The Rising Influence of Rising Affluence

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not confused... Chesapeake is investing in an oil exploration and development project in the Rocky Mountains and hopes eventually to get a 50-50 balance in oil and gas production, McLendon said. The project in the Rockies consists of 700,000 acres in the Powder River Basin in Wyoming with an unidentified partner.

Natural gas prices have fallen as Chesapeake and others have invested heavily in production of shale gas. The companies now want to diversify to be better balanced even if the price equation shifts again.

McClendon said that using the horizontal drilling techniques pioneered in shale gas for oil production in the Granite Wash has revived that play and was bringing Chesapeake returns of 100 to 150%.

He said the company made a big mistake by not pursuing oil drilling in the Bakken Shale of North Dakota and Montana, where horizontal drilling techniques have been very successful.