Drilling companies seeking to exploit unconventional energy resources in the Rocky Mountain wilderness and elsewhere are running into all kinds of obstacles these days, thanks to lawsuits, regulations, and pesky citizens who would rather ensure their drinking water remains, well, drinkable, preferably without fear of ingesting toxic chemicals or lighting themselves on fire when they turn on the tap.
Take for example, the little-known Bill Barrett Corporation, a Colorado-based natural gas company that is planning to drill up to 3,000 wells in an area of the Colorado Rockies called the Roan Plateau. Barrett Corp specializes in extracting unconventional shale gas and coalbed methane through hydraulic fracturing, a controversial technique many fear could have devastating consequences for drinking water supplies throughout the West.
Hydraulic fracturing, or “fracing,” involves blasting a mixture of toxic chemicals, sand and water into rock formations to break apart rock and release hydrocarbons. The oil and gas industry historically used fracing techniques to eek out more production from aging wells, but the technique is now used in some 90 percent of the country’s tight-sands and coal-bed methane gas wells.
As Kevin Grandia explains today over at the Huffington Post, only an ambitious legal challenge and efforts to raise public awareness can stop the destruction of the Roan by Barrett Corp and other gas industry players. Interior Secretary Ken Salazar last year called the Roan “one of those treasured landscapes of America,” and praised “the environmental values of the plateau” but he has yet to act to stop its destruction.
Hydraulic fracturing is exempt from scrutiny under the Safe Drinking Water Act thanks to the Halliburton loophole, a blatant industry giveaway inserted into the 2005 energy bill at the behest of Vice President Cheney, Halliburton’s former CEO. Halliburton pioneered the fracing technique in the 1950s, and reportedly now earns about $1.5 Billion annually from hydraulic fracturing.
The House Energy & Commerce Committee recently launched an investigation into the potential impacts of hydraulic fracturing, as Grist‘s Jonathan Hiskes noted last week. Fracing is also receiving more press coverage than usual these days thanks to a proposed $41 billion merger between Exxon Mobil and XTO Energy Inc. If the deal goes through, Exxon would become the owner of 8 million acres of shale gas and other types of unconventional resources, the largest share in the industry.
Barrett Corp., which specializes in the fracing method, is a much smaller player than Exxon, of course, but its potential to wreak havoc on water supplies in the Rockies is still noteworthy. Barrett Corp. released its 4th quarter results this week, along with its 2009 annual 10-K report to the Securities and Exchange Commission, detailing for shareholders its financial position and threats to its continued profitability.
While the company announced a solid financial performance in ‘09 and a positive outlook for future growth, the 10-K isn’t all roses, to say the least, with Barrett revealing some of its key concerns for the future, including the age-old industry bogeymen, environmentalists and regulations:
“The practice of hydraulic fracturing formations to stimulate production of natural gas and oil has come under increased scrutiny by the environmental community. In reaction, moratoria have been imposed and legislation proposed at local, state and federal levels. While these proposals have not materially affected our ability to operate, adaption [sic] of certain proposals, in jurisdictions in which we operated, would adversely affect the Company.” (2009 10-K, pg 72)
As Barrett Corp. notes, “The regulatory burden on the oil and gas industry increases the cost of doing business and consequently affects profitability.” (pg 22)
Recognizing this threat, Barrett has followed in the well-worn footsteps of major polluters nationwide by increasing its spending on lobbyists. The company has relied on several Beltway lobby shops in recent years to curry favor for its drilling plans in Congress and the administration.
Since 2004, Barrett has paid roughly $60,000 a year ($380,000 total) to National Environmental Strategies (NES), which took over Barrett’s lobbying responsibilities from K Street’s top firm Patton Boggs, which earned $100,000 from Barrett Corp in 2004.
But last year, Barrett upped the ante significantly, retaining Brownstein, Hyatt, Farber, Schrek (BHFS), to the tune of $240,000 just for 2009 lobbying, according to the Center for Responsive Politics. On behalf of Barrett Corp., Patton Boggs, NES and Brownstein Hyatt have lobbied Congress and the Bureau of Land Management on the issues of energy production in the Rockies, resource management plans for federal lands, H.R.6, the Energy Independence and Security Act of 2007, and Title I Denial of Oil and Gas Benefits.
That list is likely to grow this year, as the practice of hydraulic fracturing comes under increased scrutiny. This episode provides a crystal clear example of special interests in Washington running roughshod over the interests of local populations whose water supplies are threatened by the unregulated practice of hydraulic fracturing. Only a loud and organized public outcry can challenge the reach of Barrett’s lobbyists and stop this madness.
About Barrett’s roster of registered lobbying operations:
In 2004, NES, co-founded by former Republican National Committee chairman, Haley Barbour and former American Petroleum Institute executive Marc Himmelstein, was caught up in an ethics controversy surrounding the close relationship the firm had with then deputy secretary of the Interior, J. Steven Griles, a former NES lobbyist. NES was found to be paying $284,000 a year to Griles as a means of divesting his business interest in the firm. At the time of the dust-up, the NY Times reported that despite the controversy, “Mr. Himmelstein continues to represent companies involved with the department, including six clients that worked with the Bureau of Land Management on an environmental impact statement for the Powder River Basin, a large mining area in Wyoming.”
Himmelstein is listed as one of the lobbyists handling the Barrett account. Besides Barrett, in 2009 NES clients included the American Gas Association, Encana Corporation, Utah Council for Clean Energy, Edison Electric Institute, Sunoco and Pacific Gas and Electric Company.
Brownstein, Hyatt, Farber, Schrek LLP (BHFS)
BHFS is a large law/lobby firm founded in Colorado, with offices in major cities throughout the US. Barrett Corp has retained three of the firm’s lobbyists, Alfred E. Mottur, Jacob Johnson and C. Kyle Simpson. Mottur is a managing partner at BHFS and the co-chairman of the firm’s government relations group. Jacob Johnson is listed as a DC-based policy adviser to BHFS. Prior to joining BHFS in September 2007, Johnson was a legislative assistant to Utah Senator Orrin Hatch. C. Kyle Simpson is a Policy Director out of the BHFS office in Washington, DC and has served as the associate deputy secretary of energy and a senior policy advisor to the secretary of energy. Simpson is the executive director of an organization called “The Energy Research Coalition” of which BHFS lists itself as a member. The Research Coalition was formed in 2007 to, “support federal funding for natural gas and petroleum R&D.” The coalition members include, Chesapeake Energy, Devon Energy, Gas Technology Institute, GE Infrastructure and Strata Production Group.