NCtrend: Stepping on the gas
Vikram Rao tools around the Raleigh-Durham area in a red 2015 Mazda Miata with the top down regardless of the cold, unless it’s raining or snowing. A native of sultry India, Rao isn’t fazed by North Carolina’s moderate weather or friends who think he’s a “nut” for not staying warmer. He’s used to taking some flack. Rao, 70, is chairman of the N.C. Mining and Energy Commission, where he’s drawn the ire of environmentalists who say that the panel’s recommendations to the legislature favor industry over the risks of water and air pollution. His 34-year energy career, including his last post as chief technology officer for Houston-based Halliburton Co., the largest provider of hydraulic-fracturing services, makes him an easy target. “I have a taint because I was with Halliburton, the evil empire,” he says.
Because of his industry experience, however, there’s no one better positioned to write modern drilling regulations in North Carolina, he says. “I probably know more about gas and oil than anybody in the state, which is not saying much. For me to have said ‘no’ would have been wrong.” Rao caught the eye of influential North Carolinians in 2008 after his wife took a job at UNC Chapel Hill’s medical school. He was hired by Durham-based RTI International, a nonprofit research institute, as executive director of a consortium of the institute and the Triangle’s three big research universities that conducts studies on electric cars and solar power, among other projects. In 2012, N.C. Senate President Pro Tem Phil Berger appointed Rao to the new 14-member commission, directed by a state law to develop rules for harvesting oil and natural gas. The General Assembly had passed legislation that removed prohibitions on horizontal drilling after overriding a veto from then-Gov. Beverly Perdue. She said the bill provided inadequate protection for the environment, foreshadowing the clash between drilling supporters and conservationists, including the Charlottesville, Va.-based Southern Environmental Law Center and dozens of organizations that oppose the practice.
Hydraulic fracturing, or fracking, injects a combination of water, chemicals and sand into underground rocks known as shale, creating cracks that allow natural gas to flow through wells to the surface. By reaching rock once thought unattainable, fracking is spurring an oil and gas boom in the U.S. that has led to lower prices and prospects for U.S. energy independence. The process also produces millions of gallons of chemical-laden water stored in pits, prompting complaints in other states of tainted wells, livestock deaths and risks of soil and air pollution. It’s a charged debate: The commission received 217,000 comments last year from more than 30,000 groups and individuals seeking a voice in the state’s new rules.
Rao joined the debate in 2012 by writing Shale Gas: The Promise and the Peril, a 196-page book that defines industry jargon, lists pros and cons of fracking as well as ramifications for global oil production and national defense. Rao’s initial draft didn’t address whether the economic rewards of fracking outweigh the risks. At the urging of reviewers, he added a conclusion: Benefits of cheaper energy are worth the potential costs as long as safeguards are adequate and regulators enforce rules. “Cheap energy enables people, it keeps people warmer,” he says. “Cheap energy is absolutely at the root of solving poverty, in my mind.”
Vikram Rao says he probably knows more about oil and gas than anyone in the state. “I have a taint because I was with Halliburton, the evil empire.”
Rao grew up in India, one of three brothers whose family moved every three years because of his father’s finance job with the national railroad. At age 16, Rao witnessed deprivation while making the two-day train trip from his home in Delhi to Chennai, where he earned an engineering degree from the Indian Institute of Technology. “When you’ve been in India, you understand what privation is – other people’s privation even if you don’t suffer it,” he says. “In India, you see it all the time, every day. When you go anywhere from anywhere, you see poverty.” He came to the U.S. to attend Stanford University, earning advanced degrees in materials science and engineering. In California, he met Susan Henning, a biochemist and his wife of four decades. He started his career in 1974 in the Hightstown, N.J., research lab of NL Industries Inc., working in metal recycling. He transferred to Houston to work in the energy unit of the company, which was acquired by Halliburton in 1998. In 2001 one of the couple’s three sons enrolled at UNC Chapel Hill, and the parents fell in love with the region.
“We are so lucky here in North Carolina to have someone with that expertise,” says Ray Covington, a commission member and landowner in Lee County, which is expected to be the hotspot of the state’s fracking industry. “He is an engineer and a scientist. He’s brought a conservationist’s viewpoint to the commission.” Rao has shown a more independent streak than some commissioners, including Jim Womack, the former Lee County commissioner and economic-development consultant who preceded Rao as chairman. Environmentalists criticized Womack for meeting privately with Raleigh lobbyist Bo Heath of McGuireWoods Consulting LLC, which represents energy companies including Halliburton and Koch Industries Inc., The Associated Press reported last May. Rao declined invitations to meet with Heath because “the optics were bad” given his career at Halliburton, the AP reported. Rao replaced Womack as chairman on Aug. 1.
Rao “is a scientist, which gives him a broader perspective than Mr. Womack,” says Hope Taylor, executive director of the Durham and Asheville offices of the nonprofit Clean Water for North Carolina. But Rao overlooks dangers of water contamination, toxic emissions from drilling and other negatives in assessing economic benefits of fracking, she says.
Regulations recommended by the commission to state lawmakers would protect the environment if enacted properly and adequately enforced, Rao says. For example, safeguards require that wastewater storage pits be double-lined with sensors that notify state regulators if the first liner is breached. At the same time, Rao says he favors more environmental protections and that he may recommend them to the legislature — as a private citizen, not as the commission chairman. He’d like to see the in-ground containment of wastewater replaced by above-ground tanks, with one caveat: that above-ground storage is actually determined to be safer. That’s a topic he’s researching now.
The legislature will likely enact the commission’s rules as early as March, Rao and Taylor say. But fracking is probably years away in North Carolina because of slumping energy prices and scant research quantifying the supply of natural gas. (Estimated reserves are low compared with other states, Rao says.) By then, Rao won’t have as much say in the policies because his panel will be dissolved July 31, making room for a new oil and gas commission that will oversee the industry.