A trio of New York Times stories on natural gas shale exploration and production in late June set off a firestorm of industry response, with criticisms ranging from the stories cherry-picked the comments and data to misrepresentation of the credentials of sources.
The criticism faded a bit during the July 4 holiday week, but it seems to be heating up again.
Over the weekend The National Legal and Policy Center, a conservative watchdog group, called on the New York Times’ ombudsman to investigate the stories. According to the NLPC, the heart of the issue is that at least two of the sources cited in the article as industry insiders are not that.
“Rather they appear to be two individuals whose agenda is to publicly disparage the shale gas industry’s image and outlook,” says the NLPC letter.
The letter is critical of how one of the articles describes Deborah Rodgers as an industry insider and “a member of the advisory committee of the Federal Reserve Bank of Dallas” who is blowing the whistle on the gas industry, but the article leaves out that she is largely an anti-drilling activist and goat farmer.
But most of the NLPC’s ire is focused on Art Berman, a Houston-area geologist and consultant who has been questioning the economics of shale gas for years.
The letter points out that many of the e-mails used in the article appear to be correspondences with Berman, written by engineers, geologists and others who had seen him speak at one of several events around the country.
“Perhaps most egregiously, the [NYT] stories also neglect to mention that Arthur Berman makes his living providing investment advice based upon his own position as a shale gas critic,” NLPC continues.
“Mr. Berman offers his views regularly to media outlets which service the investment community, consistently espousing views supportive of short sellers.
Whether Mr. Berman’s clients took short open positions based on his public statements is not public information, but what is certain is that related natural gas stocks took a hit on the Times page 1 report, before bouncing back, indicating that traders likely took advantage of a very quick reputation hit, nothing more. ”
Essentially, the NLPC is insinuating Berman told investors to “short” the stocks of E&P companies involved in shale gas production in advance of the stories.
On his own blog Berman fired back, calling the letter “part of a carefully organized smear campaign orchestrated by powerful corporate interests to distract from my central argument that the shale gas plays are commercial failures.”
“I have a clean conscience about all of this and am willing to discuss it with anyone.
I told no one beyond my closest circle of family and friends about the upcoming New York Times article, and I did not make any investments, nor did any of my clients or friends, make any investments that I know about based on the timing of its publication.
I was not shown any advance versions of the article and read it for the first time late Saturday, June 25 when it was published online.
I have no active investments in stock and have not for several months. Most of my investments are in REITs, bonds, or commodity funds.”
One comment Berman makes at the end of his post caught my eye: “ I am not pleased about how the New York Times published e-mails that supposedly came through me…”
The comment seems to support a notion heard in a few other retorts to the NYT articles from some of the people and organizations cited, including Ken Medlock at Rice University’s Baker Institute, the Energy Information Administration and IHS-CERA – that the quotes and information in the articles linked to those sources were taken out of context.
Below is a segment from MSNBC that ran right after the pieces ran where Berman explains his views on shale economics in his own words (which are more nuanced than one might think if they’d only read the NYT pieces).
One key point he repeats in the interview is hard to dispute: when discussing finding costs with investors most E&Ps exclude a number of costs, such as how much they pay for leases upfront. That can and does distort the true finding costs. Companies generally report the accurate (and more expensive) finding costs deep in their SEC filings, but those are not the finding costs most widely discussed.
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Underlying this debate are energy policy issues that we need to grapple with now, while coal plants are being retired and the price of oil is so high. The fact that fireworks are still flying over the news articles shows exactly why these reservations were kept private by some of the people in the leaked emails – clearly professionals who express doubts or challenge industry claims will come under heavy fire and personal attacks. A lot of the allegations against the critics don’t seem to hold up under scrutiny, though. What I really want to know is not whether the industry is angry about the NYT coverage but whether the industry has been really honest about its reserves and the costs of producing shale gas. That to me is where the real story lies.
Howdy Neighbor:
Roger wrote, “A lot of the allegations against the critics don’t seem to hold up under scrutiny, though”
I think it is the opposite who is making the allegations, namely the critics.
I am by nature a critic and have researched the criticism. While it is true that there are isolated parts that are not in order, the isolated parts do not make up the whole.
To slur an entire industry for the actions of a few is not correct. This is called bias and prejudice.
Okay, the book of Dueteronomy has an acid test for detecting false prophets. Check the prophecy. Arthur Berman was basically canned over statements he made over some Petrohawk wells.
Can any “expert” in this debate say what happened to the Petrohawk wells and what they are now doing? How good was Berman’s forecast? Or was Petrohawk correct?
I do know the answer but since it can be found in the public domain… reporters should do something… hint… to parphrase St. Paul… oh my foolish NYT what has bewitched you?