Ex-EPA official who promised to ‘crucify’ oil companies joins Sierra Club
The former U.S. Environmental Protection Agency administrator who made headlines for promising to “crucify” a few oil and natural gas companies has joined the Sierra Club’s fight against coal, the environmental group announced Friday.
Al Armendariz resigned in April as administrator for the EPA region that includes Oklahoma and Texas after his comments at a 2010 public hearing were brought to light by U.S. Sen. Jim Inhofe, R-Tulsa.
Armendariz told a questioner that the EPA would “crucify” a couple of oil and gas companies as an example of how the agency’s environmental regulations would be enforced. He apologized for those remarks before he resigned.
Sierra Club officials welcomed Armendariz to their fight against coal.
“This is an exciting day for clean energy and public health supporters in Texas,” said Bruce Niles, a top Sierra Club official. “Al has worked closely with the Sierra Club for many years, as an environmental scientist and professor. He understands the critical importance of developing clean energy to create jobs, protect people and protect air and water.”
Armendariz spent eight years as a professor in civil and environmental engineering at Southern Methodist University in Dallas before joining the EPA.
“As a third generation Texan, I’m proud to be taking on this new role to help protect Texas,” Armendariz said. “As a father and a scientist, I know how important it is to transition to cleaner sources of energy that don’t pollute the air that our children breathe, and I’m proud to be working on a campaign with a proven track record for success.”
Starting next month, Armendariz will be senior campaign representative for the Sierra Club’s Beyond Coal campaign. He will be based in Austin.
Two OKC energy executives named among list of most outrageous perks
Two Oklahoma City executives made the unenviable list of “The Most Outrageous Executive Perks” released by Forbes and Footnoted.com on Wednesday.
SandRidge Energy Inc. CEO Tom Ward made the list by reporting he received $783,533 worth of “accounting support” from company employees last year. Chesapeake’s Aubrey McClendon was runner up in the same category with $250,000 in “personal accounting support.” In both cases, the Oklahoma City energy executives were allowed to use company accountants for their personal finances.
McClendon also was mentioned for his personal use of Chesapeake’s corporate jet.
Barry Diller, chairman of Expedia and InterActiveCorp., topped the category with $1.28 million worth of personal use of corporate aircraft. Forbes said McClendon would have been a contender, but he did not make the list because the company said he reimbursed Chesapeake for $650,000 of his $1.1 million aircraft use “after consultation between Mr. McClendon and the Compensation Committee.”
NFL great Thurman Thomas looking for return to Oklahoma, energy job
Former Oklahoma State running back Thurman Thomas acknowledges the crowd at Boone Pickens Stadium during a timeout in a 2008 game (photo by Chris Landsberger, The Oklahoman)
Thurman Thomas is a Texas native who achieved his greatest fame in western New York, where he helped lead the Buffalo Bills to four straight Super Bowls in the 1990s.
But now Thomas is looking to return to his roots.
The NFL Hall of Famer tweeted Tuesday that he missses Oklahoma and would like to return. He’s angling for a job with a state energy company.
“I will miss #Oklahoma. I would move back here, but I need a job. Can someone make that happen? Continental Resources, Devon Energy, etc…”
Thomas, who starred at Oklahoma State University in the mid-1980s, started his own energy company after he retired from the NFL.
Thurman Thomas Global Energy Group helps businesses save money on their energy costs with demand response programs, according to a Yahoo Sports profile last year. He also operates Legends Energy.
“Energy and energy savings has become a hot topic; whether you are talking about gasoline, electric, natural gas, or renewable energies, it is something everyone is talking about and concerned with these days,” Thomas said in a Q&A earlier this month with Green Real Estate Daily.
Thomas credited billionaire Oklahoma State alumnus T. Boone Pickens with spurring his interest in energy in that interview.
Maybe another OSU alum can help Thomas find a job that will bring him back to Oklahoma.
UPDATED: Thomas says he is not in a big hurry to return to Oklahoma since his daughter wants to graduate from high school in Buffalo.
“Just trying to get the ball rolling early,” he told The Oklahoman in a direct message on Twitter.
Report: Chesapeake schemed with rival to limit land prices in Michigan auction
UPDATED: see below
Chesapeake Energy Corp could be facing additional scrutiny as Reuters reported today about how the company apparently plotted with rival Encana Corp. to keep land prices under control in a promising oil and natural gas play in Michigan.
Several experts raised the possibility of antitrust violations after reviewing emails provided by Reuters.
“The famous phrase is a ‘smoking gun.’ That’s a smoking H-bomb,” said Harry First, a former antitrust lawyer for the Department of Justice. “When the talk is explicitly about getting together to avoid bidding each other up, it’s a red flag for collusion, bid-rigging, market allocation.”
The report included excepts from several emails in 2010 that show how Chesapeake and Encana officials discussed ways to avoid bidding against each other in a public land auction.
The companies said they had talked about forming a joint venture in Michigan but ultimately decided against it. Chesapeake said it did not make any joint bids with Encana.
Antitrust attorneys told Reuters that won’t dispel their legal concerns.
“Nothing in the documents suggests any benefit to the joint venture other than making the price fall,” said Darren Bush, a former Justice Department antitrust lawyer who is now a law professor at the University of Houston. “If it has no other purpose, then it’s just a shell and doesn’t change the liability of the illegal conduct.”
Chesapeake already is facing inquiries from the IRS and U.S. Securities and Exchange Commission, as well as an internal review by its board of CEO Aubrey McClendon’s personal finances.
The company now is looking to unload its acreage in Michigan as it tries to sell billions of dollars worth of asset to shore up its cash flow.
Chesapeake said it has spent about $400 million acquiring its acreage in Michigan.
The company ran afoul of new Oklahoma City neighbor Continental Resources Inc. in 2010 when it allegedly tried to back out of a $28 million acreage deal. Continetal filed a breach of contract lawsuit against Chesapeake that eventually was settled.
UPDATE: Reuters continued reporting this story Tuesday with the story of landowner Walter Zaremba, who is suing Encana over an aborted deal that could have earned him at least $54 million.
Zaremba owns “deep” drilling rights to about 20,000 acres of land that had interested both Encana and Chesapeake in 2010.
He signed a “non-binding” letter of intent with Encana to lease the land for $54 million in June 2010, but the deal fell apart two days later.
Encana denied any collusion with Chesapeake in a letter to Zaremba’s attorneys in August 2010.
“Encana was not cooperating with Chesapeake, or any other entity, in any manner in connection with the negotiations with the Zaremba entities,” Encana attorney Erika Enger wrote.
Now Zaremba is seeking more than $60 million in damages from Encana, which he accuses of fraud and conspiracy in a lawsuit.
Encana has filed a lawsuit against Zaremba seeking the return of most of the $2 million in earnest money it paid before the lease deal was canceled.
Ohio AG to probe Chesapeake allegations
Ohio Attorney General Mike DeWine is looking into allegations of fraud involving Chesapeake Energy Corp. that might have caused state pension funds to lose money, the Columbus Dispatch reports.
DeWine is responding to concerns raised by an environmental advocacy group that has compared Chesapeake to Enron.
“My office is reviewing the retirement system trading data in order to calculate possible losses attributable to the alleged fraud,” DeWine wrote in a letter to the group. “Please be assured that we will monitor the situation and take appropriate action if it appears that Ohio resources have been lost due to fraudulent activity.”
Ohio Citizen Action is devoted to preventing pollution.
The group, which boasts 80,000 members, earlier this month urged the attorney general to protect Ohio residents from Chesapeake’s possible collapse due to unaccountable management and the absence of effective state or federal regulation.
The allegations echo more than a dozen lawsuits filed by Chesapeake shareholders over the past two months amid reports of corporate governance issues at the Oklahoma City-based oil and natural gas producer.
Report: China’s Sinopec mulling bid for Chesapeake assets
Chinese oil giant Sinopec is pondering a multi-billion dollar investment in the United States as its shifts its focus to oil and natural gas production, Financial Times reports.
Sinopec Chairman Fu Chengyu was in Oklahoma City this week to do the company’s due diligence on assets being sold by Chesapeake Energy Corp., according to the report.
The gem of the assets Chesapeake is offering at this time appears to be its acreage in west Texas’ oil-rich Permian Basin. The company is looking to sell its entire 1.5 million net acre position.
Chesapeake CEO Aubrey McClendon said last month that there have been plenty of potential buyers looking over its data on the company’s Permian acreage.
A Chesapeake spokesman declined to comment Wednesday on the Financial Times report of Sinopec’s interest in the company’s assets.
Sinopec has history with another Oklahoma City-based energy company.
Sinopec struck a $2.5 billion deal with Devon Energy Corp. in January for a stake in five new resource U.S. plays.
Chengyu also has some past history with Chesapeake from his time at China’s CNOOC Limited.
CNOOC paid more than $2 billion in 2010 for a stake in Chesapeake’s holdings in south Texas’ Eagle Ford Shale and $1.2 billion in early 2011 for a share of the company’s operations in the Niobrara Shale in Colorado and Wyoming.
Is a settlement near in OG&E rate case?
A settlement could be near in a long-running rate case for Oklahoma Gas and Electric Co.
The parties were scheduled to have a settlement conference this morning at the Oklahoma Corporation Commission. During a three-hour hearing Tuesday afternoon, commissioners asked several times about the possibility of a settlement in the case, which started last July.
Commissioner Bob Anthony asked if appointing a settlement judge or mediator could be helpful at this point in the rate case.
“Commissioner, I have to tell you that I think the realm of a potential settlement is relatively small, the moving parts are relatively small, so I frankly think bringing a third party up to speed might actually not be productive,” said OG&E attorney Bill Bullard. “The others may have a different view.”
Chairwoman Dana Murphy said she didn’t support a mediator at this point.
“I would not be in favor of that. I think the parties have really worked hard on it,” Murphy said of a potential settlement.
Attorneys for the parties were mum on a settlement after the hearing. They will tell you settlements are always a possibility in rate cases, although nobody talks on the record about the details. OG&E settled its last rate case in 2009 with a $48 million increase. That was offset by an unrelated fuel-cost reduction for customers. OG&E had asked for a $110.3 million rate increase in the 2009 case.
Tuesday’s hearing centered on responses to a May 30 administrative law judge report that recommended OG&E be given what amounts to a $19.2 million rate increase. Much of the testimony was technical in nature, but it boiled down to how much the electric utility should be granted on its “return on equity.” OG&E asked for an 11 percent return on equity, which would amount to a rate increase of $73.25 million. The administrative law judge, Jacqueline T. Miller, recommended a return on equity of 10.75 percent, or a rate hike of $19.2 million.
Several other parties in the rate case, including AARP, commission staff, the attorney general’s office and groups representing industrial users, want OG&E to lower its electric rates. They suggested cuts between $4 million and $57 million.
Because of the length of the rate case, OG&E tried to implement higher interim rates earlier this month. But commissioners rejected those interim rates and held OG&E’s attorneys to an earlier statement on the record in January that the company would not implement interim rates.
Former Chesapeake employee sues over stock performance
A former Chesapeake Energy Corp. employee has filed a federal lawsuit against the company and its board of directors, accusing them of breaching their fiduciary duty to participants in Chesapeake’s employee stock ownership plan.
Debra Boggs is seeking to have the lawsuit certified as a class action case on behalf of all current or former Chesapeake employees who are beneficiaries of the program. It was filed under the Employee Retirement Income Security Act.
Her lawsuit does not indicate when Boggs, a former officer cleaner, worked at Chesapeake or how much stock she owns.
The 104-page lawsuit details Chesapeake’s alleged misdeeds, as laid out over the past two months in media reports and the company’s regulatory filings.
The allegations are similar to those brought by at least 16 other Chesapeake shareholders who have filed lawsuits since April 19.
Boggs’ lawsuit seeks to force Chesapeake to repay losses suffered by participants in the stock program.
The company’s stock dipped to as low as $13.32 a share over the past two months, but it closed Tuesday at $18.71. That is down about 2 percent from the day before the initial Reuters report about CEO Aubrey McClendon’s personal loans.
Scientists criticize gas industry’s report on methane emissions
A group that promises to bring transparency to the discussion of unconventional natural gas development is dismissing a recent study commissioned by the American Petroleum Institute and America’s Natural Gas Alliance.
The study, released June 4, concluded the industry is responsible for half of the methane emissions attributed to it by the U.S. Environmental Protection Agency. The agency in April issued new rules to limit emissions from hydraulic fracturing, a technique used in most oil and natural gas operations.
The nonprofit Physicians Scientists and Engineers for Healthy Energy on Tuesday called the industry’s study “fatally flawed.” The group issued a statement from Cornell University professors Anthony Ingraffea and Robert Howarth and research technician Renee Santoro.
“The study relies on a critically flawed survey design, completely ignores many other recent studies, and would not have passed peer-review in a scientific journal.”
The scientists contend the industry groups’ study is based on a biased survey, highly selective information and an uncertain approach.
The group praised a recent study by researchers at the National Oceanic and Atmospheric Administration and the University of Colorado, which they said measured the actual flux of methane from an unconventional gas field. It showed emissions were higher than the EPA’s estimates.
“More such studies are needed, evaluating emissions from both conventional and unconventional gas fields, and the downstream emissions from pipelines and urban distribution systems.”
The group concludes “the best available science” indicates that natural gas has a larger greenhouse gas footprint than any other fossil fuel, so it should not be regarded as a bridge fuel to cleaner alternatives.
Industry advocates have dismissed the group for its ties to the Park Foundation, which helped fund the anti-gas documentary “Gasland” and other attacks on gas development. Ingraffea and Howarth also have been criticized for inaccurate work.
Chesapeake to trim about 70 employees in North Texas
Chesapeake Energy Corp. is trimming the number of employees at its offices in North Texas as low natural gas prices have forced the company to curtail its operations in the gas-rich Barnett Shale.
Chesapeake currently has only two drilling rigs in the Barnett, so the company intends to cut loose about 70 employees at its offices in Fort Worth and Cleburne. That represents about 8 percent of its work force in North Texas.
“The colleagues we’re releasing are wonderful people, passionate about their work and true assets to our community,” Julie Wilson, Chesapeake’s vice president of urban planning, wrote in an email to employees. “I hope you’ll help us find new career opportunities for them.”
Chesapeake is eliminating positions in several departments that are most directly impacted by the company’s reduced drilling and leasing operations in the area. It had 44 active rigs in the Barnett as recently as 2008, but low gas prices have spurred the company to shift its focus to oil and liquids production.
Wilson said Chesapeake already has transferred employees to more prolific shale plays or its home base in Oklahoma City.
“Although in no way do I want to trivialize our local staff reductions, I feel compelled to note that our company remains in a strong growth mode. We continue to add staff at our headquarters in Oklahoma City and in many of our field offices as the company continues to drill approximately 1,650 new wells this year to develop our enormous reserves of domestic oil, natural gas, and liquids.”
Wilson also noted employees of pipeline subsidiary Chesapeake Midstream Partners will move into new offices once Chesapeake completes the sale of those assets to Global Infrastructure Partners later this year.
She said that does not mean the company will sell downtown Fort Worth’s Chesapeake Plaza, although it will remain open to offers.
Wilson said Chesapeake is more interested in leasing space in the building.
