Oct 26 2011

Shale Gas PR Confab

Industry Losing Message War on Shale Gas – Meet in Houston Stat!

PR Strategy:  “Minimize & Spin”

Advice:  That’s the Problem Not the Solution;

More of Same Behavior Won’t Build Public Credibility

It is an open secret:  The shale gas industry is in deep tapioca.  It is losing support in the important court of public opinion. Not just in the USA, but elsewhere as well.

France banned fracing; and challenges are rising across the world.  The loss of public support  is acknowledged in conversations with legislators and gas industry executives.  Nowadays, the shale gas industry is compared to the tobacco industry, the asbestos industry and the nuclear industry.

That might be a trifecta record for a single industry brand.

Industry execs speak about it publicly.  Tisha Conoly-Schuller of the Colorado Oil & Gas Association repeatedly says, “The public does not believe us …. The favorable perception of the oil and gas industry polls at seven percent.”
Reference link:  http://www.naturalgaswatch.org/?p=939

She raises the issue of whether the industry needs a new message and/or a new messenger.

As if in response, PR managers from the shale gas industry are gathering in Houston on October 31-November 1.  In addition to Conoly-Schuller, the PR folks will come from leading energy companies such as Chesapeake Energy, Anadarko Petroleum, Range Resources, EQT, Cabot Oil & Gas, Norse Energy, and Williams.

Conference & Definition of Insanity

If the conference program is an indicator, change will be a heavy lift for this industry.1

Recall the adage about the definition of insanity – doing the same thing over again and expecting different results.  Throughout the program we get the energy industry’s apparent wisdom like this description from Linda Rozett of the American Petroleum Institute (API) on Day 2 (emphasis added):  “Evaluating how new media can be used to get ahead of a story and develop immediate proactive responses to minimize and spin negative press.”

Or this from George Stark of Cabot Oil and Gas (emphasis added):  “… prepare spokespeople in putting out the most positive spin on an event [i.e., crisis] whilst maintaining consistency and accuracy.”  Meanwhilst (couldn’t resist), how about actually practicing the “transparency, accountability and integrity” standards touted on so many energy company websites?

What If Industry Delivered on ‘Transparency, Accountability’?

What if the shale gas industry did something really asymmetrical – what if it did what it says it does?  Nobody would expect that, would they?

Here is how it could work.  Most, if not all, of the companies listed in the program are members of the Marcellus Shale Coalition.  This industry group includes 40 U.S. and foreign gas and oil companies, and is headquartered outside of Pittsburgh.

Shale Gas’ 7 Guiding Principles

In October of last year, the industry coalition introduced its 7 Guiding Principles to much fanfare, including a media tour with Tom Ridge, former governor of Pennsylvania and former head of Homeland Security.  The second Guiding Principle says:  “We implement state-of-the-art environmental protection across our operations.”  Reference link:  http://marcelluscoalition.org/about/guiding-principles/

At the risk of sounding like a high school English teacher, we would suggest to Kathryn Klaber, president of the Marcellus Shale Coalition:

  • “We implement” is present tense – it does not say ‘we hope to implement’;
  • “State-of-the-art environmental protection” doesn’t leave much room for debate about whether it is the best available practice/technology;
  • “Across our operations” means everywhere – it doesn’t say ‘across some of our operations.’

Initially, I was impressed with the second Guiding Principle, until I asked the coalition what it means they actually do at drill sites.  My specific question is:  Does it mean the shale gas industry implements the following at all drill sites:

  1. Use a closed-loop system to eliminate plastic-lined holding pits, trenches or ponds for liquid drilling waste?
  2. Install vapor-recovery units on condensate tanks to reduce or eliminate emissions of volatile organic compounds?
  3. Use zero-emission glycol dehydration units?
  4. Use pneumatic no-bleed valves to prevent fugitive emissions (which can’t be seen with the naked eye, but which can be seen with an infrared camera)?
  5. Recycle flowback frac water to reduce the amount of freshwater used in hydraulic fracturing?

I tried for 3-4 months to get a response to this question via phone and e-mail.   My repeated inquiries were ignored.  What message does that send about an industry that claims, as Matt Pitzarella of Range Resources does in his Day One spiel about “understanding the need for being less withholding and more transparent….”

Given the industry’s nonresponse to its own guiding principles, this former gas leaseholder (who went on to fight eminent domain launched by Spectra Energy and backed by the Federal Energy Regulatory Commission) responded with an op-ed piece published in the Pittsburgh Post-Gazette (since the coalition is headquartered nearby).

It challenges whether the industry’s guiding principles are really guiding platitudes.  Reference link: http://www.post-gazette.com/pg/11041/1124307-109.stm

Protecting Status Quo = Losing Strategy

It is not in the industry’s self interest to behave the way it does. And the industry’s behavior is certainly not in the public interest.   That’s why the industry will struggle in Houston “To Overcome Public Concern Over Hydraulic Fracturing” (as it says in the program).

Instead of trying to salvage the status quo, what if the leading communicators for the industry could include the following among their “deliverables” at the conference:

  1. Write a clear and direct response to the question about what the Marcellus Shale Coalition’s second guiding principle means these companies do at every drill site – and avoid “positive spin.”  (How many communicators contributed to the writing of the guiding principles without a thought to the possibility that they might draw a ‘grown up’ question?  FD Communications does much of the PR/public affairs for the industry coalition.  Is there a PR turf ownership here – don’t tell us, we’re the smartest guys in the room?)
  2. Write a clear and direct response for Range Resources to explain how in the world the “king of the Marcellus” (as it has been called) allegedly failed to read its own production volumes; and sent letters to its gas leaseholders in Western Pennsylvania claiming that royalties were overpaid for “several production periods.”  As a consequence, it would deduct the alleged overpayment from future royalty checks.  So in one fell swoop, the ‘White Hat’ guys at Range Resources (as they like to style themselves) admit they cannot do arithmetic, and fail to accurately manage leaseholder and company finances in a task that is fundamental to the industry.  Why should leaseholders, legislators and the public have confidence in performance like this?  Reference link (including copy of letter to leaseholders):  ‘White Hat’ Gas Guyshttp://www.spectraenergywatch.com/blog/?p=742
  3. Write a clear and direct response explaining why Houston-based Spectra Energy failed to keep repeated promises to furnish gas chromatography test results to stakeholders James and Karla Levy.  The Levy’s live near Spectra Energy’s huge compressor and underground natural gas storage facility (with 13 injection/withdrawal wells) called Steckman Ridge in Bedford County, PA.  The Levy’s water well cover blew off four times due to natural gas pressure, including methane.  There have been performance problems at the heavy industrial facility since it began operations in 2009.  In this incident, Spectra Energy conducted a gas chromatography test and is said to have determined that the natural gas was not from the Steckman Ridge storage reservoir.  Despite that, the company installed a methane vent or separator on the Levy’s property.  Why not share the promised test results to demonstrate integrity, transparency and accountability?  Unless the actual test results raise questions.  Reference link:  Citizen Regulators 4http://www.spectraenergywatch.com/blog/?p=1362

Status Quo is Problem, Not Solution

More status quo isn’t going to help the shale gas industry’s credibility problem.  This industry is in deep tapioca for one reason – what it has done  to itself by its own performance.  It is not a good neighbor (e.g., does not deliver data/test results it promises property owners).  It does not do what it says it does (can’t explain its own guiding principles).  It is not trustworthy and it is not even competent (e.g., can’t read its own production volumes).  This isn’t about “minimize and spin,” bob and weave, and new media.  That’s the status quo.

Recall the sage advice of Andy Grove, legendary corporate leader and co-founder of Intel:  Success contains the seeds of its own destruction.  We are witnessing the early tipping point of the shale gas industry.  It has sown the seeds of its own downfall through its performance – and it still doesn’t get it.

Spin, bob, weave is not the solution.  It’s the problem.  Get it? 

Links & Resources

1 Media & Stakeholder Relations Hydraulic Fracturing Initiative 2011 – Website link:  http://www.media-stakeholder-relations-hydraulic-fracturing.com/   Downloadable pdf file of the program:   sgmr_brochure_6689

 

NOTE:  This article is cross-posted on the Accountability Central website:  http://www.accountability-central.com/voices-featured-commentators-and-bloggers/mike-benard-columns/   Accountability Central is part of the Governance & Accountability Institute, Inc.

One Response

  1. Jay Says:

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    Deborah Rogers Visits Canton to Speak on Economic of Shale Gas Drilling
    Shale Gas Panacea or Shell Game?

    POTSDAM, NY (November 10, 2011)– The St. Lawrence County League of Women Voters and Clarkson University announce Deborah Rogers, economic natural gas expert, as speaker for the community symposium on Tuesday, November 15, 2011. This public event invites everyone to join the discussion where the focus will be on the questions and concerns behind the economics of shale gas drilling. Ms. Rogers got involved in natural gas when she learned that an energy company planned 12 high impact wells next to her property, Deborah’s Farmstead, a nationally recognized artisanal cheese-making dairy.

    As the invited speaker, Deborah will speak on the inconsistences in the economics of shale gas drilling at 7:30 p.m. in the Barben Room, Cheel Arena at Clarkson University. The public will hear directly from Deborah Rogers, experienced financial analyst. This event is sponsored by the St. Lawrence County League of Women Voters, along with community partners: AAUW-St. Lawrence County Branch, the Center for Excellence in Communication and the Institute for a Sustainable Environment at Clarkson University, the Sustainable Living Project, SUNY Potsdam’s Environmental Studies Program and Middle Ground, the SUNY Potsdam environmental club and the Environment Studies Department and the Philosophy Department at St. Lawrence University.

    Kathleen Stein, Secretary and Acting Voter Services Chair for the St. Lawrence County League of Women Voters said, “The League is excited to announce Deborah Rogers’ presentation in Potsdam. It will give voters a chance to become more educated on the subject of hydrofracking, and encourage voters to be informed and ask hard questions. It’s what we’re all about.”
    In September 2011, New York State issued a second draft generic environmental impact statement, as well as proposed regulations to guide hydrofracking drilling in New York. The state of New York is proposing to protect the water supply of its residents from natural gas drilling. More recently the Department of Environmental Conservation made the decision to recommend a ban of hydrofracking in the City’s upstate watersheds and a process to establish rules that will allow drilling elsewhere in a rigorously protective and environmentally responsible way.
    “There appears to be a great deal of confusion regarding production vs. reserves in regards to shale gas drilling. I think this is the perfect time for New York citizens to address long unanswered question involving the true economic potential of natural gas,” said Deborah Rogers. The comment period is still open, so New Yorkers need to inform themselves on this issue and make their views known to the Department of Environmental Conservation.
    As the founder of the Energy Policy Forum Deborah is dedicated to the questioning, discussing and educating others in regards to information surrounding the complex problems inherent in shale gas. The pre-eminent web site and blog for discussing the complex problems inherent in shale gas is a comprehensive meeting ground where geologists and experts from different fields (science, environmental and finance/economics) can educate each other about the economic discrepancies and environmental dangers that surround shale gas drilling.

    Since 2009 Ms. Rogers has spoken publicly on the topics of shale gas drilling. Given her financial background, she examined the financial records of various public companies, which showed some interesting discrepancies in their public reporting. Currently she is giving presentations on shale gas economics around the country, and was recently featured prominently in The New York Times. She has also been invited to Washington, DC where she submits research and gives expert opinions to the US government on the issues of economics and shale gas.

    Deborah Rogers by appointment has been selected in 2011 to serve on the Texas Commission on Environmental Quality (TCEQ) to a task force reviewing placement of air monitors in the Barnett Shale region in light of air quality concerns brought about by the natural gas operations in North Texas. She also joined a regional steering committee for the Oil and Gas Accountability Project (OGAP) in 2011 with responsibility for economic questions.
    ###

    ABOUT ENERGY POLICY FORUM
    Launched by public policy advocate Deborah Rogers, Energy Policy Forum (EPF) is the pre-eminent web site and blog for discussing the complex problems inherent in shale gas. EPF is a comprehensive online meeting ground where geologists and experts from different fields (science, environmental and finance/economics) can educate each other about the economic questions and potential environmental impacts that surround shale gas drilling. The U.S. finds itself at an energy crossroad today as alternative power sources like wind and solar gain public acceptance and natural gas is regarded as the “bridge fuel.” EPF is unique in that it is not dedicated to the interests of any one industry. Instead, it’s a site devoted to promoting meaningful dialogue on all emerging energy issues, particularly shale gas. EPF is an essential public forum for uncovering the facts, identifying the problems and ultimately, finding solutions.

    All information expressed herein does not necessarily reflect the views of any entity other than the author’s.

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