uncontrollably from the well for several days before workers were able to bring it under control. Seven families were evacuated from their homes as 10,000 gallons of fracking fluid spilled into surrounding pastures and streams. Pennsylvania fined the company $250,000 – the highest penalty allowed under state law.

Well failures, in fact, are fairly common at drilling sites. I ask Anthony Ingraffea, an engineering professor at Cornell University and a former consultant for oil-service firms, to look at the 141 violations levied against Chesapeake in Pennsylvania last year. According to Ingraffea, 24 of them involved failures of well integrity. "When a well loses integrity, it means the seal is broken and something – usually methane, but it could also be flowback water – is leaking out underground," he says. "And it's impossible to know where it is going, or in what amounts."

It's also impossible to know what chemicals are flowing out of the wells, or how toxic they are, because companies like Chesapeake are not required to disclose the compounds they use in fracking operations. Providers of fracking fluids, such as Halliburton, claim that the composition of such fluids can't be revealed without disclosing trade secrets. In 2005, the industry lobbied hard for what's known as "the Halliburton loophole," which exempts it from federal disclosure requirements. In recent months, Colorado, Texas and Pennsylvania have moved to tighten state regulations and require mandatory disclosure of what's in the fracking fluids, but loopholes still remain. "We don't know the chemicals that are involved," Vikas Kapil, chief medical officer at the National Center for Environmental Health, admitted at a recent conference. "We don't have a great handle on the toxicology of fracking chemicals."

Whatever it is, there's a lot of it: Random data I sampled from five wells that Chesapeake drilled in Pennsylvania and Ohio last year reveals that the company injected between 24,000 pounds and 230,000 pounds of chemicals into each well. Some of the chemicals are relatively harmless, used in common household products. But others – such as 2-butoxyethanol – are known to cause cancer in animals.

An even larger threat is the flowback waste that is pumped out after a well is fracked. It's a salty brine, mildly radioactive, and laced not just with toxic chemicals but with natural hydrocarbons and heavy metals like barium and benzene, which are known carcinogens even in minute quantities. In fracking operations out West, the flowback is generally injected into underground sites that meet EPA standards. But in the Marcellus, there are virtually no injection sites. In the early days, gas producers did pretty much whatever they wanted with the billions of gallons of toxic water their operations produce. "Since there were no laws covering the disposal of this stuff at first, they just dumped it into rivers or hauled it off to sewage plants to be 'treated,' which they knew didn't work," says Deborah Goldberg, a lawyer at Earth­justice. "They just wanted to get rid of the stuff as quickly and as cheaply as possible." At one fracking operation, a subcontractor was caught opening the valves on the back of his truck and dumping the wastewater on roads.

New laws in Pennsylvania now prohibit companies from discharging flowback into rivers and streams. Instead, operators like Chesapeake either "recycle" their water by running it through a filtration system, or haul it off to Ohio and inject it underground – a process which, some seismologists now suspect, is the reason Ohio was hit by an uncharacteristically large number of earthquakes last year. (The injected water lubricates fault lines, the theory goes, causing them to slip.)

McClendon dismisses the dangers of flowback, insisting that other industries cause far more pollution. "Why are you not focused on the amount of oil runoff from parking lots when it rains?" he recently asked a top environmentalist. "What about the billions of tons of agricultural chemicals that run off every day into streams and rivers? That's real pollution that kills real fish, and degrades a real environment. What's worse for Chesapeake Bay? Fertilizer runoff from poultry farms? Or fracking 200 miles away for which there is no evidence that one drop has ever gotten more than 100 yards away from a well site?"

According to McClendon, environmentalists hate fracking for a self-serving reason: because it upends their dreams of green power. "If you believe in a world where the wind and the sun are going to produce all our power in the future, then we've disrupted that vision of the world," he says. "On the other hand, if you dream of a world where air is cleaner, where energy is half the price it was before and we're not exporting a million dollars a minute to OPEC or having to go fight wars in Afghanistan and Iraq, then you should embrace natural gas. That's what's so troubling to me – that people are willing to turn a blind eye to the enormous, well-known consequences of what we do today and not realize that this new path is the only affordable, scalable way to something else."

Last year, scientists at Duke University, McClendon's alma mater, published the first rigorous, peer-reviewed study of pollution at drilling and fracking operations. Examining 60 sites in New York and Pennsylvania, they found "systematic evidence for methane contamination" in household drinking water: Water wells half a mile from drilling operations were contaminated by methane at 17 times the rate of those farther from gas developments. Although methane in water has not been studied closely as a health hazard, it can seep into houses and build up to explosive levels.

The study caused a big stir, in part because it was the first clear evidence that fracking was contaminating drinking water, contrary to the industry's denials. Just weeks after the study was released, the Pennsylvania Department of Environmental Protection fined Chesapeake $1.1 million – the largest fine against an oil and gas operator in the agency's his­tory – for contaminating 17 wells in Bradford County, including some that had been part of the Duke study.

McClendon, a major benefactor to Duke, fired off a blistering letter to the university, which was printed in the alumni magazine and widely circulated online. He didn't point out any errors by the scientists or question their methodology. Instead, he went after their character, dismissing the study as "more political science than physical science" and accusing them of having a bias against fossil fuels. "These guys," he tells me, "have invested their lives in the view that climate change is occurring, that fossil fuels are bad, and that natural gas is a fossil fuel, and therefore it's bad."

When I ask Avner Vengosh, a geochemistry professor who served as a lead author of the study, about McClendon's letter, he laughs lightly. "I have no agenda," he says. "I am a scientist. I report what the evidence I find tells me to report." He and his colleagues visited Chesapeake's headquarters in Oklahoma a few weeks before the study was finished and shared their results with the company. They also offered to consider any data that Chesapeake might have that would challenge their results. "They offered us nothing," says one scientist who attended the meeting.

One of the wells in the study belongs to Sherry Vargson, a dairy farmer who lives in a white house on nearly 200 acres in Granville Summit, a rural area 20 miles from Chesapeake's regional headquarters in Towanda. Unlike many residents, who have been forced by gas companies to sign nondisclosure agreements, Vargson is happy to discuss her experiences with Chesapeake. In 2007, shortly after her two children left for college, a landman from the company showed up at her door and asked to lease the mineral rights beneath her farm. "He told us there was natural gas in the shale rock a mile down, and they had a new way to drill for it that was minimally invasive and would cause very little damage to our land," she recalls. "He said it was a patriotic thing to do, that natural gas would help America gain energy independence."

The landman offered Vargson $100 per acre, plus 12 percent in royalties. He told her there was no way to predict how big the royalties would be, but emphasized that she stood to make "a lot of money" over the 30-year life expectancy of the well. Vargson accepted the deal. "We thought we were taken care of," she says.

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