May 19, 2024

Hydrofracking Debate Spurs Huge Spending by Industry

Companies that drill for natural gas have spent more than $3.2 million lobbying state government since the beginning of last year, according to a review of public records. The broader natural gas industry has been giving hundreds of thousands of dollars to the campaign accounts of lawmakers and the governor. And national energy companies are advertising heavily in an effort to convince the public that the extraction method, commonly known as hydrofracking, is safe and economically beneficial.

Environmental groups, with far less money at their disposal, are mounting a more homespun campaign as they warn that hydrofracking — a process in which water mixed with sand and chemicals is injected deep into the ground to break up rock formations and release natural gas — could taint the water supply and cause untold environmental ruin.

One environmental group held a Halloween contest in which participants were asked to design costumes for drill rigs. And, claiming Mr. Cuomo is rushing the approval process for drilling by collecting public comments for 90 days, environmentalists delivered 180 water-powered clocks to the governor’s Capitol office, representing the number of days they are asking him to allow for people to weigh in.

The activity on both sides of the debate is intensifying as New York conducts four public hearings across the state, beginning Nov. 16 in Dansville, a rural community in the Finger Lakes region, and winding up next week in TriBeCa.

Interest in the issue is so widespread that Joseph Martens, the state environmental conservation commissioner, said people have taken to stopping him on the street in the Albany suburb where he lives.

“It’s very, very intense; there’s no question about it,” Mr. Martens said in a recent interview. “And it’s part of a national debate.”

Mr. Cuomo, whose first effort to field questions online from residents was swamped by the hydrofracking issue, is pleading for both sides to be patient.

“I know that the temperature is high,” he said recently. “We have a process. Let’s get the facts. Let the science and the facts make the determination, not emotion and not politics.”

The lobbying push in New York follows similar efforts by the energy industry to influence lawmakers and regulators in Washington and in other parts of the country that are rich in shale formations. Several other states, including Texas, Pennsylvania and Ohio, have also seen millions of dollars in spending in recent years by drilling companies on lobbying, campaign contributions or both.

Much is at stake as the Cuomo administration seeks to develop hydrofracking regulations: proponents say the industry could create jobs and spending in some of the most economically struggling parts of the state, especially its Southern Tier, while environmentalists warn of risks to water quality and damage to roads. And industry estimates suggest that allowing hydrofracking in New York State could generate billions in revenue for energy companies.

“What we are seeing is the concerted application of really a substantial amount of money to try to move public policy into a pro-fracking stance,” said Susan Lerner, the executive director of Common Cause New York, which has raised concerns about the environmental impact of hydrofracking. “It is a tremendous amount of pressure on our state government.”

The debate over hydrofracking has offered a new test for Mr. Cuomo, a Democrat who has declared job creation to be his top priority — but who has also cast himself as a champion of the environment.

Protesters upset with his handling of the issue have been a fixture at the governor’s appearances this year, trailing Mr. Cuomo at the State Fair and staking out an underground convention hall where he had invited former President Bill Clinton to give a speech to business leaders about economic development.

Desperately seeking to attract the attention of lawmakers and regulators, environmentalists are flooding the mailboxes of state officials and editorial page editors, picketing the Capitol and staging theatrical stunts.

“This is something that, because of the scale of drilling that’s being looked at, has really captured the public’s attention,” said Robert Moore, the executive director of Environmental Advocates of New York. “You have people who don’t normally identify themselves as environmentalists who suddenly have real concerns about this.”

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DealBook: Glencore to Emerge From Shadows With I.P.O.

Ivan Glasenberg, Glencore’s chief executive, on a teleconference in Hong Kong. The company’s stock offering, set for May 24, could raise $11 billion.Bobby Yip/ReutersIvan Glasenberg, Glencore’s chief executive, on a teleconference in Hong Kong. The company’s stock offering could raise $11 billion.

LONDON — Tucked away in a small village about 30 minutes from Zurich, Glencore International has grown from a small, secretive trading firm into one of the biggest buyers, sellers and producers of commodities in the last three decades. Behind the scenes, Glencore touches most basic resources, like sugar in coffee and the wires in cellphones.

Now, the commodities giant is stepping into the public eye for the first time, with a stock offering set for May 24 that could raise $11 billion. The hotly anticipated debut, which would be the world’s largest so far this year, values the company at $61 billion and will significantly increase the personal wealth of the 485 senior employees who currently own Glencore.

The initial public offering represents an important evolution in Glencore. The company — which handles the physical supply of 3 percent of the world’s daily oil consumption, as well as owning mines, refineries and drill rigs — is jumping into the markets amid a commodities boom that some worry has reached its peak.

But some investors question whether Glencore will be able to move beyond its shadowy past, which includes dealings with rogue states. It also remains to be seen whether Glencore can make the transition from a commodities dealer working in secrecy to a transparent public company that has to regularly report its finances. In its prospectus, it lists “fraud and corruption” among the top risks for its trading operation.

“There are some areas you don’t get too much clarity on,” Egon Vavrek, a fund manager at LGT Capital Management in Switzerland, said.

The offering documents provide a rare, albeit limited, glimpse into how the company operates and its vast influence on the commodities market. Glencore — whose nondescript headquarters are in the Swiss canton of Zug, known for its low tax rates — controls 60 percent of the third-party zinc market and 20 percent to 40 percent of alumina, thermal coal and cobalt. Glencore’s largest shareholder is its South African chief executive, Ivan Glasenberg, whose 15.8 percent stake would be valued at $9.6 billion in the share sale.

A spokesman for Glencore declined repeated interview requests, citing financial regulations in the United States against comment before the listing.

Glencore was started in 1974 by the commodities trader Marc Rich. Mr. Rich — who fled to Switzerland following tax evasion charges and was later pardoned by President Bill Clinton — famously made his money through risky deals, including buying oil in postrevolution Iran and selling it to Israel.

In the 1980s, Glencore started to expand beyond trading activities, buying a stake in a Peruvian zinc mine and other commodity assets. To gain a competitive edge, Mr. Rich forged strong relationships with business and political leaders in countries with large commodity reserves that were deemed too dangerous or corrupt by others, said Daniel Ammann, author of “The King of Oil: The Secret Lives of Marc Rich.”

The strategy continued after a group of managers, including Mr. Glasenberg, bought the company from Mr. Rich for about $600 million in 1994. Mr. Glasenberg had joined Glencore 10 years earlier, originally sourcing coal in apartheid-era South Africa. By the time he took over as chief executive in 2002, Glencore’s investments in mines and other physical assets earned a large chunk of its profit.

“Glencore goes for early stage or undiscovered areas where value is best and price is lowest,” Timothy Huff, a director in equity research at RBC Capital Markets, said. “Price is lowest because perceived risk is highest.”

Mr. Ammann added: “If there was a strike in Guinea, Glencore would be the first to know about it and be able to exploit it.”

Such tactics proved controversial. A 2004 report published on the Central Intelligence Agency’s Web site cited records that claimed Glencore had paid $3.2 million in illegal surcharges to Iraq, under Saddam Hussein, for oil outside the United Nations oil-for-food program. The company denied the allegations at the time.

Over all, Glencore’s appetite for risk paid off. In 1997, Glencore bought a stake in Kazzinc, a zinc producer, from Kazakhstan at a time when that company was suffering from bad management and corruption. The investment not only helped increase production, it reduced unemployment in the region, making it popular with the government.

A decade later, Glencore was the only company willing to lend to Katanga Mining in the Democratic Republic of Congo, which was desperate for cash after the price of copper slumped amid the financial crisis. Once the market recovered, Glencore reaped big profits.

Glencore generates the bulk of its $6.1 billion profit from its industrial assets, including a 34.5 percent stake in Xstrata, another Swiss mining company.

“Over many decades, we have developed Glencore into an unrivaled global integrated commodity producer and marketer,” Mr. Glasenberg told potential investors in April. “An I.P.O. is the next logical step.”

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