Former Chesapeake Energy CEO Aubrey McClendon Bringing Fracking to Argentina

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Aubrey McClendon, the embattled former CEO and co-founder of Chesapeake Energy, has announced his entrance into Argentina to begin hydraulic fracturing (โ€œfrackingโ€)ย in the country’s Vaca Muerta Shaleย basin.

Though he retired as Chesapeake Energy’s CEO back in 2013ย in the aftermath of a shareholder revolt, McClendon wasted little time in creating a new company called American Energy Partners (AEP). AEP, like Chesapeake, has found itself mired since its onset in legal snafus over its treatment of landowners. With AEP not getting a red carpet roll-out in the U.S., McClendon has looked southward for otherย lucrative businessย adventures.

DeSmog reported in September that McClendon has also teamed up with a private equity company affiliated with former Mexican president Vicente Fox to begin tapping into Mexico’s portion of the Eagle Ford Shale basin. We also reported that he has begun doing business in Australia.

All of those countries have something in common that makes them different from the U.S.: ย lax royalty and land dealย laws.

As McClendon boasted in an investor callย โ€” and as Chesapeake formerly acknowledged on aย portion of its website,ย since taken downย โ€”ย the company chose the land grab as a key part of its businessย model.

Mexico, Australia and Argentina are still in the โ€œland grabโ€ phase of development, with zero production scale fracking taking place in any of the threeย countries.

AEP attempts to preempt โ€œland grabโ€ charges on itsย website.

โ€œWe work hard to earn โ€“ and maintain โ€“ your trust,โ€ writes AEP. โ€œWe practice open, honest communication with our owner partners to strengthen those partnerships forged in mutualย trust.โ€

Banana Republic Landย Laws

In Mexico, unlike in the U.S. in whichย in most states’ย landowners own the minerals underneath their land, the government maintains mineral rights. The same goes for Australia.

Argentina’s government, in a presentation posted online by the Undersecretariat of Mining, brags about how its legal landscape permits foreign investors and companies to come in and commandeerย land.


Image Credit: Argentinaย Undersecretariat ofย Mining

McClendon did not say so overtly, but it appears โ€œland grabโ€ could be a key part of his plans in Argentina movingย forward.ย 

โ€œ[W]e intend to bring US-style shale drilling and operating expertise, completion techniques and cost structure to the Vaca Muerta, which we believe will prove transformative for the play,โ€ McClendon stated in an AEP press release announcing theย deal.

There is a term for this โ€œcost structureโ€ with roots in how U.S.-based companies have attempted to do business historically in Latin America: banana republic. Will history repeat itself in the Vacaย Muerta?

Photo Credit:ย PromesaArtStudio | Shutterstock

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Steve Horn is the owner of the consultancy Horn Communications & Research Services, which provides public relations, content writing, and investigative research work products to a wide range of nonprofit and for-profit clients across the world. He is an investigative reporter on the climate beat for over a decade and former Research Fellow for DeSmog.

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