Battleground for Anti-Oil/Gas Efforts Increasingly Local

January 2015, Vol. 242, No. 1

Richard Nemec, Contributing Editor

As the 2014 mid-term elections faded from view, one cogent footnote of the political power change was the significant shift in the money and manner of spending it in the national environmental movement. Even some of their harshest critics were noting a higher level of professionalism and use of legitimate spokespersons as they attempted to spend their growing cash infusion more strategically.

Billionaire Tom Steyer, head of the NextGeneration climate change political action committee, reportedly backed at least one candidate who supports TransCanada’s XL oil pipeline (and lost to a much more conservative opponent) and has apparently tempered his dogmatic approaches of the past, saying he supported some forms of hydraulic fracturing (fracking). His strategy in some areas like his home state of California seems to be centered on putting less emphasis on statewide legislation and ballot initiatives in favor of getting down and dirty in the trenches at the local level.

As the industry in Colorado found out in recent years and California’s oil and natural gas operators have begun to discover – activist groups seeking to slow or eliminate new energy development increasingly are focusing on local elected officials and their constituents. In states like Colorado and California the oil and gas industry has whipped up some pretty aggressive programs to push back and seek to replace campaign rhetoric with facts. The sophistication of the opposition is not to be taken lightly, according to energy industry public policy strategists.

Bob Poole, with tiny independent Santa Maria Energy in north Santa Barbara County, CA, is right in the midst of the battle for hearts and minds as he calls it (WHAM, “winning hearts and minds”). He has helped his company get a new drilling project approved by local authorities despite the strong anti-oil sentiment in Santa Barbara County as evidenced by a countywide ballot initiative in November that sought to effectively ban new drilling in the county. It eventually was soundly defeated.

In Colorado, the industry, with help from Gov. John Hickenlooper, businesses and state officials beat back a push for a statewide ballot initiative in 2014 that was attempting to force more local control over oil and gas drilling activity. It came in the midst of a two-year push at the local level that resulted in local bans or moratoriums on fracking being passed in five communities, although the courts subsequently ruled most of them were unconstitutional.

Industry-backed citizen groups, Coloradans for Responsible Energy Development (CRED) and Protecting Colorado’s Environment, Economy and Energy Independence (Protect Colorado), became an effective counter to sophisticated and nationally supported anti-industry groups, similar to the ones that can be found in all the local population areas of California.

Under WHAM, Poole said outreach was initiated by Santa Maria Energy on both an individual and coalition basis. The objective? “To simply start a conversation on energy with people,” he said. “We were convinced that the conversation that was going on, and still is to a certain extent, is a dysfunctional one; it is not based on facts.”

The facts were not part of the conversation for most policymakers, he added. WHAM set out with what was labeled “A Balanced Conversation about Energy.” For example, people were ignorant of the fact that the state imports 1.1 to 1.3 million barrels of oil daily. “We use between 1.8 million and 2 million b/d – just in California,” said Poole, noting those facts grab people’s attention.

Poole asks supporters of measures to shut down oil production in Santa Barbara County if they are happy with importing even more foreign oil into the state. He continues his education campaign, employing social media and more traditional television ads that include real people working in the industry to show they are neighbors to most of the opposition groups.

In some venues on a national and state level, public relations professionals are advocating hardball tactics by the industry that are causing some leaders in oil and gas to pause. They want to push back and win those hearts and minds, but they don’t want to play dirty. One Washington, D.C.-based PR pro exhorted oil and gas executives at the Western Energy Alliance’s 2014 annual meeting in Colorado to help fund what he called “an endless war.”

Richard Berman, the Washington, D.C.-based communications consultant, sought to raise money last year from industry CEOs at the Colorado meeting for his campaign against what he called “big green radicals.” An anonymous executive at that session taped Berman’s provocative remarks and turned them over to The New York Times, causing both the industry and general public to raise doubts about the tactics even if they support the end-game against groups bent on shutting down oil and gas activity.

In another industry meeting in late 2014 in California, the communications executive for the Western States Petroleum Association (WSPA), Tupper Hull, told operators gathered in Bakersfield, CA that today represents the Dickensian “best of times, worst of times.”

Hull’s premise is that while a shale bonanza from unconventional plays has placed the United States on the once unthinkable path toward energy independence, it has simultaneously spawned ever-increasing organized opposition on environmental, public health and climate change grounds.

“We are certainly facing in California and other states as well probably the most vigorous, organized and well-funded opposition we have ever seen to the fundamental process of producing, refining and retailing petroleum products,” Hull told his audience.

“Regarding the question about fracking – why we are having this debate and why it is so intense – the reality is we came to this fight late [in California]. There were huge controversies regarding the film “Gasland” that were not about California, but natural gas production in the Marcellus Shale in Pennsylvania.”

Hull contends the core arguments and long-term strategies of opposition groups are not focused on fracking per se, but rather the broader question about what the U.S. energy future is going to look like, and as he said, “how we are going to power this nation and our economy.” Fracking is just a “proxy,” in Hull’s opinion, for that much larger, fundamental battle.

So far the political outcomes keep turning up split decisions as the commitment and aggressiveness of oil and gas opponents does not seem to wane, according to industry and activist group sources. While the infamous Measure P in Santa Barbara County was soundly defeated (63-37%), similar measures in two smaller California counties with little or no oil production passed overwhelmingly (Measure J in San Benito County and Measure S in Mendocino County).

A Measure S proponent and former Wall Street trader turned organic farmer, Jamie Lee, told local news media last November that he was “happy, but cautious, too,” noting that the oil industry pumped about $7 million into defeating other California fracking bans. “We’re poking a bear in the eye.”

Measure S faced no formal opposition, relative to the San Benito and Santa Barbara measures. Oil extraction has been occurring in Santa Barbara and San Benito counties for decades while producers have largely bypassed Mendocino County, which had no commercial oil or gas wells listed in 2013 state records.

Activists in San Benito County point to various bans in cities and counties in Colorado and New York, and use that as fodder for their pre-emptive strike against future drilling in their locale. They are concerned about groundwater contamination and land impacts. The little production ongoing does not involve any fracking, but leaders in the local San Benito Rising activist group underscore that their ballot drive was to prevent any frack jobs in their community, which they envision as having huge untapped oil potential, although that is yet to be proved.

As the industry gears up to meet this challenge, proponents rely on science and common sense that is absent in much of the more emotional rhetoric from the anti-energy development side. The Center for Biological Diversity, based in San Francisco, and the well-established Natural Resources Defense Council (NRDC), while historically different in approach, show continuity on the issue of hydraulic fracturing.

The San Francisco-based center touts itself as a “trailblazer” in what it describes on its website as the movement to stop “dangerous fracking” in California. It joined the Sierra Club in 2011 in suing the federal Bureau of Land Management to prevent hydraulic fracturing on federal lands.

Similarly, the NRDC on its website raises concerns about the nationwide push for gas production, deploying fracking in areas that previously were not part of the nation’s oil patch. “NRDC opposes expanded fracking until effective safeguards are in place.” In California, NRDC and other groups supported SB 4, which has created what state officials and industry tout as the toughest rules in the nation to govern the practice of hydraulic fracturing and other well-stimulation technologies.

Nationally, however, the activists against oil and gas development went into a soul-searching mode, following the latest elections. Big funders and activists like Steyer and his NextGen organization lost more of the electoral battles than they won last November, and even within their own ranks, activists such as Josh Fried, a vice president at Third Way, told the Los Angeles Times in the immediate aftermath the pro-climate change, anti-oil/gas forces need to come up with a new strategy. “Candidate positions on climate change do not move an overwhelming majority of voters to pull the lever for or against them,” Fried was quoted as saying.

Steyer’s political strategist at NextGen nevertheless said the strategy is a long-term effort, and they intend to be persistent in carrying it out. Early in 2014 at a California Democratic Party convention, Steyer announced he would be pushing for an excise tax on oil production in the state in 2015, and a 2016 ballot measure requiring a two-thirds vote locally to allow any fracking.

“He’s identified this industry, from which he made his fortune, and now wants to include greater regulation,” said Sabrina Lockhart, communications director for Californians for Energy Independence. However, Steyer hasn’t spoken about SB 4 specifically, and the industry associations in California are readying for a fight over the excise tax, which has been raised yearly for over a decade in the state.

In Colorado, industry-supportive groups worked through November’s mid-term elections with an eye on 2016. According to the group Protecting Colorado’s Environment, Economy and Energy Independence, indications are that at least one anti-oil/gas ballot measure already is in the hopper in Colorado for 2016.

“It’s the Public Trust Doctrine, filed by a couple of avid fracking opponents,” said Karen Crummy, communications director for Protect. “It was in play for the [2014] midterm ballot, filed in court at the last minute, but was tossed out for procedural issues. It didn’t go forward. But it was filed again in late August.
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“It tries to take local control to basically the lowest level you can get, allowing any individual to sue,” Crummy said. “It basically allows anyone to sue when they feel their air, water or anything is being threatened.”

Crummy watched in 2014 how Steyer’s NextGen worked the populous and issues in Colorado, targeting the state. “His disciples are everywhere, right now,” Crummy observed just before the mid-term elections. They ostensibly were campaigning on climate change.

“What they are really doing is creating a mobilization effort for the 2016 elections, going into college towns with the idea of building that base for two years from now. There are a lot of things going on aimed at building that groundwork.”

Back in California in the fall at the energy summit in Bakersfield, oil and gas company representatives outlined details of grassroots programs they are involved in to win the public’s “hearts and minds” that Santa Maria Energy learned was so crucial in defeating the Santa Barbara County ballot initiative. It comes down to education in a broad-brush sense, offering what the small independent E&P has labeled “Petroleum 101,” a 45-minute spiel on “a very basic understanding of what we do to get the oil out of the ground and how we do it,” Poole said.

“We talk about the geology, the technology and the regulations involved.” Poole said the basic classroom-style information pitch is often accompanied by tours of the oilfield. It is hands-on and personal, something also advocated by another small independent, Signal Hill Petroleum, in the Long Beach area of Southern California.

Signal Hill, the oil producer, and Signal Hill, the city of 11,500 residents, completely surrounded by Long Beach, operates an ongoing “meet your neighbors and stay in touch” campaign, according to the E&P company’s Executive Vice President David Slater.

“We’re very involved in community investment, and look for opportunities that are meaningful and have a direct impact on our local community, and with that, we think we need to touch and feel the people being affected,” Slater said.

On the larger issues of climate change and environmental quality that the environmental groups, bankrolled by deep pockets from activist donors like Steyer are emphasizing, the industry “has a great story to tell, but we have still been beaten hands down along those lines,” said Patrick Plugge, an executive with E&B Natural Resources operations in California. Plugge is currently trying to convince a tony seaside suburb along the Pacific Coast to approve an onshore-to-offshore drilling operation.

If it’s now a “war” of words and ideas, the industry has begun to upgrade its arsenal of weapons, judging from what the California and Colorado operators are now doing. They are using social media more, getting aggressive in their local hiring programs, and helping beef up the petroleum engineering programs in local colleges.

Demographics are becoming more of a driver in company plans, according to Santa Maria Energy’s Poole. Even among the majors in the industry, day-to-day operations now include addressing community concerns. Industry leaders can thank the heightened anti-oil and gas efforts that have arisen with the shale boom for the widespread wake-up call.

“It is easy to get locked into the day-to-day operations of the business and not look up until a big problem is facing you,” Slater told a group of California operators. “It has to be an ongoing effort, and how we collectively coordinate to the benefit of our industry and our communities in message, outreach and investment is the critical question.”

The answer is still unfolding as the political winds blow in various directions.

Richard Nemec is Los Angeles-based West Coast Correspondent for P&GJ. He can be reached at: rnemec@ca.rr.com.

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