Tuesday, July 12, 2011

Chesapeake Puts its Money Where its (Big) Mouth Is

You can call Chesapeake Energy a lot of things, but timid is not one of them.  More than any other company, Chesapeake has been out front over the past several years trumpeting the virtues of natural gas.  Now the company has really put its money where its prodigious mouth is with the formation of Chesapeake NG Ventures Corp., which plans to invest $1 billion over the next ten years in companies that promote consumption of natural gas. The strategy has the not unambitious goal of helping "break OPEC's 38-year stranglehold on the U.S. economy and to lower energy costs to American consumers, enhance national security, stimulate economic growth, create hundreds of thousands of high-paying jobs and improve the environment."

Yesterday, the venture announced an investment of $150 million in Clean Energy Fuels Corp to fund the development of 150 natural gas fueling stations at strategically located Pilot/Flying J truck stops.  (Clean Energy's largest shareholder is T. Boone Pickens, of The Pickens Plan fame.)  It also committed to invest $155 million for a 50% interest in Sundrop Fuels Inc., a company that makes gasoline and diesel fuel from plant materials and natural gas and expects to break ground soon on its first biofuels plant.

While the tangible impact of these investments won't be felt for a few years, there is some psychic benefit today for everyone in the natural gas industry.  As usual, Chesapeake leads the parade.

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