By Michael Roberts
By Michael Roberts
By Michael Roberts
By William Breathes
By Jonathan Shikes
By Michael Roberts
By Jonathan Shikes
By Michael Roberts
When Jack Grynberg breezes through the doors of the Grynberg Petroleum Company, attention must be paid. Wearing a dark-blue pinstripe suit, dark glasses and a well-traveled Stetson, an unlit cigar scissored between the fingers of one hand, he seems like a shorter, Greenwood Village-CEO version of the Lone Ranger, come to set things right.
The receptionist hands him a stack of phone messages. There are reports to be reviewed, correspondence needing his signature. Grynberg waves it all aside. A pupil awaits, and there's nothing the 74-year-old wildcatter likes better than giving lessons in how the oil and gas industry really operates.
Grynberg leads the way down a corridor cluttered with boxes of legal files, past his paper-strewn corner office and shelves crammed with maps and production reports from gas fields around the world, to a conference room bedecked with seismic readouts and more maps. He dims the lights, takes off his hat, leaves the shades and the stogie in place. Then he fires up a PowerPoint presentation dealing with one of his industry's most closely guarded secrets: not how to find natural gas -- that's the easy part -- but how to steal it.
"In the summer of 1994, I went out to a field where I had 22 gas wells in northwestern Colorado," he begins. "This is the Blue Gravel Field, just eighteen miles north of Craig. I'd been getting monthly reports from the pipeline company on the amount of gas production and the heating-content analysis. To get the heating content, you have to have a temperature probe."
He pauses. On the screen, a diagram of a gas pipeline flashes, showing the gas going through a separator and a dehydrator before reaching a meter and a probe.
"I went out there," he continues, "and I couldn't find a single probe. Not for 22 wells."
For the next hour or so, Grynberg holds forth on the dozens of ways that pipeline companies and other entities can chisel gas producers out of their due. The alleged techniques involve mis-measuring gas volume and heat content (BTUs) or not measuring at all; tampering with meters or bypassing them; funny math, bad chemistry and substandard equipment. It's an astonishing lecture, backed up by court exhibits that Grynberg has used in his prodigious litigation against some of the largest gas companies in the country. He speaks quietly, but with a tone of unmistakable outrage:
"There are eleven ways to steal using analog meters. I went to a place where they make the meters in Littleton, and they showed me six ways you could tamper with the spring.... Then I discovered that on nine of my wells, they had the audacity to be super-crooks, to have a line going around the meter.... Here's a picture of the orifice plate. If it's larger than reported or it's chipped, the computations can be off to the fourth power."
It would be easy to dismiss another man ranting about a far-flung conspiracy to cheat him as slightly paranoid -- but not Grynberg. After more than forty years in the business, his family-owned companies have interests in hundreds of wells, most of them overseas, with a success rate that would put most independents to shame. And over the past two decades, he's fared almost as well in the courtroom as he has drilling for gas. Although many of the settlements are confidential, Grynberg says he's collected more than $60 million from his lawsuits against the energy giants, including whopping checks from Kinder Morgan, Questar and even Enron, years before its notorious collapse.
Among his foes, Grynberg is regarded as intensely litigious, "a professional plaintiff," a nuisance, a pariah and worse. He hasn't always prevailed in his lawsuits; even the savviest oilman hits a few dry holes. But his accusations of widespread fraud in the oil and gas industry have implications well beyond his own pocketbook. They've attracted the attention of Congress, government investigators and watchdog groups looking into how energy companies have shortchanged taxpayers and Indian tribes on billions of dollars of royalties owed for production on reservations, public lands and offshore leases.
Much of the heat has fallen on the Minerals Management Service, an obscure branch of the Department of the Interior responsible for collecting federal royalties on oil, gas and mineral leases. Energy production on federal lands has soared in recent years, spurred on by higher prices. But under the Bush administration, the MMS has cut back sharply on the number of audits it conducts of energy companies, despite alarming reports of bungled leases and dubious accounting ("Duke of Oil," September 8, 2005). That's prompted several MMS auditors, frustrated by their bosses' refusal to pursue cases of possible fraud, to file their own claims against the companies under the False Claims Act, a federal law that allows whistleblowers to sue on behalf of the government and collect a portion of any proceeds for themselves.
The Project on Government Oversight, a Washington-based nonprofit, has identified more than $11 billion in lawsuit settlements owed by oil and gas companies to states, tribes, the feds and private parties as a result of royalty underpayments from 1990 to 2001. But that may be just the beginning. "There's no doubt that there's an enormous amount of fraud," says Beth Daley, POGO's director of investigations. "They've been caught with their hands in the taxpayers' pockets over and over again."
Grynberg contends that the fraud is far greater than most people realize. And in addition to his private legal battles, he's pursued the mother of all False Claims Act cases, accusing the industry of cheating on royalties on public and tribal lands in several states, using many of the techniques for undervaluing production that he discovered at his own wells. Originally filed in 1995, the complaint has expanded over the years to encompass 73 cases and more than 300 defendants -- a virtual who's who of the oil and gas industry. Grynberg says he's spent more than $20 million out of his own pocket on the case, but the potential payoff is huge. He calculates the amount of underpayments at $35 billion. With triple damages, and the possibility of collecting up to 30 percent of any settlement, a victory could make him one of the wealthiest men in the world.
The federal government can intervene in a False Claims Act case it deems sufficiently promising, but it has not done so in Grynberg's action. Last month, a federal judge in Wyoming overrode the recommendations of his own special master and dismissed most of the 73 cases, ruling that Grynberg's claims don't meet the exacting specifications of the False Claims Act. Grynberg, who's had a fair record of getting unfavorable lower-court decisions reversed by higher-ups, has vowed to appeal.
The ruling is just one more bump in a long road that has tested his tenacity and shaped his combative nature, going back to his childhood in eastern Europe during the Holocaust and an adolescence spent partly as a soldier in Israel. His high-stakes battle with his own industry is far from over.
"Grynberg is a David taking on a whole host of Goliaths," says Jim Moorman, president of the False Claims Act Legal Center. "The oil and gas industry is very good about procedural confusion, but the court should be looking at whether he's right or wrong on the facts."
Several industry sources declined to comment on the record about Grynberg, citing his litigiousness. But in private, they dispute his motives and his conclusions, suggesting that he's exaggerating problems stemming from outmoded "legacy equipment" and other issues in pursuit of his own gain. "I don't think anyone is opposed to accurate measurement," says one industry observer. "We get paid on that."
Yet his long-running lawsuit is only one prong of Grynberg's current attack. He's assisted state and local officials mounting their own legal battles against energy companies, from Alabama to Aspen, and all without pay. He's pushed for changes in federal law to correct what he sees as inequities in the False Claims Act. He's met with lawmakers seeking to change the way business is done at MMS. And he's been a major force behind a proposed bill that could have a profound impact on standard practices in the American gas industry.
"I'm optimistic," he says cautiously, "that a number of things can be set straight."
W ildcatters rise or fall depending on their ability to stick to a few simple principles. Luck has something to do with it, to be sure, but probably not as much as gut feelings and a solid grasp of geology. In the case of Jack Grynberg, a keen instinct for survival and a fascination with science have served him well.
Grynberg was born in Brest, Poland, in 1932. He was in his second year of grade school when the Nazi invasion ended his education. Grynberg's mother served as a doctor in the partisans; by age twelve, young Jack was toting a rifle and guarding German prisoners in the woods of Belarus. After the war, he and his parents attempted to flee the new Communist regime, only to be caught by Czech state police and sent back. They spent two weeks in prison, were released and fled again.
After a year of high school in Scotland, Grynberg went to Palestine in 1947 and joined the Irgun, an irregular militia outlawed by the British. "I was a terrorist," he says with a slight smile. "A blond, blue-eyed kid who spoke with a Scottish accent." He was there for twenty months during Israel's war of independence, when the Irgun was folded into the regular Israeli army.
A scholarship from the Colorado School of Mines brought him to the United States at the age of seventeen. He completed a chemical engineering degree in two and a half years, worked briefly in research and development at Conoco, then launched his own consulting business. His knowledge of Russian led to a stint in the U.S. Army's radioactive-warfare section in Maryland in the mid-1950s ("worked as a scientific spy," his resumé explains). While stationed there he met a college senior, Celeste Bachove, and soon married her. The couple has three grown children.
Grynberg returned to Colorado and began prospecting as an independent oil and gas man in the early 1960s. He reworked a Wyoming gas field that had been written off by a previous operator and soon struck it rich. His company, Oceanic Exploration, went public and began exploration on an international scale. In the 1970s, a court battle broke out between Grynberg, the company's largest stockholder, and company management; in 1981, Grynberg took over Oceanic's offices in downtown Denver and locked out its corporate executives. He sold his interest in the company a few months later.
By that point, he'd dabbled in uranium mining, drilling contracting and a host of other projects. In more recent years, he's focused on oil, gas and gold ventures in the former Soviet Union, Africa, the Middle East and Latin America. On any given day in his Denver Tech Center offices, it isn't unusual to hear talk of the prospects of generating electrical power from sugarcane in the Caribbean, good news from a well in New Mexico and an update on Grynberg's interests in the gas fields of Kazakhstan.
It's also not unusual to hear discussion about Grynberg's other long-range, high-risk enterprise: battling energy companies in court. His disputes with pipeline companies date back to the late 1980s and early 1990s, when he became embroiled in a series of lawsuits with Enron, Questar and KN Energy (now Kinder Morgan) over the value of his gas. The companies claimed they were following standard practices of a highly regulated industry, but the closer Grynberg looked, the more suspect the "standard practices" appeared.
Grynberg had seen digital meters on state-of-the-art pipelines in Europe and Canada. Many older American pipelines used less accurate analog meters, and the errors he found tended to favor the pipeline companies. In other countries, the temperature probe measuring heat content is located upstream of the meter. The probes on Grynberg's gas were placed downstream of the meter, farther away from the wellhead and in the wake of a cooling process, known as the Joule-Thomson effect, that occurs as a result of the gas compressing as it passes through the meter and then expanding again. The result is a lower BTU measure, and a lower price to the seller.
It would be one thing if these practices were consistent throughout the American gas industry, but Grynberg insists they aren't.
"You tell me the answer," Grynberg says. "When Questar buys gas from me, they put a probe downstream of the meter. When the gas reaches Salt Lake City and it's sold to a Questar affiliate, the probe is upstream of the meter. They make my case."
As Grynberg dug deeper, he found a pattern of what he considered deliberate cheating. The pipes carrying his gas led to a master meter miles away. Because of the inevitable leaks and shrinkages involved in transporting gas over long distances, you would expect the figures on the master meter to show at least a slight decline in the volume of gas compared to the measurements of the same gas at the wells. But the master meter figures for one of the pipeline companies showed a significant increase over what the company was reporting to him. "They were stealing as much as 12 percent a month," he claims.
There was more. Lines supposedly used for maintenance that bypassed the meters entirely. Ways of skimming condensate or creating turbulence in the line to temporarily lower BTU figures. Using the wrong filters or outmoded equipment to undervalue the gas. Some of the techniques reduced the payments the pipelines made to him by only a percentage point or two; if employed collectively, though, they amounted to as much as a third of the total value of the gas.
Grynberg intently studied the paperwork the companies had to submit to the Federal Energy Regulatory Commission, hunting for discrepancies between what they reported to him and what they reported to the government. He even devised a formula expressing the relationship between the specific gravity of natural gas and its heating content so that he could chart the undervaluations. When he found numbers that simply wouldn't add up on a form submitted by an Enron subsidiary, he brought it to the attention of the regulators -- and soon became convinced that the government was, to some extent, complicit in the scam.
"I write to FERC," he recalls. "I say, 'Hey, look at these forms. They're stealing.' I call them up, they say, 'We're studying it.' I call them up again. 'We're still studying it.' Finally, I call them up, and they say, 'Don't call us. We'll call you.' Three months later, they discontinued the forms. The lobbyists earned their money on that one."
In a contractual dispute over gas prices with Enron, Grynberg brought in Lawrence Klein, the Nobel-winning pioneer of econometrics, to testify as an expert witness. On the fourth day of trial, the smart lads at Enron handed Grynberg a check for $8.5 million to settle the matter. Grynberg's lawsuit against Questar also went to trial. Although his stolen-gas claims were dismissed, the jury returned a seven-figure verdict in his favor on pricing issues. The judge reduced the amount to a mere $250,000; an appeals court reopened the matter, eventually leading to a settlement more in line with the original award.
Not all of Grynberg's suits were successful. Some got thrown out. Others became knock-down, cash-draining battles stretching over a decade or more. The litigation with KN Energy's Rocky Mountain Natural Gas Company began before his trip to the Blue Gravel Field in 1994 and chugged on for years, bouncing from one courtroom to another. At one point Grynberg produced an affidavit from a former company accountant stating that he'd been ordered to pay Grynberg on a different basis than his contract called for, shortchanging him by at least 15 percent, and that gas produced by wells owned by the company was valued at double the rate Grynberg was paid for gas of comparable quality. According to court and SEC records, the complex dispute was finally settled in 2002, with Kinder Morgan making payments to Grynberg totaling more than $32 million, while making no admissions of wrongdoing.
Yet there are other costs to taking on the powers-that-be in the energy business. Grynberg says some independents are reluctant to complain out of fear of retaliation: "They're definitely afraid. They do other business with these companies, or they're partners with them, in some cases. I have been victimized. I'm persona non grata at Merrill Lynch, Morgan Stanley, Lehman Brothers -- they won't do any corporate finance business with me.
"Goldman Sachs fired me after fourteen years of doing business because I've sued some of their best clients," he claims.
But that hasn't altered Grynberg's ways. Last year he even sued Israel for refusing to allow him to drill offshore for natural gas. He worked behind the scenes pro bono, advising the state of Alabama in a lawsuit over gas royalties that led to a record $11.9 billion verdict against Exxon Mobil in 2003; reduced to $3.6 billion by the trial judge, the judgment is currently on appeal. And he persuaded the city fathers in Aspen, where he's a part-time resident, to file suit against Kinder Morgan, claiming that the company was overcharging residents for natural gas because it calculated BTUs at sea-level heat content rather than the reduced heat value when the gas reached an elevation of 8,200 feet. A district judge ruled that the dispute should go to the Colorado Public Utilities Commission, not the courts; that decision was upheld on appeal earlier this year.
Aspen city attorney John Worcester says officials there haven't decided yet whether to file a protest with the PUC, but he believes that Grynberg's argument has merit. "It's like saying you're going to sell potato chips, and there are fewer chips in each bag, depending on where they're sold -- but the bag costs the same," he notes. "There are other utilities in the state that don't charge by volume; they charge by BTU content. You'd think the PUC would have the same methodology for everybody."
Yet all of Grynberg's other cases pale compared to his False Claims Act lawsuits. Taking penalties, triple damages and other multipliers into account, Grynberg estimates the total amount owed to the public and the Indian tribes in the cases he's developed at around $400 billion. His own private duels with the energy companies have shown him how you can shave a percentage point here, another there, and pretty soon you're talking real money.
"I said to myself, 'If they do things like this, how else do they cheat?'"
T hese are not the best of times for the Minerals Management Service and its parent, the Department of the Interior. Scathing reports in the New York Timeshave detailed how MMS signed off on sweetheart offshore drilling contracts that could cost the government $10 billion in lost royalties. Congressional hearings last summer exposed what Interior's inspector general described as "ethics failures" at the highest levels of the department. A Government Accountability Office probe of how the MMS handles its royalty collections is looming.
And the agency's own auditors are going to court, claiming that they've been thwarted in their efforts to catch fraud committed by the companies producing oil and gas on federal lands.
Some of the problems at MMS, including the botched offshore leases, date back to the 1990s. But the agency's critics say the situation has deteriorated under the Bush administration, which has cut back on auditors and placed former energy-industry lobbyists in key positions at Interior ("Grazin' Hell," April 7, 2005). "This looks like an agency that has been captured by the industry it is supposed to oversee," commented Representative Henry Waxman of California, the ranking Democrat (and soon-to-be chairman) of the House's Committee on Government Reform, during last summer's hearings.
Nearly a third of domestic oil production and a fourth of domestic gas comes from leases administered by MMS. Yet with oil and gas prices and production soaring in recent years, the amount the agency collects from its audit activities has sharply declined -- from an average of $176 million annually in the 1990s to $46 million in the years 2002 through 2005.
MMS officials say that's because they've handed over more auditing responsibilities to Indian tribes and state agencies and are collecting more royalty payments in the form of crude oil or gas rather than cash, a system known as "royalty-in-kind." In addition, they're conducting more "compliance reviews" rather than full-fledged audits in the name of efficiency.
But tribal leaders and watchdog groups have questioned the compliance-review procedure, since it depends on self-reporting by the energy companies. "It's not a real audit," says POGO's Beth Daley. "It's basically a pass for the company. If nobody double-checks, they can report whatever they want, and taxpayers are at risk. The oil and gas industry has figured out ways to game the system."
Or as former MMS auditor Bobby Maxwell told Westword last year: "Government is doing less, so the companies can do more -- more cooking of the books."
Maxwell worked for MMS for more than two decades and was regarded as one of the agency's top performers. Four years ago he was told by his superiors not to pursue an inquiry into oil royalty payments by Kerr-McGee, which Maxwell believed to be $12 million short. While working as a program manager in the MMS Lakewood office, Maxwell decided to file a False Claims Act lawsuit against Kerr-McGee on his own. Shortly after Kerr-McGee attorneys received a copy of his complaint, Maxwell was told that his position was being eliminated. He later received a substantial settlement from the government over his termination and is now preparing to go to trial against Kerr-McGee.
It's highly unusual for a government employee to file a false-claims action alleging fraud against his own agency. But since Maxwell made headlines last year, four other MMS auditors have filed similar actions in Oklahoma; two claim they were instructed not to pursue a fraud case against Shell Oil. The Department of Justice intervenes in only about a quarter of whistleblower-initiated false-claim cases, known as qui tam lawsuits. The DOJ hasn't intervened in any of the rogue auditors' cases, but it hasn't moved to dismiss them, either -- despite the obvious displeasure at Interior over the employees' rebellion.
"That's a very significant signal I don't think anyone has picked up on," says Moorman of the False Claims Act Legal Center. "Sometimes Justice doesn't intervene because it doesn't look like fraud to the government, but in some cases it's because they can't get the cooperation of the agency that's been defrauded."
Close to 80 percent of qui tamcases filed over the past twenty years have involved health-care issues, such as Medicaid fraud, or defense-contractor frauds. But the number of actions involving royalty underpayments by energy companies is growing, and so are the stakes. One case in the late 1990s involving twelve major oil companies eventually led to a $400 million settlement.
Regulators have long recognized that the potential for fraud in the natural-gas industry is even greater than it is in the oil business. A Senate investigation into royalty shortfalls on tribal lands in the 1980s reported that the MMS "failed to safeguard Indian oil and gas properties against wholesale theft and gross under-reporting of production volume by industry." The same probe found "a vast opportunity...for theft and mismeasurement in the natural gas area."
Now in its eleventh year of wandering the wasteland of the courts, Grynberg's False Claims Act litigation is fundamentally different from the auditors' lawsuits and most qui tam claims. He's attempting to demonstrate "wholesale theft" through mismeasurement at the wellhead, rather than just in the creative accounting that follows. It's a daring argument, but whether he can persuade a federal appeals court that it deserves a fair hearing is another matter.
"Jack has been refining his methodology for detecting royalty underpayments over many years," notes Daley. "There seems to be something there. He certainly has shed light on many points of interest where fraud could be taking place."
But not all of Grynberg's pupils have taken his lessons to heart. Ten years ago, he says, he gave a lecture in Cheyenne on the primary ways pipeline companies can cheat their suppliers. Among those in attendance was Johnnie Burton, then the director of Wyoming's Department of Revenue -- and now on the hot seat as the director of the Minerals Management Service.
"At the end," Grynberg recalls, "I turned to her, just making conversation, and asked, 'Did you understand what I described?' She said, 'Not a word.'"
I n 1996, when Grynberg's False Claims Act case was still in its infancy, the Colorado State Land Board solicited expert opinion on whether it should mount a similar lawsuit. The land board was interested because it relies on oil and gas royalties to help fund schools and other projects. In response to the inquiry, the Colorado Oil and Gas Conservation Commission consulted its staff of professional engineers, many of whom had worked in the industry, and recommended steering clear of Grynberg's crusade.
"We find the referenced lawsuit to be baseless and without merit," a COGCC memo stated. "It misrepresents the processes of measuring, buying and selling natural gas under field conditions in the real world. Colorado should distance itself as far as possible from this lawsuit."
Several of the items Grynberg was complaining about, such as downstream probes, bypass lines and analog meters, are widely used in the pipeline industry; some are even specified in the contracts. While the industry's long-accepted standards for measuring gas "may not be perfect," the memo argued, a better solution would be to push for more modern methods in new contracts rather than litigating them. Proving in court that the standards were rigged would be no easy task.
A decade later, Grynberg still hasn't had the opportunity to prove his case in court. The litigation has been mired in procedural problems from the start. He originally filed his complaint as a single lawsuit against a small host of defendants in Washington, D.C. In 1997 U.S. District Judge Thomas Hogan dismissed it, saying Grynberg had taken a "shotgun approach" and not made his allegations specific enough.
Grynberg then filed dozens of separate qui tamlawsuits in federal courts in eight states, including Colorado. Most of the cases ended up being consolidated under the jurisdiction of Judge William Downes in Wyoming. Denver attorney and former magistrate judge Bruce Pringle, appointed as a special master in the case, waded through thousands of pages of defense motions and briefs, many of them arguing that Grynberg didn't have standing to sue the companies under the False Claims Act.
A basic obstacle for any whistleblower plaintiff is what's known as the "original source" problem. In order to keep opportunists from simply lifting allegations of fraud from a government report or newspaper article and filing "parasitic" false-claims actions, the law requires that the plaintiff have firsthand information about the alleged fraud that hasn't already been publicly disclosed. In practice, meeting those qualifications can be difficult; the U.S. Supreme Court is expected to tackle the issue next month in the case of former Rocky Flats employee Jim Stone, who's been trying to collect on a whistleblower case against Rockwell International since 1989.
Pringle found that 35 of Grynberg's 73 cases met the requirements.
Judge Downes disagreed. In his ruling last month dismissing many of Grynberg's claims, he wrote that various public disclosures, including Grynberg's own earlier lawsuit that was dismissed by Judge Hogan, had already put the government on notice of the gas industry's dubious measurement practices. Grynberg, in his view, is "an 'opportunistic plaintiff' who has little or no significant information to contribute of his own."
The case is a classic example of overreaching, Downes decided: "Grynberg deliberately chose to make sweeping allegations of fraud against nearly the entire industry, based in large part on rank speculation. By employing such odious tactics he now becomes the instrument of his own undoing."
Grynberg seems baffled by the rebuke. "I filed 73 cases," he says. "I've spent over twenty million dollars of my own money. I've only collected on one of the cases, about a million and a half. You tell me: Am I opportunistic?"
He says a federal prosecutor told him that he had to file against every energy company for which he had evidence of fraud. "He said, 'If you just pick some of the big ones, I'll recommend that it be dismissed,'" he remembers. "I was forced to file on everybody."
There could be some consolation, perhaps, in the judge's reasoning that allegations of fraud in the oil and gas industry are now so commonplace that Grynberg shouldn't be considered an original source. But Grynberg claims he's the one who figured out where and how the alleged thievery is taking place, that he did extensive firsthand research -- traveling to producing properties, interviewing witnesses, studying the layout -- to build his case.
"From what I know, he's clearly the original source of his case," says Moorman of the False Claims Legal Center. "He hasn't taken someone else's work. His case should be allowed to go forward."
Grynberg has prepared a weighty document proposing revisions to the False Claims Act. The notion that his own prior complaint qualifies as a "public disclosure" that bars his current lawsuits against the same companies strikes him as highly ironic; such an interpretation, he writes, "rewards a notorious defrauder by providing it with partial immunity for later and distinct claims of fraud."
A hearing and formal order by Judge Downes on Grynberg's case is scheduled for November 17. Regardless of the outcome, Grynberg wants to see the False Claims Act amended to make it easier for whistleblowers to get to court. He's also keen on shaking up the standard practices of the gas industry. A bill soon to be introduced by Representative Carolyn Maloney of New York calls for the National Academy of Engineering to study methods that could improve the collection of federal oil and gas royalties. Many of the suggested changes -- requiring digital meters, fixing chipped orifice plates, temperature probes upstream of the meter, and so on -- are issues Grynberg has been harping about for years.
A lifelong Republican, these days Grynberg finds himself spending more time talking to Democrats about what's wrong in his industry. "I'm hopeful that with a new governor and a new Congress, we'll see some changes," he says.
But not all of the news now coming out of the courtroom is bad, as far as Grynberg is concerned. The Justice Department did intervene in one of his false-claims cases, one involving carbon dioxide gas wells on federal lands in southwestern Colorado. Grynberg alleged that the exploration company was valuing the gas at seventeen cents per thousand cubic feet for royalty purposes but selling it at a rate of $2.87 per thousand cubic feet. The Justice Department settled the case for around $6 million; Grynberg received a quarter of the settlement.
Just a few weeks ago, Grynberg settled several other cases involving carbon dioxide production in the Cortez area against Shell, Kinder Morgan, Exxon Mobil and related companies. He can't talk about the settlement, he says, but he acknowledges that it was a "respectable" result, even by his demanding standards.
Of all the dark secrets of the oil and gas business, that seems to be the one topic Jack Grynberg won't talk about: how much it takes to make him go away.