Collusion Uncovered in Michigan Energy Land Grab

By Sasha

According to an exclusive published in Reuters this morning, top executives from Encana Corp shared information with Chesapeake Energy Corp that facilitated a major land grab for natural gas operations in Michigan.

Encana has already begun fracking in the state, and admitted to leasing out 250,000 acres by mid-2010. Activists who had been wondering why Chesapeake, the most aggressive player on the Energy Land Grab scene, was holding back were stunned when they discovered numerous shell companies that Chesapeake had formed to sign lease deals with local farmers with the intention of flying under the radar and keeping prices down.

But then, in mid-2010, Chesapeake and Encana both “pared down” the massive land grab, with Chesapeake even rejecting 97% of the leases that had been signed with farmers through shell companies like Northern Michigan Exploration.

According to land broker Kevin Koonce, who worked  for Chesapeake, “our instructions were to flunk the title if there was a word misspelled.”

Hundreds of farmers have filed suit against Chesapeake for rejecting leases and refusing to pay, on average, $95,000 bonuses per farmer. It was originally thought that the corporation backed off, because an exploratory well came up dry. But the emails between the two corporations’ executives, penned just before the mass lease rejections, reveal that Chesapeake backed out of their land deals in Michigan in collusion with Encana to drive the price of land down from a record high, thus facilitating higher profits for both corporations at the expense of land owners.

After the leases were rejected, land prices fell from $2,100 an acre, allowing Crystal Lake Resources, another shell company of Chesapeake, to lease land in the same area for $21 an acre—a 99% decrease in cost.

While this clear violation of anti-trust laws illustrates corruption at the highest levels of power, it also comes as a no surprise to activists on the ground in Michigan who have been working tirelessly to conserve even the smallest acreage of land to no avail.

“[The controversy comes as] no surprise, of course. As far as I’ve seen, being inside land auctions, it’s clear from the lack of cross-bidding. It’s clear that they [auctions] have been planned along, and there’s not interest between any of them [gas companies] in competing against each other,” one activist told Earth First!.

On May 8, activists with grassroots group Ban Michigan Fracking (BMF) attended a land auction hoping to protect land around the Circle Pines peace, ecology, and social justice education and recreation center. As acre-by-acre the land around Circle Pines Center was grabbed by the top bidding energy companies, activists rose up, leading to the arrest of one person.

“The bidding is mostly being done by land brokers,” the activist, who wanted to remain anonymous, told EF!, “much of the parcels went for minimum bids and there’s no cross-bidding. It was really common to see land go for $12, $24, $30 an acre. The most competitive bidding happened when a lawyer from Circle Pines started bidding, and then the prices went up to $275.” Even $275 represents only 10% of the value that the land was worth before the emails between executives were exchanged.

While the land racket is apparently run by the industry, activists have attempted other ways of stopping fracking. BMF is currently suing the Department of Environmental Quality (DEQ) to force them to regulate frack wells as injection wells by requiring chemical analyses of tracking fluid. Ellis Boal, lawyer with BMF, told Earth First! that American Petroleum Institute professional, David Miller, admitted at an industry meeting that “the purpose of fracking is to increase the ultimate recovery hydrocarbons,” but the DEQ refuses to issue the proper regulation.

“If they had to do a chemical disclosure, somebody who lived nearby a frack well would be able to do baseline testing, and would know what to test for,” said Boal. There are 690 chemicals that are used in fracking fluid, but they only use one-to-two dozen in any given well. Knowing the specific chemicals would save Michigan land owners about $700 per test.

Another organization, Committee to Ban Fracking in Michigan (CBFM), is currently working to gather enough signatures for a constitutional amendment to ban tracking. According to founder of BMF and chair of CBFM, Luanne Kozma, the resistance movement is growing, “more and more people are coming into the ban movement. Some of the people are in areas that could be fracked really soon, or already are being fracked.”