Independent Oilman Takes on Oil Giants

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Jack Grynberg is the oilman other oilmen love to hate. The veteran oil driller has filed a series of lawsuits claiming that the oil industry is systematically defrauding the government of royalty payments. Grynberg has been in court for years trying to prove his case.

STEVE INSKEEP, host:

From NPR News, it's MORNING EDITION. I'm Steve Inskeep.

A Colorado man says petroleum companies owe the United States government $400 billion, and he's spending millions of his own fortune to prove his point.

Jack Grynberg says dozens of companies have been stealing natural gas from wells drilled on federal land. He's filed a lawsuit, and soon a Wyoming judge will decide if that case will be allowed to continue.

NPR's Jeff Brady has this profile of Grynberg and his lawsuit.

JEFF BRADY reporting:

Jack Grynberg works out of a cluttered corner office in a Denver suburb. From the looks of it, you'd never know he's made a lot of money discovering oil and gas deposits all over the world.

The decor is a bit dated, and the hallways are lined with files and papers sitting on the floor. Frankly, it looks a bit like a war zone, and in some ways it is. But the battlefield is the courtroom.

Mr. JACK GRYNBERG (Co-Owner, President, Grynberg Petroleum Company): Well, I guess you can say I've been a fighter ever since I was a kid. I'm a Holocaust survivor. At the age of 12, I carried a gun in the forest of Belarus, in the Partisans, fighting the Nazis.

BRADY: This is how Grynberg typically introduces himself. But he quickly turns to the bulk of his life in the oil and gas industry. For most of those decades, he's been in the courtroom as much as he's been in the field. Grynberg claims that the petroleum industry has a habit of stealing from well owners, like himself.

Mr. GRYNBERG: Litigation is the only way to do it in the United States, in a free democratic society. There's no other way.

BRADY: You're not well liked in some parts of the industry, are you?

Mr. GRYNBERG: Who me?

BRADY: Yeah.

Mr. GRYNBERG: Well, that's and understatement. I think I'm hated.

BRADY: Grynberg's success in court is mixed. But he has won multi-million dollar settlements. Most of the cases are against the pipeline companies that transport gas from wells to the market. Those companies measure the volume and heating content of the gas, and then send a check to the well owner. But Grynberg says they often under-measure both of those things.

Mr. GRYNBERG: They steal approximately 30 percent of the natural gas produced.

BRADY: Grynberg has compiled a list of more than a dozen ways that he claims the pipelines steal gas.

For example, he says companies put unnecessary bins and pipes and other obstructions just before the point where a probe measures how much heat the gas can produce. He says that pushes the heavier hydrocarbons toward the wall of the pipe, and the probe in the middle can't measure them. The heating content of the gas appears lower than it is, and the well owner is paid less.

Many of these wells are on federal land, and Grynberg says he tried to warn the government, but no one would listen.

Mr. GRYNBERG: And I said, these guys are stealing from you! We'll study it. Call back. I call back. We're still studying. Don't call us, we'll call you. And that was in the winter of '92.

BRADY: A few years later, Grynberg filed a case under the False Claims Act. It allows individuals to file a lawsuit on behalf of the government. If Grynberg is successful, the False Claims Act allows him to keep a portion of the money.

Think of him as a corner office bounty hunter. And in this case, we're talking about a lot of money.

Mr. GRYNBERG: Thirty-five billion dollars, subject to triple damages, subject to mandatory penalties. They all add up to over $400 billion.

BRADY: And the False Claims Act allows the person who reports it to get somewhere between 15 and 30 percent. I think you would automatically become the richest person in the world.

Mr. GRYNBERG: I don't think so. But I intend to give it to charity.

BRADY: Grynberg later modified that statement. He would recover his legal costs first. He claims to have spent $20 million so far. And he'd use some of the money to do more oil and gas exploration; that is, if he ever saw any money at all.

A resolution to the case likely is a long way off. Patrick Burns is with the False Claims Act Legal Center.

Mr. PATRICK BURNS (Director of Communications, False Claims Act Legal Center): Mr. Grynberg is, essentially, David, engaged in a war not with one Goliath, but with an army of Goliaths.

BRADY: Look at the list of defendants: Shell, Unocal, Conoco, Kerr-McGee.

Mr. BURNS: The oil and gas companies have unlimited resources to put into litigation, slowing down discovery. They can hire law firm after law firm after law firm.

BRADY: And so far, that's exactly what they've done. Grynberg filed his lawsuit in 1997. Nine years later, the court hasn't even begun to weigh the merits of his arguments. So far, both sides are still fighting over whether Grynberg has the right to file the case, and whether the lawsuit even qualifies under the False Claims Act.

The defendants and their lead attorney wouldn't comment for this story. NPR also contacted academic experts and industry consultants, but they also declined to comment, some citing Grynberg's litigious history as a reason.

Grynberg says he can hold on as long as the companies want to drag this out. If he dies, he says his children will take over the case.

Jeff Brady, NPR News, Denver.

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