Not so strange bedfellows – Sierra Club accepts natural gas money

By Rod Adams

On February 2, 2012, Time Magazine’s Ecocentric blog published a post titled Exclusive: How the Sierra Club Took Millions From the Natural Gas Industry—and Why They Stopped that has rocked the environmental community and the established energy industry. The story included the shocking news that the Sierra Club had accepted donations from Chesapeake Energy or its executives totaling nearly $26 million during the period from 2007-2010.

Some longtime members of the Sierra Club have expressed feelings of betrayal; Chesapeake Energy is one of the largest domestic natural gas producers in the United States with most of its production based on using the increasingly controversial technique of hydraulic fracturing (fracking). A number of concerned environmentalists and local chapters of the Sierra Club worked hard for several years to convince Carl Pope, Michael Brune, and the rest of the Club’s national leadership to take a principled stand against fracking.

What they saw instead was their national leadership promoting new technologies for producing natural gas alongside people like Aubrey McClendon, Chesapeake Energy’s chief executive officer, and T. Boone Pickens. The Club’s official policy on fracking was that it could be done responsibly and safely and that with plenty of regulation it could be a bridge to a renewable energy future.

Finally, as the industry matures, a series of best management practices will emerge, some already identified, some evolving with time. These best management practices should, to the maximum extent possible, be swiftly incorporated into regulatory requirements as they are developed. The Club opposes any unconventional or conventional drilling projects that do not comply with best management practices, even in regions where state or federal law may permit lower standards of environmental management.

The Club will use these standards as a yardstick for any regulatory reform efforts it undertakes or supports, and to judge which new drilling projects, if any, cause unacceptable environmental damage and warrant opposition.

Chapters are encouraged to press for effective regulatory frameworks to control the impacts of deep shale gas and may oppose specific projects that are inappropriately sited or that fail to comply with best management practices.

Board of Directors, December 21, 2009

Now, perhaps the disillusioned members will see the real politik reason why they did not get the support they expected from their globe-trotting leaders.

Michael Brune, who took over as the Sierra Club’s executive director in early 2010, published a blog post titled Sierra Club and Natural Gas that describes his decision to stop taking donations that are tightly linked to the natural gas industry.

By the time I assumed leadership of the Club in March 2010, our view of natural gas had changed—so I made sure our policy did, too. We created a strong natural gas campaign comprised of staff and volunteer leaders. Some chapters sought to establish tough safeguards at the state and federal level to protect their air and water; others sought to suspend fracking completely until those standards were in place. By mid-August 2010, with gas industry practices and our policies increasingly in conflict, I recommended to the Board, and it agreed, to end the funding relationship between the Club and the gas industry, and all fossil fuel companies or executives.

Unfortunately for Brune, words and videos published on the Internet do not disappear and can be recalled with a few simple searches. Before his action to stop taking natural gas industry funding in August 2010, Brune appeared on Jim Cramer’s Mad Money with some words that were welcome to the people who believe that natural gas is a terrific fuel for electrical power plants. That was not an isolated event; Brune made the following statement in November 2010:

Concerns about natural gas extraction have been on the rise not just in Dimock, but in places across the country, from West Virginia to Texas to Wyoming. And yet even given these important issues, natural gas still has a relatively lighter footprint than coal or oil. Gas is not a clean fuel, but it can be cleaner.

(Emphasis added.)

It would be difficult for Brune to prove that those positive words were not influenced by the generous contributions that Chesapeake Energy was providing to the Sierra Club.

This story, however, should not be seen as an isolated incident, but as part of a continuing effort within the energy industry to use whatever means are available to obtain a favorable position in one of the world’s largest, most profitable, and competitive commodity businesses. Here is a quote from an email written by Jim Gibson, a member of Chesapeake’s communications group:

Over the years, Chesapeake has been proud to support a number of organizations that share our interest in clean air and agree that America’s abundant supplies of clean natural gas represent the most affordable, available and scalable fuel to power a more prosperous and environmentally responsible future for our country.

Read that carefully. Here is my paraphrase: Chesapeake has supported a number of organizations that agree that natural gas is the best fuel to power our country’s future. Their funding efforts have not just been limited to the Sierra Club and have not just been limited to efforts to fight coal. Some free market focused observers find nothing inherently disturbing about efforts to obtain competitive advantage through arguably sneaky means:

Hey… this ain’t bean bag.

See… I could at least respect that. NG competes with coal, and you do what you need to do in order to gain an edge in a very competitive market. But jumping in bed with the Sierra Club? That leads to big problems, mostly because our recent success in natural gas exploration relies largely on fracking and other developing technologies.

Here is the important part of this story for nuclear energy advocates to understand. Our technology competes with both natural gas and coal for market share in the lucrative energy business.

The Sierra Club has a well known aversion to nuclear energy and has not been shy about doing all it can to halt the growth of nuclear energy and to speed the early termination of as many operating nuclear power plants as possible. The acknowledged financial relationship between the Sierra Club and the natural gas industry may be a partial explanation for the reason why an organization that has placed fighting climate change near the top of its priority list is such an ardent opponent to the most reliable form of virtually emission-free power in favor of a fuel that is only “low carbon” in comparison to coal.

We all might benefit from an improved understanding of the world if more journalists pull this thread to determine if there are other questionable financial relationships between groups with ardent stances against nuclear energy and industries that stand to benefit from reduced competition with nuclear energy developments.

Final note: I wrote about Chesapeake’s financial support for anti-coal efforts for Atomic Insights in December 2010.

_____________________________

Adams

Rod Adams is a pro-nuclear advocate with extensive small nuclear plant operating experience. Adams is a former engineer officer, USS Von Steuben. He is the host and producer of The Atomic Show Podcast. Adams has been an ANS member since 2005. He writes about nuclear technology at his own blog, Atomic Insights.

14 thoughts on “Not so strange bedfellows – Sierra Club accepts natural gas money

  1. Brucie Behr

    @Adams
    Rod-I think you are a great spokesperson for the U.S. Nuclear Industry.

    But on the issue of big wet bulb rankin cycle single use LWR’s they are ‘Old’ nuke technology. It can’t be justified in today’s or future world requirements.
    The modern world will have more options for power and the SMR brayton cycle NPP is more apt to have other uses as: desalination, district heating, fertilizer production and chemical refining to name a few besides electrical generation. Waste spent fuel re-processing will also grow as nations find the need to secure & insure nuclear fuels for their SMRs.
    Nations have every right to access nuclear technology the way they see fit to stay competitive and insure prosperity. American foreign policy military interventions based on baseless policing nuclear fuel will need to stop.
    I respect your position but my job is to be a science and political critic.
    I give live face-to-face presentations called:
    DE-PROGRAMMING CANADA II
    I call out the need to marginalize oligarch industry cronies and their plutocrat friends who strategize & craft central energy anti-market policy in secret. Among other financial scams because in most respects government policy is not crafted as UNINTENDED consequence they are crafted DELIBERATE to effect markets and political strategy.

    I just don’t see a trend toward large LWR NPPs.

    …Thanks for lively debate.

  2. Rod Adams

    @Brucie

    I think you are wrong. What the US industry really suffers from is a lack of competitive fire. We have a heat source technology that has characteristics that are orders of magnitude better than the characteristics of the competitive fuel sources and we refuse to promote those characteristics for fear of offending people with money and power.

    Our problem is that too many of the corporate leaders actually LIKE selling inferior products at elevated prices to customers who have no choices. Those leaders only dabble in nuclear energy and work hard to restrain the passionate promoters who really understand that nuclear fission releases 2 MILLION times as much energy per unit mass – meaning that it produces about 1/2 millionth the amount of waste per unit energy.

    It is quite possible – and demonstrated – to build large light water reactors that can last for 60 years and pump out massive quantities of reliable, emission free power. It is even possible – and demonstrated – to complete those complete systems for about the same cost per unit output as a coal or natural gas combined cycle plant. That is not surprising – we all produce power in about the same way, by heating a fluid that then spins a turbine or two.

    It is only because the industry has allowed its competition to layer thousands of pages of regulations administered by a 4,000 member federal bureaucracy that is officially agnostic and sometimes downright hostile to the very notion of using nuclear energy to make our nation stronger and more self sufficient that our initial capital costs are so darned high and the construction timelines are so darned long.

    Sure, there are many ways to use fission energy in addition to the old standard of large light water reactors producing steam and spinning very large turbines in a central station power plant. I have been advocating for expansion to those other technologies for 20 years, not as a replacement for the large systems but as an additional product offering to expand the menu of choices that a competitive nuclear industry should be offering to customers.

    We need machines that can compete with diesel engines and gas turbines. We need to focus our competitive fire on the fuel sources that currently dominate the energy market; we should stop fighting among each other.

  3. Brucie Behr

    @Adams @Hopf

    …hate to be the bad news guy.

    But…I just think U.S. nukes are dropping off by the minute.
    The U.S. industry suffers from big LWR mentality which means fuel for its critics as NPPs branded with the public perception nukes are too expensive, subsidized and risky. Young U.S. nuke grads might get some solace the Obama admin. made some noise about ramping up a similar ‘old’ Army Nuclear Power Program (ANPP) DOE has opted to form an SMR program for military bases. But naval and small nuclear reactors on DOD installations or even surface ship powered SMR are not commercial operations. So I don’t see how U.S. nuke grads find employment unless they go overseas to countries like Vietnam who plan to seek energy independence from Hydrocarbon fuel price manipulation.
    They seem interested in forming a robust SMR program. As Vietnam Demos feasibility of its program more countries will follow suit.
    I think the U.S. is caught between a rock-and-hard-place, damn either way.
    The pressure to use NG and oil for EPPs is too great in the U.S. This same Hydrocarbon hyper use mentality in Canada domiantes good business sense and ignores the enviro oil spills. (Hence give-away deals to China for Hydrocarbon and Uranium.)

  4. Rod Adams

    @Jim – I partially agree with you. The hole in your logic is caused by the huge inertia associated with revitalizing nuclear energy to make sure that it is “ready” to step in.

    It took about a decade to build the nuclear education infrastructure back up after its nadir in the late 1990s. What do you think is going to happen if a lot of those recent graduates find that there are no current projects to work on because the top executives at the nation’s utilities have all agreed that gas is cheap and will be cheap until they are no longer in charge.

    The US electric power industry has a long history of “bandwagon”, lemming like thinking that eventually results in disaster. When everyone was buying new nuclear in the 1970s costs were allowed to get out of control until such point as NO ONE was buying new nuclear. When everyone was buying natural gas plants in the 1990s, the demand for gas finally exceeded supply and costs for the fuel rose high enough to put a number of companies into bankruptcy and create a situation where gas turbines were selling for 10-20 cents on the dollar.

    Gas prices do not go up slowly, but building new nuclear plants does not happen overnight and never will.

  5. JimHopf

    Does anyone know roughly what it COSTS to produce gas, from a shale gas well in particular? At $2.5/MBTU, they have to be losing money, right?

    It may be unintentional (an uncontrolled glut, exacerbated by a warm winter, etc..), or perhaps they’re deliberately dumping gas to kill off the (nuclear and renewable) competition, as many of us at least suspect.

    On the other hand, it could be that their real target is all those old, dirty coal plants out there. With the difference in operating cost between old coal plants and gas plants being almost non-existent, it’s getting harder and harder to argue that placing reasonable limits on coal plant pollution would be a disaster for the economy (although the Republicans are still trying!). With spare gas plant capacity, and negligible additional cost, it would be very cheap indeed, right now, to replace all those coal plants with gas. Once that happened, they’d be in a much better position later, when gas prices go back up.

    Nuclear would be in a better position too….. Given that my main reason for being pro-nuclear is the horrific health and environmental impacts of coal plants, I have to admit that my feelings are mixed about this. If the gas industry (and the Sierra Club) succeeds in replacing alot of old, dirty coal generation, I’d say hats off to them. Then, when gas prices go back up, we will not be returning to coal. Nuclear and renewables will be ready to step in.

  6. Brucie Behr

    @Rod Adams-
    Russia-LNG (GAZPROM) $434.USD/MM3
    The March natural gas contract regained 5.1¢ to $2.55/MMbtu on NYMEX. On the US spot market, gas at Henry Hub, La., continued to climb, up 7¢ to $2.48/MMbtu. (avg. N.Am $280USD/MM3).
    Indonesian NG $370USD/MM3
    The problem: N. America is DRY FRACKED gas has choked the NG market.
    Russia GAZPROM does mostly WET pocket gas.
    N. Am NG market wants to export to INDIA-JAPAN-ORIENT thus the Gateway B.C. CANADA pipeline project. Put it is my contention Russia will underbid price for gas since they are the largest producers of WET GAS not even tapped their DRY GAS reserves.
    The N.Am market is way too ‘cuckoo clock’ pricing look at chart.
    What public utility would commit millions to build NG electrical plants??
    Locking in NG price would spell gigantic money losses for NG market http://en.wikipedia.org/wiki/File:Henry_hub_NG_prices.svg
    This is why nukes must provide stable reasonable predictable fuel pricing which gets better value over time.

  7. Rod Adams

    @Bill – It is interesting that you bring up Arkansas as a growing hub of natural gas production. Few ANS members know how important that industry is to that often overlooked state.

    I would bet that most of the people who were “shocked” when the former governor of Arkansas zeroed out all nuclear energy research money soon after he was elected as President had no idea that Arkansas has always been home to substantial natural gas reserves and that recent market & technology conditions have allowed those reserves to support a rapidly expanding amount of natural gas production.

    Much of that gas probably would have been left in the ground for future generations if the nuclear industry had grown steadily through the 1990s up until today.

  8. Rod Adams

    @Martin – It would certainly not hurt the nuclear industry if more of the companies involved in the industry spent more money marketing their superior product. That spend could legitimately, and openly, include more support for environmental groups.

    At the moment, there are not very many companies in the nuclear industry that are flush with cash. However, that should never be an excuse for failing to advertise and market; successful businesses focus more on those activities when times are tough.

    McClendon’s actions are a reasonably good example – he nearly lost control of his company during the economic crisis when the stock price of CHK dropped from about $70 per share to less than $20 and the selling price of their primary product fell from $13 per million BTU to less than $3. That crisis (2008-2009) occurred right in the middle of his donations to Sierra (2007-2010).

  9. Rod Adams

    @Bruce – I assume that you are talking about spot prices in North America, not those for actual LNG consuming nations like Japan, South Korea, and Taiwan. In those places, LNG is currently trading for about 15-16 dollars per million BTU.

  10. Brucie Behr

    LNG spot price are super low and domestic and international concerns are nail biting over the inherent price volatility (due to storage capacity) of the Natural Gas market and might not warrant building natural gas power plants.

  11. Bill Eaton

    I live in Arkansas where “fracking” in the Fayetteville shale formation has become controversial at the local level in matters of possible potable water well contamination, shallow earthquake stimulation from waste injection wells ( three of which have been ordered shut down by the DEQ) and financial equity due to the low excise tax on extraction that the driiling and production companies enjoy in Arkansas compared to neighboring states with similar resources. It does not surpise me at all that the Sierra Club has been accepting money from the gas industry. What is surprising is that its members may not be paying attention to where it gets its money. I’ll bet the SC annual report does not disclose funding sources.

  12. Trent

    Surprise, suprise, surprise….

    People should pay attention more to these “non-profits.” I have never supported Sierra Club because they refuse to address how mass immigration is causing ecological damage to our country.

  13. Martin Burkle

    I guess the lesson is that the nuclear industry should contribute to the Sierra Club. After all, nuclear electricity does not pollute the atmosphere and does not cause the global warming. Would EPRI or Exelon be the better contributer? Ron would the Sierra Club allow you to be a member?