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Former Obama Energy Aide Named to Board of Fracked Gas Exports Giant Cheniere

11:14 am in Uncategorized by Steve Horn

Cross-Posted from DeSmogBlog

 

Face photo of Heather Zichal

Revolving door: An Obama energy aide may join a fracking giant.

Heather Zichal, former Obama White House Deputy Assistant to the President for Energy and Climate Change, may soon walk out of the government-industry revolving door to become a member of the board of directors for fracked gas exports giant Cheniere, who nominated her to serve on the board.

The announcement, made through Cheniere’s U.S. Securities and Exchange Commission Form 8-K and its Schedule 14A, comes just as a major class-action lawsuit was filed against the board of the company by stockholders.

In reaction to the lawsuit, Cheniere has delayed its annual meeting. At that meeting, the company’s stockholders will vote on the Zichal nomination.

The class-action lawsuit was filed by plaintiff and stockholder James B. Jones, who alleges the board gave stock awards to CEO Charif Souki in defiance of both a stockholders’ vote and the company’s by-laws.

Souki — a central character in Gregory Zuckerman‘s book The Frackers — became the highest paid CEO in the U.S. as a result of the maneuver, raking in $142 million in 2013, $133 million of which came from stock awards.

Zichal was nominated to join Cheniere’s audit committee of the board, and will be paid $180,000 per year for the gig if elected.

Among the audit dommittee duties: “Prepare and review the audit committee report for inclusion in the proxy statement for the company’s annual meeting of stockholders,” which is now set for September 11 after the push-back following the filing of the stockholder class-action lawsuit.

“The audit committee’s responsibility is oversight, and it recognizes that the company’s management is responsible for preparing the company’s financial statements and complying with applicable laws and regulations,” Cheniere’s audit committee charter further explains.

Cheniere (stock symbol LNG, shorthand for “liquefied natural gas”) is currently awaiting a final decision on Corpus Christi LNG, its proposed LNG exports facility. That terminal would send gas obtained predominantly via hydraulic fracturing (“fracking”) to the global market.

The company already received the first ever final approval to export fracked gas from the U.S. Federal Energy Regulatory Commission (FERC) in April 2012 for itsSabine Pass LNG export terminal, which is scheduled to be operational by late-2015.

The nature of what role Zichal will play on the board and audit committee of the first company to make a major bet on LNG exports remains unclear. But one thing remains clear: she joins a politically well-connected cadre of Cheniere board members.

Other prominent Cheniere board members include John Deutch, former head of the U.S. Central Intelligence Agency (CIA) and Vicky Bailey, a FERC commissioner, both of whom worked for the Clinton administration.

And given Zichal’s former role as liaison between the oil and gas industry at the White House and her track record serving in that role, it raises the question: was she working for the industry all along?

Zichal Oil and Gas Services

Zichal was best known to many as the main mediator between the oil and gas industry and the White House during her time working for the Obama administration. In fact, Cheniere cites that experience as the rationale for nominating her to serve on the board.

“Zichal has extensive knowledge of the domestic and global energy markets as well as the U.S. regulatory environment,” reads the “skills and qualifications” portion of her nomination announcement on Cheniere’s Schedule 14A. “She brings a diversified perspective about the energy industry to our board having served in significant government positions during her career.” 

As Obama’s “climate czar,” Zichal headed up the effort — mandated via an April 13, 2012 Obama Executive Order — to streamline regulatory oversight of the gas industry in the U.S.

Titled, “Supporting Safe and Responsible Development of Unconventional Domestic Natural Gas Resources,” the Executive Order signed in the form of a “Friday news dump” created “a high-level, interagency working group that will facilitate…domestic natural gas development” overseen by Zichal.

Obama signed the Executive Order after meeting with Jack Gerard, head of the American Petroleum Institute (API), and other industry leaders. According to EnergyWire, API requested the creation of that working group.

“We have called on the White House to rein in these uncoordinated activities to avoid unnecessary and overlapping federal regulatory efforts and are pleased to see forward progress,” Gerard told the Associated Press in response to a question about the order.

A month later on May 15, Zichal spoke to API about her efforts and those of the Obama administration on fracking.

“It’s hard to overstate how natural gas — and our ability to access more of it than ever — has become a game-changer and that’s why it’s been a fixture of the President’s ‘All of the Above’ energy strategy,” she told API.

Just think about it: a few years ago, the conventional wisdom was that the United States would need to build more terminals to import natural gas overseas. And today, America is the world’s leading producer of natural gas and we’re actually exploring opportunities for exports.

As a May 2012 Bloomberg article explained, among Zichal’s tasks was wooing API head Jack Gerard, which she appears to have succeeded at.

Similar to the interagency working group created by the April 13, 2012, Executive Order, Zichal also oversaw the Bakken Federal Executives Group, which was created through the signing of Executive Order 13604 on March 22, 2012. That order was part of the same package that called for expedited building of the southern leg of the Keystone XL tar sands pipeline.

Executive Order 13604 created an interagency steering committee with a goal “to significantly reduce the aggregate time required to make federal permitting and review decisions on infrastructure projects while improving outcomes for communities and the environment.”

Zichal was also instrumental in legalizing the American Legislative Exchange Council‘s (ALEC) approach for fracking chemical fluid disclosure on U.S. public lands, overseen by the U.S. Department of Interior’s Bureau of Land Management.

“Zichal met more than 20 times in 2012 with industry groups and company executives lobbying on the proposed rule,” reported EnergyWire. “Among them were the American Petroleum Institute (API) and the Independent Petroleum Association of America (IPAA), along with BP America Inc., Devon Energy Corp. and Exxon Mobil Corp.”

Beyond overseeing streamlined permitting for fracking sites on both public and private lands, Zichal also oversaw the White House file for the Pavillion, Wyo., fracking groundwater contamination study.

Conducted by the U.S. Environmental Protection Agency (EPA), many believe the White House — counseled by Zichal — made a political calculus to cancel the ongoing investigation, the first of three major major studies on the subject shutdown by the EPA.

“Deeply Embedded”

The Zichal nomination is taking place alongside the deployment of the Obama Administration regulating coal-fired power plants through the U.S. Environmental Protection Agency. The rule is a de facto endorsement of fracking and gas-fired power plants as part of the “all of the above” energy policy.

As the Zichal case makes clear with regards to climate change-causing fracked gas, LNG exports flow through the revolving door in Washington, DC, and beyond.

“The fact that one of Obama’s top climate advisors is now helping expand fossil fuel use raises questions about how deeply embedded oil and gas industry interests are in the administration,” Jesse Coleman, a researcher for Greenpeace USA told DeSmogBlog.

Follow the Money: Three Energy Export Congressional Hearings, Climate Undiscussed

9:33 am in Uncategorized by Steve Horn

Cross-Posted from DeSmogBlog

A joint meeting of the US Congress

Congress keeps talking, but not about climate change.

In light of ongoing geopolitical tensions in Russia, Ukraine and hotly contested Crimea, three (yes, three!) U.S.Congressional Committees held hearings this week on the U.S. using its newfangled oil and gas bounty as a blunt tool to fend off Russian dominance of the global gas market.

Though 14 combined witnesses testified in front of the U.S. Senate Committee on Energy and Natural Resources, the U.S. House Energy and Commerce Committee’s Subcommittee on Energy and Power and U.S. Senate Committee on Foreign Relations, not a single environmental voice received an invitation. Climate change and environmental concerns were only voiced by two witnesses.

Using the ongoing regional tumult as a rationale to discuss exports of U.S. oil and gas obtained mainly via hydraulic fracturing (“fracking”), the lack of discussion on climate change doesn’t mean the issue isn’t important to national security types.

Indeed, the Pentagon’s recently published Quadrennial Defense Review coins climate change a “threat force multiplier” that could lead to resource scarcity and resource wars. Though directly related to rampant resource extraction and global oil and gas marketing, with fracking’s accompanying climate change and ecological impacts, “threat force multiplication” impacts of climate change went undiscussed.

With another LNG (liquefied natural gas) export terminal approved by the U.S.Department of Energy (DOE) in Coos Bay, Ore., to non-Free Trade Agreement countries on March 24 (the seventh so far, with two dozen still pending), the heat is on to export U.S. fracked oil and gas to the global market.

So, why wasn’t the LNG climate trump card discussed in a loud and clear way? Well, just consider the source: ten of the witnesses had ties in one way or another to the oil and gas industry.

Senate Committee on Energy and Natural Resources

Headed by recently named chair U.S. Sen. Mary Landrieu (D-LA), the March 25 U.S. Senate Energy and Natural Resources Committee hearing featured four of five witnesses with industry ties, all of which went undisclosed. It was titled, “Importing Energy, Exporting Jobs. Can it be Reversed?”

“The last thing Putin and his cronies wants (sic) is competition from the United States of America in the energy race,” Landrieu declared in her opening statement. “Tyrants and dictators throughout history have had many reasons to fear revolutions, and this U.S. energy revolution is one they should all keep their eyes on!” More on that later.

Given the enthusiasim conveyed in her statement, perhaps it’s unsurprising Landrieu — whose state of Louisiana is an oil and gas industry hub like few others — also has close industry ties.

Up for re-election in 2014, Landrieu has already taken close to half a million dollars from the industry to the chagrin of environmentalistsCommittee Ranking Member Lisa Murkowski (R-AK) has taken $40,600 during this campaign cycle, as well, even though she isn’t up for re-election until 2016.

Daniel Adamson, senior counsel for the committee, worked as a lobbyist fornatural gas utility company Avista Corporation from 2004-2010.

And now for the witnesses:

Adam Sieminski: Before taking the seat as head of the U.S. Energy Information Administration (EIA) in 2012, Sieminski worked in the fossil fuel finance sector.

“From 2005 until March 2012, he was the chief energy economist for Deutsche Bank, working with the bank’s global research and trading units,” explains his EIAbiography. “From 1998 to 2005, he served as the director and energy strategist for Deutsche Bank’s global oil and gas equity team.”

- W. David Montgomery: Testifying at both this committee hearing and the U.S.House Energy and Commerce Committee’s Subcommittee on Energy and Power hearing, Montgomery is the senior vice president of NERA (National Economic Research Associates) Economic Consulting.

NERA penned a study on behalf of the DOE published in December 2012concluding LNG exports will be economically beneficial to the U.S. It recently published an updated follow-up study funded by Cheniere — the first company to receive a permit to export fracked U.S. gas in Sabine Pass, La., in 2012 — concluding “unlimited LNG exports benefit U.S.

Author of a 2009 paper titled, “Organized Hypocrisy as a Tool of Climate Diplomacy,” commissioned by the fossil fuel funded American Enterprise Institute, Montgomery is not a climate change denier. He just doesn’t think anything should be done to tackle climate change.

“Trying to bribe or coerce unwilling countries into curtailing their GHG emissions threatens to cause more harm than good,” he wrote in the American Enterprise Institute paper.

Montgomery sang a similar tune during a March 2011 U.S. House Committee on Science, Space and Technology hearing:

Read the rest of this entry →

Former Chesapeake Energy CEO Aubrey McClendon Buys Fracking Wells In Ohio’s Utica Shale

9:41 am in Uncategorized by Steve Horn

Cross-Posted from DeSmogBlog

Former Chesapeake Energy CEO and Founder Aubrey McClendon is back in the hydraulic fracturing (“fracking”) game in Ohio’s Utica Shale in a big way, receiving a permit to frack five wells from the Ohio Department of Natural Resources on November 26.

“The Ohio Department of Natural Resources awarded McClendon’s new company, American Energy Utica LLC, five horizontal well permits Nov. 26 that allows oil and gas exploration on the Jones property in Nottingham Township, Harrison County,” a December 6 article appearing in The Business Journal explained. “In October, American Energy Utica announced it has raised $1.7 billion in capital to secure new leases in the Utica shale play.”

McClendon is the former CEO of fracking giant Chesapeake Energy and now the owner of American Energy Partners, whose office is located less than a mile away from Chesapeake’s corporate headquarters.

The $1.7 billion McClendon has received in capital investments for the purchase of 110,000 acres worth of Utica Shale land came from the Energy & Minerals GroupFirst Reserve CorporationBlackRock Inc. and Magnetar Capital.

McClendon — a central figure in Gregory Zuckerman’s recent book “The Frackers” — is currently under investigation by the U.S. Securities and Exchange Commission. He left Chesapeake in January 2013 following a shareholder revolt over controversial business practices.

In departing, he was given a $35 million severance package, access to the company’s private jets through 2016 and a 2.5% stake in every well Chesapeake fracks through June 2014 as part of the Founder’s Well Participation Program.

Little discussed beyond the business press, McClendon has teamed up with a prominent business partner for his new start-up: former ExxonMobil CEO Lee Raymond.

Power Mapping McClendon’s New Venture

“[Lee] Raymond has emerged as a director alongside Mr. McClendon in American Energy Ohio Holdings LLC… according to [an SEC] regulatory filing,” The Wall Street Journal reported in October.

The former Exxon CEO’s brother son John Raymond is the Managing Partner, Chief Financial Officer, and Chief Executive Officer of Minerals & Energy Group, currently the largest capital investor in McClendon’s start-up venture. He is also a partner McClendon’s new venture. Ryan Turner, Chesapeake’s Stock Plan Manager has also joined the team as a partner.

“Jefferies Group LLC gave financial advice to American Energy” for the deal,according to Bloomberg — and is listed as such on American Energy Ohio Holdings LLC’s SEC Form D.

Ralph Eads III — McClendon’s fraternity brother at Duke University — serves as Global Head of Energy Investment Banking at Jefferies Group, Inc.

“Mr. Eads…is a prince of this world,” the New York Times reported in October 2012. ”His financial innovations helped feed the gas drilling boom, and he has participated in $159 billion worth of oil and gas deals since 2007.”

Eads maintained tight financial ties with McClendon when he was at the helm of Chesapeake Energy.

High Stakes Game

In teaming up with Lee Raymond, the former CEO of ExxonMobil — notorious for its role in funding climate change denial — and his brother John, McClendon has shown he is back in Ohio ready to play ball.

But a recent Environmental Integrity Project report indicates the life-cycle climate change impacts of fracking are more severe than previously thought.

With the U.S. Navy predicting an ice-free Arctic summer by 2016 due to climate change, it’s a ball game with undeniably high stakes.