Shale Daily / NGI All News Access

Administration's Fracking Advisory Panel Under More Fire

The number of parties unhappy with the low level of industry representation on President Obama's new hydraulic fracturing (fracking) advisory panel continues to grow as answers are sought and questions surrounding the Department of Energy's (DOE) motives arise.

Recently House Republicans were able to attach report language to a DOE spending bill that would require the newly created administration panel on fracking to have significant representation from the natural gas industry.

Last week the nonprofit Institute for Energy Research (IER), openly questioning whether DOE is trying to boost natural gas prices by appointing a nonindustry-friendly panel, filed a Freedom of Information Act (FOIA) request "to understand how the Obama administration chose the members of a panel on hydraulic fracturing." IER pointed out that the panel does not include anyone actually engaged in fracking, but it does include the president of an environmental group.

With natural gas moving to the front and center of Obama's energy agenda (see Shale Daily, March 31), his administration tasked Energy Secretary Steven Chu to form a broad-based panel to examine potential risks associated with fracking (see Shale Daily, April 4). Once the members were announced and the panel got to work, questions surrounding the its makeup immediately arose (see Shale Daily, June 14; June 7; May 11; May 9).

The House Republican report's language, which accompanies the fiscal year 2012 DOE spending measure, calls for the seven-member panel established by Chu to have at least three members with hands-on experience in extracting shale gas.

"No less than one-third of panel members should be industry representatives who actively work in the natural gas industry," said the report, which was adopted by the House Appropriations Committee, The Hill reported.

Reps. Maurice Hinchey and Nita Lowey, both New York Democrats, offered an amendment to block the language, but it was rejected. "Federal advisory boards are supposed to be unbiased, impartial bodies that advise our agencies, but almost everyone who currently serves on the shale gas advisory panel has direct financial ties to the oil and shale gas industry." Hinchey said.

The make-up of the panel has come under attack since early May, when Chu announced the members of the panel, which has been directed to make recommendations on how to improve the safety and environmental performance of fracking in shale formations. Currently DOE has filled six of the seven slots on the panel, including the chairman position, with individuals who have financial ties to companies involved with fracking operations, according to Democratic House lawmakers.

While a few of the panel's members have or have had ties to industry, they currently are directors or hold consulting positions or university posts, rather than being on the front lines of oil and gas development, industry members point out. The oil and gas industry contends that active industry members are underrepresented on the panel.

Conversely, earlier this month a Washington, DC-based advocacy group called on the Obama administration to replace the chairman of the panel because of his ties to industry. John Deutch, a Massachusetts Institute of Technology professor who heads the advisory board, "must step down from the panel," said Dusty Horwitt, senior counsel and public lands analyst for the Environmental Working Group (EWG).

"During a stint on the board of Schlumberger Ltd., one of the world's three largest hydraulic fracturing companies, Deutch received about $563,000 in 2006 and 2007, according to Forbes online. He is now on the board of Cheniere Energy Inc., a Houston-based liquefied natural gas company that, according to Forbes, paid him about $882,000 from 2006 through 2009...The panel must be chaired by an impartial person and must also be expanded to include independent experts," Horwitt said.

In its FOIA filing, IER said "the administration, DOE, and, in particular, Secretary of Energy Steven Chu do not have a good track record of working to reduce energy prices. Quite the contrary. In 2008, Secretary Chu told the Wall Street Journal that 'somehow we have to figure out how to boost the price of gasoline to the levels in Europe.' This brings into question the purpose of DOE's fracking panel."

Also last week, EWG filed a FOIA request with DOE for information on its hydraulic fracturing panel, but IER noted that EWG's request was only concerned with one type of possible conflict of interest.

IER's FOIA request involves the conflicts of interest of all of the panel members. That includes the conflicts of the representatives of environmental groups and the possible communications between the Obama administration and their allied environmental groups in composing the panel.

"The United States has regained its position as the world's largest producer of natural gas in large part because of technologies such as hydraulic fracturing," said Daniel Simmons, director of regulatory and state affairs at IER. "It is important to consider the environmental and economic impacts of hydraulic fracturing in an open and honest manner. Attempts to preempt the states' regulation of hydraulic fracturing should be viewed with skepticism and so it is important to closely watch the actions of the Obama administration."

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