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failure to stem the rising tide of foreign oil imports during the past 40 years, I am confident a concerted effort to accelerate development of America’s shale gas and unconventional oil resources can make our country fully independent of OPEC oil within 10 years. We put a man on the moon in 10 years in the 1960s, so we should certainly be able to use American natural gas and oil to replace OPEC oil imports within 10 years. This independence from OPEC would have enormously important psychological and competitive benefits for our country, and for the first time in 50 years we would be able to control our energy destiny. Just as our country’s economy benefited greatly from the surge in American oil production from 1920 to 1970 (1.2 million barrels of oil per day to 9.6 million barrels of oil per day), America could once again lead the world in economic growth if we achieved lower energy costs and a significant reduction in our oil import expense — all directly resulting from technological advances applied to world-class unconventional reservoirs right here in the U.S. An added benefit of energy independence would be fewer and less expensive foreign military entanglements. During the past 10 years we have suffered more than 236,000 casualties and spent more than $3 trillion dollars fighting conflicts in Iraq and Afghanistan. It is quite possible these conflicts could have been avoided or minimized if we had not been reliant upon OPEC oil and had our oil imports not indirectly funded terrorism against the U.S. during the past decade. Developing America’s oil and natural gas resources can provide our policymakers with the opportunity to develop a new foreign policy that capitalizes on America’s emerging ability to rely on its own endowment of unconventional resources to become energy independent from OPEC. This could very well be one of the most liberating events in our nation’s history. I look forward to celebrating American energy independence 10 years from now, just in time for the 50th anniversary of the first OPEC oil embargo.

A CLEANER AMERICA, TOO The development of America’s homegrown energy resources will not only save money, it will improve our environment. Currently, the U.S. is the world’s second-largest emitter of carbon dioxide and also a Top 10 emitter of particulates,

mercury and other airborne pollutants. Virtually all these pollutants come from burning coal to generate electricity and consuming gasoline and diesel for transportation. Substituting natural gas for coal, gasoline and diesel is the only actionable, affordable and scalable pathway toward a cleaner environment. You don’t read about it very often, but since 1996 natural gas has already replaced approximately 20% of the coal burned in America to make electricity. As a result, U.S. coal

consumption in 2012 will likely be the lowest in 16 years. Even more important, our air will be cleaner and public health will be better as a result. Now that we have begun this conversion from coal to natural gas, we should make it a national goal in the next few years to shut down all coal-fired power plants not equipped with state-of-the-art pollution control equipment. Because many coal-fired power plants are too old and inefficient to justify this financial investment, it is quite reasonable to expect that we can reduce American coal consumption by another 25 to 33% during the next 10 years. Ironically, doing so would reduce American carbon emissions below the 2020 level that was sought by President Obama’s 2009 cap-and-trade bill. That contentious bill would have been enormously expensive if implemented and today would be unnecessary because of the rapidly increasing market share of natural gas in the power generation market.

Imagine what it would be like to be able to simply say “no” to OPEC oil.

2011 Annual Report | 13

Profile for Chesapeake Energy

Annual Report 2011  

Annual Report 2011