by Russell Gold
McClendon wasn’t content to win a couple regional fights. As usual, he wanted more. He wanted—and needed—to keep drilling and producing gas. If supply was going to rise, he wanted to make sure that demand rose as well. Otherwise prices would fall. That’s Economics 101: basic supply and demand. In the late summer of 2007, a plan came together in his head. If he could convince Texas and Oklahoma that natural gas was a better fuel than coal, why stop there? Why not preach the gospel of gas on a national basis? Since there was no national energy policy, McClendon set out, essentially, to create one. Concern about global warming was rising, and natural gas, while not carbon-free, could generate a lot more kilowatts of power for each ton of carbon emitted than coal could. Asked why he fought the Oklahoma coal plant—whether it was blatant self-interest or something loftier—he said both were true. “What’s the matter with self-interest? From my perspective, I have a better product than coal,” he said in a 2007 interview. Years later, he called coal “an antiquated fuel contributing to serious health and pollution issues . . . I was determined to speak when others didn’t seem willing to do so.”
To deliver this message, he needed allies that could reach people not inclined to listen to an energy executive. He wanted natural gas to be sanctioned by an esteemed environmentalist. As usual, McClendon got what he wanted. After several meetings with the Sierra Club’s Pope, he received a papal blessing, of sorts, for his chosen fuel. Within a year of their first meeting, Pope began promoting the environmental benefits of natural gas. It was a strange alliance.
The partnership began with money. In October 2007 McClendon made the first of $56 million in anonymous pledges to the Sierra Club. It was one of the largest donations in the history of the organization. At the same time, he also created the American Clean Skies Foundation, a national outgrowth of the Texas Clean Sky Coalition. McClendon was the chairman of the foundation and its main financier. (Tom Price and Ralph Eads served on the board.) The Chesapeake CEO pursued a two-pronged strategy. He could use the American Clean Skies Foundation to promote the benefits of US natural gas across the country. It was a domestic energy source and has half the greenhouse gas emissions as burning coal, the group trumpeted. Plus, it doesn’t emit any of the other toxins that coal produces—the nitrogen oxide and sulfur dioxide—associated with an increased incidence of asthma. Privately, he provided the money for the Sierra Club to expand an ongoing anticoal campaign. The Sierra Club’s effort had focused on coal plants in the Midwest. With McClendon’s money, it went national.
The first inkling that Carl Pope had befriended the fossil-fuel industry came in early 2008, in the Oil and Gas Investor, a small glossy magazine that delivered monthly doses of glowing executive profiles and insights into which companies were drilling where. In an interview, Pope talked about his willingness to embrace gas. “Among the fossil fuels, natural gas is at the top,” he said. “There’s a lot of opportunity—people in the natural gas industry tell me—to produce more natural gas domestically by using new technologies, and we’re in favor of that.”
The alliance was a marriage of convenience, not ideology. Pope, the environmentalist, viewed climate change induced by massive increases in carbon in the atmosphere as a global threat. He expounded on this theme in his monthly column in the Sierra Club’s magazine. If the warming of the Earth isn’t stopped, he argued, all previous club victories such as preserving wild places and protecting wildlife would be pointless. McClendon, the energy executive, was a capitalist who believed in natural gas, the down-home religion of Oklahoma. He was engaged in a fuel fight, not an environmental fight. Pope wanted to eradicate coal to cut carbon emissions. McClendon wanted to beat down coal because it would create a larger market for natural gas. They were fighting the same fight, but for different reasons. Still, the two men seem to have forged a genuine bond. “I’m a big fan of Carl,” McClendon said years later.
At the time, McClendon was well on his way to becoming a billionaire. His personal fortune was tied mostly to Chesapeake, which was tethered to natural gas. When gas prices rose, so did Chesapeake’s share price and McClendon’s wealth. Pope, meanwhile, was struggling to keep the Sierra Club’s coffers full. Following the terrorist attacks of 2001, the nation’s attention moved away from environmental causes. Pope said later that after 9/11, “the Sierra Club and all other membership organizations started getting less and less individual donations. So we became more reliant on money that came with strings. That’s the reality of the world.” Even with McClendon’s donations, the Sierra Club’s finances weren’t robust. Pope would soon cut funds for local chapters and lay off staff.
The two men also shared certain similarities. Both had run their organizations for years. McClendon had been at the helm of Chesapeake since the 1980s and ran it as if it were his personal fiefdom. He was a visionary and expected people to follow his lead. All critical decisions and many smaller decisions at Chesapeake ran through him. He set the tone and expected everyone else to follow. Pope had been executive director of the Sierra Club since 1992. It is no exaggeration that for many environmentally minded Americans, Pope set the tone for what to think about the complex issues of climate change, energy, and conservation. His vision and energy helped revitalize the environmental group and expand its membership. Pope was brilliant and possessed a seemingly boundless intellect and energy, much like McClendon. But by this point, he was also beginning to keep his board of directors in the dark about certain critical decisions. He never told them that McClendon had become a major donor.
To keep the McClendon donation hidden, Pope engaged in linguistic gymnastics. In 2008, asked point-blank at a speech in Cleveland about rumors that the Sierra Club owned an interest in oil wells, Pope replied, “We will not take money from oil companies. We have no connection whatsoever. . . . That is just a rumor.” At the time, Chesapeake was producing thirty-one thousand barrels of oil a day. The donations came from McClendon himself. Technically, what Pope said was true, even if it doesn’t pass the smell test.
The identity of Sierra Club’s secret donor was revealed to Michael Brune shortly before he took over from Carl Pope as director of the Sierra Club in March 2010. He had previously run the Rainforest Action Network—“Environmentalism with Teeth” was its slogan—and he was an activist at heart. He once took over the PA system at a Home Depot in Atlanta and announced, “Attention shoppers. Aisle ten features wood logged from Indonesia, destroying the lives of thousands of indigenous people.” Another message that day: “Attention shoppers. Thank you for buying ancient redwoods from California.” The police escorted him out. Hired by the Sierra Club, he was preparing to begin his new job when a senior Sierra Club executive said that he should take a trip to meet the group’s largest donor in his first few weeks. Brune asked who that was and where he would be going. The executive said she couldn’t tell him. Brune guessed it was T. Boone Pickens. No, was the response, but he was warm. His second guess was Aubrey McClendon.
It’s not unusual for nonprofit organizations to get anonymous donations. Donors seek anonymity for all sorts of reasons. Some don’t want to be bombarded with pitches from other groups. Others seek to avoid calling attention to themselves, preferring to let the work they support speak for itself. Generally, someone on the board of directors would be briefed about a large anonymous donation. But McClendon’s multimillion-dollar donations to the Sierra Club were a guarded secret, with only a tiny group aware that the nation’s leading environmental group was receiving funding from one of the nation’s largest fossil-fuel producers. Pope never told the board of directors.
When Brune took over the Sierra Club, his first major initiative presented to the board was to recommend snubbing the group’s largest funder, at a time when the group was struggling for money. At a weekend retreat of the board of directors in August 2010, he broke the news of McClendon’s donations to the all-volunteer board, a group of activists, lawyers, and scientists. In addition to informing them about the $26 million already received, he
also suggested that they turn down another $30 million in promised pledges. (The donation amounted to about 12 percent of the Sierra Club’s contributions between 2008 and 2010.) “It was a shocking time,” board member Jeremy Doochin recalled. “And it was a very tough decision. You had a lot of money being put to a good cause, shutting down coal-fired power plants.” The board discussed it for a couple hours and agreed to Brune’s recommendation.
Brune said it was the right choice: “We needed to be independent from companies and industries whose practices we needed to change. We can’t simultaneously accept any money, much less millions of dollars, from a company that clearly had environmental problems in an industry that was dramatically in need of reform.” The board agreed.
McClendon’s funding of the Sierra Club had remained a secret for two and a half years. During that period, Carl Pope and Aubrey McClendon stumped for gas. They appeared at industry conferences and visited with members of congressional staffers. Their message was that gas was now abundant. It was no longer a scarce resource and could be relied on as never before. Gas wasn’t perfect, they argued, but it was a bridge fuel toward a low-carbon future. Using more gas for power generation could serve two goals. First, it reduced the need to burn the coal, which released twice as much carbon into the atmosphere. Second, natural gas power plants were more flexible than coal or nuclear plants. They could be switched on and off, and could run at a quarter capacity. They were an excellent complement for renewable power sources such as wind. When the currents blowing through a wind farm died down, operators of power grids needed another power source to fire up rapidly to keep the system balanced. Modern natural gas plants could do that; coal couldn’t.
This argument, however, was out of step with the Sierra Club’s own thinking. A couple years earlier, facing increasing evidence that climate change was accelerating, Pope had led the group through a several-month process of drafting a seventeen-page policy statement of its beliefs about energy and the environment. Using less energy by improving fuel mileage and improving weatherization was the best option. Wind power and solar panels on rooftops were the “preferred” sources of energy. Acceptable energy included small hydroelectric dams and developing ways to turn inedible plants such as switchgrass into ethanol. Finally, there were traditional energy sources that could be used during the transition to a low-carbon future. The Sierra Club opposed energy from burning coal, crude from Canada’s oil sands, or the development of new natural gas fields in the United States. Pope told me that when the policy was drafted, neither he nor anyone else in the Sierra Club thought natural gas was abundant enough to play a big role.
Putting together this policy had been a monumental task. Changing it would be equally trying. Carl Pope opted to depart from the organization’s stated priorities. He took McClendon’s money and began publicly stumping with the gas executive, a man whose every statement to Wall Street boasted about Chesapeake’s plans to drill thousands of new wells and develop new natural gas fields.
Carl Pope’s new thinking about natural gas soon came to a head with Sierra Club activists in the Northeast. Early drilling of Marcellus Shale wells in southwestern Pennsylvania had proven fruitful. The industry set its sights on leasing land above the rock formation from West Virginia all the way into upstate New York. Of these states, New York turned out to be most resistant. In 2008 a bill was introduced in the state legislature to modernize its drilling regulations and permit the newfangled horizontal shale wells without a lengthy review or public hearing for each one.
As the bill made its way to the governor’s desk, Roger Downs tried to figure out what it all meant and what he should do about it. Downs was one of two paid staffers for the Sierra Club’s New York chapter and was its main lobbyist in Albany. Soon after he was hired in March 2008, he began getting calls from members visited by gas industry landmen asking them to sign leases. He was also hearing from grassroots groups in New York and Pennsylvania with horror stories about how intrusive natural gas drilling was.
Downs decided to see for himself what fracking would mean in New York. On a summer day in June 2009, he set out from Albany and drove southwest for more than an hour. He parked at a cemetery on the outskirts of the small village of Maryland. He grabbed binoculars, a notepad, and a handheld GPS. Cutting across private property, he hiked up a hill toward where the Ross #1 well was to be drilled.
At the time, the Ross #1 well was nothing more than a permit in a New York State office. Gastem USA, a unit of the Canadian oil and gas explorer Gastem, had applied for permission to drill and frack a well in Otsego County to see if there was gas in the Marcellus Shale in upstate New York. The state government was still debating whether to allow the kind of large-scale hydraulic frack jobs that were becoming commonplace in Pennsylvania. Under existing rules, Gastem could drill and frack it with no more than eighty thousand gallons of liquid. It would be a tiny frack, one twenty-fifth the size of a typical well. But Gastem was intent on drilling it. For Downs, the Ross #1 had a couple attractive qualities. It was not too far from his Albany office, and the permit listed the longitude and latitude where it was to be drilled. What better way to learn about fracking than to drop in on the well a few times over the summer and fall?
As Downs walked up the hill, the sound of faraway cars faded. He was in an unperturbed hemlock forest. He crossed a couple overgrown logging roads, but otherwise he had left civilization behind and was hiking through an intact ecosystem. He stopped to check his GPS, made some slight course corrections, and pushed on up the hill. After he had covered about a mile or so, he found a single stake in the ground with a Day-Glo orange tag on which had been written “Ross 1.”
He stood there and absorbed it all. “It was this undeveloped, unfragmented forest,” he said. “And then the context hit me. The area could survive this one well. But Gastem had forty thousand contiguous acres.” How many wells would be drilled in this area? As he looked around, he found a large wetland not four hundred feet north of the future drilling pad. “I was shocked. I couldn’t believe how close it was.”
Downs was a wetlands biologist by training. He had spent years studying these ecosystems. At a previous job, he spent nearly a decade repopulating the Susquehanna River with shad, coming up with a plan that included a fish elevator around a dam. He did a quick inventory of the wetlands near the well site, taking samples of the grassy sedges and jotting down notes. By the time he returned to his car a couple hours later, he was troubled. Drilling here in this forest? It didn’t make any sense. By the time he returned to Albany, he was ready to begin fighting fracking in earnest.
But there was a problem. As the Sierra Club’s lobbyist in New York’s capital, he knew the national Sierra Club’s leader was in favor of natural gas and fracking as well. Carl Pope was speaking in favor of gas alongside Aubrey McClendon. And there was a “one club” philosophy. The Sierra Club was strongest when it spoke with one voice, and that voice was Carl Pope speaking in favor of gas drilling. Over the past year, as New York had debated changing its rules to allow modern gas drilling, the state chapter had staked out a lonely position. It didn’t oppose the bill that updated the state’s rules, but urged a thorough environmental review that would delay gas drilling for years. A Chesapeake lobbyist buttonholed him to ask what he was doing. How could you be fighting this with us giving you so much money? Downs recalled being asked. The encounter disturbed him but also seemed to confirm a hunch. The national Sierra Club had been downsizing and letting go of staffers. Positions that opened were in the “Beyond Coal” campaign. Downs had connected some dots. The organization had money for the anticoal campaign, and Carl Pope was palling around with natural gas companies. He suspected that the national Sierra Club, based in faraway San Francisco, had gotten a little too cozy with the companies who now wanted to drill a lot of wells in New York State. “It was very uncomfortable,” said Downs. “In the Sierra Club, we were very divided. I think everyone was well intended. The national club took the thirty-thousand-
foot approach to energy policy, whereas the chapter was looking at real experiences on the ground.”
Downs returned to the Ross #1 several times over the next few months. Eventually Gastem invited him to observe the frack job in November. He spent ten hours on the pad, watching a crew frack the well and then another crew arrive to extract the water. “I thought I had understood the issues, but it was all on an intellectual level,” he said. He stood there on the pad, the forest around him hanging on to some of its fall colors, and smelled the diesel fumes coming from ten compressors. He had a little trouble breathing. And just like his first visit, he began to extrapolate this industrial process across Gastem’s forty thousand acres and then across hundreds of thousands of acres from New York’s Finger Lakes down across the state’s Southern Tier. “It was pretty staggering. It made me pretty sick,” he said.
By this point, he said, the New York chapter’s relationship with the national Sierra Club was “chilly.” The state’s executive committee a month earlier had voted to call on the state legislature to ban fracking. The San Francisco leadership called the local leaders and told them to stand down. It violated the one-club philosophy. The local chapter had to reverse its position. But the state chapter kept hearing from its members, many of whom were being visited by landmen seeking to lease their properties. A New York City councilman began raising the specter that upstate gas drilling could jeopardize the watershed that provided clean water to ten million people and require a $10 billion filtration plant. And Downs was educating himself about fracking. He began to worry about the benzene, a carcinogen, and other chemicals that were part of the fracking cocktail.