Natural gas does not emit certain noxious chemicals, such as mercury or other solids. The only chemical it does produce is carbon dioxide, and only half the amount produced by oil. Easier and quicker to control than other production plants, natural gas plants can generate a constant source of energy, unlike wind and solar energy providers. The cost of natural gas is equivalent to $1.15 a gallon, and it has a 130-octane level rating. Additionally, ninety-eight percent of the United States natural gas consumption is produced in the United States, which means there is also no dealing with foreign oil competition.
That is great news for the Chesapeake Energy Corporation (CEC), an independent company that is now one of America’s largest natural gas corporations. Developed in 1989 by Tom Ward, who started with 10 employees and $50,000 cash, this entrepreneurial empire now drills 43,000 wells and produces 2.4 billion cubic feet per day. Headquartered in Oklahoma City, Okla., the CEC focuses its efforts on developing and producing conventional and unconventional reserves, with the majority of its work focused on the four major American shale plays: the Barnett Shale in Texas, the Haynesville Shale on the Texas/Louisiana border, the Fayetteville Shale in Arkansas and the Marcellus Shale in the northern Appalachian Basin. With the large size of these shales, CEC’s geographic area covers much of the nation, and the company carries leases in 16 states.
Drilling deep into the ground, companies like CEC often find more than just natural gas. While its 102 drilling rigs produce about 92 to 93 percent natural gas, those drills also naturally co-produce about seven- to eight-percent oil or hydrocarbon liquids. Jim Gipson, director of media relations, says that these liquids, common to co-produce with the natural gas are extremely important to users. Oil and natural gas are both found underground from decomposed organic matter. Before natural gas was considered a useful energy 20 years ago, the gas aided in bringing oil to the surface, and then the gas was disposed. Research now shows that natural gas is a four-methane, one-sulphur molecule that is much cleaner and cheaper than the higher carbon makeup that is found in crude oils.
“We think natural gas is very well-positioned [to further evolve to fill the energy sector’s needs], as it’s proven to have reserves to shoulder a greater share of that responsibility,” Jim Gipson, director of media relations at CEC says.
People Power
The CEC is not only a leader in energy development, but also in employee and investor relations. Fortune named CEC one of the 100 Best Companies to Work For in 2009. With 7,800 employees, a high return on investment, its own University campus, and a high percentage of young employees, CEC has good reasons for its status.
In Oklahoma City, 50 percent of its 3,200 employees are younger than 33. Gipson says that this is due to the educational efforts that CEC has made, and the programs that it has created.
“What we’ve done is recognize this gap, and in 10 years a good chunk of our expertise will be able to retire,” Gipson says. “We actively recruit, and we provide scholarship programs all around the country, both an OU for engineering and an OSU for geology.”
Also, CEC provides150 paid summer internships in Oklahoma City to upper level college students, and the students work in departments that are relevant to their degree program.
“We hire a good percentage of those kids,” Gipson says. “We are building our work force. They get to work on real projects. There’s a lot to do and you get handed live ammo your first week.”
Investment is very important to CEC, and the outcome is also very successful due to the intelligent minds that deal with CEC’s financial end every day. Gipson says that although capital spending was reduced from 156 rigs in 2008 to 102 rigs in 2009, the company still invests several billion a year in acquiring leaseholds and drilling.
Looking Ahead
The worry that the supply of natural gas was scarce in the region has been diminished. Recent studies show just the opposite is true. CEC says that there are ample gas reserves for energy for the next 118 years, but instilling that notion has become CEC’s newest challenge.
“Because of the significant new discovery that our industries have made on new reserves of natural gas, our biggest challenge is finding and stimulating demand for using it,” Gipson says. He explains that the Marcellus Shale and the Haynesville Shale are very exciting for CEC. He expects the Marcellus Shale to turn up as a leading energy location in the world within the next 20 to 25 years.
Beginning with just a small investment and a handshake, CEC is now one of the top energy producing companies in the nation, and is constantly growing. It provides employment for thousands of families. From a standing start with no leases, no wells and no rigs, CEC now produces an undeniably impressive contribution to the nation’s energy needs every day. As a company with a beautiful, Georgian architecture campus that constantly recruits the best young minds in the industry, CEC is one of the greatest entrepreneurial stories in the nation. And, its story continues to develop.