Aubrey McClendon, former CEO of hydraulic fracturing (“fracking”) giant Chesapeake Energy and current CEO of American Energy Partners (AEP), has signed a joint venture with a private equity firm led* by former Mexico president Vicente Fox.* 

In a joint press release, AEP and EIM (Energy and Infrastructure Mexico) Capital announced a “long-term, landmark partnership to explore the vast exploration and development opportunities offered by Mexico's abundant oil and gas energy resources.” The deal serves as another case study of U.S.-based companies cashing in on the Mexico energy sector privatization policy the U.S. State Department helped make possible under both the Obama Administration and the Bush Administration.

EIM Capital was “founded in anticipation of Mexico's historic Constitutional Reform of 2013,” according to its website.

“This is a significant vote of confidence in the Energy Reform program championed by current Mexican President Enrique Pena Nieto, and in the myriad possibilities offered by Mexico's unconventional resources,” hailed the press release. Among those resources: Mexico's side of the Eagle Ford Shale basin.

McClendon, one of the main characters featured in the book “The Frackers,” also recently announced AEP's entrance into Australia.

A State Department diplomatic cable published by Wikileaks shows that Fox, president of Mexico from 2000-2006, helped pave the way for the constitutional amendments passed in December 2013, which resulted in the privatization of Mexico's energy sector. The amendments opened up the country for international companies to sign joint ventures with state-owned oil company Petróleos Mexicanos (PEMEX).

And Fox, like others in the U.S., has since passed through the government-industry revolving door to profit from the policy apparatus he made possible.

The Fox Cable

An October 3, 2005 State Department diplomatic cable about Fox's first visit to Alberta, Canada stated that Fox introduced a “plan for expanding the organization’s role, including a new provision for energy.” 

“[T]he Mexican Trade Consul in Calgary…[said] there continues to be much interest in investing in Mexico's energy sector,” reads the cable. “The Trade Consul said it is 'painful' to let Mexico's resources sit in the ground.”

Eventually that “pain” receded, with Mexico's energy sector totally revamped in the decade that would follow. Fox reacted to the EIM-AEP deal with elation.

“This is a major opportunity for Mexican energy production,” Fox said in the press release. “We look forward to working closely with the Mexican government to advance this monumental project and enhance Mexico's current energy policy.” 

Royalty Ripoff?

One of the promising aspects of Mexico's energy sector privatization package — from the vantage point of the oil and gas industry and capital investment firms — is the lower amount of royalty payments due to landowners, as compared to in the U.S. 

Fox spoke of “Mexico’s cheaper labor costs and the government’s willingness to accept less royalties than U.S. landowners would make drilling cheaper in Mexico than in Texas,” in an October 2014 Dallas Morning News article. “The details are still being finalized, but EIM executives said the government would accept a sliding scale on royalties between 11.5 percent and 15 percent, depending on the price of oil.”

Shale gas producers in particular, such as McClendon's AEP, will benefit from a discount handed to them in Mexico as a result of the constitutional amendments. The logic behind the discount, explained the Brookings Institution, is due to higher capital investment costs associated with fracking.

Chesapeake Energy is currently mired in a class-action lawsuit in Texas for allegedly short-changing landowners on royalty payments. And Jefferson County, Ohio landowners sued AEP subsidiary American Energy-Utica in June in another class-action lawsuit filed by 50 landowners, alleging much the same.

Mexico may be the perfect frontier for McClendon, who has made a career out of “land grab” as a business plan and preferring to make money by flipping over land.

Perhaps it's only appropriate, then, that McClendon has crossed the border despite the fact it remains unclear when bidding will actually take place for shale drilling in Mexico, which according to the country's energy secretary Joaquin Coldwell has been “suspended…pending a future evaluation.”

*Correction: This post originally stated that EIM was “owned by” Vicente Fox. President Fox serves on the board of directors of EIM and leads the firm along with its CEO, but Fox does not own it. We regret the error.

Photo Credit: Wikimedia Commons

The ongoing push to lift the ban on exports of U.S.-produced crude oil appears to be coming to a close, with Congress introducing a budget deal with a provision to end the decades-old embargo. 

Just as the turn from 2014 to 2015 saw the Obama Administration allow oil condensate exports, it appears that history may repeat itself this year for crude oil. Industry lobbyists, a review of lobbying disclosure records by DeSmog reveals, have worked overtime to pressure Washington to end the 40-year export ban — which will create a global warming pollution spree.

Image Credit: U.S. House of Representatives

Congress has introduced four oil export-promoting bills in the past year, all of which received heavy lobbying support from the industry. Language from those bills, as with a bill that opened up expedited hydraulic fracturing (“fracking”) permitting on public lands in the defense appropriations bill last year, is inserted into the broader budget bill. 

So without further ado, meet some of the lobbying and big money interests that propelled these bills forward. 

“Changing Crude Oil Market Conditions”

The push to repeal the oil export ban gained momentum throughout 2014 and culminated with the Obama Administration partially lifting the ban oil condensate. Before that partial repeal, a wholesale ban lift attempt ensued in Congress via H.R. 5814, clunkily named “To adapt to changing crude oil market conditions.”

H.R. 5814 mandated that the “United States should remove all restrictions on the export of crude oil, which will provide domestic economic benefits, enhanced energy security, and flexibility in foreign diplomacy.”

Companies such as Anadarko Petroleum, Marathon Oil and HollyFrontier Corporation all put their best foot forward in lobbying for the bill. Anadarko paid Robert Hickmott and W. Timothy Locke — both of whom passed through the government-industry revolving door — to do the job. 

Take Two

Failing to pass in 2014, climate change denying U.S. Rep. Joe Barton (R-TX) re-introduced a bill by the same namesake as H.R. 5814 again in February 2015, now with a new bill number: H.R. 702.

From an oil and gas industry point of view, Barton was a fitting sponsor of the bills as someone who has taken close to $2 million in campaign contributions from the oil and gas industry throughout his political career. Barton also has $50,000-$100,000 in investments in fracking industry giant EOG Resources.

H.R. 702 passed with a 261-159 vote count in the U.S. House of Representatives in October but has yet to move through the U.S. Senate. 

Far more companies lobbied for the bill this time around the block.

Image Credit: OpenSecrets.org

Among them is ExxonMobil, the news these days mostly for the “Exxon Knew” climate change denial scandal and the ongoing New York Attorney General's Office investigation.

Exxon's oil exports lobbyist armada includes former U.S. Senator Don Nickles (R-OK) and Majority Leader and U.S. Sen. Mitch McConnell (R-KY)'s former chief of staff Michael Solon.

The fracking lobby, America's Natural Gas Alliance (ANGA), also brought its lobbying clout to the forefront for the bill. ANGA lobbied for H.R. 702 in both quarters two and three. National Industrial Sand Association, the frac sand industry's lobbying group, also lobbied for the bill. 

Koch Industries front group Americans for Prosperity (AFP) also deployed a trio of lobbyists to advocate on behalf of H.R. 702. 

Crude Oil Export Act

Before Barton re-introduced “changing crude oil market conditions” in February, U.S. Rep. Michael McCaul (R-TX) used his first day on the job in 2015 on January 6 to introduce another related oil export ban repeal bill, Crude Oil Export Act (H.R. 156). 

ExxonMobil again had a seat at the lobbying table pushing for this bill's passage, as did Nickles and his lobbying group Nickles Group on the company's behalf. Koch Industries also tossed its hat in the ring to lobby for the bill, as did ConocoPhillips, Chesapeake Energy, Shell Oil, BP and others.

The industry-funded and lobbyist-run think tank and advocacy apparatus Bipartisan Policy Center (BPC) also lobbied for the bill during quarter three via its lobbying and advocacy 501(c)(4) wing, the Bipartisan Policy Center Advocacy Network.

All of the lobbyists BPC deployed to push lifting the export ban, a DeSmog review has revealed, passed through the revolving door and formerly worked as congressional staffers.

Financial disclosure records show that the sponsor of H.R. 156, U.S. Rep. Michael McCaul (R-TX) has millions of dollars invested in oil and gas companies ranging from ExxonMobil, Chevron, Marathon Oil, EOG Resources, Schlumberger, Halliburton, Shell Oil, Dominion and others. Throughout his decade-long political career, McCaul has taken nearly $400,000 in campaign money from the oil and gas industry. 

American Crude Oil Export Equality Act

On the Senate side, in May U.S. Sen. Heidi Heitkamp introduced the latest iteration of an oil export ban repeal bill called the American Crude Oil Export Equality Act (S.1372). Though the bill has not gained much traction, it has not been without a valiant effort by the oil and gas industry, with the same familiar company names rearing their heads once again.

Image Credit: OpenSecrets.org

The lobbying list for S.1372 includes Koch Industries, the Bipartisan Policy Center, Marathon Oil, Devon Energy, ExxonMobil, ConocoPhillips, Shell Oil, BP, ANGA, the American Petroleum Institute and others. 

Heitkamp bears similarities to other oil export ban lifting bill sponsors in that she also has taken large amounts of campaign contributions from the oil and gas industry throughout her political career. In her nascent two-year long political career as a U.S. Senator, Heitkamp has taken over $186,000 from the industry, her third biggest campaign contributor by category.

Refining Industry Big Money Flip

To date, the refining industry has situated itself as one of the most ardent opponents of oil exports besides the environmental community. That state of play changed, though, during the drafting stages of the budget bill.

Early on, news broke that a drafted proposed budget provision introduced by U.S. Sen. Tom Carper (D-DE) called for a trade-off between oil exports and subsidies going to oil refineries, otherwise known as a win-win for the oil and gas industry.

Carper, who devotes a portion of his website to the environment and climate change, is up for re-election in 2016 and one of his biggest donors so far is private equity firm giant Blackstone Group. Among many other oil and gas industry assets it finances, Blackstone serves as the financier of PBF Energy, the company that owns a massive Delaware City-based oil refinery.

Image Credit: OpenSecrets.org

An examination of Carper's financial disclosure records shows he has upwards of $30,000 invested in refining giant Valero Energy — from whom PBF Energy bought a New Jersey-based refinery in 2010 — and upwards of $15,000 invested in BP (owner of the massive BP Whiting tar sands refinery in Whiting, Indiana).

“There are negotiations to make sure that the unintended consequences to dozens of refineries across the country are avoided,” Carper told The Hill on December 10. “The idea is that if the oil export ban is going to be lifted, we want to be sure there’s no collateral damage to refiners in this country.”

Environmental advocacy group Friends of the Earth took umbrage with Carper's statement.

“Big Oil is already awash in billions worth of subsidies every year and Sen. Carper wants to send them even more,” Lukas Ross of FOE told Delaware's News Journal. “Instead of pushing for extra goodies for his refining industry pals, Sen. Carper should oppose any climate-denying deal that would lift the crude oil export ban.”

Carper did not respond to DeSmog's request for comment, but it appears his provision did not make it into the proposed budget bill. Instead, another pro-petroleum refinery provision made it into the budget, buried at the very end on pages 2008 and 2009. 

Titled “Treatment of Transportation Costs of Independent Refiners,” the section offers a tax incentives for the transportation costs of getting petrochemical products to and from independent refineries in the U.S.

McKibben: “Hypocrisy”

In an opinion piece published by The Hill, 350.org founder and author Bill McKibben decried what he called the “hypocrisy” of the possibility of the signing of this bill, pointing out the post-Paris timing of it.

“If you were wondering how seriously world leaders took the obligations they imposed on themselves in Paris over the weekend, the early returns would indicate: not very,” wrote McKibben. “Barely 48 hours after all the back-patting at the climate conference had ended, word leaked out in Washington that the administration and Congress were preparing to lift the 40-year ban on oil exports, a major gift to the oil industry.”

Utilizing the #KeepTheBan hashtag on Twitter, groups such as the Center for Biological Diversity and Food and Water Watch are pushing for citizens to call the White House and congressional members and tell them not to lift the ban.

Photo Credit: Jirsak | Shutterstock

Pennsylvania's beleaguered top prosecutor has filed a civil action against two of the nation's largest oil and gas companies, Chesapeake Energy and pipeline company Williams Partners LP, alleging that the companies defrauded over 4,000 property owners out of the royalties owed for shale oil and gas produced from their land.

“This alleged conduct amounts to a 'bait-and-switch,'” Attorney General Kathleen Kane said in a statement. “Pennsylvania landowners were deceived in thousands of transactions by a company accused of similar conduct in several other states,” she added, referring to Chesapeake Energy, which has faced class actions in Texas, Louisiana and Ohio over its royalty payments.

Chesapeake Energy, struggling to recover from a series of financial scandals, was able to raise over $5 billion dollars by gouging landowners nationwide and skimping on royalty payments, a ProPublica investigation concluded last year.

The state attorney general's office said that the lawsuit is expected to help Pennsylvania landowners recover “tens of millions” of dollars in restitution, plus punitive damages.

The new legal action, the product of a nearly two-year long investigation, comes at a time when Attorney General Kane herself faces felony charges in an unrelated matter and is holding office despite a suspended law license, raising questions about her office's capacity to enforce the state's consumer protection laws while also facing its own legal struggles.

For years, thousands of farmers, homeowners and others have complained to their elected officials about allegedly deceptive leasing practices they encountered in dealing with landmen representing Chesapeake Energy and many other drillers during the rush to snatch up drilling rights in areas with little history of oil and gas exploration during the shale gas rush.

At least two other class action lawsuits have been filed in Pennsylvania alleging that landowners explicitly negotiated payment terms that were later ignored by the gas companies. The attorney general's new lawsuit seeks to intervene in the settlement of one such case, valued at over $11 million.

Currently, a second wave of landmen from the oil and gas industry is sweeping across the U.S., seeking the rights to build pipelines to carry shale oil and gas to consumers. Many landowners have reported high pressure sales tactics, like telling landowners that if they refuse to sign, the company will simply seize the right to the land through eminent domain.

The Pennsylvania attorney general's lawsuit focuses in part on the high pressure sales tactics – including making “take it or leave it” offers and leaving unreasonably short times to make decisions – that played a role in convincing homeowners, farmers and others to sign over their oil and gas rights on Chesapeake's terms.

The new lawsuit seeks punitive damages of at least $1,000 for each unauthorized deduction as well as payment of the royalties that the state says are owed to over 4,000 landowners. Chesapeake engaged in self-dealing, artificially inflated production charges deducted from landowners royalty checks, and deliberately miscalculated the amount of money it paid out, the lawsuit asserts.

“As a result of the misrepresentations, Chesapeake and other defendants allegedly took deductions and, in some cases, made retroactive deductions of post-production expenses from royalty checks,” the attorney general's office wrote. “These practices occurred despite landowners' claims that their leases contained the necessary language to prohibit such deductions.”

As her office takes on a powerful industry, Attorney General Kane remains embroiled in a legal battle over allegations that she wrongfully leaked grand jury information to the Philadelphia Daily News and faces charges of obstruction of justice, official oppression and felony perjury. Her law license was suspended by the state's Supreme Court in September, but she has continued to hold office, assigning her duties that require bar membership to attorneys within her office. 

The lawsuit against Chesapeake is being prosecuted by lawyers from the anti-trust and consumer protection divisions of the attorney general's office, according to a statement from Kane's office. However, it is not clear to what degree Kane's own legal difficulties will affect her employee's ability to focus on further investigations into Chesapeake and other drillers across the state.

Leasing Regrets

The sales pitch from leasing agents who fanned out across large swaths of the U.S. was simple: there's oil and gas under your feet, and if you simply let us buy the right to drill it from you, we'll make you rich.

But once the gas started flowing, Chesapeake, the nation's second largest natural gas company and a handful of its business partners, refused to uphold their end of the bargain and deliberately engaged in complex financial transactions whose hidden purpose was to keep royalty payments out of the hands of landowners, according to the attorney general's suit.

For years, residents have reported that something seemed shady about their royalty payments.

“There’s never a clear delineation of what those costs are,” Mary Jane Foelster of Bradford County, PAtold State Impact in 2013. “I couldn’t begin to tell you what they are.

For Bradford County planning commissioner Glenn Aikens, signing a lease with Chesapeake wound up costing him more than he was paid, he told DeSmog last year as he showed a copy of a royalty check for $0.10, sent by the company as his share of the income from the three shale gas wells drilled on his 359-acre farm after the company subtracted production expenses.

Aikens and Foelster are hardly alone. Kane's office said that they focused on their efforts the heavily-drilled northern part of the state and on Chesapeake Energy, but that their lawsuit is likely to grow.

“We have identified at least 4,000 landowners, but we expect the number could be considerably higher,” Jeffrey Johnson, a spokesperson for the attorney general told U.S. News and World Report. “We're hopeful that today's filing will lead other affected landowners we have not spoken with to share their concerns with the office.”

Boom and Bust

The complaints from landowners have often extended to other drillers, not simply Chesapeake Energy.

The Marcellus Shale Coalition, an industry trade group, pointed to the financial pressures faced by drillers and said that leasing problems were far from systemic. “Mineral owners are feeling the pinch of persistently low commodity prices…” the Marcellus Shale Coalition said in a statement according to Natural Gas Intelligence. “It's important to recognize that post-production related issues – which have been extremely localized and not widespread – are being actively addressed in the courts where contract matters should be addressed.”

A Chesapeake spokesman denied that the company had done anything wrong. “We strongly disagree with Attorney General Kane's baseless allegations and will vigorously contest them in the appropriate forum,” spokesman Gordon Pennoyer said in a statement.

The charges come at an already difficult time for the driller. Chesapeake Energy's stock has plunged in recent years, recently testing new lows of less than $4.00/share, a sign that Wall Street investors see little to like about the company's financial prospects.

Aubrey McClendon, the embattled former CEO and co-founder of Chesapeake Energy, has announced his entrance into Argentina to begin hydraulic fracturing (“fracking”) in the country's Vaca Muerta Shale basin.

Though he retired as Chesapeake Energy's CEO back in 2013 in the aftermath of a shareholder revolt, McClendon wasted little time in creating a new company called American Energy Partners (AEP). AEP, like Chesapeake, has found itself mired since its onset in legal snafus over its treatment of landowners. With AEP not getting a red carpet roll-out in the U.S., McClendon has looked southward for other lucrative business adventures.

DeSmog reported in September that McClendon has also teamed up with a private equity company affiliated with former Mexican president Vicente Fox to begin tapping into Mexico's portion of the Eagle Ford Shale basin. We also reported that he has begun doing business in Australia.

All of those countries have something in common that makes them different from the U.S.:  lax royalty and land deal laws.

As McClendon boasted in an investor call — and as Chesapeake formerly acknowledged on a portion of its website, since taken down — the company chose the land grab as a key part of its business model.

Mexico, Australia and Argentina are still in the “land grab” phase of development, with zero production scale fracking taking place in any of the three countries.

AEP attempts to preempt “land grab” charges on its website.

“We work hard to earn – and maintain – your trust,” writes AEP. “We practice open, honest communication with our owner partners to strengthen those partnerships forged in mutual trust.”

Banana Republic Land Laws

In Mexico, unlike in the U.S. in which in most states' landowners own the minerals underneath their land, the government maintains mineral rights. The same goes for Australia.

Argentina's government, in a presentation posted online by the Undersecretariat of Mining, brags about how its legal landscape permits foreign investors and companies to come in and commandeer land.

Image Credit: Argentina Undersecretariat of Mining

McClendon did not say so overtly, but it appears “land grab” could be a key part of his plans in Argentina moving forward. 

“[W]e intend to bring US-style shale drilling and operating expertise, completion techniques and cost structure to the Vaca Muerta, which we believe will prove transformative for the play,” McClendon stated in an AEP press release announcing the deal.

There is a term for this “cost structure” with roots in how U.S.-based companies have attempted to do business historically in Latin America: banana republic. Will history repeat itself in the Vaca Muerta?

Photo Credit: PromesaArtStudio | Shutterstock

It was a tumultuous week in the world of hydraulic fracturing (“fracking”) for shale oil and gas, with a few of the biggest companies in the U.S. announcing temporary shutdowns at their drilling operations in various areas until oil prices rise again from the ashes.

Among them: Chesapeake Energy, Continental Resources and Whiting Petroleum. Chesapeake formerly sat as the second most prolific fracker in the U.S. behind ExxonMobil, while Continental has been hailed by many as the “King of the Bakken” shale basin located primarily in North Dakota.

Halliburton too, the drilling services goliath and namesake of the “Halliburton Loophole” exempting the industry from U.S. Environmental Protection Agency (EPA) enforcement of the Safe Drinking Water Act as it applies to fracking operations, has recently announced it will cut 5,000 drilling jobs globally (8 percent of its workforce).

“Continental Resources Inc., the shale oil pioneer controlled by billionaire wildcatter Harold Hamm, halted all fracking in the Bakken shale formation in the U.S. Williston Basin after posting its first annual loss since the company’s public debut in 2007,” wrote Bloomberg. “Continental said it has no fracking crews currently working in the Bakken. The company continues to drill there, focusing on areas with the highest returns, but will leave most wells unfinished this year.”

Chesapeake's immediate future is just as bleak, if not more so, and it will halt drilling in the Marcellus Shale, Utica Shale, Eagle Ford Shale and elsewhere. The company sits as the top-producing driller in both the Utica and the Marcellus.

Whiting, the most prolific shale oil producer in the Bakken, will halt all of its fracking in the near-future. The company, 83 percent of whose produced oil comes from fracking the Bakken, will simultaneously slash its spending budget by 80 percent. 

North Dakota and Oklahoma, with economies largely dependent on revenues generated from oil and gas drilling, have both projected $1 billion budget shortfalls for the forthcoming budget cycle. Things are even worse in Alaska, with a pending $3.5 billion budget shortfall.

And if the sordid news for the frackers were not bleak enough on the bottoming out of oil prices, David Hughes — a former oil industry geoscientist and current fellow with the Post Carbon Institute — recently delivered sworn testimony to the North Carolina Utilities Commission that shale gas production will peak in 2017 nationwide and then begin a rapid productivity decline. 

But low oil prices, while temporarily shutting down drilling projects, do not automatically equate to an ecological victory. Naomi Klein, author of several books including “This Changes Everything: Capitalism vs. The Climate,” addressed this about a year ago in an interview published by Grist.

“It is not preordained that low oil prices will either hurt or help the climate movement,” said Klein. “If we do nothing, then it’s more likely that low oil prices will work against sensible climate action, just for simple economic reasons. When oil is cheap, people feel able to buy more of it. Already we’re hearing these stories, like the comeback of the SUV.”

Klein said that's why she believes advocates must “kick oil while it's down” and not remain complacent. 

“There are various reasons why, if we get the right set of incentives in place — both political and economic — it can be a really, really good time to get off fossil fuels and push very aggressively toward a decentralized, renewables-based economy,” Klein remarked.
 

Last year, a wave of bankruptcies swept the oil and gas drilling industry as oil prices collapsed, leading to layoffs, lost revenues for communities, and turning former boomtown-era mancamps into ghost towns in places like North Dakota's Bakken shale.

Even before oil prices plunged, the price of shale gas was already under siege from a domestic supply glut caused by the shale drilling frenzy. All told, prices dropped from its all-time high of over $15/mcf when the shale boom began in 2005 to $1.57/mcf — the lowest levels since 1998 — in March.

For shale exploration and production companies, however, the conventional wisdom has held for years that there is a light at the end of the tunnel — gas exports.

Unlike oil, natural gas is difficult to transport across oceans. To ship gas by tanker, it needs to be cooled to below -256 degrees Fahrenheit, an expensive and technologically challenging process, requiring the construction of multi-billion dollar Liquefied Natural Gas (LNG) import and export terminals.

Once those terminals were built, the international market could soak up the shale gas supply glut, allowing drillers to make handsome profits for their investors and to keep rig workers employed for years to come, shale boosters predicted.

In February, the first ever export of LNG from shale gas reached Brazil, leaving from Cheniere Energy's Sabine Pass terminal in Louisiana. Last month, a second shipment of American shale gas reached India — but that gas sold for just roughly $5/mcf at the Dabhol LNG import terminal there.

In other words, unfortunately for the shale drilling industry, those new shale exports are entering a world market that is also suffering from its own sudden collapse in prices.

LNG prices hit 18-year lows this month, in part due to collapsing demand from China and other Asian countries for commodities and in part because other countries have also invested heavily in building export facilities at the same time as the U.S..

“U.S.LNG will materialize at a time when the biggest market (Japan) is witnessing a demand reduction and when supply is growing again massively thanks to Australia,” said Thierry Bros, senior gas analyst at Societe Generale, told Reuters in October. “This is the worst possible timing for this new LNG that has no dedicated market.”

Before the shale rush, companies spent billions building import terminals, only to suddenly face a domestic supply glut that abruptly made American-drilled gas cheaper than LNG from overseas. “Ten years ago, we thought we were facing a gas shortage and we built all of these facilities to import natural gas,” Frank Wolak, a Stanford University energy expert, told the Los Angeles Times in 2014. “Now they are all sitting idle.”

Now, it seems, the LNG industry may once again be facing a sudden and unexpected reversal.

“Just two years ago, exporting LNG from the U.S. sounded like a lucrative opportunity for shale drillers. Buyers in Northeast Asia were paying up to $20 per million British thermal units more than spot Henry Hub gas prices,” Bloomberg reported in March. “That premium has collapsed, this week trading around $2.70.”

And since the process of liquefying the natural gas and shipping it carries additional costs — potentially enough to eat through all of the higher price that LNG commands in some international markets — that's bad news for the shale drilling industry, already under enormous financial pressure from the collapse of oil prices by roughly two thirds since 2014.

Since the start of last year, over 50 North American oil and gas producers have filed for bankruptcy. But the oil and gas has continued to flow (in part because even when drillers go bankrupt, their existing wells are usually left in production by their creditors).

Those who expect that LNG exports will reverse the fortunes of shale gas drillers may be in for a rude awakening. “The low and volatile energy price environment is forcing developers to tighten belts and we can expect more proposed projects to delay investment decisions,” James Taverner, a Tokyo-based analyst at IHS Inc., told Bloomberg. “There are far more LNG projects competing to go ahead than the market can absorb.”

That's a very different story than the one oil and gas industry lobbyists are pushing in Washington D.C, where some have claimed that nearly a half a million jobs could be supported by gas exports. “LNG exports could contribute up to 452,000 jobs nationwide between 2016 and 2035 and add up to $73.6 billion annually to the GDP, according to an ICF International study,” Jack N. Gerard, president and CEO of the American Petroleum Institute wrote in February. “Policies currently pending in Congress to expedite and establish greater certainty in the LNG export permitting process are essential to further capitalize on our position as the world’s leading natural gas producer.”

The reality? The prospects from LNG have soured so fast that shale gas sellers may struggle to find buyers at prices that will allow them to turn a profit. “Regulators this month rejected Veresen Inc.’s request to build a terminal in Oregon partly because it couldn’t prove there was enough demand,” Bloomberg reported in March.

Of course, some analysts saw the supply glut and price collapse coming. “The latest free lunch being peddled involves exporting U.S. natural gas. Don't be surprised if it evaporates,” Wall Street Journal reporter Liam Denning warned in 2012, explaining that domestic gas futures ran at $3/mcf, while the international market paid as high as $17/mcf. “That spread is why companies such as Cheniere Energy are racing to build plants to export U.S. gas. But if '$3 in, $17 out' sounds too good to be true, that is because it is. While the economics of exports can make sense, they are no slam-dunk.”

The Heartland Institute, best known for its climate denying extremism, has also been hyping LNG exports. “The export of U.S.-produced natural gas marks the emergence of America as an energy-rich nation,” James Taylor, senior fellow with The Heartland Institute, wrote this week. (As DeSmog earlier reported, Heartland's “2012 Fundraising Plan” showed the pro-coal think tank planned to “raise funds from businesses with a financial interest in fracking” by “approach[ing] dozens of companies and trade associations that are actively seeking allies in this battle.”)  “For years, we behaved and suffered as an energy poor nation due to our poor political choices,” Mr. Taylor continued.

But the geopolitical leverage that the industry has touted in Washington D.C. will only emerge if American exports indeed can be delivered cheaper than gas out of, say, Qatar (currently the world's largest LNG exporter). “The fact that Qatar owns the value chain from start to finish allows it to have a level of efficiency that is going to be tough for other producers to match,” Allison Wood a Control Risks Group Ltd. official, told Bloomberg in January.

Of course, the paradox here for investors in U.S.LNG exports is that LNG terminals are notoriously time-consuming to construct – and a lot can change during that lead time. In March, a group of analysts at Wood Mackenzie warned that“average utilisation of USLNG export capacity between 2017-20 could vary from 54-100%” – in other words, that virtually half of the LNG plants expected to come online in the next few years could wind up mothballed, depending on what direction coal and gas prices swing.

On the other hand, the low LNG prices of today could be followed by sudden gas price spikes, if companies drop construction plans and LNG supplies run short over the long-run, Wood Mackenzie analyst Saul Kavonic told Bloomberg.

And that possibility makes LNG a risky bet for buyers as well.

Even the most seasoned investors have stumbled when trying to predict the prospects of natural gas. According to Forbes, famed investor Carl Ichan lost over $1 billion by placing a poorly-timed bet on Chesapeake Energy, America's second-largest supplier of natural gas, which has seen its stock price collapse from over $66 a share to single digit levels over the past eight years — in part due to the domestic supply glut that the company helped create.

The erratic swings of shale gas and LNG prices reflect the volatile and unpredictable nature of the oil and gas industry, calling into question the wisdom of building more fossil fuel infrastructure that could wind up trapping consumers into buying fuel that not only brings with it costly global warming impacts, but also a sticker shock when electrical and home heating bills arrive.

Of course, individual companies can protect themselves against volatility by inking long-term contracts — but experts say that the long-term market is becoming more difficult to predict, making both sides of the deal commitment-shy. When Reuters asked the owners of LNG plants under construction about their exposure to price-shift risks, only two out of the five companies said they had long-term agreements in place.

This uncertainty already has federal regulators concerned. In March, the Federal Energy Regulatory Commission refused to grant permits for the construction of the Jordan Cove LNG terminal planned in Oregon, in part because the company lacked contracts proving that it could sell that LNG. (On Friday, Veresen and the Williams pipeline company, which backed the Jordan Cove project, filed a request for a rehearing by FERC.)

Environmentalists in Texas immediately took note, saying that the Oregon plant's rejection showed that the adverse impacts on communities outweighed any public benefit from exports. “Rio Grande LNG is boasting about its non-binding contracts, and Annova and Texas LNG exude confidence that they will be able to sell their LNG overseas, but that’s clearly not enough for FERC approval, especially since we can show how damaging these projects would be,”  Jim Chapman, chair of the Lower Rio Grande Valley Sierra Club, said in statement when the Oregon permit was turned down.

Still, companies are pressing forward with an aggressive LNG buildout.

“As of December 4, 2015, the U.S. Department of Energy (DOE) had approved only 16 applications for permits to export liquefied natural gas (LNG) to non-free trade agreement nations,” the American Petroleum Institute indicates on its website, where they have created an online map showing the locations of each planned project. “There are currently 28 pending applications where U.S. businesses are seeking approval to build and operate terminals to process LNG for sales abroad.”
 
Photo Credit: LNG Carrier, by Herry Lawford, via Flikr.

As eyes turned to the most viewed presidential debate in U.S. history, the Obama administration meanwhile quietly auctioned off thousands of acres of land for oil and gas drilling in national forests, opened up 119 million acres for offshore drilling leases in the Gulf of Mexico, and delivered a blow to the Endangered Species Act. 

The Endangered Species Act rule change followed a multi-year lobbying campaign by the oil and gas industry and occurred the morning before the debate unfolded.

The leasing decisions came just weeks earlier, with the most recent one taking place as an online rather than in-person drilling lease auction, the product of industry and U.S. government backlash against efforts such as the Keep It In The Ground campaign which aim to block fossil fuel project development.

Collectively, the announcements coincide with the release of a report by the group Oil Change International, which crunched the “climate math” numbers and concluded that governments must stop both permitting new fossil fuel projects and tapping into a huge swath of existing oil and gas fields and coal mines.

First Online Lease

As chronicled by DeSmog, in recent months the Obama administration has increasingly shifted toward holding online auctions for oil and gas on public lands and in public waters, in backlash against the Keep It In The Ground movement.

One politically connected company in particular — EnergyNet — stands to profit from the shift away from in-person oral auctions for fossil fuel leases, which are open to the public and provide a more visible platform for protests. 

On September 20 EnergyNet conducted the second ever solely online auction on behalf of the U.S. Bureau of Land Management (BLM). EnergyNet also ran the first such auction as a pilot test in 2009. This latest auction was held for oil and gas leases located on over 4,000 acres of public lands in the Homochitto and Bienville National Forests in Mississippi. 

“I am pleased that Eastern States was able to be the first BLM office to use this new authority,” BLM Eastern States Director Karen Mouritsen said in a press release. “The success of this effort builds upon the experience of other government agencies with online auctions, and gives the BLM another tool to efficiently administer its oil and gas program.”

Magnum Producing was the company that came out on top in this online auction, winning every single parcel of land and paying only $18.23 per acre, according to BLM data.

Image Credit: U.S. Bureau of Land Management

119 Million Acres in the Gulf of Mexico

Less than a week before the BLM Eastern States online auction, the Obama administration announced another lease auction, scheduled for March 2017, in which 47 million acresoff the coasts of Louisiana, Mississippi, and Alabama will be available for offshore drilling. 

“As one of the most productive basins in the world, the Gulf of Mexico remains a critical component of the Administration’s domestic energy strategy to create jobs, foster economic opportunities, and reduce America’s dependence on foreign oil,” U.S. Bureau of Ocean Energy Management (BOEM) Director Abigail Ross Hopper said in a press release. “The exploration and development of the Gulf of Mexico’s vital energy resources will continue to help power our nation and drive our economy.”

Just weeks earlier on August 19, BOEM, which is administering the Gulf offshore drilling lease auction, opened up for public comment a 2018 lease of another 72 million acres of Gulf of Mexico waters to the oil and gas industry. That brings the total to 119 million acres in the Gulf of Mexico now up for grabs in the next two years, which will be under the watch of a new presidential administration. 

Gutting the Endangered Species Act

On the morning of the presidential debate, the U.S. Fish and Wildlife Service and NOAA's National Marine Fisheries Service unveiledrules which are expected to increase the difficulty of listing animals and plants under the protections of the Endangered Species Act. 

The new rules“restrict the ability of ordinary citizens, scientists, and public-interest organizations to obtain Endangered Species Act protections for species on the brink of extinction,” explained the Center for Biological Diversity (CBD) in a press release. “The new rules eliminate the ability of the public to submit multispecies petitions and require that 30 days prior to submitting a petition, the petitioner must notify every state where an imperiled species may live.”

According to CBD, these changes have long been on the oil and gas industry wish list. CBD also told DeSmog via email that the organization sees it as a form of “appeasement” to the oil and gas industry, as well as right-wing states and politicians. Meanwhile, U.S. Rep. Rob Bishop (R-UT), Chairman of the U.S. House Committee on Natural Resources, praised the Obama administration for the change but said more needs to be done by the next administration.

“This announcement is a call for help from the administration and an acknowledgement that ESA is broken,” said Bishop (sic).

“These revisions give the appearance that state input will improve and that closed-door settlements will no longer drive petition and listing decisions. Unfortunately, serial environmental litigation will continue to drive ESA policy, and there is nothing the agencies can do about it unless we reform the underlying statute. No matter who wins the White House in November, the law’s failings necessitate reform.”

Bishop, in citing “closed-door” legal settlements, echoed a “sue and settle” talking point deployed by the likes of industry-funded groups like the U.S. Chamber of Commerce, the Western Energy Alliance (WEA), and Endangered Species Watch.

In a report titled “Sue and Settle: Regulating Behind Closed Doors,” the U.S. Chamber of Commerce describes the concept as “when an agency intentionally relinquishes its statutory discretion by accepting lawsuits from outside groups that effectively dictate the priorities and duties of the agency through legally binding, court-approved settlements negotiated behind closed doors.”

Bishop's top campaign contributors for his re-election campaign include BP, ExxonMobil, Koch Industries, and others.

Anti-ESA Advocacy

The oil and gas industry at-large has engaged in a years-long lobbying and influence-peddling campaign to gut the Endangered Species Act, led in the forefront by WEA and the Independent Petroleum Association of America (IPAA). IPAA created the hydraulic fracturing (“fracking”) industry front group, Energy in Depth.

“The industry takes seriously its obligations to protect species listed as threatened or endangered under the Endangered Species Act (ESA),” says WEA, which hosts a “wildlife committee” meeting every month. “However, misuse of the ESA can directly prevent energy development, ranching, farming, timber, mining, and other productive uses of the land. Far too often the ESA has been used as a means to prevent or delay responsible economic activity rather than for species protection.”

Commenters on the proposed rule included fracking companies such as ConocoPhillips, Devon Energy, and pipeline giant Williams Companies, as well as groups like IPAA, American Petroleum Institute, the U.S. Chamber of Commerce, and an industry-funded front group called the Endangered Species Act Reform Coalition. Some of them — such as Devon and the Chamber — cited “sue and settle” in their submitted comments.

Image Credit: Regulations.gov

Environmental and community groups submitted their own comments on the proposed rule change, sounding the alarm about the ability to petition government if the rule is implemented.

“There would be an enormous chilling effect on citizens’ fundamental right to petition their government if other federal agencies emulate the rules the Services are proposing here,” they wrote. “The effectiveness of petitions as a driver of environmental protection and social justice would be diminished immediately, and would undeniably harm the interests of the petitioner.”

The new rule goes into effect on October 27, roughly two weeks before Election Day.

Main photo: Oil Platform Credit: Cipiota, CCBY-SA 3.0

Asked for his take on President-elect Donald Trump's appointment of Oklahoma Attorney General Scott Pruitt to head the U.S. Environmental Protection Agency (EPA), multi-billionaire investor and Trump business partner Carl Icahn told Bloomberg that Pruitt is “going to really be a breath of fresh air.” Given Icahn's business ties, that statement is steeped in accidental irony. 

Icahn, owner of the holding company Icahn Enterprises and a major donor to Trump's presidential campaign, was instrumental in choosing Pruitt — a man who as state prosecutor actively opposed most federal environmental regulations and denied the science of climate change — for the nation's top environmental job. As reported by The Wall Street Journal, Trump allowed Icahn, the 26th most wealthy man on the planet, to vet and interview finalists for high-level EPA jobs even though Icahn owns business assets impacted by current EPA regulations.

In addition, a DeSmog investigation shows that Icahn Enterprises owns oil industry assets based in Oklahoma, which are involved in EPA enforcement violations, and does business with TransCanada's Keystone pipeline system. 

EPA“Run Amok”

In his interview with Bloomberg, Icahn made clear his lack of affinity toward the EPA and environmental regulations.

“The EPA, in my opinion, has gone way too far, has sort of run amok with these crazy regulations,” Icahn said. “I've spoken to Scott Pruitt I'd say four or five times and gotten to know him and I really think he's a great pick.”

Pruitt, he told Bloomberg, “feels pretty strongly about the absurdity of these obligations,” and Pruitt believes that “it's very bad in this country to have more than several good refineries on the brink of disaster and the brink of bankruptcy, which the EPA has made to come about.”

Keystone XL, Koch Connection

It turns out that one of those refineries Icahn was referring to is actually owned by his holding company and based in Pruitt's home state of Oklahoma: the Wynnewood Refining Company.

Wynnewood is a 70,000-barrel-per-day oil refinery situated in Wynnewood, Oklahoma, and is a subsidiary of CVR Energy, a company owned by Icahn Enterprises. Carl Icahn chairsCVR Energy's Board of Directors.

In 2005, Koch Industries helped build an expansion project for Wynnewood, which boosted its refining capacity from 55,000 barrels per day to its current capacity. According to a story published by UPI, that expansion allowed the site to “process heavy, high-sulfur crude oil,” otherwise known as tar sands crude.

Koch Industries has given Pruitt $10,000 in campaign contributions throughout his political career in Oklahoma.

Up to 35,000 barrels per day of that tar sands oil, according to Icahn Enterprise's November 2016 Investor Presentation, flows through TransCanada's Keystone Pipeline. That's the Alberta, Canada-to-Cushing, Oklahoma pipeline authorized into existence by President George W. Bush in March 2008.

That tar sands oil also flows through what DeSmog has dubbed Enbridge's “Keystone XL Clone” pipeline system, which like Keystone, brings Alberta’s tar sands oil to Gulf of Mexico refinery markets.

Image Credit: Icahn Enterprises 

“As part of our crude oil gathering and logistics business, we have built 1 million barrels of owned tankage at Cushing, Okla., the oil trading hub through which we supply our non-gathered barrels to both the Coffeyville and Wynnewood refineries,” CVR detailed in its 2011 Annual Report. “Combined with our 3 million barrels of leased storage in Cushing, we now have even more flexibility to benefit from the wide range of crudes available at Cushing, especially heavy Canadian crudes and crudes from the Bakken and other fields in the northern Midcontinent.”

Wynnewood also receives some of its crude oil from the Blueknight Pipeline, according to CVR Refining LP's most recent U.S. Securities and Exchange Commission (SEC) report. In 2012, Blueknight signed a deal with XTO Energy — a subsidiary of ExxonMobil — to feed its oil obtained via hydraulic fracturing (“fracking”) from Oklahoma's Woodford Shale basin into Wynnewood.

XTO, which owns a huge amount of land in the Woodford basin, has given $6,500 in campaign contributions to Pruitt throughout his political career. 

EPA Violations, Other Assets

In its most recent SEC quarterly report filed on November 3, Icahn Enterprises discussed the detrimental role regulations could have on its profit-margin bottom line at the Wynnewood facility, referred to in the report as “WRC.” Icahn Enterprises wrote that environmental protection “laws and regulations could result in increased capital, operating and compliance costs” for Wynnewood.

Image Credit: U.S. Securities and Exchange Commission

The EPA's Detailed Facility Report for Wynnewood documents that in the past five years, Wynnewood has spent 12 out of 20 quarters in significant violation of the Clean Air Act and been subject to four formal enforcement actions and another 13 informal enforcement actions. 

In 2014, the facility released more than 2.8 million pounds of volatile organic compounds (VOCs), which are chemical substances that if inhaled, can cause cancer and other illnesses. The list of carcinogenic VOCs emitted by Wynnewood includes benzene and ethylene.

According to EPA data, in 2015 Wynnewood emitted 825,437 metric tons of carbon dioxide (CO2), 13,534 metric tons of methane, and 213,776 pounds of toxins (as defined by the EPA's Toxic Release Inventory). That refinery's 2015 CO2 and methane emissions are equivalent to driving 245,831 passenger vehicles for a year and using a year's worth of electricity for 171,853 homes, according to the EPA's Greenhouse Gas Equivalencies Calculator.

Beyond CVR Energy, Icahn Enterprises also owns a 13.8-percent stake in fracked gas exporting giant Cheniere and an 8.46-percent stake in prospective fracked gas exporter and mining giant Freeport-McMoran. Until recently selling its stake, Icahn also held a 4.55-percent stake in the Oklahoma-based fracking goliath Chesapeake Energy.

In December 2013, the EPA and U.S. Department of Justice handed Chesapeake a $9.7 million fine for multiple violations of the Clean Water Act, the largest fine ever given to a company for this kind of violation.  

That violation included “27 sites damaged by unauthorized discharges of fill material into streams and wetlands” and required the company “to implement a comprehensive plan to comply with federal and state water protection laws at the company’s natural gas extraction sites in West Virginia, many of which involve hydraulic fracturing operations,” according to the EPA press release announcing the fine.

Chesapeake also received a $600,000 fine from the EPA in 2012 because it had “discharged [60] tons of crushed stone and gravel into Blake Fork, a water of the United States, on at least three different occasions in December of 2008,” explained the EPA in a press release. The company has given Pruitt $11,500 in campaign money during his political career.

These types of enforcement actions, suffice to say, likely won't take place under Pruitt's watch.

“Pruitt’s nomination is historic. No one has ever headed the EPA with his level of anti-science, anti-environmental record, which includes multiple lawsuits against the EPA intended to prevent the EPA from doing its job. Which is now supposed to be his job,” wrote Jay Michaelson in the Daily Beast.

“Wholly Owned Subsidiary”

The Center for Biological Diversity used an apt business metaphor to decry Trump's nomination of Pruitt to head the EPA.

“Pruitt is a wholly owned subsidiary of the oil industry,” said Kassie Siegel, director of the Center for Biological Diversity's Climate Law Institute, in a statement. “Nominating him to lead the agency that protects our air, water, and climate from pollution is like putting the Swamp Thing in charge of draining the swamp.”

But if Pruitt is the subsidiary and Trump is the boss, then who’s the owner? Carl Icahn, of course.

Update: The day after the Pruitt EPA hire announcement, CVR Energy's stock price rose 17.17-percent, up $3.63 and to $24.77 per share. The stock market analysis site Fool.com attributed the bump directly to the connection Icahn had to the hire. 

“It also just so happens that Icahn was very influential in the nomination of the next U.S.EPA administrator as he actually interviewed several of the candidates and gave his feedback to President-elect Trump,” they wrote. “As you can imagine, Wall Street is going to act very favorably when the person with a controlling stake in your company gets to play a large role in naming the person that will regulate your business.”

Main image: Pixabay

In a recent “Victory Tour” speech in Des Moines, Iowa, President-elect Donald Trump told the audience that he sought to pick a Cabinet and team of advisors composed of “people that made a fortune” because “now they’re negotiating with you, OK?”

Carl Icahn, the 26th richest man on the planet according to Forbes, fits the “made a fortune” bill. Icahn, a business partner of Trump and major donor to his presidential campaign, has been named by the President-elect as his Special Advisor on Regulatory Reform.

However, as recently reported by DeSmog, Icahn stands to gain directly from deregulation in the energy and environmental sphere. He has already made his mark on the future Trump administration by vetting and recommending the regulation-averse Scott Pruitt, whom Trump eventually picked to head the U.S. Environmental Protection Agency (EPA). 

To get a taste for Icahn's approach to business, look no further than his holding company, Icahn Enterprises, which bought the Atlantic City Trump Taj Mahal out of bankruptcy in 2014 and then decided to close it down rather than meet the demands of striking workers

Icahn Enterprises owns a controlling stake in the petroleum refining company CVR Energy and its subsidiary CVR Refining, both of which have a long track record of EPA violations. The two companies own the Wynnewood Refining Company in Wynnewood, Oklahoma, which receives some carbon-intensive tar sands oil from the Keystone Pipeline System owned by TransCanada.

Beyond CVR, Icahn also owns large stock-holding stakes in hydraulic fracturing (“fracking”) giant Chesapeake Energy and the fracked gas exporting companies Cheniere and Freeport-McMoran, as well as in the offshore oil and gas drilling company TransOcean. Transocean was the driller responsible for the catastrophic BPDeepwater Horizon oil spill in the Gulf of Mexico in 2010.

“Individual Capacity”

Trump made an official statement on the Icahn hire. In it, his transition team said Icahn will be serving in an “individual capacity” and will continue to own and operate Icahn Enterprises as his full-time job.

“Carl was with me from the beginning and with his being one of the world’s great businessmen, that was something I truly appreciated,” Trump said in the statement. “He is not only a brilliant negotiator, but also someone who is innately able to predict the future especially having to do with finances and economies. His help on the strangling regulations that our country is faced with will be invaluable.”

Icahn was also given a chance to offer a first take on how he sees his new role in the looming Trump White House.

“Under President Obama, America’s business owners have been crippled by over $1 trillion in new regulations and over 750 billion hours dealing with paperwork,” said Icahn in the Trump press statement. “It’s time to break free of excessive regulation and let our entrepreneurs do what they do best: create jobs and support communities. President-elect Trump is serious about helping American families, and regulatory reform will be a critical component of making America work again.”

Conflicts of Interest? Icahn Says That's “Crazy”

Critics of Icahn landing this job in the Trump administration have raised the issue of his numerous potential conflicts of interest, which seems to be the rule rather than the exception among Trump's White House team.

“It is very disconcerting and troubling to people who take investor protection issues seriously,” Andrew Stoltmann, a partner at securities law firm Stoltmann Law, told USA Today. “It's a little like asking the fox to guard the hen house.”

Unhappy about the analogy, Icahn responded on CNBC and called it a “crazy” comparison, dismissing concerns about conflicts of interest. In that interview, Icahn also directly addressed his involvement with CVR Energy.

“I would ask you, should Jamie Dimon be discussing banking regulations because he's also the CEO of JP Morgan?,” said Icahn in response to a question about his ownership stake in CVR. “I mean, it's almost a crazy issue if you think of it that way. You know, I can understand saying that I shouldn't be involved in owning these if I were making policy, as is true of Cabinet members that are really making policy.”

Since first reported that Icahn was interviewing Cabinet nominees on Trump's behalf, including the climate change-denying Pruitt, CVR Energy's stock price has risen from $16.75 per share to $23.69 per share. The Wall Street Journal reported that Icahn has made over $600 million dollars on CVR stocks since this past election day, a 67-percent rate of return.

Many believe Pruitt, who currently serves as Attorney General of Oklahoma and lists being a “leading advocate against the EPA’s activist agenda” in his official biography, would likely reduce the number of violations and fines slapped against Icahn's companies and other companies.

Icahn Enterprises has also seen its stock rise from $42.93 per share on election Day to $56.01per share as of publishing time for this article, a 76-percent return on investment.

Katrina Vanden Huevel, Editor-in-Chief of The Nation Magazine, was quick to point out Icahn's potential to act in his own financial, rather than the public, interest in a comment on Twitter.

How many more billionaires can Trump fill the swamp with? Carl Icahn to regulate how his own industry is regulated.

— Katrina vandenHeuvel (@KatrinaNation) December 21, 2016

Photo Credit: DeSmog

In the world of biochar business, it's been mostly “talk” and little “walk.” Few biochar businesses have scaled up their operations in a serious way, despite big claims — with little scientific proof to back them up— about the substance's climate change mitigation potential.

Cool Planet Energy System is seemingly the exception to the rule, with a December 2013 Forbes article hailing the company as one apparently “too good to be true.” The heaviest hitter making a bet on biochar, Cool Planet called its marketing strategy “the ultimate contrarian solution” at the 2013 North American Biochar Symposium attended by DeSmog in Amherst, Massachusetts.

“Cool Planet is addressing global accumulation of carbon dioxide emissions by transforming the fuel production process. Our carbon negative fuel cycle permanently removes CO2 from the atmosphere by sequestering biochar,” Cool Planet formerly boasted on its website. “This comprehensive process results in up to a 150% carbon footprint reduction.”

The video below details the company's biochar approach and Cool Planet explains its ”carbon negative fuel cycle” in another video.

“[I]nstead of just leaving…agricultural waste to just rot on the ground, what we do is collect the leftover biomass and run it through the biomass fractionator which extracts useful hydrocarbon fuels such as gasoline and residual carbon called biochar,” Cool Planet details. “Biochar is highly porous and has beneficial water- and nutrient-maintaining capabilities.”

Straightforward enough. The claims, thereafter though, get steeper and some have taken them to task for making grandiose claims without backing them up with verifiable, peer-reviewed science. 

“We take the biochar and process it to become a soil enhancer, which we place back in the ground,” Cool Planet continues (emphases mine). “This sequesters the carbon in the ground for hundreds of years, which makes the associated fuel carbon negative while building soil for growing more crops. The result is a new fuel production process called the carbon negative fuel cycle that permanently removes atmospheric CO2 while growing more crops and food and producing a clean, affordable and carbon negative fuel.”

Breaking Ground

In February 2014, Cool Planet broke ground on its first commercial facility in Alexandria, Louisiana, biblically dubbing it “Project Genesis.” Joining Cool Planet for the ground-breaking: then-Louisiana Republican Governor Bobby Jindal.

“Cool Planet’s bio-refineries will provide tomorrow’s technology today to harness our renewable energy resources and supply advanced fuels to meet our nation’s growing energy demands,” Jindal stated in a press release.

With an investor list including the likes of General Electric, BP, ConocoPhillips, Exelon, and Google Ventures, one thing's for certain: there's big money — $100 million, to be precise— riding on Cool Planet's success going forward.

“They are working on global problems, such as producing renewable fuels and removing of carbon dioxide from our atmosphere,” Bill Maris, a Google Ventures managing partner told The Verge of the deal. “It's the kind of investment that we love at Google Ventures, because the vision is so big.”

However, major questions remain.

Where is the scientific grounding for the grand claims made by the company's principals? And is “success” measured in terms of Cool Planet's quarterly profits or in terms of the company's ability to use its product to mitigate climate change?

Despite the fact that, business-wise, the company is proceeding with haste, its science lags far behind, according to a 2014 investigative article published by The Verge.

“Cool Terra”

At the 2013 North American Biochar Symposium, Cool Planet announced the launch of its biochar soil amendment product “Cool Terra,” a wordplay on the ancient Amazonian “terra preta,” a fertile soil enriched with a charcoal-like substance and produced by indigenous peoples of the Amazon more than 800 years ago.

Then, in December 2013, Cool Planet became the first ever biochar manufacturer certified by the International Biochar Initiative (IBI). 

“Every trial we've done, we've seen 60-percent yield improvement,” Rick Wilson, Cool Planet's then-vice president of strategic relationships and former long-time employee of BP, said during his presentation at the Symposium.

Wilson's not the only one at the company making grandiose claims.

In a February 2012 Solve For X presentation, Mike Cheiky, Cool Planet's founder and chief technology officer who has since left the company, said that if given three percent of the world's landmass to produce its product and bring it to market, Cool Planet could reduce carbon emissions by 100 parts per million in the next 40 years.

Photo Credit: YouTube Screenshot

The “Carbon Negative Plan” is realized, according to Cool Planet, from its “Carbon Negative Fuel Cycle.”

Cool Planet's “Carbon Negative Fuel Cycle.” Image Credit: U.S. Patent and Trademark Office

Cool Planet has received 13 different patents from the U.S. Patent and Trademark Office, with twopertaining to the company's production of “negative carbon fuel” and anotherthreecentering around the production of renewable fuels using its technology.

“Shoddy Science”

For all the apparent promise of Cool Planet's “Cool Terra,” there's also an elephant in the room: the company's scientific claims have never been peer-reviewed or even shown to the public, for that matter.

Asked for those results by DeSmog, Michael Rocke, Cool Planet's then-vice president of business development, said they are a trade secret and can't be shared. He did not respond to repeated requests for comment sent by DeSmog about the biochar offsets protocol submitted by International Biochar Initiative (IBI) shot down by the American Carbon Registry in 2015.

The 2014 investigative article covering Cool Planet's rise to prominence by The Verge — which included interviews with over a dozen company insiders who spoke confidentially — concluded that the company, led by Mike Cheiky, uses “shoddy science” and shady business practices to lure in investment capital. 

The piece also reveals Cheiky has a history of attracting initial investment money from venture capitalists and then after a few years, moving on to his next project.

“I'm the lab guy, I'm on to the next thing,” he told The Verge. “I've made lots of money, couple of yachts, lots of houses, and high-performance sports cars, but I really love working in the laboratory. That's my mission. To be the first person to do something.”

Indeed, Cheiky has moved “on to the next thing” and now co-runs a start-up company called V-Grid Energy Systems alongside Rocke. V-Grid makes grandiose claims about its products in the same way Cool Planet describes its “carbon negative” potential. 

Cool Planet's “Heavy Hitters”

Cool Planet has also signed on some “heavy hitters” to join its upper-level management team, which, in addition to the investment capital it's received from big corporations, gives the company a veneer of legitimacy to the public and to investors.

Case in point: Archie W. Dunham, former president, CEO, and chairman of the board of directors of ConocoPhillips, sits on the board. Dunham sits on the board for Chesapeake Energy, one of the top producers of gas obtained via hydraulic fracturing (“fracking”) in the U.S.

Archie W. Dunham, Photo Courtesy of Wikimedia Commons

Bill Halter, former Lt. Governor of Arkansas and Democratic Party primary candidate for the U.S. Senate in 2010, is also a member of Cool Planet's board of directors.

“Don't Forget Your Engineering”

Big investors and big names are one thing. But the jury's still out on the veracity of Cool Planet's scientific claims.

One professor interviewed by The Verge (whom I also met with), William Banholzer— a senior advisor at the Wisconsin Energy Institute and research professor of chemical and biological engineering at University of Wisconsin-Madison — actually uses Cool Planet in presentations he gives as a case study of using scientifically “outrageous claims that defy common sense” while marketing its product.

“[People] see GE and these other big people put their money in,” Banholzer told The Verge. “Because these companies put their money in, [people] immediately jump to the idea, ‘Oh well they must know what they’re doing, it means there is something pretty good there.’ So I use Cool Planet as an example of 'Don’t forget your engineering.'”

In the case of the companies giving Cool Planet start-up capital, Banholzer suspects it's non-scientists who've eaten Cool Planet's sales pitch for lunch.

“They have a lot of investment guys, who are like bankers, and they don’t use their engineering talent to do due diligence.”

Regardless of the state of its science, Cool Planet received U.S. Department of Agriculture (USDA) BioPreferred certification for its Cool Terra soil amendment product in February 2016.

Last week the U.S. House of Representatives' Committee on Energy and Commerce held a subcommittee hearing on two bills to expedite permitting for exports of natural gas. Domestic production of this fossil fuel has been booming in recent years, mainly thanks to hydraulic fracturing (“fracking”) opening up vast reserves in shale formations.

Several former and present committee staffers have either taken oil and gas industry-sponsored trips as staffers or spun through the government-industry revolving door between Congress and the lobbying sector. And all of the politicians backing the two bills under consideration have taken tens of thousands of dollars in contributions from the oil and gas industry for their 2018 mid-term election campaigns.

The hearing featured testimony from Charlie Riedl of the Center for Liquefied Natural Gas, a group founded by the American Petroleum Institute, along with other industry representatives. Only one climate advocate spoke at the hearing, which also featured testimony from representatives of the U.S. Federal Regulatory Commission (FERC) and the U.S. Department of Energy (DOE). 

Both bills, the Unlocking Our Domestic LNG Potential Act (H.R. 4605) and Ensuring Small Scale LNG Certainty and Access Act (H.R. 4606), implicate DOE and FERC directly, agencies with direct oversight of the permitting process for liquefied natural gas (LNG) exports. H.R. 4605 calls for expedited permitting of conventional, large-scale LNG shipments, in part by cutting DOE from the approval process. H.R. 4606, on the other hand, pushes for so-called “small-scale” LNG exports (based on the tanker size, not volume exported from a site) to be deemed in the “public interest” under Section 3(c) of the Natural Gas Act, which would exempt them entirely from FERC and DOE regulatory reviews.

Parallel Push from Energy Department

The DOE itself, as previously reported by DeSmog, has proposed a regulation that essentially mirrors the goals of H.R. 4606. In a bizarre twist to that story, many of the public comments submitted to the DOE in support of that proposed rule appear to be anonymously written copy-pastes from previous industry-authored materials. U.S. Sen. Marco Rubio (R-FL) and U.S. Sen. Bill Cassidy (R-LA) also introduced a bill in October much like H.R. 4606, titled the Small Scale LNG Access Act.

Small-scale LNG does not mean smaller levels of exported gas but instead refers more specifically to the type of tank carrying the gas abroad. The leading company in this emerging industry is Tellurian, which was co-founded by Charif Souki, founder and former CEO of the pioneering LNG export company, Cheniere. 

Tellurian did not disclose lobbying for this legislation in particular or small-scale LNG more broadly in its most recent lobbying disclosure, which lists its lobbyists as Ankit Desai and Majida Turner. Desai served as a campaign finance bundler for Hillary Clinton's 2016 presidential campaign, while Turner formerly served as an assistant to the U.S. Secretary of State under President George W. Bush, Spencer Abraham. But the company has explicitly stated previously that its business plan revolves around the export of small-scale LNG and that the term is a misnomer.

“So people have started talking about small-scale and mid-scale and we’ve sort of chuckled at that. As you would imagine, there is nothing small scale about LNG,” Tellurian CEO Meg Gentle said in a March 2017 interview. “It’s just making the refrigerator component itself a little bit more modular, repeatable and standardized. But we’re still using the largest [General Electric] turbines, the largest storage tanks ever built.” 

DOE Supports Bills, Upton Mentions Puerto Rico

Industry connections also exist among the DOE members who testified at the LNG bills' hearing. Steve Winberg, Assistant Secretary for Fossil Energy for the DOE, formerly worked as head of research and development for the shale gas drilling company CONSOL Energy. He spoke at the hearing in support of both bills. 

“When it comes to fossil fuels, the United States has become the world’s largest combined producer of oil and natural gas, resulting in an abundance of reliable and affordable energy resources available for domestic use and for export,” said Winberg in his statement to the committee. “The Department appreciates the ongoing bipartisan efforts to address our nation’s energy challenges, and looks forward to working with the committee on the legislation on today’s agenda and any future legislation.”

Credit: Steve Winberg, U.S. Department of Energy Assistant Secretary for Fossil Energy; U.S. House of Representatives Committee on Energy and Commerce, Subcommittee on Energy

Also at the Subcommittee on Energy hearing last week, Chairman and U.S. Rep. Fred Upton (R-MI) said that expediting permitting for small-scale LNG exports was necessary because it would allow LNG to flow to Puerto Rico, whose electricity grid was destroyed by Hurricane Maria last fall and is now under repair.

“As we learned on our trip, Puerto Rico’s grid was in very rough shape to begin with and many of their power plants were so outdated they were still burning petroleum,” Upton said in his opening remarks. “I believe there is real potential for Puerto Rico to expand their use of natural gas, and these bills — especially the small-scale LNG bill — can be part of the solution.”

Upton has received over $1 million in campaign contributions from the oil and gas industry throughout his congressional career, including $10,000 from Energy Transfer Equity (a subsidiary of pipeline giant Energy Transfer Partners, owner of the Dakota Access pipeline and co-owner of the proposed Lake Charles LNG export terminal), $5,000 from Halliburton, and another $5,000 from Koch Industries for his 2018 re-election campaign. Upton has received $101,950 in campaign contributions from Energy Transfer Partners over his career in Congress.

According to his 2017 financial disclosure forms, Upton has tens of thousands of dollars in investments in oil and gas companies such as ExxonMobil, Chesapeake Energy, Chevron, EOG Resources, and Schlumberger. 

Committee Revolving Door, Industry Trips

Many current and past staffers on the Subcommittee on Energy have either worked for the oil and gas industry or taken trips sponsored by it.

The most prominent among them is Maryam Sabbaghian Brown, currently the Vice President of Federal Government Affairs for Sempra Energy, which owns the proposed Cameron LNG export facility in southwest Louisiana and the proposed Energí a Costa Azul LNG export site in Baja California just south of the U.S.-Mexico border in Mexico. Brown formerly served as chief legal counsel for the subcommittee. Her husband, Stephen Brown, works as Vice President of Federal Government Affairs for the pipeline company Tesoro. Beyond her subcommittee work, Brown in the past served as a policy adviser for U.S. House Majority Leader Paul Ryan (R-WI).

According to Sempra's quarter three lobbying disclosure form, Brown lobbied the DOE and Congress on both a “General discussion of legislative proposals to facilitate permitting of natural gas infrastructure” and a “General discussion of liquefied natural gas (LNG).”

Additionally, the Subcommittee on Energy's recently departed lead staffer, Tom Hassenboehler, previously worked as a lobbyist for America's Natural Gas Alliance (ANGA) and now co-heads a lobbying and consulting firm named The Coefficient Group.

Ben Lieberman, who serves as legal counsel for the House Committee on Energy and Commerce, was one of several staffers who has taken industry-sponsored trips. In his case, Lieberman took a day-long trip sponsored by the American Exploration and Production Committee (AXPC) to visit a fracking site owned by Pioneer Natural Resources located in the Eagle Ford Shale near San Antonio, Texas, according to ethics forms reviewed by DeSmog. Wyatt Ellertson, a research associate for the House Energy and Commerce Committee, also went on a 2017 trip to Texas sponsored by AXPC, according to disclosure forms reviewed by DeSmog.

Greg Zerzan, another legal counsel for the committee, formerly served as a lobbyist for Koch Industries. Furthermore, committee deputy staff director Mike Bloomquist has served as a lobbyist for ANGA and subcommittee Senior Adviser and Staff Director Rick Kessler formerly lobbied for Tesoro, Sunoco, and Chevron.

Co-Sponsor Cash

The co-sponsors of both bills have also taken tens of thousands of dollars from the oil and gas industry for the 2018 campaign cycle.

For example, in the 2018 race alone, the oil and gas industry has donated $41,200 to U.S. Rep. Bill Johnson (R-OH), $79,800 to U.S. Rep. Bill Flores (R-TX), and $144,450 to U.S. Rep. Kevin Cramer (R-ND). The one Democrat backing the bills, U.S. Rep. Henry Cuellar (D-TX), has taken $51,500 from the oil and gas industry for the 2018 election cycle. That includes $5,000 each from ExxonMobil, Chevron, and Halliburton, and another $2,500 from Koch Industries.

It is not clear if the bills will go beyond the introduction and hearing phase even with the myriad industry ties working in their favor, particularly during an election year, or if the bills are simply what is known as “message bills,” introduced into the ether mostly for public relations purposes. The Rubio-Cassidy bill, for example, has not gone beyond the introduction phase and has gained no additional co-sponsors since October.

The DOE's proposed small-scale LNG rule is still under consideration, with the public comments received now under review.

Main image: Revolving doors. Credit: Lionel Allorge, CCBY-SA 3.0

On the heels of Iowa and Ohio, Wyoming has become the third state to introduce a bill criminalizing the type of activities undertaken by past oil and gas pipeline protesters. 

One of the Wyoming bill's co-sponsors even says it was inspired by the protests led by the Standing Rock Sioux Tribe against the Dakota Access pipeline, and a sheriff involved in policing those protests testified in support of the bill at a recent hearing. Wyoming's bill is essentially a copy-paste version of template legislation produced by the conservative, corporate-funded American Legislative Exchange Council (ALEC).

At the organization's December meeting, ALEC members voted on the model bill, the Critical Infrastructure Protection Act, which afterward was introduced in both Iowa and Ohio.

Like the ALEC version, Wyoming's Senate File 74 makes “impeding critical infrastructure … a felony punishable by imprisonment for not more than ten (10) years, a fine of not more than one hundred thousand dollars ($100,000.00), or both.” Two of the bill sponsors of SF 74, Republican Sens. Eli Bebout and Nathan Winters, are ALEC members. SF 74 has passed unanimously out of its Senate Judiciary Committee and now moves onto the full floor.

ALEC's model bill, in turn, was based on two Oklahoma bills, HB 1123 and HB 2128. The Sooner State bills, now official state law, likewise impose felony sentencing, 10 years in prison, and/or a $100,000 fine on individuals who “willfully damage, destroy, vandalize, deface, or tamper with equipment in a critical infrastructure facility.” As DeSmog has reported, the Iowa bill has the lobbying support of Energy Transfer Partners — the owner of the Dakota Access pipeline (DAPL) which runs through the state — as well as that of the American Petroleum Institute and other oil and gas industry companies.

ALEC brings together primarily Republican Party state legislators and lobbyists to enact and vote on “model” legislation at its meetings, which take place several times a year. Within different task forces at these meetings, corporate lobbyists can voice their support or critiques of bills, while also getting a vote. Those bills often then are introduced as legislation in statehouses nationwide, as in this latest example in Wyoming.

Hydraulic fracturing (“fracking”) in Wyoming has helped the state vastly increase its natural gas production and spurred pipeline build-out. However, multiple studies in recent years have also linked fracking-related activities around the small town of Pavilion to groundwater contamination. 

Credit: Center for Media and Democracy

Targeting 'Ecoterrorism'

Wyoming's bill, like the ALEC model bill and one of the Oklahoma bills, includes language implicating any organization “found to be a conspirator” and lobbing a $1 million fine on any group which “aids, abets, solicits, encourages, hires, conspires, commands, or procures a person to commit the crime of impeding critical infrastructure.” 

State Senate Judiciary Committee Chairman Leland Christensen, a Republican and one of the bill's co-sponsors, said when he introduced the bill that legislative language was needed to hold accountable those “organizations that sponsor this kind of ecoterrorism.”

The fiscal note for the Wyoming bill says that the “fiscal impact to the judicial system is indeterminable,” while also discussing the prospective costs of incarcerating people under the auspices of the legislation.

“The Department of Corrections states that the impact of the bill is indeterminable as there is currently no way to accurately estimate the number of offenders that will be sentenced pursuant to the bill,” reads the fiscal note. “Each year of incarceration currently costs the state approximately $41,537 per inmate, including medical costs. Each year of community supervision costs the state approximately $2,000 per inmate.”

ALEC Model Confirmed

One co-sponsor of the Wyoming bill, its sole Democratic supporter, Rep. Stan Black, told WyoFile.com that the bill was inspired by what took place at the Standing Rock Sioux Reservation and that SF 74 was based on the ALEC model bill. 

Shortly after ALEC members voted to adopt the Oklahoma legislation as a model bill, Oklahoma’s HB 1123 was also adopted by the corporate-funded Council of State Governments (CSG) as a piece of “Shared State Legislation” (SSL) at its own annual meeting held just a week later.

One of the state legislative officials sitting on CSG's Committee on Shared State Legislation, North Dakota's Republican Rep. Kim Koppelman, has a long history of involvement with ALEC, and throughout 2017 he spoke critically of the Indigenous-led movement against the Dakota Access pipeline. 

ND Rep. Kim Koppelman; Photo Credit: North Dakota Legislature

“One of the major issues we dealt with was several bills introduced in response to the violent protests at the site of the Dakota Access pipeline,” Koppelman wrote in a February 2017 article halfway through the North Dakota Legislature's session. “As you may know, peaceful protests led by Native American tribes began this summer but they attracted others from throughout the nation and deteriorated into illegal occupation of sites on federal land, trespassing on private land, blocking of roadways and some incidents of violence.”

At the beginning of 2017, Koppelman co-sponsored threepieces of North Dakota legislation, which crack down on pipeline protests. Two of them passed and are now state law.

The bills “struck a good balance to ensure everyone's constitutional right to peacefully protest, which we cherish, but to provide for appropriate consequences when anyone crosses the line into anarchy, terrorizing or destruction of property,” wrote Koppelman in his article. “These bills have been fast tracked to give law enforcement the tools they need.”

After DeSmog filed an open records request pertaining to Koppelman's ALEC and CSG efforts in this area, he told DeSmog, “I have no documents or records concerning the subject of your request but, even if I did, you should be aware that, under North Dakota Century Code Section 44-04-18.6, communications and records of a member of the North Dakota Legislative Assembly are not subject to disclosure.”

In a follow-up email exchange, Koppelman told DeSmog that he “had no role in bringing the bill” to CSG and does not know who did so.

“Frankly, I don't even specifically recall the bill you've inquired about, without going back to review it,” Koppelman told DeSmog. “I also don't recall who may have supported or opposed it at that meeting, either on the Committee or among the members of the public in the audience.”

For the ALEC bill, Koppelman also said he could not speak to its origins as a model or who has pushed it at the state-level since becoming a model.  When asked by DeSmog if CSG records the Shared State Legislation meetings or keeps minutes, Koppelman said that he does not believe so “because the result of meetings and the committee's work is in the published volume” of Shared State Legislation which CSG disseminates annually.

CSG has in the past, though, kept meeting minutes of its SSL voting sessions, doing so as recently as 2014. Those minutes included an attendance list, which listed nearly three times the number of lobbyists present as state legislators and showed industry attendees representing both the American Gas Association and the Consumer Energy Alliance.

According to a letter obtained and published by HuffPost, the ALEC model bill has also enjoyed the backing of the American Gas Association, American Chemistry Council, American Fuel & Petrochemical Manufacturers (AFPM), and Marathon Petroleum.

Industry, Cops Push ALEC Bill in Wyoming

According to a follow-up story by WyoFile.com, the Wyoming Senate Judiciary Committee had Wyoming Business Alliance lobbyist Cindy DeLancey, rather than the lead sponsor, Sen. Christensen, introduce the bill in front of the committee.

Before taking over as head of the Wyoming Business Alliance, DeLancey worked as a director of government and public affairs for BP, where she did “government and public affairs support for the Leadership Team of the Lower 48 North Business Unit,” according to her LinkedIn profile. DeLancey's Wyoming Business Alliance biography also shows that she formerly served as the chair of the Petroleum Association of Wyoming’s Government and Public Relations Committee. She did not respond to a request for comment.

Wyoming Business Alliance steering committee members include representatives from the Petroleum Association of Wyoming, Chesapeake Energy, Devon Energy, and Jonah Energy. Petroleum Association of Wyoming leadership committees consist of representatives from companies such as Devon Energy, Chesapeake Energy, BP, Anadarko Petroleum, and other companies, while its board of directors lists officials from those companies, plus ExxonMobil, EOG Resources, Halliburton, Williams Companies, and others.

WyoFile.com has reported that, according to a document received from Sen. Christensen, the Petroleum Association and other oil and gas companies have also come out as official supporters of the bill, along with law enforcement representatives. The Wyoming bill's official backers include the Wyoming Association of Sheriffs and Chiefs of Police, the Wyoming Business Alliance, the Petroleum Association of Wyoming, the Wyoming Petroleum Marketers Association, American Fuel and Petrochemical Manufacturers (AFPM), Holly Frontier Corporation, Anadarko Petroleum, and ONEOK.

According to a special events calendar obtained by DeSmog, the Wyoming Business Alliance hosted a reception at the Cheyenne Botanic Gardens on February 12, just days after Wyoming bill SF 74 was introduced on February 9.

On March 1, ALEC will also host a reception at the Nagle-Warren Mansion Cheyenne, according to that calendar, with invited guests asked to RSVP to Wendy Lowe or David Picard. Picard currently has no oil and gas industry lobbying clients, according to his lobbying disclosures, but his lobbying firm's website says he formerly did so for companies such as Shell, BP, and Marathon. He did not respond to a request for comment for this story.

According to lobbying disclosure forms, Lowe works as a lobbyist for Williams Companies, a major pipeline company with over 3,700 miles of pipeline laid in Wyoming. Lowe also formerly served as associate director of the Petroleum Association of Wyoming, according to her LinkedIn Profile. 

Credit: Wyoming State Legislature

Lowe, the private sector chairwoman for ALEC in Wyoming as of 2014, won the state chair of the year award from ALEC in 2012. She has also previously received corporate-funded “scholarship” gifts to attend ALEC meetings as an official Wyoming representative, according to a 2013 report published by the nonprofit watchdog group Center for Media and Democracy.

An ALEC newsletter from May 2011 shows that, at an ALEC event Lowe co-hosted in 2011 in Wyoming, she praised the organization for “creating a unique environment in which state legislators and private sector leaders can come together, share ideas, and cooperate in developing effective policy solutions.”

The Center for Media and Democracy also reported in 2014 that Lowe, a former Peabody Energy lobbyist, gave a presentation titled, “Increasing Travel Reimbursement Income” at an ALEC meeting in Chicago in 2013. But Lowe told DeSmog that, although she attended the Senate hearing on the bill, she did not know about it until it was proposed and is not lobbying for it. 

National Sheriffs: DAPL Full Circle

At a state Senate Judiciary Committee hearing on the Wyoming bill, Laramie County Sheriff Danny Glick also came out in support of the legislation, warning that a situation similar to Standing Rock could happen in Wyoming.

“One of our Niobrara county commissioners already has graffiti going up — ‘No DAPL’ — in that area up there,” Glick said at the hearing, referring to the shorthand for the Dakota Access pipeline. Glick, an Executive Committee member and Immediate Past President of the National Sheriffs' Association, was one of the most supportive sheriffs pushing what has been characterized as a heavy-handed and militaristic reaction by law enforcement to the activism at Standing Rock.

Under the direction of Glick, Laramie County sent officers to the Dakota Access protests under the auspices of the Emergency Management Assistance Compact (EMAC), triggered after North Dakota's Republican Governor Jack Dalrymple issued an emergency order on August 19, 2016. Glick too, spent time at Standing Rock and spoke at a press conference alongside Morton County Sheriff Kyle Kirchmeier on October 6, 2016.

Laramie County Sheriff Glick. Credit: National Sheriffs' Association Facebook Page

Glick, who attended a roundtable meeting at the White House in February 2017 with President Donald Trump and other sheriffs, was also previously CC'd on a set of emails obtained by DeSmog and Muckrock in which the National Sheriffs' Association and public relations firms it had hired wrote talking points in an attempt to discredit those who participated at Standing Rock. Those talking points said to describe the anti-pipeline movement as rife with “anarchists” and “Palestinian activists” who used violence and possessed “guns, knives, etc.”

'Worst Instincts of Power'

Critics say the Wyoming bill could have far-reaching and negative impacts, if it becomes law, both in terms of criminal sentencing and for First Amendment rights. The American Civil Liberties Union of Wyoming, for example, has come out against the bill on both grounds. 

Wyoming politicians have introduced anti-protest and anti-free speech legislation, Senate File 74. This bill is designed to shut down protests and activism. Contact your elected representatives today and ask them to stand up for the First Amendment! #WyLeg

— ACLU of Wyoming (@ACLUWYO) February 20, 2018

The Sierra Club in Wyoming agreed, saying in an email blast that the bill is “explicitly designed to crush public opposition to projects like the Dakota Access and Keystone pipelines, by preventing the kind of protests that occurred at Standing Rock.”

Even people representing industry interests and within the Republican Party have come out against the bill as it currently reads.

“This bill appeals to the absolute worst instincts of power,” Larry Wolfe, a Wyoming attorney who represents the oil and gas industry, said at a hearing about the bill, according to WyoFile.com. “We the powerful must protect things that are already protected under existing law.”

Republican Senator Cale Case largely echoed the concerns put forward by Wolfe.

“This country has been through WWII, civil unrest in the 1960s and a heck of a lot more, but we didn’t need legislation like this,” Case conveyed in an email to WyoFile.com. “Good laws already exist to protect property without this chilling impact on free speech.”

Main image: On August 31, 2016, “Happy” American Horse from the Sicangu Nation locked himself to construction equipment as a direct action against the Dakota Access pipeline. Credit: Desiree Kane, CCBY 3.0

During its first year under Donald Trump, the U.S. Department of Interior has coordinated closely with the oil and gas industry to accomplish its priorities on the nation's expansive federal lands. Among them: considering a plan to transfer control of oil and gas development on public lands to the states. This revelation comes from emails and documents obtained by the Western Values Project through the Freedom of Information Act (FOIA).

The key coordinator of this plan has been Timothy Williams, who has served as the go-between for the oil and gas industry and Interior Department. Williams, deputy director of the agency's Office of External Affairs, formerly served as the field director of the Nevada state branch of Americans for Prosperity, a front group founded and funded by Koch Industries.

Williams, the emails show, has served as the point of contact for outreach on policy issues for groups such as the Independent Petroleum Association of America (IPAA), Western Energy Alliance, the American Petroleum Institute (API) and its state-level branches, and other oil and gas companies such as ConocoPhillips, Chesapeake Energy, and EOG Resources. IPAA is best known as the creator of the front group Energy in Depth, which serves as an outspoken voice on issues pertaining particularly to hydraulic fracturing (“fracking”) in the U.S.

The emails also portray discussions of the policy fight over endangered species protections for the greater sage grouse and other regulatory topics, with regular outreach to and input received from the oil and gas industry. They further exhibit many examples of Interior Department officials, including Secretary of the Interior Ryan Zinke, being invited — and often accepting invitations — to speak at industry events and conferences.

Push to Transfer Federal Lands to States

The emails display that, on a regular basis, the oil and gas industry notifies senior-ranking Interior Department officials when submitting regulatory comments. Usually, those types of comments are sent to a general email account or via online submissions.

For example, the department’s regulatory reform initiative, launched in June, set up the email address regulatoryreform@ios.doi.gov. That address is listed in a Federal Register notice, posted in June 2017, calling for public comments on the Interior Department’s initiative to slash regulations.

In comments submitted to the Interior Department on August 10 and then emailed to high-ranking Interior Department officials, the Western Energy Alliance called for the agency to transfer control of oil and gas production on federal public lands to the states, citing an Interstate Oil and Gas Compact Commission (IOGCC) model resolution on public lands passed in 2017.

“The Interstate Oil & Gas Compact Commission (IOGCC), a multi-state government agency representing oil and natural gas producing states, has issued a resolution urging delegation to the states for the regulation of operations on federal public land,” reads the comment. “The IOGCC resolution sends a clear signal that states are prepared to take on the added responsibility for approving drilling and completion permits, rights-of-way, and inspections on federal lands.”

IOGCC is a group of state-level oil and gas regulators, organized as an interstate compact, which receives funding from oil and gas production and from industry sponsorship of its twice-annual conferences. It serves as a de facto lobbying organization for the industry. Transferring federal lands over to the states has long been on the wish-list of IOGCC, Western Energy Alliance, API, and IPAA.

A month later, it appears, the Western Energy Alliance held a meeting with Vincent DeVito— Zinke’s top energy aide within the Interior Department — about the lands transfer issue.

Vincent DeVito. Credit: Vincent DeVito Twitter Profile

In a September 14 email, Western Energy Alliance's president, Kathleen Sgamma, thanked DeVito for meeting with her and said she would “work up a comprehensive briefing paper on the federal nexus and delegation of primacy ideas that we discussed and get that to you as soon as they’re ready.”

Sgamma, as previously reported by DeSmog, spearheaded the effort to move leasing for oil and gas on federal public lands and offshore plots from in-person auctions to an online venue run by the private company EnergyNet. The effort's aim was to “end the circus” of protests at those auctions organized by the “Keep It In The Ground” movement. Sgamma also gave a presentation about the public lands transfer issue at IOGCC's 2015 Annual Business Meeting held in Salt Lake City, Utah.

Both DeVito and Sgamma did not respond to a request for comment before publication. A spokesman from the Western Energy Alliance told DeSmog that Sgamma was currently in Washington, D.C. in her capacity as a member of the Interior Department's Royalty Policy Committee and could not immediately respond to a question about the briefing paper she mentioned in her September 14 email to DeVito. 

ONSHORE Act and Public Land Swap

Months later on January 18, the Republican U.S. Senate delegations from Utah and Wyoming, as well as U.S. Sen. John Hoeven (R-ND), introduced a bill — invoking the term “cooperative federalism” — which would essentially fulfill Western Energy Alliance's goals. In the fourth quarter of 2017, API lobbied for that bill, the ONSHORE (Opportunities for the Nation and States to Harness Onshore Resources for Energy) Act (S. 2319), according to lobbying disclosure forms reviewed by DeSmog.

“Duplicative regulations on federal lands are especially costly for western states, where federal ownership is mixed among state and private lands,” Hoeven, a former IOGCC chairman and past North Dakota governor, said in a press release. “Our legislation recognizes that states like North Dakota have long had effective regulatory systems in place and should take the lead in managing oil and gas development within their borders. This will help unlock our nation’s energy potential, creating good jobs for our citizens while also ensuring good environmental stewardship.”

As previously reported by DeSmog, IOGCC's North Dakota representative — Lynn Helms, director of mineral resources for the North Dakota Industrial Commission and former employee of the oil and gas company Hess Corporation — has employed his relationship with Hoeven's most senior staffer to garner congressional support for swapping regulatory control of oil and gas production on federal lands. That staffer is Ryan Bernstein and he serves as chief of staff and legal counsel for Sen. Hoeven.

Bernstein has $100,000-$250,000 invested in oil and gas minerals through his company Hills and Prairie Properties LLC, according to his 2017 congressional personal financial disclosure forms reviewed by DeSmog.

Bernstein, at the behest of IOGCC, also prompted a Congressional Research Service (CRS) study on the legality of the land transfer idea, with the service concluding it would violate federal law unless new congressional legislation is enacted. That study was never published by CRS, but was obtained in a records request by DeSmog, and appears to be the potential impetus behind introduction of the ONSHORE Act.

Credit: Congressional Research Service

Helms, who sat on IOGCC's resolutions committee when he first spearheaded the idea of the land transfer, also advocated for the ONSHORE Act during a congressional hearing.

IPAA also came out in support of the ONSHORE Act in a hearing held by the U.S. House Subcommittee on Energy and Mineral Resources. The lobbying group pointed to the IOGCC model resolution in its testimony.

“IPAA strongly supports efforts to delegate primary regulatory authority for oil and natural gas activities on federal land to the states,” said the IPAA official. “We support the IOGCC resolution and believe the mechanism outlined in the ONSHORE Act provides a workable process to achieve that objective.”

IOGCC’s Alaska representative — Cathy Foerster, commissioner for the Alaska Oil and Gas Conservation Commission — also testified at that hearing in support of the land swap idea, pointing to IOGCC's ability to carry it out if it became public policy.

Environmental groups, however, feel differently about the matter and 39 of them decried the ONSHORE Act in a letter.

“Federal agencies are required by law to manage our public lands and resources for multiple use — including environmental protection and community health — for present and future generations,” they wrote. “States, on the other hand, often lack the funding, staffing, and expertise necessary to manage the workload that is associated with overseeing federal oil and gas development. Many states currently lack the resources to manage their own oil and gas programs.”

'No Request Will Go Unanswered'

The Western Values Project, an advocacy group focused on energy and public lands issues in the American West, has decried what it discovered in its FOIA request, saying the findings convey how the interests between the oil and gas industry and the Interior Department seem to have fused in the Trump era.

“These emails show the level of influence by oil and gas industry trade groups and lobbyists being granted by Interior political appointees on critical public land decisions. Across the board, it appears no request will go unanswered and will likely end up being fulfilled by Interior,” said Jayson O’Neill, deputy director of the group, in a press release. “We already knew Secretary Zinke was beholden to oil and gas lobbyists and special interests, but the extent to which it has permeated across Interior should concern everyone that values public lands.”

Main image: Gold Butte National Monument, Nevada. Credit: U.S. Bureau of Land Management, public  domain