shale gas

Wed, 2014-07-23 09:08Sharon Kelly
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Pennsylvania Environmental Regulators Flunk State's Own Shale Gas Audit

In January 2013, Pennsylvania's auditor general announced that he would conduct an investigation into whether state regulators were effectively overseeing the impacts from the shale gas drilling rush.

A year and a half later, the results are in: the state's environmental regulators are failing badly in at least eight major areas, at times declining to cite drillers who broke the law. In a damning 158-page report, the state's auditor general highlighted the agency's wide-ranging failures. The report detailed the Department of Environmental Protection's (DEP) use of a legal “loop hole” to avoid inspecting wells and described the agnecy's failure to fulfill its duty to track the industry's toxic waste. The report also faulted the agency for a reliance on voluntary measures in policing the industry.

The federal government has largely taken a hands-off approach to policing the drilling boom. What federal rules do exist have various broad exemptions exemptions for the oil and gas industry. Pennsylvania, which features a large swath of the Marcellus shale, is widely viewed as ground zero for the current fracking boom. In the unusually candid report released this week, state auditors have concluded that the state is overwhelmed by the industry and is providing insufficient oversight.

“It is DEP’s responsibility to protect the environment from these environmental risks and to ensure that laws and regulations which govern potential impacts to water quality are enforced,” Pennsylvania's auditors wrote. “Unfortunately, DEP was unprepared to meet these challenges because the rapid expansion of shale gas development has strained DEP, and the agency has failed to keep up with the workload demands placed upon it.”

Auditors described state environmental regulators as woefully outgunned and unprepared for the sudden arrival of the shale gas drilling frenzy.

Tue, 2014-07-01 09:17Steve Horn
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Meme with Wings: Are Western Anti-Fracking Activists Funded by Putin's Russia?

At a June 19 speaking event at London's Chatham House, North Atlantic Treaty Organization (NATO) secretary-general Anders Fogh Rasmussen claimed the Russian government is covertly working to discredit hydraulic fracturing (“fracking”) in the west from afar.

“I have met allies who can report that Russia, as part of their sophisticated information and disinformation operations, engaged actively with so-called non-governmental organisations — environmental organizations working against shale gas — to maintain European dependence on imported Russian gas,” said Rasmussen, the former Prime Minister of Denmark.

Rasmussen's comments were relayed to the press by someone in attendance who apparently broke the “Chatham House Rule” by telling outsiders about the content of a Chatham House meeting.


Anders Fog Rasmussen; Photo Credit: Wikimedia Commons

But Rasmussen left out some key context from his presentation, which he said “is my interpretation” and did not further elaborate on his “disinformation operations” comments.   

That is, while powerful actors have claimed on multiple occasions that western-based anti-fracking activists are funded by the Kremlin, no one has ever documented such a relationship in the form of a money paper trail.

Mon, 2014-06-30 12:15Sharon Kelly
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In Blow to Oil Industry, New York's Top Court Upholds Local Fracking Bans

New York's highest state court ruled today that local governments have the legal authority to use zoning to bar oil and gas drilling, fracking and other heavy industrial sites within their borders. In a 5-2 decision, affirming the rulings of three lower courts, the justices dismissed challenges to fracking bans created by two towns, Middlefield and Dryden.

The case has been closely watched by the oil and gas industry in the Marcellus region and nationwide. Over 170 towns, villages and cities in New York state have crafted local moratoria or bans on fracking. Dozens more towns are expected to enact moratoria in the wake of this ruling, according to Earthworks, one of the public interest groups whose attorneys worked on the case.

Nationwide, nearly 500 local governments have enacted measures against fracking, according to Food and Water Watch which tracks local control actions, including towns in Texas, West Virginia, Pennsylvania, Colorado and California, each of which have been the focus of recent shale rushes.

The oil and gas industry had argued that allowing local control over fracking risked creating a patchwork of rules in different municipalities. Environmental groups countered that the rights of local communities to control development within their borders trumped those concerns, and that local governments had the clear legal authority to decide how development could proceed.

“On the one hand, you're saying yes, we should have a comprehensive strategy to deal with such an important issue to our state – energy,” Chief Judge Jonathan Lippman explained when the cases were argued before the court on June 3. “And on the other hand, municipalities believe (they can) determine how they're going to live. They want some voice in how they live.”

Today, less than a month later, the court's majority decided in favor of local control. “The towns both studied the issue and acted within their home rule powers in determining that gas drilling would permanently alter and adversely affect the deliberately-cultivated, small-town character of their communities,” the New York Court of Appeals wrote in its majority ruling.

Fri, 2014-06-27 01:00Steve Horn
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Revealed: Heather Zichal Met with Cheniere Executives as Obama Energy Aide Before Board Nomination

Heather Zichal, former deputy assistant for energy and climate change to President Barack Obama and nominee to sit on the board of directors of LNG export company Cheniere Energy Inc., held two meetings with Cheniere executives while working for the White House. 

White House meeting logs show Zichal attended the meetings with three executives from Cheniere, owner of the Sabine Pass LNG (liquefied natural gas) export facility, the first terminal to receive a final approval from the U.S. Federal Energy Regulatory Commission (FERC) during the hydraulic fracturing (“fracking”) boom.

The meetings appear to have taken place just over two weeks apart from one another, according to the meeting logs. The first meeting was on January 14, 2013, and the second on January 29, 2013. Just over eight months later, Zichal resigned from her White House job, with Reuters citing “plans to move to a non-government job.”

Cheniere CEO Charif Souki — who is facing a major ongoing class-action lawsuit — sat in on both of those meetings. He was joined by Cheniere executives Patricia Outtrim, vice president of governmental and regulatory affairs, and Ankit Desai, vice president of government relations.

Desai, a Cheniere lobbyist, formerly worked with Zichal on U.S. Secretary of State John Kerry's 2004 presidential campaign, serving as his budget director. Desai also formerly served as political director for then-U.S. Senator and now Vice President Joe Biden.


President Barack Obama (L), Heather Zichal (Center), Sec. of State John Kerry (R); Photo Credit: Facebook

Zichal served as Kerry's energy and environment policy adviser for the 2004 campaign and in 2006, became his legislative director, a job she held until becoming policy director for energy, environment and agriculture for President Barack Obama's 2008 presidential campaign

Fri, 2014-06-20 10:25Steve Horn
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Heather Zichal, Former Obama Energy Aide, Named to Board of Fracked Gas Exports Giant Cheniere

Heather Zichal, former Obama White House Deputy Assistant to the President for Energy and Climate Change, may soon walk out of the government-industry revolving door to become a member of the board of directors for fracked gas exports giant Cheniere, who nominated her to serve on the board. 

The announcement, made through Cheniere's U.S. Securities and Exchange Commission Form 8-K and its Schedule 14A, comes just as a major class-action lawsuit was filed against the board of the company by stockholders.

In reaction to the lawsuit, Cheniere has delayed its annual meeting. At that meeting, the company's stockholders will vote on the Zichal nomination.

The class-action lawsuit was filed by plaintiff and stockholder James B. Jones, who alleges the board gave stock awards to CEO Charif Souki in defiance of both a stockholders' vote and the company's by-laws. 

Souki — a central character in Gregory Zuckerman's book “The Frackers“ — became the highest paid CEO in the U.S. as a result of the maneuver, raking in $142 million in 2013, $133 million of which came from stock awards.

Cheniere CEO Charif Souki; Photo Credit: Getty Images

Zichal was nominated to join Cheniere's audit committee of the board, and will be paid $180,000 per year for the gig if elected.

Among the audit committee duties: “Prepare and review the audit committee report for inclusion in the proxy statement for the company's annual meeting of stockholders,” which is now set for September 11 after the push-back following the filing of the stockholder class-action lawsuit.

“The audit committee’s responsibility is oversight, and it recognizes that the company’s management is responsible for preparing the company’s financial statements and complying with applicable laws and regulations,” Cheniere's audit committee charter further explains.

Wed, 2014-06-11 13:09Steve Horn
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Revealed: Emails Show ND Ethics Law Potentially Broken on Petraeus Fracking Trip

DeSmogBlog has obtained emails via North Dakota's Open Records Statute revealing facts that could be interpreted as indicating that North Dakota Treasurer Kelly Schmidt broke State Investment Board ethics laws.

The potential legal breach occurred during a late-April fracking field trip made to the state by former CIA Director Gen. David Petraeus.

In a radio interview responding to DeSmogBlog's original investigation about the trip, Schmidt said rolling out the red carpet for Petraeus — who now works at Manhattan-based private equity giant Kohlberg Kravis Roberts (KKR), which holds over $1 billion in oil and gas industry assets and calls itself a “mini oil and gas company“ — was “not unusual.”

KKR initially told DeSmogBlog it followed all state and federal laws during the Petraeus visit. 

But new emails obtained by DeSmogBlog from both the North Dakota State Investment Board and the Office of the North Dakota State Treasurer call that and much more into question. 

Rewinding back to where it all began, for the final stops of the two-day Petraeus visit to North Dakota, he and his KKR colleagues Ari Barkan and Vance Serchuk met with representatives from the North State Investment Board and the North Dakota Department of Land Trusts.

Banal convenings at face-value, what preceded and followed the meetings tells a bigger story: first a crucial plane flight and then a follow-up invitation to come to New York City to talk business.

Looked at on the whole, the plane flight and what came after it raises fundamental legal and ethical questions about the burgeoning — and much-touted in some circles — North Dakota oil and gas Legacy Fund.  

Mon, 2014-06-02 05:00Sharon Kelly
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Loopholes Enable Industry to Evade Rules on Dumping Radioactive Fracking Waste

As the drilling rush proceeds at a fast pace in Pennsylvania's Marcellus shale, nearby states have confronted a steady flow of toxic waste produced by the industry. One of Pennsylvania's most active drilling companies, Range Resources, attempted on Tuesday to quietly ship tons of radioactive sludge, rejected by a local landfill, to one in nearby West Virginia where radioactivity rules are still pending. It was only stopped when local media reports brought the attempted dumping to light.

“We are still seeking information about what happened at the Pennsylvania landfill two months ago when the waste was rejected, and about the radiation test results the company received from the lab,” Kelly Gillenwater, a West Virginia Department of Environmental Protection spokeswoman, told the Pittsburgh Post-Gazette, which had tracked the waste after it was rejected by a Chartiers, PA landfill because it was too radioactive. “For now this is still under investigation.”

It's one of a series of incidents involving the disposal of fracking's radioactive waste. Collectively these incidents illustrate how a loophole for the oil and gas industry in federal hazardous waste laws has left state regulators struggling to prevent the industry from disposing its radioactive waste in dangerous ways.

Thu, 2014-05-29 17:00Steve Horn
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ND Treasurer: Red Carpet Rollout for Gen. Petraeus Fracking Field Trip "Not Unusual"

North Dakota Treasurer Kelly Schmidt has responded to DeSmogBlog's investigation of the Bakken Shale basin fracking field trip her office facilitated for former CIA Director Gen. David Petraeus, who now works at the Manhattan-based private equity firm Kohlberg Kravis Roberts (KKR)

Schmidt expanded on the initial comments she provided to DeSmogBlog in response to our findings obtained via North Dakota Open Records Statute. Among other things, she described the blurred lines existing between the North Dakota government, the oil industry and private equity firms like KKR as “not unusual.” 

Schmidt's comments came on May 23 on WDAY's Jay Thomas Show, guest hosted that day by Rob Port, just over three weeks after her office hosted Petraeus.

DeSmogBlog's May 22 investigative piece revealed that KKR — which has ties to North Dakota's hydraulic fracturing (“fracking”) boom via Samson Resources and The Ridge housing complex and considers itself a “mini oil and gas company” — wrote the press release for the Office of North Dakota State Treasurer announcing Petraeus' visit, closely counseled Schmidt's office on media strategy and hosted Schmidt on a company chartered private jet.

Thu, 2014-05-29 11:00Sharon Kelly
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Shale Rush Hits Argentina as Oil Majors Spend Billions on Fracking in Andes Region

While many countries, including France, Germany and South Africa, have banned or delayed their embrace of fracking, one country is taking a full-steam-ahead approach to the unconventional drilling technology: Argentina.

The country is welcoming foreign shale companies with open arms in the hope that oil and gas drilling will help combat one of the world’s highest currency inflation rates. But the government there is also facing violent clashes over fracking in arid regions of the Andes mountains and allegations from locals of water contamination and health problems.

Argentina’s Vaca Muerta shale formation — estimated to hold an amount of oil and gas nearly equal to the reserves of the world’s largest oil company, Exxon Mobil — has already attracted billions in investment from the major oil and gas company Chevron.

In April, the government drew global attention when it announced plans to auction off more acreage. “Chevron, Exxon, Shell have shown interest in Vaca Muerta. They will compete for sure,” Neuquen province Energy Minister Guillermo Coco told potential investors on a road show in Houston on April 30th.

Argentina, which the EIA estimates could hold even more shale gas than the U.S., already has over 150 shale wells in production, more than any country in the world aside from the U.S. and China. California-based Chevron, in partnership with Argentina’s state-owned oil company YPF, invested $1.24 billion in a pilot program last year. Last month, Chevron announced an additional $1.6 billion effort for 2014, part of Chevron's overall investment plan that could top $15 billion. The company is hoping that this plan will allow it to extract 50,000 barrels a day of shale oil plus 100 million cubic feet of shale gas per day from the country’s Andes mountain region.

American drillers have talked up Argentine shale as the next big thing. “Vaca Muerta is going to be an elephant compared to Eagle Ford,” Mark Papa, CEO of EOG Resources told the Argentine press in 2012, referring to a major oil-producing shale formation in Texas.

Wed, 2014-05-28 05:00Sharon Kelly
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Exclusive: Leaked EPA Draft Fracking Wastewater Guidance Suggests Closer Scrutiny for Treatment Plants

One of the most intractable problems related to fracking is that each well drilled creates millions of gallons of radioactive and toxic wastewater.

For the past several years, the Environmental Protection Agency has faced enormous public pressure to ensure this dangerous waste stops ending up dumped in rivers or causing contamination in other ways.

But the drilling boom has proceeded at such an accelerated pace in the United States that regulators have struggled to keep up, to control or even track where the oil and gas industry is disposing of this radioactive waste. As a consequence, hundreds of millions of gallons of partially treated waste have ended up in the rivers from which millions of Americans get their drinking water. 

An internal draft EPA document leaked to DeSmog gives a small window into how, after a full decade since the start of the drilling boom, the agency is responding.

The document, dated March 7, 2014, is titled “National Pollutant Discharge Elimination System Permitting and Pretreatment for Shale Gas Extraction Wastewaters: Frequently Asked Questions.”

It's revealing for what it shows about how EPA staff are taking the hazards of fracking wastewater more seriously — and also how little things have changed.

“In general, the EPA memo does a good job of making clear that fracking wastewater discharges are covered under the Clean Water Act, and that proper discharge permitting is required, including setting limits to protect water quality standards and to comply with technology based standards in the Clean Water Act,” explained Clean Water Action attorney Myron Arnowitt, who was asked by DeSmog to review the document. “It is mostly an increased level of detail for regional EPA staff regarding permitting issues under the Clean Water Act, compared to the pervious memo in 2011.”

The document, intended as a guide for local regulators on how the Clean Water Act should be interpreted and applied, is impressive in many ways.

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