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Texas Energy Institute Head Quits Amid Fracking Study Conflicts

The head of the Energy Institute at the University of Texas at Austin resigned following an investigation that found conflicts of interest in a study on the risks of natural gas drilling.

Raymond Orbach, 78, resigned as director of the institute last month, the university said in a statement released today. The study’s lead investigator, Charles Groat, 72, also retired from his faculty position, according to the statement.

The outside panel, which included academics and was headed by the former chairman of Lockheed Martin Corp. (LMT), Norman R. Augustine, also determined that the institute study represented a conflict of interest.

“Primary among the shortcomings was the failure of the principal investigator to disclose a conflict of interest that could have had a bearing on the credibility a reader wished to assign to the resulting work,” the panel said in its report released today.

Bloomberg News reported July 23 that Groat has been on the board of Plains Exploration & Production Co. (PXP) since 2007, a relationship he didn’t disclose in the report. As a board member, Groat receives 10,000 shares of restricted stock a year, according to company reports. He also receives an annual fee, which was $58,500 in 2011, according to filings.

Groat’s Connection

Orbach said that he learned of Groat’s connection to the company from a Bloomberg reporter’s inquiry.

Groat’s study, titled “Separating Fact from Fiction in Shale Gas Development,” concluded that there’s no evidence of groundwater contamination from hydraulic fracturing, commonly known as fracking.

Critics say the practice endangers water supplies and have called for increased government regulation.

The University of Texas has accepted the recommendations from the outside panel that the study be withdrawn, according to the statement. The university has pulled the study from its website and stopped distributing copies.

Groat said in an e-mail that he decided to take over as director of the Water Institute of the Gulf in Baton Rouge, Louisiana, early this year, before “any of the issues about me or the report emerged.” He declined to comment on the report until he could read it.

The university’s Energy Institute released the report Feb. 16. At the time, Groat was associate director of the Energy Institute. He’s the former director of the U.S. Geological Survey.

Texas’ news release, which accompanied the study, was titled, “New Study Shows No Evidence of Groundwater Contamination from Hydraulic Fracturing.” The outside panel concluded that the university’s news release didn’t reflect the “tentative nature of the conclusions” in the report.

Orbach, who will remain on the faculty, was traveling and unavailable for comment.

To contact the reporter on this story: Mark Drajem in Washington at mdrajem@bloomberg.net

To contact the editor responsible for this story: Jon Morgan at jmorgan97@bloomberg.net

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