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Tuesday, May 6, 2003 - Page updated at 12:00 AM

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Nature Conservancy gas drilling placed endangered birds at risk

The Washington Post

TEXAS CITY, Texas — Eight years ago, Mobil Oil gave the Nature Conservancy what was one of the group's largest corporate donations, a patch of prairie that encompassed the last native breeding ground of a highly endangered bird.

Mobil officials said the donation offered "the last best hope" of saving the Attwater's prairie chicken, a speckled grouse whose high-stepping mating dance attracts avid bird watchers to the Texas plains each spring.

Then an unusual role reversal took place.

The Conservancy, whose core mission is preserving land to protect species such as the prairie chicken, started acting like an oil company: It sank a well under the birds' nesting ground.

Most environmentalists oppose drilling in sensitive areas as destructive. But the Conservancy subscribes to an aggressive form of "compatible development," a pragmatic approach that seeks to accommodate the needs of business as well as environmentalism. The Conservancy wanted to turn the Texas City Prairie Preserve into a national model to demonstrate that drilling can be accomplished without harming the environment. It would use the profits from drilling to buy more habitat for the birds.

That's not the way things worked out.

Today, there are fewer prairie chickens on the preserve than there were when drilling began. The number of endangered grouse nesting there has fallen from a peak of 36 in 1998 to a current estimate of 16. A previously unreported analysis by the Conservancy's Texas science director stated that the project had subjected the grouse to a "higher probability of death."

The drilling also led to legal and financial problems. Another national charity accused the Conservancy of stealing its mineral rights, forcing the Conservancy and its partners last year to pay a $10 million settlement.

After The Washington Post began looking into Texas City, Conservancy President Steven McCormick wrote an internal memo stating that the organization made an "incorrect" assumption about the mineral rights that resulted in "a mistake." But he insisted: "Our local staff always put the interests of the Attwater's prairie chicken first. ... We did not compromise our commitment to our mission."

A Conservancy vice president told a reporter visiting the preserve, "We have not been able to detect any negative impact on the birds."

Records and interviews tell a different story.

A century ago, the Gulf Coast was home to a million or more Attwater's prairie chickens, known for a courtship ritual marked by cocked tail feathers and inflated orange throats. Their numbers shrank as development gobbled up coastal grasslands.

Today, each member of the last wild, breeding population can be found on 2,300 acres of tallgrass prairie an hour from Houston.

Mobil drilled on the property until 1995, when it gave the land to the Conservancy. At the time, an executive called the donation "the last, best hope of saving one of the world's most endangered species." Mobil, a Conservancy official explained, wanted "to place the land with an entity that would act in the best interest of this endangered bird."

In 1999, the Conservancy announced its intention to drill. It said it had consulted with the U.S. Fish and Wildlife Service, developed a management plan for the birds and would sink its wells far from the birds' primary habitat.

In late summer that year, Conservancy biologists planned to introduce captive-bred grouse into the natural flock, allowing the birds to acclimate before falcons and other predators returned. The Conservancy stressed that oil work would halt by Sept. 1 to make way for the releases.

Drilling began midsummer that year.

The story might have ended there if not for the patchwork of oil rights underlying the preserve.

A year later, in July 2000, Houston oilman J.L. "Jack" Schneider Jr. wrote a letter to the 96-year-old nonprofit Russell Sage Foundation of New York. He said he had made "a cursory examination" of Texas records and noticed that for decades the foundation had owned partial oil rights for a 1,000-acre plot.

Schneider described his interest as "speculative," based largely on the discovery of gas beneath land 14 miles away. "We have no data indicating your area is, or will be," profitable, Schneider wrote.

He offered to buy the foundation's rights for $26,176.

The foundation sent a consultant to evaluate, which led to startling conclusions: that Schneider was fronting for the Conservancy; that the preserve's mineral rights were worth millions; and that the Conservancy already had begun draining the foundation's natural gas.

The result was a bitter legal battle between two nationally respected nonprofits. The Sage Foundation ultimately accused the Conservancy of orchestrating a "conspiracy" to satisfy its "greed."

"As far as I am concerned, it was criminal," said James Roane, a former Conservancy member who co-owned a portion of the mineral rights. "They were stealing our oil."

Mineral rights on the Texas City Prairie Preserve had been divided in two. In the north, the Conservancy shared the rights with the Russell Sage Foundation and 39 other investors. In the south, the Conservancy held exclusive rights. The grouse's habitat straddled both tracts. So did a large pocket of natural gas.

By the time of Schneider's offer, Conservancy contractors had drilled for gas on the southern tract. Instead of drilling straight down, they turned and bored northward, traveling to within 600 hundred feet of the northern tract. Unknown to the northern-tract owners, the Conservancy's drill had tapped into the natural-gas pocket deep beneath both tracts. Soon the Conservancy was selling gas owned by all the rights holders on the southern and northern tracts.

The Conservancy's plan to acquire the northern-tract mineral rights was born on a turkey hunt. Schneider explored the idea with Tom Rollins, an honorary trustee in the Texas chapter of the Conservancy and the chapter's former chairman. He and other Conservancy officials agreed to send Schneider to acquire the northern-tract rights without disclosing the true buyer.

"It sounded like it was a good idea," Ray Johnson, then the Conservancy's manager for eastern Texas, recalled in a deposition. Rollins later defended the hidden-buyer strategy as "industry practice" and a way to cheaply acquire the rights.

Sage Foundation lawyers described it this way: "Schneider and Rollins fabricated a story to hide the truth."

The wrangling in a tiny Texas courthouse dealt only with money. But paperwork generated by the litigation shows some Conservancy officials feared the drilling had harmed the endangered grouse.

Allowing newly released, captive-bred birds to acclimate to their wild surroundings was "critical," a Conservancy biologist said, placing the preferred release window in late July and early August. After that, predators would return and the chances for survival would plummet.

When the Conservancy drilled in 1999, it needed a pipeline to transport the natural gas to an interstate line. Because of construction delays, the pipeline work continued into late summer and then into the fall.

Although the Conservancy's agreements with contractors required that they complete work by the end of July for the sake of the birds, the charity did not halt construction. It allowed work to continue until November, according to depositions and an April 2000 draft report prepared by James Bergan, the organization's Texas science director, and Matt Williams, preserve manager at the time. The Conservancy released the birds three months late.

The report says Williams believed the delay "may have compromised" the operation, noting that all the captive-bred birds "died shortly after their delayed release in November."

Although the report did not give a specific number, federal records show 17 captive-bred birds were released on the preserve that year.

Bergan wrote in an analysis prepared in June 2002 that "well completion delays forced a delay in releasing (prairie chickens) and subjected them to higher probability of death from raptor predation."

Documents also reveal the preserve suffered a gas explosion and an unspecified number of oil spills.

In his deposition, Johnson of the Conservancy said that if the endangered birds were the sole concern, "it would have been better if we didn't have any activity on our preserve."

By January 2002, the Conservancy's natural-gas operation had generated about $8 million in revenue. Officials planned to spend half purchasing additional habitat along the Gulf Coast, but failed to do so. Now, much of the profit has gone toward the lawsuit settlement.

After contributions from its insurance company and partners, the Conservancy said, it paid $5.6 million toward the $10 million settlement.

The Conservancy still expects to make a net profit on the well and says it will spend the money on the endangered birds.

After The Washington Post began examining the Texas City project, Conservancy President McCormick issued a memo to staff members and state trustees describing "tactics" used at the preserve as "not consistent with our values." McCormick informed the trustees about the newspaper's inquiry and stressed that he saw nothing to be gained by "keeping bad news quiet."

That startled parties to the suit, who said that in return for the $10 million settlement, the Conservancy had demanded they sign gag orders. Many declined.

McCormick later explained in an interview: "We just didn't want people to talk about how ... stupid we were."

Last October, the Conservancy dispatched biologist Stanley Temple, a trustee of its Wisconsin chapter, to Texas City. After spending a day at the preserve, he concluded that the staff had made "heroic efforts" and "met the challenge." Despite the drop in birds, he said, the operation was important for showing that birds can coexist with oil rigs.

Today, the Conservancy continues to pump gas from beneath the endangered species and says it would drill again, given the opportunity.

"The takeaway lesson from our experience at Texas City," McCormick wrote, "is that we need to learn how to manage the risk, not how to avoid it altogether."

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