"Mayor White has major stake in Barnett Shale production company."
Farouk Shami on Tuesday, February 9th, 2010 in a press release
Shami says White has major stake in Barnett Shale drilling company
Gubernatorial hopeful Bill White doesn’t shy away from energy issues — after all, he was mayor of Houston, a city that many oil and gas companies call home, and was deputy energy secretary for about two years during the Clinton administration.
More unusual by Houston — and Texas — standards, White touts initiatives undertaken during his six years as mayor to reduce the amount of toxic chemicals emitted by Houston's petrochemical industries.
But now Farouk Shami, White's leading Democratic opponent, is trying to use an energy issue against the former mayor, touching on concerns among residents and officials about the environmental and health effects of drilling in populated areas of the Barnett Shale, a natural gas field that stretches west and south from Dallas and covers more than 20 counties.
Shami released a statement Feb. 9 with this headline: "Mayor White Has Major Stake in Barnett Shale Production Company." In it, Shami concluded that "it's a conflict of interest at best and utter hypocrisy at worst."
First things first. Is White really connected to a company drilling for natural gas in the Barnett Shale?
Shami’s statement links White to the drilling through the former mayor’s ownership of stock in Exxon Mobil Corp., based in Irving. The oil giant is in the process of buying Fort Worth-based XTO Energy Inc., one of the leading producers of gas in the Barnett Shale. XTO says on its Web site that the area accounts for more than 20 percent of its total oil and natural gas production, and it has plans to expand its drilling there.
Shami's press release says White "has at least $2.2 million invested in oil and gas stocks, with a substantial position in the giant Exxon Mobile" (sic).
Asked how it calculated the size of White's investment, Shami's campaign provided a chart based on a federal financial disclosure form White filed in May 2009 when he was a candidate for the U.S. Senate. The campaign counted 14 energy companies in White’s portfolio during 2008, including Exxon and ConocoPhillips. Then it added up the reported values of White’s energy stock holdings.
Therein lies a problem. Instead of exact dollar amounts, the disclosure form lists a range of values for each stock, and some are pretty wide. For example, the reported value of White’s investment in BJ Services Co., an oil and gas services company on whose board he sits, is between $500,001 and $1 million – a difference of a half-million dollars. Totaling the high numbers yields $2.2 million; using the low numbers, $1 million.
In text with the chart, the Shami campaign used different language from the press release, which states that White has "at least $2.2 million" invested in oil and gas companies. The chart wording states White has "as much as" that amount.
A more definitive measure of White's holdings came from his campaign, which said his oil and gas stocks were worth $1.1 million to $1.3 million in 2009. They are in several accounts personally managed by White and account for about 25 percent of his total portfolio.
The White campaign said the candidate has owned Exxon stock for more than five years and disclosed to us the number (700) and value (about $45,000) of the shares. Since Exxon is valued at about $310 billion, White owns far less than 1 percent — a figure that Katy Bacon, a spokeswoman for the White campaign, suggested does not constitute the "substantial position" in Exxon that Shami claims.
Besides, Exxon’s $31 billion purchase of XTO, announced in December, is still pending, subject to approval by XTO stockholders and the Federal Trade Commission. That means that as of right now, owning stock in Exxon does not equal owning stock in XTO.
However, we discovered White does have an interest in Barnett Shale drilling through another company in his portfolio. According to the Texas Railroad Commission, which regulates the exploration and production of oil and natural gas, ConocoPhillips — in which White reported owning stock valued between $100,001 and $250,000 in 2008 — is currently active in the Barnett Shale through a subsidiary, Burlington Resources.
So much for assessing White's stake in the Barnett Shale. A more problematic issue is whether the investments constitute a conflict of interest, as Shami claims.
During the debate, both Shami and a reporter asked White whether he supported a proposed moratorium on new drilling in the Barnett Shale. White said he did not, arguing that emissions and other violations should be addressed on a case-by-case basis. "I think it would be unfair to shut down operations of all operators based on what some operators do," he said.
In the news release, Shami, who is in favor of a moratorium, says that "it’s disturbing to think Mayor White’s conflict of interest could be putting people’s lives at risk."
Brian Roberts, a professor of government at the University of Texas, said the ethical concerns raised by Shami are speculative and could become an issue only if White, as governor, were to participate in decisions related to oil and gas. But Roberts said the regulation of those industries largely belongs to the Railroad Commission, whose members are elected.
Putting aside the conflict issue, where does this leave us?
Shami is correct that White has a financial interest in Exxon, as well as other oil and gas companies. And it's true that Exxon is acquiring XTO, a $27 billion company that's a big player in the Barnett Shale. But Shami's assertion that White's $45,000 investment in Exxon constitutes a "major stake" in XTO is off the mark.
Though we found that White has a larger interest in ConocoPhillips, which owns another company drilling in the Barnett Shale, that too is a tiny piece of a multinational oil company's action.
We rate Shami's statement as Barely True.
Editor's note: This statement was rated Barely True when it was published. On July 27, 2011, we changed the name for the rating to Mostly False.