Raleigh, N.C. — The board appointed to ensure North Carolina's nascent natural gas drilling industry doesn't pollute air and water includes former energy and mining company executives as well as others who have advocated moving ahead with gas exploration in the state.
One appointee filling a slot for a "member of nongovernmental conservation interest" is also involved a company formed to negotiate mineral rights leases for landowners.
Lawmakers who made those appointments last week in the closing days of this year's legislative session say the board has both balance and expertise. But environmental advocates say the board's composition raises concerns.
"If these folks are predisposed towards moving forward as quickly as possible, they're not likely to ask for the time and resources that may well be necessary to conduct proper studies," said Elizabeth Ouzts, state director for Environment North Carolina.
Controversial process moves gets NC OK
Just five years ago, the subject of natural gas drilling in North Carolina was a conversation that almost exclusively involved offshore exploration. While some landowners and geologists have known for decades that areas of the state could contain natural gas, recent studies identifying areas of potential gas production from layers of shale rock sparked renewed interest.
Estimates are uncertain, but a recent U.S. Geological Survey report said there was likely about 1.7 trillion cubic feet of natural gas in the Deep River Basin, which runs roughly from Durham to the South Carolina border. That would be enough to supply North Carolina's natural gas needs for more than five years, if consumed at the 2010 rate.
To extract that gas, companies would use a process called hydraulic fracturing, which is generically, and somewhat pejoratively, known as "fracking." It involves drilling down and then horizontally to reach long pockets of gas sandwiched between layers of rock. A high-pressure mix of water, sand and chemicals is then injected into a well to fracture the rock layers and free the gas.
Fracking technology has been used in the oil and gas industry for decades, but it has recently become part of the public conversation due to controversy in New York, Pennsylvania and Ohio. Landowners and environmentalists in those states blame fracking for polluting groundwater and contributing to problems ranging from increased truck traffic to earth tremors.
Those processes, particularly horizontal drilling, were illegal in North Carolina until the General Assembly legalized the process this year, overriding Gov. Bev Perdue's veto. The state cannot yet issue permits for drilling, but lawmakers charged the newly created Mining and Energy Commission with crafting regulations to govern the process by 2014.
Commission members described by law
The state geologist, the assistant secretary for energy in the Commerce Department and an appointee of the North Carolina State University Minerals Research Laboratory Advisory Committee will serve as ex-officio members of the commission.
Of the other twelve seats, six are set aside for industry experts, four for state and local officials, and two for "conservation interests."
Perdue, a Democrat, has four appointments to the commission, but she hasn't made any yet. Assuming she signs a final technical corrections bill, she must choose a representative of a publicly traded natural gas company, a licensed attorney with expertise in energy matters, a member of the state's Environmental Management Commission and a member of the Commission for Public Health.
House Speaker Thom Tillis and Senate President Pro Tem Phil Berger, both Republicans, have four appointments each. They made those appointments through House Bill 1234, a measure that seated members on dozens of state boards and commissions.
"At this point in time, we really don't have any idea what's under the ground in North Carolina," said Ray Covington, one of Tillis' appointments. He said it's possible the panel would conclude that natural gas drilling isn't a practical option in North Carolina.
Panel members have potential conflicts
Covington fills a slot on the board reserved for a "member of nongovernmental conservation interest" and has served on the Lee County Agricultural Advisory Board and worked on a project to assemble land for the historic Endor Iron Furnace site.
However, he is also a founder of North Carolina Oil and Gas, a company that is hoping to gather landowners into a cooperative and negotiate mineral rights leases on their behalf. The company's website says, "We want this land drilled," and a frequently asked questions section says the company will receive a percentage of "any bonus negotiated and royalty received."
In an interview, Covington says he and his partners were inspired to form the company after being contacted repeatedly by "land men" for gas drillers interested in buying mineral rights.
"Where do you see the conflict of interest?" Covington asked Wednesday. "I'm a landowner. Are you saying we should exclude all landowners in the two terrestrial Triassic basins? Because if that's the case, I don't think there will be anyone on the commission."
"I think you would hope they bring people on the commission that actually have experience, and I do," said Covington.
The issue of landowner protections is one of the least settled issues in the fracking debate, and one that Attorney General Roy Cooper has said needs more study. Tillis said that Covington was chosen because of his experience.
"I think all the people who are on the board understand conflicts of interest and other things as a result of being on that board, and I'm confident that they'll do their jobs well," Tillis said.
Other Tillis appointees include Charles Holbrook, a geologist who retired from the petroleum industry; William McNeely III, a member of the state's current mining commission whose family company rents equipment and provides material for landscaping; and Sanford Town Councilman Charles Taylor.
"We have got to be objective. That’s the whole key to this committee," Taylor said.
While he believes the evidence shows gas drilling can take place safely, he said North Carolina needs to be careful in setting up its regulatory framework. Of paramount importance, he said, is protecting water supplies and landowners.
"Having good, safe drinking water is a precious resource," he said. "You've got to think about the next generation."
Holbrook did not return a phone call seeking comment, but he has written articles favorable to fracking on his website, the Voice of NC.
"The concern by many that hydraulic fracturing operations will damage freshwater aquifers is not well founded," Holbrook wrote in July 2011.
WRAL News is still trying to contact McNeely.
Berger's choices have energy industry backgrounds
Berger's appointments include Vikram Rao, a former executive with Halliburton, a giant energy and oilfield services company. He is now the director of the Research Triangle Energy Consortium, which studies the development of energy supplies.
Rao initially agreed to an interview about the Mining and Energy Commission and then declined to speak. It's worth noting that RTEC describes itself as "well-placed as an organization to play a significant role in informing on the policies that will drive the energy sector in this area."
Ouzts said she didn't want to single out any member of the commission for criticism. However, she said, Rao's background does raise concerns for environmentalists.
"Having a long history with Halliburton is certainly likely to influence his perspective moving forward," she said.
Berger's other appointments include Ivan "Tex" Gilmore, a former executive with mining company PCS Phosphate; Lee County Commissioner James Womack; and George Howard, president of Restoration Systems, which restores wetlands and sells "mitigation credits" to companies doing construction elsewhere.
Howard did not return a call seeking comment, and WRAL News is still trying to contact Gilmore.
Grady McCallie, policy director at North Carolina Conservation Network, said Howard and Covington occupy the two seats environmental groups thought would be set aside for conservationists. Both men, he said, bring expertise to the table, but lack the perspective advocates were hoping to have on the board.
"Their expertise may be valuable, but it's not conservation advocacy expertise," McCallie said.
Lee County Commissioner Womack, an information technology consultant and retired Army officer, said North Carolina needs to move carefully but quickly.
"There are some categories of regulatory measures that could impede the industry to the point of being unproductive," he said. "We're trying to sort out what's intelligent and responsible from what's unnecessary and counterproductive."
He said some people will never be in favor of drilling.
"I don't think it's anywhere in our mission statement that it's our job to make people feel comfortable," he said as he got ready for a trip to look at natural gas drilling operations in Pennsylvania with a National Association of Counties tour.
Asked what might make him want to slow down the state's push toward permitting, Womack said, "Slow down is what environmentalists say when they want to stop something. Slow down is not in my," he said, stopping for a minute and then adding, "Slow down is not the term I would use."
The commission has not yet scheduled its first meeting, at which it will choose a chairman and vice chairman.