Oil Battles Wind on the Great Plains

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AP Photo/David Crenshaw, File

The Great Plains of Oklahoma are dotted with cattle, wheat fields, and the seesawing donkey-shaped jacks that drag crude oil from the shale rock beneath. Notwithstanding the collapse of commodity prices, some 190,000 active oil and gas wells in the state provide jobs, directly and indirectly, to an estimated one in six Oklahomans. Even the statehouse in Oklahoma City is surrounded by wells; one is nicknamed Petunia, after the flower bed on which it was drilled.

But increasingly, in Oklahoma's western half, the land is also populated by wind turbines-giant, white structures on farms with names like Blue Canyon and Renewable Frontier.

Those turbines are turning the storied wind that comes sweeping down Oklahoma's plains into an increasingly critical statewide energy source. Wind now provides 18 percent of the state's electricity, a higher share nationally than any states besides Iowa, Kansas, and South Dakota. In many Oklahoma counties, wind energy equipment-including more than 2,000 turbines statewide-has put cash in the hands of landowners and driven up property values, freeing up money for schools and public services.

But a handful of oil and gas executives have set out to trim the wind industry's sails. Starting in March, billboards began popping up along the Interstate in Oklahoma City, near the capitol building and the Petunia well. Their origin wasn't clear at first, but their message was: The tax credits that have spurred Oklahoma's wind energy boomlet are bad for the state. Blared one billboard: "Cost to Oklahoma taxpayers in 2016 is $242 million. Out-of-state wind companies benefited. That BLOWS."

The provenance of the signs didn't remain a mystery for long, however. News reports disclosed that they were paid for by the Windfall Coalition, a nonprofit group started by Harold Hamm, the billionaire founder of oil-and-gas behemoth Continental Resources. Other supporters include Pete Delaney, the former chief executive of coal company OGE, and Jeff McDougall, president of JMA Energy Co., an oil-and-gas producer.

As Oklahoma's legislators struggle to close a $1.3 billion state budget deficit before the end of May, the fossil fuel tycoons are leading an anti-wind campaign that wields the state budget crisis as a convenient cudgel. Hamm argues that wind, an industry no longer in its infancy, should be subject to the same production tax rate as oil and gas-2 percent in the first three years, and 7 percent after that. He also wants to see the end of all state tax incentives for wind energy. (At press time, Hamm and the Windfall Coalition had not responded to an interview request for this story).

"They have put a grand spotlight on the excessive costs of the wind power incentives that has really helped educate and motivate a lot of legislators," says state Senator Mike Mazzei, a Republican who represents parts of South Tulsa, Broken Arrow, and Bixby, in eastern Oklahoma. While Mazzei says that a production tax on wind wouldn't have the votes to pass, he has drafted legislation that would cap the zero emissions tax credit for new wind energy projects. He says that subsidy, in its current form, will cost the state $58 million this next fiscal year.

But some legislators say it's the fossil fuels industry that should be getting more scrutiny. They point to a dramatic rise in earthquakes linked to the drilling technique known as fracking, a raft of tax breaks that exceed those given to wind, and millions in state spending each year to import coal from Wyoming. Industry critics say the problem is not wind, but the influence that Hamm and his coalition's influence in the Greco-Roman halls of the Capitol.

Hamm and the coalition took out a full-page ad in The Oklahoman last Sunday, at a price of $33,000, the paper says. A package of three billboards cost roughly $17,500 all told. (The wind energy industry has meanwhile countered with its own billboards). Shelley Shelby, a lobbyist for Hamm's oil company who is also affiliated with Windfall, disclosed more than $1,400 in lobbying expenses last month, including nearly $1,000 on lunch events for state representatives and $160 on basketball tickets for the state's governor, Mary Fallin. (Hamm and other Windfall Coalition officials were not available for comment.)

"Why are we looking at wind?" asks Cory Williams, a Democratic state representative from Stillwater. "Because that's where we're being told to look. Who is telling us to look there? The Windfall Coalition. Who is running that? Harold Hamm. The greed of oil and gas in Oklahoma and the ineptitude of politicians is like nothing you've seen."

Wind energy supporters say the fossil fuel industry's influence threatens to slow the state's progress toward a clean energy future. They note that last year, the wind industry already gave up an exemption on property taxes, and that the industry's only remaining state tax credit is scheduled to sunset at the end of 2020. Altering that credit now would destabilize investments and put projects at risk, say environmental advocates. Industry backers also say that many of the Windfall Coalition's arguments rely on misleading math, anti-foreign sentiment, and a heaping helping of hypocrisy. "They are trying to destroy wind energy at all cost, lying included," declares Johnson Bridgewater, executive director of the Sierra Club's Oklahoma chapter.

Oklahoma's anti-wind campaign has roots in one man's "not in my backyard" sentiments. Two years ago, a company called EDP Renewables sought to build a 59-turbine wind farm in northeast Oklahoma's Craig County. One nearby landowner objected to the turbines, which he said would mar the view from his Double R Ranch. That landowner happened to be Frank Robson, a real-estate executive and the brother-in-law of the late Walmart founder, Sam Walton.

Robson started a nonprofit dubbed WindWaste, to educate Oklahomans about what it calls "the harmful effects of industrial wind." The group argued, among other things, that wind farms cause "wind turbine syndrome," a controversial diagnosis (for headaches and dizziness) that has not been recognized by the U.S. Centers for Disease Control and Prevention. According to the Energy and Policy Institute, a pro-clean-energy think tank, Robson began to refocus his attacks on wind after hiring consultants who advised him to drop the NIMBY talk and highlight instead the state's financial support of the industry. Hamm has credited Robson for introducing him to the issue. (Robson, who has also become a key supporter of the Windfall Coalition, declined to comment for this story).

Last year, anti-wind forces gained a victory in the legislature, with the passage of bills that amended two tax breaks. Jeff Clark, executive director of the Wind Coalition, which represents wind industry developers, says his group recognized that the existing incentives were "overly generous." Particularly given the state budget crisis, wind officials were prepared to give them up, he says. "They worked extremely well with me," says Earl Sears, a Republican state representative from Bartlesville, in eastern Oklahoma, who authored one of the bills.

Around the same time that Oklahoma's politicians were looking to hike taxes on wind, they were busy slashing taxes on the wealthy, and on oil and gas.

In 2014, in the era of $100-a-barrel oil, the legislature cut production taxes on new wells from 7 percent to 2 percent, after three oil companies, including Hamm's, threatened to haul up their rigs and drill elsewhere. Legislators have also reduced income taxes on Oklahoma's top earners, from 6.65 percent in 2004 to 5 percent beginning this year.

Now, with oil prices in the tank, politicians are scrambling to repair this partially self-inflicted wound. Signs of financial strain are everywhere. Some schools have gone to four days a week. The tough-on-crime state is laying off prison guards and contemplating criminal justice reform. The state Department of Human Services has cut 700 positions and expects to slash more.

In recent months, Hamm's pressure on Oklahoma officials has become more overt. In March, the Office of the State Treasurer released a report featuring guest commentary from Hamm and Pete Delaney. It also included a chart, similar to one used by the Windfall Coalition that appears to suggest that Oklahoma's wind energy is contributing to a drop in natural gas prices. (Economists, including Stanford University's Frank Wolak, says linking the state's wind energy production with falling gas prices worldwide is a stretch.) Wind industry officials say that after they queried the treasury office about the numbers, state officials issued a clarification.

Hamm's group has also sought to whip up public angst over the number of out-of-state and foreign wind farm owners. His billboards feature images of turbines affixed with flags from South Korea, Maryland, Texas, and Germany. Wind advocates say that part of balancing the budget is bringing in money from out of state and overseas. "You would never turn away British Petroleum when they want to invest, or Shell when they want to invest," says Clark. "That's terrible for Oklahoma's economy."

As Hamm has hammered wind, however, tax incentives for his own industry, oil and gas, have slowly begun to receive greater scrutiny. According to the Oklahoma Policy Institute, a think tank, tax breaks and cuts to oil and gas cost the state more than $600 million last year, significantly more than those for wind. One break, in particular, seems made for satire. The state offers a rebate to wells that lose money, meaning that Oklahoma is subsidizing oil producers to pump even more crude into an already oversaturated market. That break would cost taxpayers around $158 million next year, according to the Oklahoma Tax Commission. Last Thursday, the state Senate voted to suspend the oil credit, and the House is expected to take it up soon.

Mazzei, the GOP state senator, says the legislature is taking responsible action to halt that "out of control" incentive. But he says that people who try to equate oil and gas credits with those offered to the wind industry need to keep in mind the drilling industries' broader economic benefits. "Oil and gas, which do have their fair share of incentives, produce thousands and thousands of jobs and millions and millions of payroll taxes," he says, something that he argues is not true for wind.

In Enid, the northern Oklahoma town of 50,000 where Hamm started his oil business, the reality on the ground is starting to look a little different. The surrounding county has two wind farms, 300-megawatt Chisholm View, run by a Boston company, and 100-megawatt Breckenridge, owned by a Florida firm. Brent Kisling, executive director of the Enid Regional Development Alliance, says the payments landowners get from the wind farm operators are equivalent to a manufacturing plant coming to town and hiring 80 people at the county average wage of $35,000. "We love out-of-state companies investing here," he says. As the legislative session ends, Kisling is hoping that Oklahoma's attempts to diversify its energy future aren't blown off course.