Into hostile territory
Recordings: Companies endorse military tactics to counter the anti-drilling ‘insurgency’
Denton Record-Chronicle | Peggy Heinkel-Wolfe and Lowell Brown
January 7, 2012
Read this article on the publishing site
FLOWER MOUND — In the months before, it was just Tammi Vajda and several others who came to Town Council meetings.
They were outnumbered by other Flower Mound residents who favored natural gas drilling in town. They called Vajda names.
“My husband asked me why I did this,” Vajda said. After one brutal meeting in late 2009 — when some mineral owners called her a Zionist and a tree-hugging liberal — he all but stopped coming to meetings with her.
That night, in January 2010, the tables were turning.
More than 600 people filled the council chambers. The overflow room was standing room only. People stood in the foyer and the hallways. Crowds of people stood in the parking lot, waiting to get inside for their chance to speak.
“It was a watershed moment,” Vajda said.
Now residents were angry that the Town Council had rejected a moratorium on new drilling permits. Now Vajda sat in the employee break room with some of the same people who had called her names.
Now that they were outnumbered, she wanted to ask them how it felt. But she didn’t.
Vajda and her friends took a page from the same playbook that the gas industry had used to get so many people to sign leases. In late 2009, they printed out fliers and went door to door, explaining the potential impacts of shale gas production.
They convinced some people not to sign. From others who had already leased, Vajda learned that land men had enlisted at least one neighbor to cash in the trust he had in the neighborhood to help make deals. Then he moved away, Vajda said.
Vajda and the others had tailored their message. Men wanted to talk about money. How much would leasing really bring? Would it affect their home value? Women listened to concerns about health and safety.
One woman called Vajda after finding the flier on her front door. They knew each other through their daughters’ school. Vajda spent a long time listening to the woman’s doubts. She couldn’t believe that natural gas drilling and production would be allowed anywhere in Flower Mound. She would not be convinced that it was going on right under her nose, Vajda said.
Vajda sent her links to various pages on the town’s website and blogs about gas production in Flower Mound.
“This wasn’t something that was written about in the mayor’s monthly message,” Vajda said.
Vajda was not surprised at the news that some of the shale gas companies had promoted military-style psychological operations in communities where they worked. She and other Barnett Shale area residents have seen the tactics that blur the line between information and influence in local governance.
During a November conference for public relations professionals in the shale gas industry in Houston, some practitioners encouraged their peers to adopt counterinsurgency tactics. An employee of an environmental group registered for and attended the event, and later released her personal recordings after becoming concerned about what she heard.
One company representative told peers to motivate people to come out on their behalf and give them “language that they can use to engage their neighbors.” He also told peers that his company found psy-ops veterans — soldiers who served in the Afghanistan and Iraq wars and trained in psychological techniques — were well-suited to “help folks develop local ordinances.”
Another representative called shale gas critics an “insurgency.” He told peers to download and follow The U.S. Army and the U.S. Marine Corps’Counterinsurgency Field Manual and Rumsfeld’s Rules, a document filled with quotes from the former U.S. secretary of defense.
Vajda and others in Texas have seen the results that may have come from the tactics. When neighbor is pitted against neighbor, it manifests not only in heated shouting matches but also in a long-simmering distrust. As homeowners grow fearful of diminishing values, they try to hang on to their property rights, only to see the mineral rights taken away through a twist of state law. Local governance battles go in remission only to re-emerge with the next concession the industry needs to stay profitable.
Market prices for natural gas have tumbled since summer, hovering around $3 per thousand cubic feet, or MCF. Shale gas producers have often said production becomes uneconomical when gas goes below $5 to $7 per MCF. That $5 to $7 level has not been seen in years and is not anticipated in the near future. The Energy Information Administration projects an average of $4.13 per MCF in 2012.
In 2010, the nation used about 23 trillion cubic feet of natural gas for cooking, heating and generating electricity.
About 20 percent of the state’s 3,110 billion cubic feet of shale gas produced in 2009 came from the core counties of the Barnett Shale in North Central Texas — Denton, Johnson, Tarrant and Wise — according to the U.S. Energy Information Administration.
By 2030, the nation could get half its natural gas from shale, according to analysts at the James A. Baker III Institute for Public Policy at Rice University in Houston. Operators are drilling in the Eagle Ford Shale in South Texas, in the Haynesville Shale of East Texas and Louisiana, and in shale formations in more than 30 other states.
Some producers are gearing up to export natural gas to China, India and elsewhere.
Politics without principles
Martin Garza stepped to the microphone inside a crowded civic center and cleared his throat.
For more than an hour, the oil and gas industry attorney had listened to Denton residents worried about how gas drilling affected the air they breathe, the water they drink and the value of their homes and land. The city’s gas drilling task force called the meeting in August to get input from residents on the issue, and an overwhelming majority of speakers favored tougher regulations.
Garza didn’t like what he heard.
“I hope that the city welcomes all views, but in doing that it really needs to be all views … and not such narrow focus as I’ve heard this evening,” he said.
Garza, a partner with the Dallas law firm K&L Gates, said he’d helped cities write ordinances on the industry’s behalf since 2001 and believed Denton needed help from operators and industry attorneys to flesh out the issues and avoid misunderstandings.
“Misunderstandings do lead to lawsuits,” he said.
Cities frequently revise ordinances with little direct participation of those affected. Corinth, for example, spent nearly a year updating its ordinances for sexually oriented businesses without participation by that industry — one that has frequently sued cities for rules meant to protect public health, safety and property values.
However, when area residents have asked for tougher review and regulations of the natural gas industry, industry representatives offer to assist city councils or their appointees to draft such regulations, an offer many city officials seem reticent to refuse.
Ponder, for example, wanted to fast-track its updates in early 2011, after Devon began drilling next to its largest neighborhood. Devon’s representatives frequently offered their assistance during the process, including presenting the Town Council with the company’s edits to the ordinance the night the council was scheduled to adopt the new rules.
Denton started work on an ordinance overhaul in 2009 amid public anger over the City Council’s vote to let Range Resources drill inside the Rayzor Ranch development near homes, a city park and a hospital. Some council members said they opposed drilling at the location but feared the company would follow through on a threat to sue if they denied it.
It was Range Resources’ director of corporate communications and public affairs, Matt Pitzarella, who told fellow conferees of his company’s discovery that psy-ops veterans were well-suited for local community work. Pitzarella did not return a call for comment.
City leaders have treaded carefully ever since the legal threat, inviting industry-related representatives to serve alongside city staff and residents on a drilling task force to help write a new code.
Industry representatives were quick to volunteer for the panel, although not everyone who volunteered was picked, said Mark Cunningham, the city’s planning director.
“They want to be there so they can evaluate what’s being proposed so that it doesn’t amount to overkill and to ensure we understand the processes involved in their operations,” he said.
Residents involved in the push for stronger regulations said they feared the task force was tilted in the industry’s favor. Council member Kevin Roden, who campaigned last year on tougher drilling regulations, helped form a separate advisory committee to seek more public input.
“I’ve always been interested in a very robust citizen involvement in a process like this,” Roden said. “Anytime you have a town hall meeting on this, it’s not like you have a ton of citizens coming out in support of more gas drilling in Denton. In fact, it’s quite the opposite.”
Industry representatives have sat on ordinance committees from the smallest towns, such as Bartonville, to the largest cities of the shale, including Flower Mound, Fort Worth and Dallas, as they rewrote rules.
Corinth appointed three residents as voting members of a committee that rewrote its ordinance, none with ties to the industry.
Before adopting the ordinance, the Corinth City Council asked its planning director to draw a map similar to one drawn after the city adopted an ordinance forbidding a registered sex offender from residing within 2,500 feet of certain protected uses. Although the setback for gas production from protected uses was shorter — 1,000 feet in most cases — the maps were similar. They showed the activity limited to only a few areas of the city.
In the last legislative session, Texas cities saw the defeat of House Bill 3105, which would have limited what little authority cities have to regulate the industry locally. Similar legislation to limit a city’s authority has been introduced in Pennsylvania.
Wealth without work
In walking their neighborhoods around the Hilliard pad site in Flower Mound, Vajda and others convinced enough people not to lease that the operator, Titan Operating, had to ask state regulators for an exception.
Operators are supposed to make a good faith effort to secure leases from all the mineral owners where they plan to drill. In some neighborhoods, like Vajda’s, some homeowners have refused to lease to try to protect their property values.
But once operators secure enough leases in an area for a unit, they can ask the Texas Railroad Commission for a Rule 37 hearing on the unleased portions. Getting an exception to the rule, ostensibly to minimize the waste of natural resources, allows the operator to drill and not pay those mineral owners who haven’t leased. Statewide, between August 2008 and September 2011, the Railroad Commission has granted 6,683 exceptions under Rule 37. Some well sites have had more than one exception granted, according to commission spokeswoman Ramona Nye.
Flower Mound resident Eric Jellison told Vajda and other landowners around the Hilliard site that he would help them fight the exception by paying for an attorney to represent them at a Railroad Commission hearing in Austin. He wanted to learn the process “backwards and forwards,” he said, so when a Rule 37 fight came to his neighborhood, he would know what to do.
“I didn’t care why people didn’t sign, the reasons why they didn’t want it — whether it was health concerns or property values,” Jellison said. “People don’t like being bullied into it — saying, ‘Sign or we’ll steal it.’ Fine, you may win, but you’re gonna have to fight for it.”
The company did win. Vajda and her husband would never see any money, but the small amount didn’t matter to her, she said.
Jellison also heard the news that people like him had been labeled “insurgents” at the industry conference.
“I find it ironic,” Jellison said. “They are the outsiders coming in, going against the local municipality — the established government people are living with. They don’t have any permanent business here. Anyone like that is deemed, by definition, an insurgent.”
It was Matt Carmichael, manager of external affairs for Anadarko Petroleum Corp., who recommended at the conference that public relations professionals download and read the Army’s counterinsurgency manual. Anadarko is active in the Haynesville Shale of East Texas and the Eagle Ford Shale of South Texas.
Carmichael did not return a call for comment.
Jellison’s wife, Virginia, ran for Flower Mound Town Council and lost by a narrow margin in 2008. By 2010, the political scene turned vicious, with some shale gas operators right in the thick of it, Vajda said.
Keystone Exploration wrote a letter to its royalty owners endorsing the incumbents in April 2010. The company characterized residents like Vajda and Jellison as anti-drilling activists who would do all they could to limit the industry.
“These activists will directly affect your minerals’ value and our ability to produce gas,” Keystone officials wrote.
Keystone President and CEO Tom Blanton did not return a call for comment.
In the Southeast Texas town of Cuero, the heart of the new Eagle Ford Shale boom, Sister Elizabeth Riebschlaeger is watching the results of the tactics in her community.
“Everybody wants the money,” said Riebschlaeger, a Catholic nun and community activist.
People didn’t know at first this boon was not the same as the oil rush of the 1950s. Tapping a pool of oil, you can be anywhere on top, Riebschlaeger said. Driving State Highway 183 from Gomez to Cuero after her prison ministry visits, she often sees four to five new wells in Eagle Ford, along with huge storage facilities because there aren’t enough pipelines.
“Now there has to be many wells,” she said. “You get engulfed.”
Some friends and neighbors have figured out the public relations tactics, she said. They won’t be bullied, but they also see the operators hiring local cleanup crews and gravel haulers, or buying local, including buying water from ranchers.
“They [residents] know if they complain to the Railroad Commission or the EPA, they could stop doing business with them,” she said. “It’s said very quietly, ‘Don’t expect any business,’ or ‘If I talk to you, I’ll lose business with my company.’”
The Jellisons got direct threats, Eric Jellison said.
During a Town Council meeting, a sitting council member told them he would run them out of town for their stance on property rights.
The couple received two anonymous, untraceable calls; one threatened his wife’s insurance business, and the other threatened to get all the oil and gas customers to pull out of his software business, he said.
“If someone has nothing better to do than sit at a phone and call those customers I’ve had great relationships with for all these years, then they could have at it,” Jellison said.
Nothing came of it, he said.
Commerce without morality
After Chesapeake Energy began approaching property owners in Lakeside, population 1,500, on the northwest side of Lake Worth, resident Ute Mercado heard from people living elsewhere in the city that the company was difficult to deal with.
At first, she didn’t find that to be true at all. The company’s representatives were professional, well spoken and respectful, she said. Chesapeake’s materials were well written.
However, as the time came closer for the city to approve the permits to drill this spring, communication deteriorated, she said.
“I always felt like it was pulling teeth to get answers to our questions,” Mercado said. “They would barely answer our questions.”
After drilling began and various problems occurred, including promises and pledges to the community that were not kept, complaints got addressed in ways that just made people angrier, she said.
Neighbors wondered whether there was any consequence to company employees who were found trespassing, but had lied by identifying themselves as working for the city.
After trucks were left idling and one trucker knocked over a stop sign, neighbors called the community relations liaison. But they were told to call the company complaint line instead.
“We asked them to keep our streets clean,” Mercado said. “They sent in street sweepers that just threw everything into our yards.”
The first two wells inside Lakeside have been drilled, but not yet hydraulically fractured, she said. Residents have begun to wonder if they should stop complaining, since it seems to backfire.
“We’re starting to think that’s what they want — they want us to put up with whatever it is that they do,” Mercado said.
Michael Kehs, Chesapeake’s vice president of strategic affairs and public relations, told peers at the November conference that their company was “not marauders coming to despoil the landscape.”
Kehs did not return a call for comment.
The conference at the heart of the controversy, called the Media & Stakeholder Relations Hydraulic Fracturing Initiative 2011, was advertised as a way to help public relations professionals engage the public with a “positive image” of the shale gas industry. It was held Oct. 31 and Nov. 1 at a Houston hotel.
Sharon Wilson, a regional organizer for Earthworks’ Oil and Gas Accountability Project, an environmental group, said she registered for and attended the event to keep an eye on the industry’s strategies.
Wilson has written on her Bluedaze blog about cases in which she believes the industry used intimidation tactics against her or other critics. Still, she wasn’t prepared to hear talk of counterinsurgency tactics, she said.
“It’s not anything that’s new to us because if you live around the gas patch you know that these things are happening, but maybe you don’t have a formal word to put to it,” Wilson said. “It was shocking just to hear them say it out in the open.”
The statements raised ethical issues that no one at the conference addressed, she said.
“They are using very extreme measures, and if they could do this right or even well they would not have to be using such extreme measures,” Wilson said. “Because most people want to be warm, and they want the lights to be on, and they want the burner to come on to warm their can of soup. They also don’t want to be exposed to these chemicals, and they want clean air and clean water.”
Industry speakers portrayed drilling opponents as unreasonable, but most people don’t start out that way, Wilson said.
“For the most part I think that most people started out not being unreasonable and not being opposed to it,” she said. “They have created this PR nightmare for themselves.”
Not all public relations professionals would agree with the tactics, according to Samra Bufkins, a public relations lecturer in the Mayborn School of Journalism at the University of North Texas. She’s worked for both sides in Galveston when issues have arisen between the petrochemical industry and the communities where they locate.
She’s been to professional conferences when audience members didn’t agree with the speaker. Many public relations professionals — who aren’t required to be specially educated or licensed in any way — are members of the Public Relations Society of America, she said. The society requires its members to pledge to a code of ethics. Some members seek accreditation, which provides even more vigorous training in ethical practices.
Some employees of some shale gas producers are members of the PRSA, but not all, Bufkins found. Fewer still are certified.
Bufkins believes that it’s still possible for companies to develop shale, but their community relations stance requires them to tread a thin line, she said.
In a way, public relations professionals serve as the company’s conscience, she said.
“As a professional value, they must serve to protect the public interest,” Bufkins said, adding that can be hard to do if the company’s lawyers are reluctant to sign agreements with communities about how they will operate.
Professionals promoting heavy-handed tactics, like counterinsurgency measures, suggests that “they don’t think residents can handle the bad news straight from the beginning,” Bufkins said.
That’s not been her experience, but “you have to do it right from the beginning,” she said.
Shale development may still be possible in a new field somewhere else, she added.
Where the public perceives that one or more shale companies have a problem, the companies probably won’t be able to change people’s minds.
“Trust is at the root of all of this,” she said. “They’re probably never going to regain trust — if they ever had it.”
PEGGY HEINKEL-WOLFE can be reached at 940-566-6881 . Her e-mail address is firstname.lastname@example.org.
LOWELL BROWN can be reached at 940-566-6882 . His e-mail address is email@example.com.
WHAT THEY SAID
Community relations personnel from several major shale gas companies spoke frankly at a conference meant to deal with the public’s concerns about shale gas production. Here’s a sample of some of the comments, both during presentations and in response to questions from the audience of their peers:
On dealing with the community where they operate:
“I would say that I don’t know that the issue is transparency, maybe the issue is level of engagement. I think that we’re very transparent. It’s very clear on our blogs that there’s nowhere to leave a comment. But our Facebook wall is open, and we will engage on Twitter and on other forums. It’s just that we decided that the climate that we’re in, especially in the Barnett, it just wasn’t going to be productive to have the people power to have that happen. But we really do engage offline.” — Nicole Nascenzi, Williams
“We have several former psy-ops folks that, for us at Range, because they’re very comfortable in dealing with localized issues and local governments, really, all they do is spend most of their time helping folks develop local ordinances and things like that. But very much having that understanding of psy-ops in the Army and the Middle East has applied very helpfully for us here in Pennsylvania.” — Matt Pitzarella, Range Resources
“I recommend that everyone in this room download the U.S. Army/Marine Counterinsurgency Manual … [audience murmurs] ... because we are dealing with an insurgency. There’s a lot of good lessons in there and, coming from a military background, I’ve found that insight in that extremely valuable. With that said, there’s a course provided by Harvard and MIT [Massachusetts Institute of Technology] twice a year, it’s called ‘Dealing With an Angry Public.’ Take that course and tie that to the manual. A lot of the officers in the military are attending this course. It gives you the media tools on how to deal with a lot of the controversy that we as an industry are dealing with. And thirdly, I have a copy of Rumsfeld’s Rules. That’s my Bible, by the way. That’s the way I operate.” — Matt Carmichael, Anadarko Petroleum Corp.
On dealing with political officials:
“We typically try to not have more than four or five outsiders on a [rig] tour per one Range person. I think we’ve done up to 50 people at a time, mostly whenever we take congressional staffers out. Half of them spend most of their day being hung over from whatever they did the night before, and the other half are very engaged.” — Matt Pitzarella, Range Resources
On dealing with academics:
“Seek out academics, and academic studies and champion with universities because that, again, provides tremendous credibility to the overall process. We tend to be viewed very skeptically. But we’ve aligned with the University of Buffalo. We’ve done a variety of other activities where we’ve gotten the academics to sponsor programs and bring in people for public sessions and educate them on a variety of different topics.” — Dennis Holbrook, Norse Energy
On dealing with the press:
“We would invite, in all cases — what we’re looking at for Ohio and other places — is to bring reporters in early so that they get the inoculation they need from some of the things that they hear.” — Michael Kehs, Chesapeake Energy
“If you don’t get that warm fuzzy feeling from someone, I think it’s OK to play dodge ball with them for a while. You know, everyone’s working on a deadline.” — Matt Pitzarella, Range Resources