Published: February 26, 2009 10:33 pm      

Chesapeake Energy cuts most positions at W.Va. regional office

Supreme Court gets part of blame as 185 of 225 jobs moving to Oklahoma

CHARLESTON — Natural gas producer Chesapeake Energy said Thursday it will eliminate a majority of the 225 jobs at its West Virginia regional office, shifting a substantial number of positions back to its home state of Oklahoma.

About 40 people are expected to remain in Charleston.

Chesapeake said the change is meant to accelerate development from the Marcellus shale gas find, which runs through states in the Midwest and Northeast, but Chief Executive Aubrey McClendon also blamed the West Virginia Supreme Court.

The state’s lone appellate court refused to review a $404 million verdict awarded to landowners in a royalties dispute last year. Chesapeake, which says it has invested $850 million in West Virginia over the past four years, first responded by dropping plans to construct a $40 million regional headquarters building in Charleston.

“At that time, we realized that until West Virginia’s judicial system provides fair and unbiased access to its courts for everyone, a prudent company must be very cautious in committing further resources in the state,” McClendon said in a statement. “Even though the state Supreme Court’s decision was not the primary reason for the reorganization, it did play a significant role in our decision.”

Chesapeake and co-defendant NiSource Inc. later settled the case by agreeing to pay $380 million to landowners.

McClendon said returning jobs to headquarters in Oklahoma City will allow the company to apply more resources to gas deposits elsewhere in the country.

“Based on our experience, we believe that consolidating key positions in Oklahoma City dedicated to developing the Marcellus shale will enable us to more aggressively and efficiently implement our exploration and production program across the region,” he said.

Energy companies have cut spending as the economy worsened.

“We have been considering this reorganization as tightening credit markets and declining energy prices have dictated a reduction in capital spending and the elimination of cost redundancies,” said Martha A. Burger, a senior vice president.

Still, Tom Price Jr., another senior vice president at Chesapeake, said a substantial number of the positions will be either relocated to or filled in Oklahoma City.

Chesapeake is a major player in the Marcellus shale, which could contain as much as 363 trillion cubic feet of recoverable gas.

Gov. Joe Manchin said the decision was heartbreaking.

“All companies — large and small — are doing everything they can to sustain themselves through this national recession,” Manchin said in a statement. “This cutback by Chesapeake is that type of decision.”

Manchin pledged to try and help Chesapeake workers who lose their jobs find other positions in the state.

— AP energy writer Mark Williams in Colombus, Ohio, contributed to this report.