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Skyscraper, energy companies top list of Oklahoma City business news in 2012

Oklahoma City's new Devon Energy Center, questions for Chesapeake CEO Aubrey McClendon and crafts retailer Hobby Lobby's fight against health insurance mandates were among the top business stories this year.
by Paul Monies Modified: December 21, 2012 at 11:53 pm •  Published: December 24, 2012

An outspoken energy company CEO facing questions over his personal finances, a retail family committed to its faith and a self-made billionaire reaping the rewards from an oil-field gamble in North Dakota all made headlines in Oklahoma business this year.

But the biggest news came from the opening of a 50-story skyscraper in downtown Oklahoma City. The 70-year-old man behind the Devon Energy Center, Larry Nichols, capped his big year by announcing his retirement from the company he co-founded with his father, John. He will remain as executive chairman of Devon Energy Corp. In recognition of his work for Devon and downtown Oklahoma City, Oklahoma Today magazine named Nichols its Oklahoman of the Year.

Devon's new headquarters opened for some employees in March and had an official opening celebration in October. It towers over a continually changing Oklahoma City and was among the focal points as the NBA Finals came to town in June when the Thunder played the Miami Heat. The worldwide spotlight from the championship was everything city boosters could hope for, even if the series outcome disappointed Thunder fans.

Across town, turmoil gripped the expanding Chesapeake Energy Corp. campus in the spring after a series of reports by Reuters uncovered some personal financial dealings of CEO Aubrey McClendon. Revelations that McClendon had borrowed at least $1.2 billion against his ownership stake in Chesapeake wells led to a board shake-up and his replacement as chairman. Archie Dunham, former CEO of Conoco Inc., took over as chairman in June and announced a board review of McClendon's financial deals, which included loans from banks also doing business with Chesapeake. About a dozen shareholder lawsuits are still pending against the company, as is an informal investigation by the Securities and Exchange Commission.

The boardroom intrigue came at an inopportune time for the company McClendon co-founded in 1989. Battered by low natural gas prices and with a huge portfolio of land in emerging shale gas plays, Chesapeake scrambled to switch focus to more lucrative natural gas liquids and oil developments. Its funding shortfall hampered some efforts, and the company took out a $4 billion unsecured loan in the summer to bridge a temporary gap between pending asset sales and cash needed for operations. In 2012, Chesapeake sold about $11 billion in assets and plans to raise up to $8 billion from asset sales in 2013.

Chesapeake continued to call for the increased use of natural gas as a transportation fuel, a push backed by T. Boone Pickens and Gov. Mary Fallin. The Oklahoma governor helped lead a bipartisan effort with governors from 21 other states in getting Detroit automakers to offer natural-gas vehicles for government fleets.

Chesapeake remains one of Oklahoma City's top employers and philanthropic benefactors. While traders and analysts have doubted McClendon before, the company has repeatedly proved them wrong.

Low natural gas prices weren't helpful for local energy companies with large gas reserves, but they did help some utility consumers. Rates rose for customers of Oklahoma Natural Gas and Oklahoma Gas and Electric Co. Those increases were softened by lower costs for the fuel that are passed on to customers.

Those low natural gas prices, along with stricter regulations on emissions from coal-powered plants, also convinced Public Service Co. of Oklahoma to announce it will phase out its last two coal units in the state by 2026. The Tulsa-based utility, a unit of American Electric Power, said it would retire a coal unit at Oologah's Northeastern station in 2016. It will install emissions-control equipment on another Northeastern coal unit and continue operating it until 2026. PSO plans to spend $350 million on the environmental compliance plan that includes replacing the power with electricity generated by natural gas.

On the oil front, Continental Resources Inc. finalized its corporate relocation to Oklahoma City from Enid and celebrated its 45th anniversary with a marketing campaign proclaiming itself as “America's Oil Champion.” Its founder, Harold Hamm, 67, made Time magazine's list of 100 most influential people for 2012, with a short profile written by U.S. Sen. Jim Inhofe, R-Tulsa.

“After a humble start on a poor family farm in Oklahoma and a job pumping gas in Enid, Harold Hamm launched a wildcatting oil company and built it into the billion-dollar Continental Resources,” Inhofe wrote.

Continental last week added to its dominant position in the Bakken oil field in North Dakota. It previously announced a new area of exploration in Oklahoma called the South Central Oklahoma Oil Province, or SCOOP. The company hopes to reinvigorate one of Oklahoma's oldest oil fields with technology and techniques it perfected in the Bakken.

Hamm also waded into presidential politics as chairman of Mitt Romney's advisory committee on energy policy. A fundraiser with the GOP nominee at Hamm's Nichols Hill home in May raised about $2 million for the Romney campaign.

President Barack Obama made a rare appearance in Oklahoma in March when he traveled to Cushing to tout his support for the southern leg of the Keystone XL pipeline from the Canadian oil sands to the Texas Gulf Coast. The president's critics quickly dismissed the visit as a campaign stunt and called on Obama to approve the northern section of the pipeline that has been delayed by environmental concerns. Construction of the pipeline's southern section began in Oklahoma in November. When complete, it will take up to 700,000 barrels of crude oil from the storage hub in Cushing to the Houston area.

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by Paul Monies
Energy Reporter
Paul Monies is an energy reporter for The Oklahoman. He has worked at newspapers in Texas and Missouri and most recently was a data journalist for USA Today in the Washington D.C. area. Monies also spent nine years as a business reporter and...
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