A controversial genius, consummate risk-taker and pioneer of the US shale patch, Aubrey McClendon, died on 2 March
To some critics, he epitomised American corporate excess and poor governance. To others, he was the man who helped usher in the renaissance of US oil, with ramifications far beyond his home state of Oklahoma. Aubrey McClendon, formerly head of Chesapeake Energy, who died in a car crash aged 56 on 2 March, a day after being indicted by the US Department of Justice for breaking antitrust laws, was fracking’s rock star – charismatic, flamboyant and possessing a huge tolerance for risk.
Most recently, he was chief executive of American Energy Partners, a firm managing shale assets in the US which had broadened into plays in Australia and Argentina. But McClendon made his name with Chesapeake, a company that was almost synonymous with the rise of US shale gas. McClendon and his partner, Tom Ward founded the firm in 1989 with just $50,000. At its peak in 2008, it was worth more than $25bn.
McClendon and Ward saw a dearth of US gas supply in the 2000s and believed high prices would make pricey techniques like hydraulic fracturing and horizontal drilling viable. It was McClendon’s “chance to become a modern-day Getty or Rockefeller”, writes Gregory Zuckerman in his book The Frackers: The Outrageous Inside Story of the New Energy Revolution. The tall Oklahoman with his mane of white hair pounced.
Chesapeake gambled, amassing enormous land positions – McClendon started his career as a landman – and fracking with abandon. Production boomed as the techniques spread. The US became the world’s biggest gas producer. Plans to import liquefied natural gas were scrapped in favour of exports. Even as prices collapsed, the drillers kept drilling. Soon the revolution spread to oil. McClendon and his fellow frackers had changed the dynamic of global energy supply.
But as the gas price fell the McClendon controversies mounted. By 2005, he was the highest-earning boss in the S&P 500: paid more than $100m from the company of which he was both chairman and chief executive. As production soared and the market bottomed, McClendon faced a margin call on some loans. He sold almost all his shares in Chesapeake to fund the debt. In 2012, with more allegations swirling, he was stripped of the chairmanship. In 2013, he was out. Ever the gambler, McClendon had borrowed more than $1bn and used Chesapeake wells in which he held a personal stake as collateral. Other allegations – of misuse of corporate funds, of using company data after he’d left the firm – followed him. The indictment claimed McClendon had rigged lease auctions in Oklahoma between 2007 and 2012.
The legacy of McClendon’s risk-taking may outlast even his $12m library of maps or 2,000-bottle wine collection. In Oklahoma, he was a lavish patron, helping establish the Oklahoma City Thunder basketball team in his home town (McClendon part-owned the franchise; Chesapeake sponsored it and its name was plastered on the arena). He helped revive the city with other donations – fulfilling some of those Rockefeller dreams, in an overlooked state.
But the real significance of McClendon, like that of his rivals in the US shale patch, is now plain much further afield. The US oil and gas renaissance is still shifting global trade and geopolitics, with consequences from Moscow to Riyadh. LNG from the lower 48 is now sailing to foreign buyers. Tight oil has lessened the reliance on Opec. “No individual is without flaws,” said another oil-industry pioneer, T Boone Pickens, after McClendon’s death, “but his impact on American energy will be long-lasting.”
Aubrey McClendon, 1959-2016