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Bush Family and Its Inner Circle Play Central Role in Lawsuits Against Denton, Texas Fracking Ban

George P. Bush, Texas Land Commissioner-Elect

On November 4, Denton, Texas, became the first city in the state to ban the process of hydraulic fracturing (“fracking”) when 59 percent of voters cast ballots in favor of the initiative. It did so in the heart of the Barnett Shale basin, where George Mitchell — the “father of fracking” — drilled the first sample wells for his company Mitchell Energy.

As promised by the oil and gas industry and by Texas Railroad Commission commissioner David Porter, the vote was met with immediate legal backlash. Both the Texas General Land Office and the Texas Oil and Gas Association (TXOGAfiled lawsuits in Texas courts within roughly 12 hours of the vote taking place, the latest actions in the aggressive months-long campaign by the industry and the Texas state government to fend off the ban.

The Land Office and TXOGA lawsuits, besides making similar legal arguments about state law preempting local law under the Texas Constitution, share something else in common: ties to former President George W. Bush and the Bush family at large.

In the Land Office legal case, though current land commissioner Jerry Patterson signed off on the lawsuit, he will soon depart from office. And George Prescott Bush — son of former Florida Governor and prospective 2016 Republican Party presidential nominee Jeb Bush and nephew of former President George W. Bush — will take his place.

George P. Bush won his land commissioner race in a landslide, gaining 61 percent of the vote. Given the cumbersome and lengthy nature of litigation in the U.S., it appears the Land Office case will have only just begun by the time Bush assumes the office.

The TXOGA legal complaint was filed by a powerful team of attorneys working at the firm Baker Botts, the international law firm named after the familial descendants of James A. Baker III, a partner at the firm.

Baker III served as chief-of-staff under both President Ronald Reagan and President George H.W. Bush, Secretary of State under George H.W. Bush and as a close advisor to President George W. Bush on the U.S. occupation of Iraq. He gave George P. Bush a $10,000 donation for his campaign for his race for land commissioner.

James A. Baker III Campaign Contribution George P. Bush

Photo Credit: Texas Land Commission

The Energy Policy Act of 2005which exempts the oil and gas industry from the Safe Drinking Water Act, the Clean Water Act and the National Environmental Policy Act for fracking, is seen by critics as the legacy of ashes left behind by the George W. Bush Administration.

Yet almost a decade later, the two lawsuits filed against Denton show the Bush oil and gas legacy clearly lives on and stretches from the state where the fracking industry was born all the way to Iraq and back again. 

Federal Reserve Policy Keeps Fracking Bubble Afloat and That May Change Soon

In August 2005, the U.S. Congress and then-President George W. Bush blessed the oil and gas industry with a game-changer: the Energy Policy Act of 2005. The Act exempted the industry from federal regulatory enforcement of the Safe Drinking Water Act, the Clean Water Act and the National Environmental Policy Act.

While the piece of omnibus legislation is well-known to close observers of the hydraulic fracturing (“fracking”) issue — especially the “Halliburton Loophole” — lesser known is another blessing bestowed upon shale gas and tight oil drillers: near zero-percent interest rates for debt accrued during the capital-intensive oil and gas production process.

Or put more bluntly, near-free money from the U.S. Federal Reserve Bank. That trend may soon come to a close, as the Federal Reserve recently announced an end to its controversial $3 trillion bond-buying program.

In response to the economic crisis and near collapse of the global economy, the Federal Reserve dropped interest rates to between 0 percent and .25 percent on December 16, 2008, a record low percentage. It also began its bond-buying program, described in a recent Washington Post article as implemented to provide a “booster shot” to the economy.

“The Federal Reserve will employ all available tools to promote the resumption of sustainable economic growth and to preserve price stability,” the Fed stated in a press release announcing the maneuver. “In particular, the [Federal Reserve] anticipates that weak economic conditions are likely to warrant exceptionally low levels of the federal funds rate for some time.”

That free money, known by economics wonks as quantitative easing, helps drilling companies finance fracking an increasingly massive number of wells to keep production levels flat in shale fields nationwide.

But even with the generous cash flow facilitated by the Fed, annual productivity of many shale gas and tight oil fields have either peaked or are in terminal decline. This was revealed in Post Carbon Institute's recently-published report titled, “Drilling Deeper: A Reality Check on U.S. Government Forecasts for a Lasting Tight Oil & Shale Gas Boom.” 

Drilling Deeper: New Report Casts Doubt on Fracking Production Numbers

Post Carbon Institute has published a report and multiple related resources calling into question the production statistics touted by promoters of hydraulic fracturing (“fracking”)

By calculating the production numbers on a well-by-well basis for shale gas and tight oil fields throughout the U.S., Post Carbon concludes that the future of fracking is not nearly as bright as industry cheerleaders suggest. The report, “Drilling Deeper: A Reality Check on U.S. Government Forecasts for a Lasting Tight Oil & Shale Gas Boom,” authored by Post Carbon fellow J. David Hughes, updates an earlier report he authored for Post Carbon in 2012.

Hughes analyzed the production stats for seven tight oil basins and seven gas basins, which account for 88-percent and 89-percent of current shale gas production.

Among the key findings: 

-By 2040, production rates from the Bakken Shale and Eagle Ford Shale will be less than a tenth of that projected by the Energy Department. For the top three shale gas fields — the Marcellus Shale, Eagle Ford and Bakken — production rates from these plays will be about a third of the EIA forecast.

-The three year average well decline rates for the seven shale oil basins measured for the report range from an astounding 60-percent to 91-percent. That means over those three years, the amount of oil coming out of the wells decreases by that percentage. This translates to 43-percent to 64-percent of their estimated ultimate recovery dug out during the first three years of the well's existence.

-Four of the seven shale gas basins are already in terminal decline in terms of their well productivity: the Haynesville Shale, Fayetteville Shale, Woodford Shale and Barnett Shale.

-The three year average well decline rates for the seven shale gas basins measured for the report ranges between 74-percent to 82-percent. 

-The average annual decline rates in the seven shale gas basins examined equals between 23-percent and 49-percent. Translation: between one-quarter and one-half of all production in each basin must be replaced annually just to keep running at the same pace on the drilling treadmill and keep getting the same amount of gas out of the earth.

Court Files: Coal CEO Robert Murray Unearths Lease from Aubrey McClendon's New Fracking Company

Robert E. Murray, CEO Murray Energy Corporation

DeSmogBlog has obtained a copy of a sample hydraulic fracturing (“fracking”) lease distributed to Ohio landowners by embattled former CEO and founder of Chesapeake Energy, Aubrey McClendon, now CEO of American Energy Partners

Elisabeth Radow, a New York-based attorney who examined a copy of the lease, told DeSmogBlog she believes the lease “has the effect of granting American Energy Partners the right to use the surface and subsurface to such a great extent that it takes away substantially all of the rights attributable to homeownership.”

The American Energy Partners fracking lease was shaken loose as part of the discovery dispute process in an ongoing court case pitting coal industry executive Robert E. Murraycontroversial CEO of Murray Energy Corporation and American Energy Corporation — against McClendon in the U.S. District Court for the Southern District of Ohio Eastern Division

Murray brought the suit against McClendon back in August 2013, alleging McClendon committed trademark and copyright infringement by using the “American Energy” moniker. Murray’s attorneys used the lease as an exhibit in a Motion to Compel Discovery, filed on September 8, over a year after Murray brought his initial lawsuit. 

The case has ground to a slow halt as the two sides duke it out over discovery issues and related protective order issues, making a large swath of the court records available only to both sides’ attorneys and causing many other records to be heavily redacted.

Out of that dispute has come the American Energy Partners lease, published here for the first time.

Tar Sands Trade: Kuwait Buys Stake in Alberta As It Opens Own Heavy Oil Spigot

Chevron made waves in the business world when it announced its October 6 sale of 30-percent of its holdings in the Alberta-based Duvernay Shale basin to Kuwait Foreign Petroleum Exploration Company (KUFPEC) for $1.5 billion.

It marked the first North American purchase for the Kuwaiti state-owned oil company and yields KUFPEC 330,000 acres of Duvernay shale gas. Company CEO and the country's Crown Prince, Sheikh Nawaf Al-Ahmad Al-Jaber Al-Sabah, called it an “anchor project” that could spawn Kuwait's expansion into North America at-large. 

Kuwait's investment in the Duvernay, at face-value buying into Canada's hydraulic fracturing (“fracking”) revolution, was actually also an all-in bet on Alberta's tar sands. As explained in an October 7 article in Platts, the Duvernay serves as a key feedstock for condensate, a petroleum product made from gas used to dilute tar sands, allowing the product to move through pipelines. 

And while Kuwait — the small Gulf state sandwiched between Iraq and Saudi Arabia — has made a wager on Alberta's shale and tar sands, Big Oil may also soon make a big bet on Kuwait's homegrown tar sands resources.

“Kuwait has invited Britain’s BP, France’s Total, Royal Dutch Shell, ExxonMobil and Chevron, to bid for a so-called enhanced technical service agreement for the northern Ratqa heavy oilfield,” explained an October 2 article in Reuters. “It is the first time KOC will develop such a big heavy oil reservoir and the plan is to produce 60,000 bpd from Ratqa, which lies close to the Iraqi border [in northern Kuwait]…and then ramp it up to 120,000 bpd by 2025.”

In the past, Kuwait has said it hopes to learn how to extract tar sands from Alberta's petroleum engineers.

Peabody Energy Booted From S&P 500, King Coal on the Defensive as Market Signals Industry Decline

King Coal and industry multinational Peabody Energy (BTU) have taken a beating in the markets lately, and it has some executives in the dirty energy industry freaking out

On September 19, Dow Jones removed Peabody Energy from its S&P 500 index, considered a list of the premier U.S. stocks for investors. The St. Louis Post-Dispatch cited the downward trajectory of the company's market capitalization as the rationale behind the ouster of Peabody from the S&P 500 index. Peabody will now join the JV leagues in the S&P MidCap 400.

Peabody's downfall symbolizes ongoing market trends within the coal industry overall.

“The total market value of publicly traded U.S. coal companies has rebounded slightly in recent months, but remains nearly 63% lower than a total of the same companies at a near-term coal market peak in April 2011,” explained SNL Energy in April. 

“A perfect storm of factors, including new federal regulations impacting coal-burning power plants, cheap competing fuels, railroad service issues and weak global markets has kept pressure on a number of coal operators since the industry's 2011 near-term peak.”

A new study published this week by the Carbon Tracker Initiative — best known for its work accounting for a “carbon budget” and unburnable carbon — raises further questions about the future of coal's global market hegemony. It's another blow to the coal industry as the United Nations convenes this week's Climate Summit in New York City to discuss climate disruption, in no small part driven by antiquated coal-fired power plants.

Labor Day News Dump: FERC Hands Enbridge Permit for Tar Sands by Rail Facility

On the Friday before Labor Day — in the form of an age-old “Friday News Dump“ — the Federal Energy Regulatory Commission (FERC) handed a permit to Enbridge, the tar sands-carrying corporate pipeline giant, to open a tar sands-by-rail facility in Flanagan, Ill. by early-2016. 

With the capacity to accept 140,000 barrels of tar sands product per day, the company's rail facility serves as another step in the direction towards Enbridge's quiet creation of a “Keystone XL Clone.” That is, like TransCanada's Keystone Pipeline System sets out to do, sending Alberta's tar sands all the way down to the Gulf of Mexico's refinery row — and perhaps to the global export market.

Flanagan sits as the starting point of Enbridge's Flanagan South pipeline, which will take tar sands diluted bitumen (“dilbit”) from Flanagan to Cushing, Okla. beginning in October, according to a recent company earnings call. From there, Enbridge's Seaway Twin pipeline will bring dilbit to Port Arthur, Texas near the Gulf.

Enbridge made the prospect of a tar sands-by-rail terminal public for the first time during its quarter two investor call.

“In terms of the rail facility, one of the things we're looking at is – and the rail facility is really in relation to the situation in western Canada where there is growing crude oil volumes and not enough pipeline capacity to get it out of Alberta for a two or three year period,” Guy Jarvis, president of liquids pipelines for Enbridge, said on the call.

“So, one of the things we're looking at doing is constructing a rail unloading facility that would allow western Canadian crudes to go by rail to Flanagan, be offloaded, and then flow down the Flanagan South pipeline further into Seaway and to the Gulf.”

FERC has given Enbridge the permit it needs to make that happen.

Legal Case: White House Argues Against Considering Climate Change on Energy Projects

Just over a month before the United Nations convenes on September 23 in New York City to discuss climate change and activists gather for a week of action, the Obama White House Council on Environmental Quality (CEQ) argued it does not have to offer guidance to federal agencies it coordinates with to consider climate change impacts for energy decisions.

It came just a few weeks before a leaked draft copy of the Intergovernmental Panel on Climate Change's (IPCC) latest assessment said climate disruption could cause “severe, pervasive and irreversible impacts for people and ecosystems.”

Initially filed as a February 2008 petition to CEQ by the International Center for Technology Assessment, the Sierra Club and the Natural Resources Defense Council (NRDC) when George W. Bush still served as President, it had been stalled for years. 

Six and a half years later and another term into the Obama Administration, however, things have finally moved forward. Or backwards, depending on who you ask. 

NEPA and CEQ

The initial February 2008 legal petition issued by the plaintiffs was rather simple: the White House's Council for Environmental Quality (CEQ) should provide guidance to federal agencies it coordinates with to weigh climate change impacts when utilizing the National Environmental Policy Act (NEPA) on energy policy decisions. 

A legal process completely skirted in recent prominent tar sands pipeline cases by both TransCanada and Enbridge, NEPA is referred to by legal scholars as the “Magna Carta” of environmental law.

Magna Carta; Photo Credit: Wikimedia Commons

CEQ oversees major tenets of environmental, energy and climate policy. It often serves as the final arbiter on many major legislative pushes proposed by Congress and federal agencies much in the same way the White House's Office of Information and Regulatory Affairs (OIRA) does for regulatory policy. 

Obama Opened Floodgates for Offshore Fracking in Recent Gulf of Mexico Lease

In little-noticed news arising out of a recent Gulf of Mexico offshore oil and gas lease held by the U.S. Department of Interior's Bureau of Ocean Energy Management, the floodgates have opened for Gulf offshore hydraulic fracturing (“fracking”).

With 21.6 million acres auctioned off by the Obama Administration and 433,822 acres receiving bids, some press accounts have declared BP America — of 2010 Gulf of Mexico offshore oil spill infamy — a big winner of the auction. If true, fracking and the oil and gas services companies who perform it like Halliburton, Baker Hughes and Schlumberger came in a close second.

Gulf of Mexico Oil Lease Map August 2014
Map Credit: U.S. Bureau of Ocean Energy Management

On the day of the sale held at the Superdome in New Orleans, Louisiana, an Associated Press article explained that many of the purchased blocks sit in the Lower Tertiary basin, coined the “final frontier of oil exploration in the Gulf of Mexico” by industry analysts.

“The Lower Tertiary is an ancient layer of the earth's crust made of dense rock,” explained APTo access the mineral resources trapped within it, hydraulic fracturing activity is projected to grow in the western Gulf of Mexico by more than 10 percent this year, according to Houston-based oilfield services company Baker Hughes Inc., which operates about a third of the world's offshore fracking rigs.”

State Dept. Overseers of Contentious Enbridge Tar Sands Pipeline Workaround Have Industry, Torture Ties

The Sierra Club, National Wildlife Federation (NWF) and other green groups recently revealed that pipeline giant Enbridge got U.S. State Department permission in response to its request to construct a U.S.-Canada border-crossing tar sands pipeline without earning an obligatory Presidential Permit.

Enbridge originally applied to the Obama State Department to expand capacity of its Alberta Clipper (now Line 67) pipeline in November 2012, but decided to avoid a “Keystone XL, take two” — or a years-long permitting battle — by creating a complex alternative to move nearly the same amount of diluted bitumen (“dilbit”) across the border.

The move coincides with the upcoming opening for business of Enbridge's “Keystone XL” clone: the combination of the Alberta Clipper expansion (and now its alternative) on-ramp originating in Alberta and heading eventually to Flanagan, Ill., the Flanagan South pipeline running from Flanagan, Ill. to Cushing, Okla. and the Cushing, Okla. to Port Arthur, Texas Seaway Twin pipeline.

Together, the three pieces will do what TransCanada's Keystone XL hopes to do: move dilbit from Alberta's tar sands to Port Arthur's refinery row and, in part, the global export market.

Environmental groups have reacted with indignation to the State Department announcement published in the Federal Register on August 18. The public commenting period remains open until September 17.

Jim Murphy, senior counsel for NWF, referred to it as an “illegal scheme,” while a representative from 350.org says Enbridge has learned from the lessons of its corporate compatriot, TransCanada.

“When we blocked Keystone XL, the fossil fuel industry learned that they have a much stronger hand to play in back rooms than on the streets,” said Jason Kowalski, policy director for 350.org. “They will break the law and wreck our climate if that's what it takes for them to make a buck.”

But as the old adage goes, it takes two to tango. 

That is, influential State Department employees helped Enbridge find a way to smuggle an additional 350,000 barrels of tar sands per day across the border without public hearings or an environmental review. 

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