View Full Version : McClendon speaks out against OG&E's proposed plant

07-30-2007, 04:51 PM
Chesapeake CEO speaks out against proposed power plant at Oklahoma Corporation Commission meeting

By Heidi Rambo Centrella - 7/30/2007

Chesapeake Energy Corp.’s Aubrey McClendon criticized the construction of a proposed coal plant today before the Oklahoma Corporation Commission.

“I’m here in a somewhat uncomfortable position,” McClendon told commissioners. “I find myself being in disagreement with some very good friends of mine, that would be OG&E and PSO and these are two corporations that Chesapeake does business with every day.”

The two companies are part of a group seeking to construct an initially-priced $1.8 billion coal plant to provide electricity for OG&E, Public Service Company of Oklahoma and the Oklahoma Municipal Power Authority.

McClendon said his reasons for opposing the facility are five-fold.

“We don’t believe the plant is needed right now in Oklahoma,” McClendon said, citing unused power by existing plants.

The second reason, he said, is the technology the plant proposes to use is not what they intended to use in the beginning.

“Our view that they had to move from a more conventional technology to this technology was because they knew they needed a cleaner plant. We believe this would only reduce emissions by about 10 percent,” he said, adding the technology is only used in Japan and Denmark, where he said the plants run at much less efficiency than “a normal coal plant.”

“We don’t understand why Oklahoma, our rate-payers and citizens should be the guinea pigs for this proposed plant with its new technology.”

His third reason for opposing the plant is that it is too expensive, as it already has increased in cost from $1.4 billion to $1.9 billion as the technology changed.

“We’re certain that by the time this plant works to move forward, the cost will go up more. There is not a billion-dollar energy infrastructure project in the last year anywhere in the world that has come in on budget.”

Rather, he said he could see it costing upward of $3 billion.

His fourth reason for believing coal is the wrong answer is he sees no reason why Oklahoma, which is the second-largest per capita gas producer in the country should be “importing train loads of dirty coal from Wyoming every day and at the same time exporting clean-burning natural gas to other states.”

“We believe it is a major contributor to air pollution in Oklahoma, water pollution in Oklahoma, public health issues in Oklahoma, and we believe it’s the wrong solution to Oklahoma’s growing energy needs,” he said.

“It’s just against the interest of Oklahoma. If you look around today, virtually everything that’s going on in our state, at the end of the day has some relationship to the natural gas industry that is robust and profitable and it’s leading this state forward. It’s the foundation of our current prosperity, and I think will be the foundation of our future prosperity if we’re willing to take advantage of it.”

One way to resolve the threat of higher natural gas prices, McClendon said, is companies can purchase it today in 10-, 15- or 20-year terms.

“You can hedge away your gas price risk right now,” he said.

Paul Renfrow, vice president for OG&E Corp., agreed it’s awkward to be on opposite sides of the issue.

He did say the company has no fuel preference whatsoever.

“We have jobs,” he said. “And our job is to forecast what Oklahoma’s electricity needs are going to be. We can’t wait until the day we have a blackout to take action.”

In their research, Renfrow said they found by the year 2011-2012, a new baseload generation would be required. Baseload is power that runs 24/7.

“As the economy grows, that baseload demand grows,” he said, adding that natural gas and coal were the only viable options, however they both have pros and cons.

“Natural gas is without a doubt the cleaner-burning fuel…but it comes with price fluctuation and high prices,” he said. “Coal is a very stable fuel, but what comes with coal is environmental baggage.”

Renfrow said currently OG&E is about 60 percent natural gas, so “we have no bias.”

“Natural gas works great, but you cannot put all of your eggs in one basket,” he said. “So we’ve done all the modeling and the analysis and brought it to the Corporation Commission for something that’s new in this state. It’s called pre-approval.

“Chesapeake, for some odd reason went to the Supreme Court trying to block

our ability to have this pre-approval. We don’t understand that.

“So there’s how we got to where we are today,” Renfrow continued. “We have no fuel preference. Coal is significantly cheaper than natural gas, and Aubrey (McClendon) was right - it’s about price and it’s about portfolio. Those are the two key reasons we’re interested in a coal plant.”

When asked if his opposition was based on competition, McClendon replied, “Life is about competition. We compete everyday.”

OKCBusiness, Copyright © 2007, All Rights Reserved.

07-30-2007, 05:06 PM
McClendon makes some good points. And even if the cost of burning coal is cheaper, that "environmental baggage" OG&E spoke of can translate into real costs in the future. And, you have to think that at some point, someone is going to get serious about emissions requirements and then you may be looking at a $3 billion project that either has to be scrapped or seriously modified to comply.

I don't know what the numbers really are, but it just doesn't seem right to be building coal plants in Oklahoma.

07-30-2007, 05:12 PM
I think reason number one is that Mr. McClendon cannot testify without bias because he is Natural Gas and has a direct interest. I have no problem with a person wanting to sell more of their product but I do have a problem with people trying to force their customers to buy their products. I am a firm believer this is the only reason despite him saying there were five.

I find this very disturbing of Chesapeake to do this because it is not right. That is my opinion.

07-31-2007, 09:32 AM
I do agree that his opinion is biased and that he will profit greatly from the nullification of this plant getting built. However, he is one of the state's largest employers and pays above the state average. More business will only solidify Chesapeakes presence in Oklahoma and create more local jobs. Secondly, he is right, it is a cleaner burning fuel. I agree that we don't need to be burning coal at all, and especially trucking it in from out of state (profiting out of state companies). Keep the money in the local economy and think about the environment. I'm with BDP, I don't know the numbers, but it doesn't seem right. I think we need to nix this proposal and think about the long-term consequences more and have OG&E propose something more environmentally friendly.

07-31-2007, 09:52 AM
We ought to build a nuclear power plant.

By far the cheapest and cleanest.

SWOKC 4 me
07-31-2007, 09:57 AM
What's with OGE's "wind power" "we want to clean up the environment" push, then they want to go and build a coal power plant. In my opinion you either want to be an environmentally friendly company or you don't....

And I am with the others on the fact that I would pay a slightly higher price to see in state companies profit over out of state companies.

OU Adonis
07-31-2007, 10:04 AM
What's with OGE's "wind power" "we want to clean up the environment" push, then they want to go and build a coal power plant. In my opinion you either want to be an environmentally friendly company or you don't....

And I am with the others on the fact that I would pay a slightly higher price to see in state companies profit over out of state companies.

I agree. I would rather pay a bit more if it went to a local company. I am not a "Green" person per say, but it just seems silly to use coal when we can use a cleaner burning fuel.

07-31-2007, 10:22 AM
I think reason number one is that Mr. McClendon cannot testify without bias because he is Natural Gas and has a direct interest.

Oh, no doubt. But that doesn't nullify his other arguments. It's unfortunate that the only person with a platform to voice these concerns in a high profile manner also has a financial interest in that decision. But again, his financial position in natural gas does not preclude the validity of the other arguments he presented. I mean, if a guy owns a wind farm that wouldn't nullify his argument that wind is cleaner or make him irresponsible for making that argument. I don't think McClendon has attempted to mislead the market with his arguments. At worst, he is simply marketing the advantages of using his product.

McClendon has a cleaner, locally extracted product that is in ample supply to provide Oklahoma with its energy. What is wrong with him making his case over a dirty imported product for which there is no current infrastructure?

I have no problem with a person wanting to sell more of their product but I do have a problem with people trying to force their customers to buy their products.

Well, that's pretty much the business model for the energy sector as a whole. You have little choice in determining the basis of your energy or from where it comes. OG&E building a coal plant does little to change that, unfortunately. These choices are made largely by public policy and McClendon is simply advocating a policy of local energy over imported energy, while OG&E is advocating price over all other local concerns, including use of local resources and environmental impact.

It would be great if we could simply check a box on a form or on the internet to pick from where our energy comes and how it is produced. But that is so far from reality and would be a logistical nightmare to implement, that we, for better or worse, have to decide these things as a community.

SWOKC 4 me
07-31-2007, 10:29 AM
I am not a "Green" person per say, but it just seems silly to use coal when we can use a cleaner burning fuel.

I am not a "Green" person either, but I have a problem when a company has such a big "environmentally friendly" push then does something completely opposite. They seem to be playing for both teams.

08-01-2007, 09:18 PM
I agree sw. I am a green person and I think it is completely idiotic for OGE and PSO to want to build a coal plant, when we have some of the largest gas companies in the nation here, which is cleaner and cheaper in the long run.

I think they should go all out with regard to the wind and solar energy in Western OK and build the stupid transport infrastructure (I heard/read that this was the hold up to an otherwise 16 Gigawatt generation of clean energy).

While I agree we should do the solar, I also agree that it is somewhat unreliable when the wind does stop blowing (what, once a year in the winter??) or the sun doesn't shine. But I think you would be going backwards with coal, since OUR natural resource is oil and gas - it should be oil or gas driven. ...

Aubrey may have somewhat of a conflict of interest per say, but honestly I think his arguments are valid. Its only too bad that he's one of the few that's talking. Where's the mayor or other OKC prominent people on this??? If nothing else, let's keep the energy needs met by city/state companies and resources!!!

Makes sense, other states/cities do it. It's called, self sustaining economy (vs. shipping out).

08-02-2007, 12:05 PM
Coal is cheap...but its horrible. I in no way support building a coal plant, and I think it's crap that they want to charge US to pay for the thing. I consider it part of the infrastructure required to provide the service they offer. They should have to pay for it out of their profits just like anyone else in any business. You don't finance a project by taxing the people that use's just wrong.

We definitely need to find a greener solution. Geothermal, Wind, Solar, something that isn't coal. It's nasty, dirty, bad for the people around it and the environment. Get with the program and build something either green or nuclear. Seriously...just not coal.

Hey, maybe partner with those Chesapeake folks and make a natural gas plant? I'm sure they'll cut a good price.

08-02-2007, 01:23 PM
I'm still wondering why the state isn't considering anything but coal or natural gas... it seems that the guys hauling the money bags into the capitol building have done a fantastic job of limiting our choices to bad idea vs. bad idea.

Seriously, nuclear is the way to go here.

08-02-2007, 01:31 PM
Nuclear is definitely cleaner, but we still haven't perfected the way to deal away with the radiological waste safely. It would probably have to be in the hilly regions of Oklahoma out of a common tornado prone area. If you watched the Democratic National Debates a few weeks ago, you will see that pretty much all the front-runners are opposed to nuclear in the U.S. until we can better the technology. I have no doubt, nuclear will rise again as a player in the future. Look at Europe.

08-03-2007, 02:23 PM
I agree sw. I am a green person and I think it is completely idiotic for OGE and PSO to want to build a coal plant, when we have some of the largest gas companies in the nation here, which is cleaner and cheaper in the long run.

Don't you work for an airline manufacturer? Didn't the European Union just tell us the airplanes are the number 1 destroyer of the environment because they release their pollutants at high altitude?

Someone else complained that we should support Oklahoma compaines first. Aren't Oklahoma Gas and Electric and Public Service Company of Oklahoma Oklahoma companies? How about this, why don't we let the people who know the most about running an energy company decide how it is best to do it?

According to the US Department of Mines, Oklahoma has the 19th highest coal reserve of 32 coal bearing states, so why the assumption that the coal will come from Wyoming? I for one am a little bothered by the CEO of the thrid largest gas producer saying the plant isn't needed and will be more expensive than planned. I guess it is only needed if it burns natural gas and nothing at Chesapeak has ever cost more than they thought. I assume their entire campus came in under budget.

08-03-2007, 04:51 PM
Kerry, construction projects post 9/11 and Katrina rarely come in under or at budget. I could care less what Chesapeake's campus cost because it's a private business. If taxpayers footed the bill it'd be another story. Taxpayers/billpayers would be fitting the bill of the OG&E plant so it does matter. Secondly, as many said, it's a dirty solution and we need to be thinking about our long term future. I'd rather see Chesapeake make money off the deal even if it costs a little more. Natural Gas is in abundance, cheaper, and much cleaner. Chesapeake also hires about 200 new employees a month. Last time I checked, I don't think any Oklahoma coal companies are hiring near at that pace as well as I'm pretty confident, they don't donate near the amount of money to the local economy for beautification, non-profits, etc. I vote to scrap the coal plant idea.

08-08-2007, 08:21 AM
Hearing will continue on coal plant

By Adam Wilmoth
Business Writer

The Oklahoma Supreme Court decided Tuesday not to intervene in a case over whether a 950-megawatt coal-fired power plant should be built near Red Rock.

The decision allows the Oklahoma Corporation Commission to continue its hearing on the matter.

"We're pleased with the court's action today,” said Stan Whiteford, spokesman for Public Service Company of Oklahoma. "We still have a ways to go with the process, but we think this helps clear the way for the OCC's actions in regards to the Red Rock hearing.”

PSO, Oklahoma Gas and Electric Co. and the Oklahoma Municipal Power Authority proposed the $1.87 billion facility last summer. OG&E and PSO have asked the Corporation Commission to pre-approve their plans.. The authority is not regulated by the commission.

Opponents including the Quality of Service Coalition and Oklahoma City-based Chesapeake Energy Corp. sued the Corporation Commission saying it does not have constitutional authority to hear the case. They asked the Supreme Court to stop the case.

"This is not really a setback,” said Lee Paden, attorney for the Quality of Service Coalition. "We always knew there was a possibility the court might not want to assume jurisdiction and deal with the issue. We continue to participate in the hearings at the Corporation Commission. We raised a number of concerns that ranged from technology to the cost of plant and the unknowns of the plant and what additional costs are going to have to be incurred to build it.”

Tom Price Jr., Chesapeake's senior vice president of corporate development, heard the news while he was in Boston attending the National Conference of State Legislators. The conference only reinforced his resolve to prevent the plant from being built, he said.

"I attended two sessions today in which they talked about the anxieties of virtually all states with carbon emissions,” he said.

"For us to listen to the concerns of other states around the nation and for us to be as well educated on this process as we are and to remain silent is inconsistent with our commitment to Oklahoma.”

Red Rock proponents have said the plant is in the best option for the state because coal costs about one-sixth the current price of natural gas, which has been volatile in recent years. They also say the proposed plant will be one of the cleanest-burning coal plants in the country.

Tuesday's Supreme Court ruling leaves the issue in the hands of the Corporation Commission

09-10-2007, 02:00 PM
McClendon 1
OG&E 0

I guess his public statements on this situation went over a little better than his regarding the Sonics

In public deliberations today at the Oklahoma Corporation Commission, commissioners indicated they will not approve an application to build a coal-fired electric power plant.

OG&E, Public Service of Oklahoma and the Oklahoma Municipal Power Authority proposed the $1.87 billion coal plant near Red Rock last summer, saying relatively inexpensive coal is the best option for the state and for Oklahoma electricity customers.

The project has been opposed by a group of Oklahoma industrial electricity users, the Quality of Service Coalition and Oklahoma City natural gas producer Chesapeake Energy Corp., which launched a public media campaign against construction of the plant.

09-10-2007, 04:51 PM
Glad to hear it didn't pass today. Where does this issue go from here?

09-10-2007, 06:53 PM
Thats too bad, I wanted this to pass just to spite McClendon. But I guess the ego train will keep on rolling.

09-10-2007, 07:43 PM
I'm glad you're so passionate in your personal dislike of McClendon, that you will put it before what is good for our state and our air quality.

09-10-2007, 07:44 PM
Kudos to the State of Oklahoma, the Corporation Commission, Aubrey, CHK, and the folks at!

Good decision. We need to build a natural gas, or even better yet, a nuclear power plant.

09-11-2007, 08:36 AM
Exactly Cuatro, why would you want it to pass just to spite McClendon? That makes no sense. At least McClendon has the better interest of Oklahoma and our future air quality at hand versus having a coal fired plant that will only contribute more pollution to our air. Typical Oklahoman not caring about our environment.