Chesapeake Energy officials called Kanawha County Commission president Kent Carper Thursday morning, asking for his support in their plan to cancel building their Eastern Division headquarters in Charleston.
Chesapeake Energy officials called Kanawha County Commission president Kent Carper Thursday morning, asking for his support in their plan to cancel building their Eastern Division headquarters in Charleston.
Carper balked at the request.
"They have threatened all along if they didn't get their way, they were going to pull up stakes and leave," Carper said. "It's a big loss. I do care, but when they didn't get what they wanted, they decided to punish everybody. Maybe that's not the kind of corporate neighbor we need."
On Thursday, the natural gas company halted plans to build the headquarters at NorthGate Business Park because of a West Virginia Supreme Court ruling on May 22, the company announced.
"The decision was stunning," Scott Rotruck, vice president of corporate development, said in a prepared statement. "As a result, Chesapeake Energy has made the decision to cancel plans to build a new regional headquarters building in Charleston."
In January 2007, a Roane County jury found that Columbia Natural Resources Corp., which Chesapeake bought in November 2005, and NiSource Inc. shortchanged more than 8,000 gas-rights owners.
Last week, the state Supreme Court voted 5-0 to deny a request for an appeal from NiSource and Chesapeake Energy, upholding the jury verdict that requires the natural gas companies to pay $405 million to plaintiffs in royalties and punitive damages.
"While we hold a less significant amount of the liability in the verdict, we do believe it sends a profoundly negative message about the business climate in the state," Rotruck said. "The reality of this decision is that nobody in West Virginia, similarly situated, has a guaranteed right of appeal in the judicial system."
Robert C. Skaggs Jr., NiSource president and CEO, agreed.
"The court's decision to not even address the substance of an appeal in a case of this significance ... is unprecedented and contrary to the most basic principles of fairness," he said in a news release last week. "We firmly believe in the merits of our position and will continue to vigorously pursue our arguments before the U.S. Supreme Court."
Chesapeake will join NiSource in that appeal to the U.S. Supreme Court.
Carper said he disagreed with Chesapeake's attack on West Virginia's courts, saying the decision was unanimous and Chesapeake knew about the lawsuit when it purchased Columbia Natural Resources.
"West Virginia needs to see appropriate compensation for our natural resources," he said.
Steve Roberts, president of the West Virginia Chamber of Commerce, also lamented the loss of the Chesapeake headquarters.
"We are sorry at this turn of events. The opportunity to have a new regional headquarters seemed to us like a very good thing for Charleston and West Virginia," he said. "It's impossible to look at it as anything other than a loss."
However, he did say the loss sheds light on the need for judicial and legal reforms, including the establishment of an absolute right to appeal and the nonpartisan election of judges.
Chesapeake Energy officials called Kanawha County Commission president Kent Carper Thursday morning, asking for his support in their plan to cancel building their Eastern Division headquarters in Charleston.
Carper balked at the request.
"They have threatened all along if they didn't get their way, they were going to pull up stakes and leave," Carper said. "It's a big loss. I do care, but when they didn't get what they wanted, they decided to punish everybody. Maybe that's not the kind of corporate neighbor we need."
On Thursday, the natural gas company halted plans to build the headquarters at NorthGate Business Park because of a West Virginia Supreme Court ruling on May 22, the company announced.
"The decision was stunning," Scott Rotruck, vice president of corporate development, said in a prepared statement. "As a result, Chesapeake Energy has made the decision to cancel plans to build a new regional headquarters building in Charleston."
In January 2007, a Roane County jury found that Columbia Natural Resources Corp., which Chesapeake bought in November 2005, and NiSource Inc. shortchanged more than 8,000 gas-rights owners.
Last week, the state Supreme Court voted 5-0 to deny a request for an appeal from NiSource and Chesapeake Energy, upholding the jury verdict that requires the natural gas companies to pay $405 million to plaintiffs in royalties and punitive damages.
"While we hold a less significant amount of the liability in the verdict, we do believe it sends a profoundly negative message about the business climate in the state," Rotruck said. "The reality of this decision is that nobody in West Virginia, similarly situated, has a guaranteed right of appeal in the judicial system."
Robert C. Skaggs Jr., NiSource president and CEO, agreed.
"The court's decision to not even address the substance of an appeal in a case of this significance ... is unprecedented and contrary to the most basic principles of fairness," he said in a news release last week. "We firmly believe in the merits of our position and will continue to vigorously pursue our arguments before the U.S. Supreme Court."
Chesapeake will join NiSource in that appeal to the U.S. Supreme Court.
Carper said he disagreed with Chesapeake's attack on West Virginia's courts, saying the decision was unanimous and Chesapeake knew about the lawsuit when it purchased Columbia Natural Resources.
"West Virginia needs to see appropriate compensation for our natural resources," he said.
Steve Roberts, president of the West Virginia Chamber of Commerce, also lamented the loss of the Chesapeake headquarters.
"We are sorry at this turn of events. The opportunity to have a new regional headquarters seemed to us like a very good thing for Charleston and West Virginia," he said. "It's impossible to look at it as anything other than a loss."
However, he did say the loss sheds light on the need for judicial and legal reforms, including the establishment of an absolute right to appeal and the nonpartisan election of judges.
"West Virginia needs to be more like other states," he said. "We are an energy-abundant state, with a close proximity to major markets. We have a good work force and yet we have these economic problems... You can copy success."
Chesapeake's new $30 million Eastern Division headquarters was to be built on 27 acres in NorthGate. The futuristic half-mooned-shaped building would have been 120,000 square feet, housing about 300 employees.
The company held a groundbreaking in August 2007, featuring company officials, Gov. Joe Manchin, Rep. Shelley Moore Capito, R-W.Va., and Charleston Mayor Danny Jones.
"We've had a few bumps in the road," Aubrey McClendon, chief executive officer and founder of Chesapeake, said at the August event, "[but] Charleston, West Virginia, is the exactly right place to lead the new exploration of the natural gas in the Appalachian Basin."
On Thursday, Manchin expressed mixed emotions about Chesapeake's decision.
"We are obviously disappointed with the decision, but also understand their frustration at what they see as not being given a chance to have their fair day in appeals court," Manchin said in a statement. "It's important to remember, however, that their operations will be maintained in West Virginia as they are today, and so we will continue to work closely with them and look forward to having the opportunity to grow that relationship further in the years to come."
The Eastern Division will continue to be managed from Charleston, but from leased space, the company said.
Chesapeake occupies all or part of eight floors of office space in City Center West, located at the confluence of Interstates 64, 77 and 79 in downtown Charleston. The lease expires at the end of 2009.
The company does not have a firm plan on what it will do when the lease expires.
Ed Maier, president of General Corp., which owns City Center West, said he would be pleased if Chesapeake would remain as a tenant.
"We hope to continue to keep them here at City Center West," he said. "We hope to continue that relationship."
The company also leases space at the merchants building next door to City Center West, at the West Virginia-American Water Co.'s building on Pennsylvania Avenue and on Summers Street.
"I think it is very sad," Charleston Mayor Danny Jones said Thursday. "Charleston got caught in the middle of a court situation that we were not a part of or had no control over."
The headquarters would have certainly drawn other business to the area, he said.
"We think it would have been a good corporate model to recruit with and we think it would have been great for the city."
To contact staff writer Sarah K. Winn, use e-mail or call 348-5156.
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