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Home / Articles / Boulderganic / Boulderganic /  Hickenlooper's new oil and gas regulations: Real substance or fracking greenwash?
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Wednesday, November 27,2013

Hickenlooper's new oil and gas regulations: Real substance or fracking greenwash?

By Jefferson Dodge and Joel Dyer
USDA / Wikimedia Commons
Gov. John Hickenlooper

The oil and gas industry and Gov. John Hickenlooper’s “plan A” was easy enough to spot when it came to their shared desire to increase oil and gas development in Colorado. For its part, the industry spent millions of dollars on advertising to convince the public that fracking is as American as apple pie. As for our oil and gas geologist-turned-governor, his mission was to use the power of the state to provide the threat of filing economically devastating lawsuits against municipalities that dared to try to stop fracking within their communities. But as we saw in 2012 and again during this November’s elections, “plan A” is failing badly.

Longmont passed a fracking ban last year and is currently being sued by the state and the oil and gas industry. But in the most recent elections, despite Longmont’s travails, Lafayette passed a fracking ban and Boulder and Fort Collins each passed five-year moratoriums on the controversial extraction practice that uses a mixture of water, sand and more than 500 chemicals, many of which are known or suspected carcinogens, to extract oil and gas from shale formations.

Broomfield also voted on a five-year fracking ban, which for now appears to have passed by 17 votes. However, the margin of victory was so close that it triggered an automatic recount that will not begin until Dec. 2.

So after millions of dollars spent by the industry and an endless stream of threats from the governor, the anti-fracking momentum has done nothing but continue to grow as one community after another votes to restrict the hydraulic fracturing of oil and gas wells within city limits. But it’s far too soon for the citizens of those towns and others around the state who are desirous of similar protections to think victory is at hand. That’s why they call it “plan A.”

Within days of the industry’s recent defeat at the ballot box, “plan B” was rolled out in the form of a new set of air quality regulations proposed by the governor and agreed to by the largest oil and gas producers in the state, Anadarko Petroleum Corporation, Encana Corporation and Noble Energy.

On the surface, the new oil and gas regulations sound like a step in the right direction. They revise the current Colorado Air Quality Control Commission regulations that were themselves put in place last year after the Environmental Protection Agency created new, stricter standards for air pollution stemming from the oil and gas industry and then required states to enforce the new standards.

Colorado determined in 2012 that it would only enforce some of the EPA’s new standards at that time, but would revisit the EPA’s air quality requirements in 2013, at which time the state would consider adopting all of the federal guidelines as well as any revisions deemed necessary.

The new regulations that Hickenlooper is currently proposing would create air quality rules in Colorado that are, on paper, even stricter than those now required by the federal government by way of the EPA.

The main difference between the state regulations and the EPA standards is that Hickenlooper’s new rules would apply to emissions of methane, and that would be a first for any state when it comes to oil and gas industry regulation. Methane regulation is deemed important because it has been found to be one of the most potent greenhouse gases when it comes to global warming.

In addition, the governor’s proposed regulations would require oil and gas producers to find and repair gas leaks in their equipment used for drilling and production purposes. The regs would also require better industry record-keeping regarding leaks.

Companies would be required to quickly install high-efficiency burners, as opposed to simply venting gas into the air when there is no pipeline available for transport or market in which to sell the gas. But perhaps most importantly, a number of the governor’s proposed provisions would apply to existing wells — not just new wells being drilled. This is important because there are already more than 52,000 existing wells in Colorado, so not retrofitting the air quality standards would render the new regs nearly impotent when it comes to improving the state’s air quality. (See sidebar on page 21 for more analysis on the pros and cons of the new regs.)

Yet despite what sounds like a major step forward for Colorado’s environment and the public’s health, it appears that the new regulations may not be the environmental windfall that oil and gas industry critics were hoping for.

In fact, the new regs may turn out to be little more than the latest ploy by the industry to fulfill its goal of rapidly drilling up Colorado’s remaining gas reserves before the lucrative natural gas export market dries up. Experts predict there is only a five- to 10-year export window before most countries begin to produce their own supplies of shale gas. That short time horizon, coupled with the fact that there is virtually no market for gas in the U.S and that other countries are currently willing to pay as much as eight times the going rate in the U.S., explains the industry’s rush to drill and export.

But what has been lost in the discussion of Hickenlooper’s new stricter regulations is how the enforcement of these new rules will actually be accomplished.

A quick look back at what happened in 2012 when the EPA first passed its new, stronger federal regulations on oil and gas industry air pollution may shed some light on why the oil and gas industry seems so willing to go along with the governor and his new regulations this time around.

The reason given by the Colorado Air Quality Control Commission (CAQCC) for not implementing all of the EPA’s new rules in 2012 was that it could potentially “trigger unduly burdensome permitting requirements for companies.” Based on its explanation for not enforcing the EPA rules, it seems the CAQCC sees its first priority as watching out for the good of the oil and gas industry, not the public’s health.

The CAQCC also pointed out that it only had a paltry eight inspectors, and that with such a small enforcement capacity it was not realistic to adopt all of the new EPA standards, even though most of the EPA’s new regulations applied primarily to new wells being drilled.

As you may recall, earlier this year the Hickenlooper administration worked the back rooms to defeat proposed legislation that would have greatly increased the number of inspectors at agencies regulating the oil and gas industry. The additional 60-plus inspectors proposed by the legislation would have made it at least possible to inspect most wells once every few years. Not exactly a formula for rigorous regulatory monitoring, but still a vast improvement over the current virtual lack of enforcement.

Both Hickenlooper and the oil and gas companies that helped shape the new regulations obviously understand that there are no new inspectors and what that means when it comes to the reality of enforcement.

If the eight existing inspectors at the CAQCC can’t even enforce the EPA’s air quality rules at just a few new well sites being drilled at any given time, then how can eight inspectors enforce all of the EPA rules plus Hickenlooper’s new rules at more than 52,000 existing wells, along thousands of miles of pipelines, as well as thousands of production platforms and gas plants?

The answer is that they can’t. In fact, even if by some miracle a CAQCC inspector were to stumble onto a methane leak in violation of one of Hickenlooper’s new rules, Colorado has such meaninglessly small fines — some of the lowest in the United States — that the guilty company might well choose to ignore fixing the leak indefinitely, finding it more cost-effective to simply pay the fine down the road. This has happened on more than one occasion.

Often in Colorado the initial fines of $1,000 a day are later reduced or even forgiven entirely by the state bureaucracy that issued the fine. Just as with the additional inspector legislation, the Hickenlooper administration helped to defeat a bill last year that would have raised the minimum fine for oil and gas polluters in violation of state and federal laws to a still quite low $15,000 per day.

What all this means is that the oil and gas companies are likely willing to embrace the governor’s new “stricter” regulations because they understand that there is no mechanism for enforcing those regulations. Without ample inspectors and meaningful fines, the governor’s new regulations are rendered nearly meaningless.

Despite all the praise for Hickenlooper’s seemingly bold stand against an industry he has previously blindly supported to the point of severely injuring his own political career, the oil and gas industry is still basically in charge of regulating itself, a dangerous game to play with an industry with a nearly unparalleled track record for environmental impropriety.

But more important than the state’s inability to actually enforce the new regulations, these new standards could be used as a powerful PR tool designed to help the industry increase its drilling and fracking in Colorado.

If the oil and gas industry can change the current fracking debate from “should it be banned” to “should it be allowed, provided that strict rules and regulations are in place that would appear to guarantee its safety,” then the industry wins and it knows it.

The industry understands that if you spend enough money, you can find friends and allies in unusual places to certify that you are fracking responsibly — even unusual places within the environmental movement itself.

The industry’s “plan B” is a far craftier approach than its relatively straightforward “plan A.” It’s designed to make it appear as though the industry and the governor have finally seen the light and that they now understand what the citizens of Colorado have been saying all along, namely, that the environment and the public’s health must come before corporate profits and donations to campaign coffers.

To make “plan B” work, the industry needs buy-in from those who consider the environment to be an important quality of life issue. That just happens to describe the vast majority of people living in Colorado. To get that kind of buy-in, to literally change the debate from how to stop fracking to allowing seemingly safe fracking, the industry and the governor understand that they need to make the new oil and gas regulations appear to be some kind of grand compromise with anti-fracking activists and the environmental movement as a whole. They needed an environmental Judas goat.

The governor and industry needed a representative from the environmental movement at the negotiating table, an organization that could be involved throughout the process and then claim that it had significantly helped shape the new oil and gas regs. And they needed to be able to tell the world that as a result of that participation and negotiation, those same environmentalists are now endorsing drilling and fracking as a good thing.

But where could the oil and gas industry hope to find such an organization with which to partner? Where could it find environmentalists who could be counted on to support fracking in Colorado and elsewhere? They seem to have found their answer in the form of the Environmental Defense Fund (EDF).

When the governor announced his new regulations, he stated that the regulations were the result of the efforts of both the oil and gas industry and the Environmental Defense Fund.

800px_The_Global_Energy_Context_Fred_Krupp_talks__8417459670_.jpg

Environmental Defense Fund Executive Director Fred Krupp speaks at the World Economic Forum in Davos, Switzerland, during a session titled "The Global Energy Context." | World Economic Forum / Wikimedia Commons

For many observers, the EDF’s participation gave credibility to the new regulations. But for others more familiar with the organization, just the opposite was true.

It appears that in recent years the EDF has become a key player in the promotion of drilling and fracking shale gas across the U.S., and a good deal of its annual budget is being supplied by those who support or actually profit from fracking shale gas. When it comes to the court of public opinion on fracking, EDF may be the best thing that’s ever happened to the gas industry.

Such a revelation sheds light on the governor’s new regs and raises a new question: Are the regulations that the EDF helped to craft in Colorado really going to protect the environment, or are they just another example of industry greenwashing? There are those who believe the latter to be true.

When it comes to controversy regarding fracking within the environmental movement, no single example has stood out more than EDF’s Methane Emissions Study.

As a matter of context, in April 2011, scientists from Cornell University, including Robert Howarth, Ph.D. and the David R. Atkinson Professor of Ecology and Environmental Biology, along with colleagues Renee Santoro and Tony Ingraffea, published the firstever peer-reviewed assessment of shale gas’s greenhouse footprint, including methane.

The Cornell study found that shale gas wells emitted in the range of 2.2 per cent to 4.3 percent of a well’s lifetime production into the atmosphere, and that another 1.4 percent to 3.6 percent of a well’s lifetime gas production escaped into the atmosphere while being transported and processed downstream from the well site.

What this study ultimately meant for the gas industry was that if the Cornell study was correct, then according to Howarth, “gas in general and shale gas in particular is a disastrous fuel since methane is a greenhouse gas with far greater potency than carbon dioxide.”

In other words, the idea that we could use natural gas as an environmentally friendly bridge fuel as we wean ourselves from oil and coal was incorrect. The study caused quite a stir in the boardrooms of the oil and gas industry.

Howarth_Robert.jpg

Robert Howarth

As time passed, many other similar studies were conducted by various academic institutions, as well as by organizations such as the National Oceanic and Atmospheric Administration (NOAA) in Boulder. Some used regional monitoring gear placed near gas fields, while others used airplanes to directly measure releases from specific wells and gas fields.

All of these additional studies, many of which were presented at national scientific meetings and/or published, confirmed the findings of the Cornell study, with many actually detecting much higher rates of emissions than Howarth and his co-authors had reported.

A consensus was growing across the country — at least it was growing until the EDF joined with the oil and gas industry to fund its own emissions study. The steering committee for the EDF study consisted of the study’s author, University of Texas professor David Allen, nine representatives from the oil and gas industry — including lobbyist and public relations personnel from Shell, Southwestern Energy, ExxonMobil and others — along with two EDF employees.

The EDF emissions study found that emissions from shale gas well sites was only about 1/20 of what had been reported in the Cornell study and the others that had previously been conducted. So how could that be?

Earlier this week, Howarth told Boulder Weekly that while he hasn’t read Colorado’s draft air quality regulations yet, he is familiar with the Environmental Defense Fund.

In fact, he worked there from 2000 to 2002.

According to Howarth, the EDF study found relatively low methane emissions at well sites because researchers were working with industry and only examined sites that were hand-picked by oil and gas companies.

“Industry gives them a list of sites that are acceptable for them to go to, over a particular timeframe, they go to those sites, they make those measurements,” Howarth explains. “Are those the average conditions? Is industry going to invite them to look at where things are not going so well, or where companies aren’t being as careful? Clearly not.”

He called the low methane emissions outlined in the findings a “best-case scenario, if you did everything perfectly,” but the real average, which can be better measured from the air without the need for industry cooperation, is much higher.

“I think they’ve gotten some good scientists involved, but there’s an inherent bias in how they’ve gone about it, because of the money and the way they set up their review teams,” Howarth says.

He remains skeptical of those who reviewed the research, for instance.

“They say they had a peer review team of scientists,” Howarth says. “Well, yes and no. Most of those peer reviewers come from an industry background, or still work for industry, or have some sort of connection to industry. It’s not a balanced effort.”

He says the results seem to have been pre-ordained from the beginning.

“Even before they started, the folks at Environmental Defense Fund headquarters were putting out press releases and statements saying this is the way to go, it’s probably going to show that shale is OK,” he says. “They sort of predetermined the result.”

In some of his latest research, Howarth points out that methane emissions vary depending on what the natural gas is used for. He says EDF likes to use figures associated with electric power generated by natural gas because it is a more efficient process and generates fewer emissions than when natural gas is used for heating.

 

When asked whether he ever felt pressure to come up with desired research results when he worked for EDF, Howarth replies, “I guess I’d rather not say. Let’s put it this way: I like being an academic scientist. Even at academic institutions we feel political pressures when you’re up against the oil and gas industry. But a [non-governmental organization] that has no serious endowment and is dependent on continuous cash flow to keep you going feels strong pressures from those who give money. There’s just no getting around it. It’s human nature.”

So is funding really a factor that could explain why the EDF conducted such an industry-friendly study and is now using the results of that study to try to convince people everywhere, including here in Colorado, that fracking shale gas is good and safe?

Like so many other questions involving the oil and gas industry, the answer can likely be found by following the money trail.

There is no question that EDF gets a good deal of its funding from people and organizations who either want to see gas used as a bridge fuel or who actually profit from fracking shale gas.

In August 2012, New York City Mayor Michael Bloomberg penned an opinion piece titled “Fracking is too important to foul up” wherein he stated, “The production of shale gas through fracking is the most significant development in the U.S. energy sector in generations.”

400px_Mayor_Michael_Bloomberg.jpg

New York Mayor Michael Bloomberg | Rubenstein / Wikimedia Commons

The next day, Bloomberg gave the EDF $6 million so that the organization could pursue a strategy designed to secure strong rules and help the industry develop best practices for extracting unconventional gas reserves through fracking. In other words, Bloomberg’s money wasn’t given to EDF to study whether fracking should be done. It was given to EDF to help make sure that fracking shale gas was being done as well as it could be in the 14 states where most shale gas is being produced, which includes Colorado. And Bloomberg is hardly the biggest donor using the EDF to push a pro-fracking agenda.

Another key funder of the controversial EDF emissions study was Tom Steyer, a former hedge fund manager who has formed a pro-natural gas consortium of sorts that includes the likes of Bloomberg, former treasury secretaries Henry Paulson and Robert Rubin, and George Shultz, who served as secretary of state under former President Ronald Reagan.

These individuals have been outspoken in their belief that natural gas, including unconventional shale gas, is the answer to the world’s energy needs.

IMG_7103.jpg

Julian Robertson gave EDF more than $40 million. | Robertson Family Foundation Inc.

Perhaps the heaviest hitter of all when it comes to the EDF’s bottom line is famed hedge fund manager Julian Robertson, who also sits on EDF’s Board of Trustees.

During the last decade, there were years when it was reported that nearly one-third of the EDF’s entire budget that the organization spent on climate change was donated by Robertson or his foundation.

According to Mathew Nisbet writing for Big Think, Robertson gave the EDF more than $40 million between 2005 and 2009.

So obviously Robertson, who also happened to be the single largest donor to Mitt Romney’s Restore our Future super PAC, has some influence over what EDF thinks about fracking. And since he invests money into the gas industry, it’s likely he’s all for it.

More specifically, Robertson is a senior advisor to Tiger Infrastructure Partners, a hedge fund focused on investing in energy assets. The managing partner of Tiger is Emil Henry, who served as assistant secretary of the treasury under Henry Paulson.

Tiger created a partnership with Kiewit Corporation called TKT Midstream Partners. According to the Wall Street Journal, TKT plans to spend up to a half-billion dollars in seed money that’s being provided by Robertson and the Ziff family, whose fortune is derived from Ziff Davis Media, to build pipelines and processing plants for natural gas.

It should be noted that Kiewit has been a major player in building downstream shale gas assets, including large gas export terminals in Maryland and Oregon, the giant Bakken Shale Gas plant in North Dakota, major gas plants in Texas, three gas plants in Wyoming and even the Melbourne gas plant here in Colorado.

These are just some of the EDF’s individual funders with ties to the gas industry. And on the corporate donor list, a quick look at the sponsors page of the EDF’s emissions study shows the names of Anadarko Petroleum, Encana, BG Group, Chevron, Talisman, XTO Energy and ExxonMobil.

If Kiewit and the other companies listed above are confident enough in fracking’s future to invest billions of dollars building natural gas plants and export terminals, it must have something to do with their close ties to major campaign donors and elite political players who happen to be former high-ranking government officials like former secretaries of the treasury or secretaries of state with backgrounds at Goldman Sachs.

These are the kind of ties that can smooth the path and possibly even remove all regulatory barriers to fracking and the highly controversial practice of exporting our natural gas resources. It is hard to believe that the Obama administration’s new found love for fracking shale gas isn’t connected.

Even the EPA under Obama has suddenly stopped its research and pulled out of the places where it had previously stated it believed that fracking had contaminated groundwater. Clearly very powerful forces are at play politically in this country when it comes to fracking and shale gas production. This appears to be the case in Colorado as well.

Sam Schabacker, mountain west director for Food and Water Watch, describes EDF as “a smokescreen” that has a history of being “an apologist for the industry” when it comes to oil and gas companies in Colorado.

He says that the group has been allied with industry in other states, including partnering with corporate fishing interests during an effort to privatize fisheries on the West Coast and working on an effort in Pennsylvania to form the Center for Sustainable Shale Development, which he refers to as an initiative to “sell the public on the whole idea that fracking can be made safe and sustainable. It’s pretty misleading.”

He also says EDF was involved in negotiating the state’s 2011 regulations requiring oil and gas companies to disclose the chemicals they use in hydraulic fracturing, regulations that Schabacker says are “riddled with loopholes, like the trade secret exemption” that allows industry to conceal chemicals that they classify as confidential trade secrets.

“They fight for strong regulations,” Schabacker says of the EDF. “We’re going to fight for a ban.”

He adds that some environmental groups are hesitant to criticize EDF if they get funding from the same sources, because funders don’t want to see infighting within the environmental movement. “You’re probably going to get a call from your funder, asking why you are rocking the boat,” Schabacker says.

Calls to Dan Grossman, regional director of the EDF’s Rocky Mountain office, went unanswered.

So where does this leave us when it comes to what we should think about Hickenlooper’s new regulations forged with the help of the oil and gas industry and the Environmental Defense Fund?

The words skeptical and fearful come to mind. For now, fracking bans and moratoriums seem to be the only way to guarantee that fracking is safe.

Respond: letters@boulderweekly.com

 

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