An exposed steel frame rises out of Chesapeake Energy CEO Aubrey McClendon’s unfinished wine cellar like the skeleton of a beached whale laid out in the middle of the Manor Hill neighborhood at NW 68 and Classen Boulevard.
McClendon personally purchased an office building and at least one house to make way for the wine cellar in 2006 and 2007, but construction stalled after the site was cleared, the concrete foundation was poured and ark-like steel eves were erected in 2008. Stacks of unused building materials, including rusting metal beams, still clutter the site.
“I think it’s an eyesore,” said Manor Hill resident Linda Ross, who lives two doors down from the back side of the incomplete wine cellar. “All of the building materials are just sitting there rotting. I don’t appreciate Aubrey just leaving it there half finished.”
Like the wine cellar, much of McClendon’s grand vision for Chesapeake Energy’s campus and ancillary development will be incomplete when he leaves the company he co-founded April 1 in the wake of a boardroom shake-up.
A review of court records, speech transcripts, and planning documents by The Oklahoman shows a vision that went far beyond the headquarters.
Chesapeake’s plans for the area around its campus included company-owned shopping centers, a hotel, high-end condominiums and a chain of modern convenience stores dubbed “Peake” that would feature pumps with compressed natural gas.
That vision, far from complete, would have complemented a corporate headquarters that features such amenities as a 2.5-acre community garden, a 72,000-square-foot fitness center and a $10 million, 63,000-square-foot employee child care center topped with a steel-tube sculpture spelling the word “Hi.”
Although Chesapeake has said it is slashing costs and selling billions of dollars in assets in the face of a bearish natural gas market and a board shake-up, the company has remained mum about its plans for the hundreds of millions of dollars of real estate it owns in Oklahoma City or for several development projects in various stages of completion.
Chesapeake Energy officials declined to comment on its future real estate development plans to The Oklahoman.
CEO drove vision
Many of Chesapeake’s land development activities have been intertwined with its charismatic CEO since McClendon co-founded the company in 1989 with Tom Ward, now CEO at SandRidge Energy Inc.
McClendon modeled Chesapeake Energy’s original signature red brick five-story buildings on a university-style setting — one he said he hoped would create a comfortable arrival for younger hires. By the early 2000s, McClendon’s interest in real estate evolved from the campus itself to nearby properties — many of which were bought at prices far above market value.
The Chesapeake-owned Nichols Hills Plaza shopping center is on the same street as the company’s headquarters, and less than a mile from McClendon’s Hills home.
The company’s $27.5 million purchase of Nichols Hills Plaza, $215 per square foot in 2006, was described as “phenomenal” at the time by retail property specialist Mary Grace of Grace Commercial Real Estate.
McClendon has an ownership interest in multiple Oklahoma City restaurants that Chesapeake plays landlord to, according to loan documents and county real estate records, including Irma’s Burger Shack, the Metro Wine Bar & Bistro and Deep Fork Grill.
The company or its affiliates, meanwhile, own Republic Gastropub, the Classen Curve shopping center, Triangle shopping center, Metro shopping center, a strip shopping center at the northeast corner of Western and NW 63 and a Shell Gas Station — properties all within two blocks of Chesapeake’s campus.
The wine cellar stands as a reminder of McClendon’s intent to create a neighborhood in which he would play a long-term role as chief planner — one that sometimes involved personal business interests locating within or near commercial real estate owned and developed by the company.
A shell company with the same mailing address as Chesapeake Energy purchased a house directly across the street from McClendon’s unfinished wine cellar and two other tracts of land a block away in April for $1.8 million, according to property records.
Plan never revealed
Although Chesapeake has amassed real estate in Oklahoma City encompassing hundreds of properties worth hundreds of millions of dollars over the past decade, the company has been reticent to reveal its plans for much of its holdings.
The company previously has said its campus could encompass as much as 300 acres and house as many as 10,000 employees in the future.
Ward 2 Oklahoma City Councilman Ed Shadid, who represents the area, said he spends a lot of time dealing with issues related to Chesapeake’s expanding presence in his district when the company’s development plans spill over into his constituents’ neighborhoods.
“One peculiarity has certainly been that the city has not seen a complete master plan of what the company envisions,” Shadid said. “If there was a master plan, I think it has changed maybe multiple times. It’s difficult for me to have changed expectations, because it wasn’t clear to me what the master plan was and what it continues to be.”
Between 2003 and 2007, Chesapeake experienced a period of unprecedented growth owing to rising natural gas prices and new technological advances in unconventional drilling.
Chesapeake was added to the S&P 500 in 2006. The same year, documents submitted to the Oklahoma City Planning Department showed that the company had plans for up to 75 condos, restaurants and a heliport.
In 2007, the company said it had hired the Boston-based firm Antonio Di Mambro + Associates to develop a 20-year master plan for its campus, but again, the public was allowed only glimpses of that vision.
Oklahoma City Planning Director Russell Claus admits he was never fully informed about McClendon’s grand plan for the area, which in its totality is comparable in land mass to Bricktown, downtown Oklahoma City’s entertainment district.
Claus calls the commercial investment by Chesapeake and McClendon “unprecedented” locally.
“I don’t have an idea as to what he was planning,” Claus said. “As for the campus itself, we did get to see a lot of his ideas actually get developed.”
While natural gas prices have fallen precipitously since 2008, Chesapeake and McClendon have continued to dream big.
What is known about McClendon’s vision is gleaned from pitches he and representatives have made to affected nearby property owners and at civic gatherings.
“The concept we want to establish is a place where you can live, work and play,” McClendon said in a 2007 interview with The Oklahoman. “I want a place where you can walk to work, or to a restaurant, or to a bar or the cleaners. ... I’m not trying to replicate anything. We’re trying to do something original.”
For several years, construction cranes have remained prominent fixtures at Chesapeake’s still expanding corporate campus, where there had not been a construction break in more than a decade. The company currently has about 700,000 square feet of office space under construction on its main campus, according to building permits.
A number of the company’s unfinished real estate development projects also surround the campus.
Merchants at the shopping center reported in 2008 they were told plans for rebuilding the plaza included a mix of more offices, housing and a hotel. They also were told the company hoped to remove Avondale Drive if it could acquire Nichols Hills town hall neighboring the shopping center.
Interested in boosting sales tax revenue at Nichols Hills Plaza, city officials sent a letter to Chesapeake in late 2011 hoping to begin negotiations to sell the town hall property.
However, the sale talks never moved forward, primarily because the small city does not have the funds needed to relocate or rebuild its town hall elsewhere, Nichols Hills Councilwoman Sody Clements said.
“We don’t have the money to do it, so there we are,” Clements said.
Chesapeake’s plans for a company-owned grocery store in Nichols Hills Plaza have been scrapped and much of the southeast end of the shopping center where the grocery store was supposed to go remains empty.
The company initially had promised Nichols Hills that the store would be open by fall 2012.
A grassy lot sits empty at NW Grand Boulevard and Glenbrook Drive where Chesapeake once had plans for a five-story condominium development. Chesapeake purchased the aging apartments at the site and had the property razed in 2008.
After Chesapeake revealed plans to develop a five-story condominium complex to residents in Glenbrook neighborhood, neighbor and former Oklahoma City Urban Renewal Authority Chairman Stanton L. Young sued Chesapeake Land Development Co., which functions as the energy company’s real estate arm. In his lawsuit, Young claimed that Chesapeake would be in violation of neighborhood covenants if it were to move ahead with the development.
Although Young lost his lawsuit to have the development halted, Chesapeake has never moved forward with the condominium project after having the old apartment complex torn down.
Young, through a representative, declined to comment on the lawsuit. Fellow area resident Sharon Polkinghorne, who signed a sworn statement outlining what a Chesapeake executive had told her about plans for the condominiums as part of Young’s lawsuit, said things are more peaceful in the neighborhood these days.
But there is a definite uncertainty among Glenbrook residents about what will now happen to the grassy lot, she said.
“That’s the big question mark — what are they going to do with it?” Polkinghorne said. “They’ve got plans, they’re just not sharing them with us.”
Through a shell company, Chesapeake owns an entire block of now-vacant midcentury brick homes near NW 50 and Pennsylvania Avenue in anticipation of future development.
Some of the homes, all in the 5100 block of Barnes Avenue, were purchased for as much as two or three times their assessed market value, according to property records.
The last house on the block to sell was most recently valued by the county assessor at $92,685 and sold in January for $235,000.
The company would not discuss what it has in mind for Barnes Avenue. However, McClendon spoke of plans for Chesapeake to begin multiple Peake CNG stations, including a couple in Oklahoma City, at the company’s last shareholder meeting in June.
Plans for such a CNG fueling station and retail store at NW 50 and Western Avenue have yet to move forward, although Chesapeake razed a Conoco station that stood on the spot and petitioned the city to close NW 49 at Western to appease residents in the area concerned about additional traffic in the neighborhood.
Shadid believes plans for the development at NW 50th and Western have since stalled.
While Shadid believes that Chesapeake’s presence in Oklahoma City will continue, he has concerns about how new leadership will view McClendon’s past zeal for real estate development.
“What I’m curious about,” Shadid said, “is whether the new board would have the same enthusiasm for Oklahoma City real estate that is tangential if not completely unrelated to the oil and gas industry.”