Blowout

by Rachel Maddow

  On September 25, 2014, nine days after Yevtushenkov’s arrest, and on his sixty-sixth birthday, a judge in Moscow declined to grant the billionaire’s request for release, conditional or otherwise. He was to face criminal charges that carried a seven-year prison sentence. Yevtushenkov was ordered to remain under house arrest, without access to phones or the internet or any visitor not approved by the court. The next day the court seized his shares in Bashneft. Shares in his holding company, Sistema, dropped to less than half their value the day before Yevtushenkov’s arrest. Bashneft was down more than a third. There was talk of a fire sale.

  “The assumption is that a deal [to sell Bashneft] has been struck,” said one investment banker. “The question is what will be left of the carcass.”

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  Well, good things sometimes happened in bunches, even to not-good people. The day after the Bashneft asset seizure, on September 27, 2014, Rosneft announced that the West Alpha rig had struck oil seven thousand feet beneath the floor of the Kara Sea. Imagine the luck! It happened right inside the window that the U.S. government had afforded ExxonMobil to pack up its things, close off the well, and make sure the environment was all safe and sound. Turns out, ExxonMobil had used the time to just kept drilling. The hydrocarbon trap Exxon drillers had tapped was believed to hold about a billion barrels of oil and oil equivalent. This represented one of the largest single finds in years, anywhere in the world. The Norwegian owners of the West Alpha rig boasted of the speed of the operation. So too did Rosneft. “The drilling was completed in record-breaking time—in one and a half months.” Exxon remained fairly mum about the find, perhaps because it was not eager to invite attention from officials at the U.S. Department of the Treasury. Sechin had the most to say that day. He had already told the world he suspected there was a new Saudi Arabia worth of oil and gas to be discovered, beneath the Arctic waters, off the continental shelf of Russia. Owned by Russia! With the help of his friend and partner ExxonMobil (and not to forget Western oil service companies like North Atlantic Drilling, Schlumberger, Halliburton, Weatherford, Baker Hughes, Trendsetter, and FMC—that’s a lot of sanction waivers), he was on his way to proving it true. The first oil extracted in the Kara Sea, Sechin noted, “is an astonishing sample of light oil.”

  Sechin also took the opportunity to christen the newly discovered field—which might soon be home to as many as forty wells.

  He called it simply Pobeda.

  Pobeda means “Victory.”

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  But of course there were loose ends left to tie up. In December 2014, after more than three months under house arrest, Vladimir Yevtushenkov was released. Good news: Putin’s prosecutors were dropping the money-laundering charges for lack of actual substantiation. Yevtushenkov “is now a free man who can work productively,” said his lawyer. Bad news: the real reason he was being released was that the three months he spent under house arrest had accomplished their purpose for the Kremlin. While Yevtushenkov was in stir, remember, a judge in Moscow “nationalized” the billionaire’s shares in Bashneft, which meant that his shares in his own company were handed over to the Russian state. In three months, Yevtushenkov had been robbed by Vladimir Putin and Igor Sechin to the tune of about $8 billion, the vast majority of his net worth. Not to mention, of course, control of the best-run and most remunerative oil company in one of the biggest oil-producing countries on earth. Yevtushenkov did apparently retain a good portion of his sense of humor, however. “If you like another [of my companies] tomorrow and want to take it, you are welcome,” he told Putin.

  Control of Bashneft eventually ended up in the hands of, you guessed it, Rosneft. At, you guessed it, a steep discount. Igor Sechin’s Kremlin-assisted “purchase” of a majority stake of Bashneft was concluded on remarkably favorable terms—he got the company for a pittance. Then, for a little icing on the cake, he found a court in Russia that would force Yevtushenkov to pay Rosneft $1.7 billion, for supposedly stripping Bashneft of its assets. So Putin and Sechin took his company, and then they made him pay them for the trouble of taking it. Gangster-style.

  One unexpected piece of collateral damage in Sechin’s new crocodile act was the serious injury to the standing of the economic development minister at the Kremlin, Alexei Ulyukayev. Minister Ulyukayev had had the temerity to voice his opinion that Bashneft should go to the highest bidder on the open market. And Rosneft should stay out of it. For my enemies…Sechin invited Ulyukayev to his home and, truly gangster-style, presented him with a gift basket of his famous homemade sausages, some fine wine, and, unbeknownst to his guest, $2 million worth of rubles, in cash, stuffed into the bottom of the parcel. Sechin then had the minister arrested on the spot (the FSB gendarmes were conveniently there, at the ready) for soliciting and receiving a bribe. Ulyukayev was sentenced to eight years in prison and ordered to pay a $2.2 million fine. That takes care of him.

  Arkady Rotenberg did not get his Italian hotel and villas back, but he and his brother got the consolation prize of a fat new construction contract. Four billion dollars to build the twelve-mile-long bridge linking the Russian mainland to its newest territorial acquisition—Crimea. All hail Novorossiya!

  On a cold day in Moscow at the end of February 2015, while the battle for eastern Ukraine rumbled on, Boris Nemtsov, who had become the most fearless critic of Putin’s illegal annexation of Crimea and his illegal war in the Donbas, sat for a long interview with the Polish edition of Newsweek. He was due to lead a massive antiwar demonstration in Moscow two days later. Nemtsov understood it was likely to take decades to chip away at Putin and authoritarian rule in Russia, but he wasn’t giving up, and he was driven by a sense of urgency. “I have no doubt that the struggle for the revival of Russians will be tough,” he told the Newsweek interviewer. Putin “implanted them with a virus of inferiority complex towards the West, the belief that the only thing we can do to amaze the world is use force, violence and aggression….[Putin and his siloviki] operate in accordance with the simple principles of Joseph Goebbels: Play on the emotions; the bigger the lie, the better; lies should be repeated many times….Unfortunately, it works. The hysteria reached unprecedented levels, hence the high level of support for Putin. We need to work as quickly as possible to show the Russians that there is an alternative. That Putin’s policy leads to degradation and suicide of the state. There is less and less time to wake up….You need an alternative vision, a different idea of Russia. Our idea is one of a democratic and open Russia. A country that is not applying bandits’ methods to its own citizens and neighbors.”

  Later the next evening, walking home after a dinner out with his girlfriend, Nemtsov was gunned down on a suddenly and strangely traffic-less side of a bridge across the Moscow River, steps from the Kremlin grounds. The assassination appeared to have been meticulously planned and executed by a team of two or even three dozen people. The Kremlin fingered a group of Chechen terrorists and continues to block independent investigations into Boris Nemtsov’s murder. One very dangerous, very consequential loose end, tied off forever.

  And where was ExxonMobil’s chieftain, Rex Tillerson, in all this? He was standing by, waiting for the unfortunate geopolitical cloud to disperse. Rex didn’t agree with everything Putin was doing, presumably. But, hey, Putin and his guys understood Tillerson, who was, after all, just a businessman trying to do the best he could in trying times. “The first time I went over to see [Putin, Sechin, and the others] after the sanctions were in place, I was a little nervous,” Rex explained to a group of curious college students early in 2016. “And it was interesting because the first question they asked me was, ‘Well, how are you doing? Are you okay?’

  “And I said, ‘Well, yeah, I’m fine. Why do you ask?’ They said, ‘Well, we just wondered whether your government was coming after you because you’ve been doing business with us.’ They were more worried about me. And so they understood.�
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  Austin Holland’s dream job at the Oklahoma Geological Survey was turning out to be not all that dreamy. In fact, being the head seismologist for Oklahoma had become a kind of nightmare—an eighty-to-ninety-hour-a-week, never-see-your-children, everybody-is-screaming-at-you nightmare. Holland had plenty of sympathy among the scientific community both inside and outside his adopted state. “You’ve got a tough job, guy,” one former employee of the OGS wrote, but only at the end of a long email suggesting how Holland might better do that job. “If Austin hasn’t aged 20 years in the past 3 he’s a better man than I,” a colleague of Holland’s wrote to friends early in 2014. “We have a new geophysicist to help Austin out, but it’s not the science, it’s the politics, and she (no one) will be able to help him out on that account.”

  By the fall of 2014, though, people in the field—even the people rooting for him—were finding it hard to forgive, or even explain, Austin Holland’s continuing reticence about the probable causes of the new, fairly terrifying earthquake swarms in Oklahoma. Historically un-shaky Oklahoma had suddenly become the earthquake capital of America. The year 2014 was shaping up like no other in recorded state history. Landlocked, stable little Oklahoma had suffered triple the number of earthquakes that runner-up California had. Not OK! The only other categories where Oklahoma led the country were top-tier college football, annual decreases in public school funding per student, and the rate of female incarceration. But on seismic activity, the state’s prowess really stood out: there were 16 magnitude 4.0 quakes in Oklahoma in the first six months of 2014 alone and 268 magnitude 3.0 or better. That’s in a state that had averaged fewer than two 3.0-plus quakes annually for the sixty years before 2008. The cause seemed pretty clear to anybody paying attention: the increase in seismicity was concurrent with the increase in newfangled, “unconventional” oil and gas drilling in the state. Yes, correlation isn’t causation, but it felt as though every dentist and barber and dry cleaner in the state was certain the problem was fracking.

  The layman’s diagnosis was partially true. But seismologists and petroleum geologists and hydrologists were beginning to reach a more nuanced understanding. Hydraulic fracturing itself—breaking oil and gas out of shale rock—might cause an earthquake in one in every ten or even one in every twenty fracked wells. But the bigger culprit appeared to be the way the drillers were disposing of the billions of gallons of used slickwater and produced water the earth vomited up once the drillers were done with the fracturing part. And, then too, there was another fracking-era unconventional production process at play: something called dewatering, wherein Oklahoma drillers would vacuum up more millions of gallons of ancient, briny underground fluid, separate out the oil and gas, and then reinject the extracted fluid back into the depths of the earth. All this appeared to be playing havoc with the pressures and stresses on long-quiet faults down in the basement rock, just beneath what the business calls the “economically interesting strata,” where the oil and gas is.

  Academic papers had started to draw links between the earthquakes and the extraction and injection of increasing quantities of this underground goo. But there were so many unanswered questions about how much was too much: At what volume did you risk triggering quakes? Were there rates and depths of injection that were less dangerous than others? Could you fiddle with the timing to make the process safer?

  Austin Holland had remained cautious as well, perhaps to a fault. He knew he was privy to a field of data that could really upset people, especially all the folks in Oklahoma who made their money in the oil and gas industry. (He’d been yelled at plenty by 2014.) But Holland also knew the data could provide real insight into this awe-inspiring new human capacity to alter the environment. The scientific term at issue would be “induced seismicity”: man-made earthquakes. Imagine that. It’s one thing to know we can visit Mars and invent the internet, but, seriously, human beings can make big earthquakes? Thousands of them? The meek may inherit the earth, but the bold could certainly screw it up in the interim.

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  From the time Austin Holland arrived in Oklahoma in 2010 through the first seismic swarms, and the record-breaking earthquake in Prague in 2011, and the exponential growth of felt quakes in his state, he remained determined to study induced seismicity the right way. Using all the new raw data. To make a real contribution to the scientific literature. But there was so much to keep up with now—ten or twelve magnitude 3.0 earthquakes every week. Each event produced useful new data points, which would help him be both accurate and confident in his conclusions. Holland meant those conclusions to be unassailable, so he tried as best he could to keep his head down and do his work, to do good science. He was also determined to produce a crucial tool the state lacked: a comprehensive and exquisitely detailed map of the faults that existed in the geologic strata that underlay the state. If Oklahoma was going to start shaking at this point in the twenty-first century, it was worth knowing where the shaking would most likely commence. But that kind of project would take time too, and he had so little time. He never seemed to have enough time.

  All of this meant Holland did not feel comfortable enough, even in 2014, to make a definitive statement to the public at large about the precise perils of the oil and gas industry practice of wastewater injection. He had started to suggest the real possibility of oil and gas operations contributing to specific seismic events as early as 2011, but chiefly in peer-reviewed papers. He took pains not to incite undue public alarm, or to point toward any conclusions he couldn’t prove from fact. “We clearly need to examine the issues and are actively working to understand them, but none of the discussion that is occurring within the popular media is at all helpful to the discussion or the science,” Holland wrote to a fellow seismologist at the U.S. Geological Survey. “Every hour I spend talking to reporters is another two hours I really can’t be doing the research that needs to be done.” Holland was more open with his brethren at scientific conferences, but even there he seemed to hold back. Rivka Galchen from The New Yorker caught this interaction at an induced-seismicity conference outside Oklahoma City in November 2014: “Someone asked Holland about several earthquakes of greater than 4.0 magnitude which had occurred a few days earlier, across Oklahoma’s northern border, in Kansas,” Galchen wrote in a piece subtitled “The arrival of man-made earthquakes.” “Holland joked, ‘Well, the earthquakes aren’t stopping at the state line, but my problems do.’ There was a follow-up question: Why had there previously been no quakes in Kansas, and now for a year and a half there have been so many?

  “As the question was asked, a couple of men wandered into the back of the room, where trays of beer and soda were set up. Holland called out, ‘Well, Justin, what do you think of that question?’

  “The U.S.G.S.’s Justin Rubinstein, one of the three organizers of the conference, said, ‘Um, well, if you map the fluid-injection records and the earthquake records—there you go.’…Holland said, “Well, you heard it from him, not me.”

  Occasionally that fall, evidence of Holland’s vexation seeped out. Like when a petroleum geologist who was certain that many of these earthquakes were unquestionably productions of the oil and gas industry buttonholed Holland after his presentation at the Osage Nation’s annual oil and gas summit in Tulsa. “During Holland’s question and answer session—and afterwards in the lobby—we had several exchanges. I pressed him hard,” Bob Jackman wrote in The Oklahoma Observer. “Frustrated, he blurted out: ‘You don’t understand—Harold Hamm and others will not allow me to say certain things.’ ” Holland later claimed Jackman misquoted him. Jackman was sure of the quotation and said he wrote it down at the time: Harold Hamm and others will not allow me to say certain things.

  Subsequent reporting certainly bolsters the fact of the matter, if not the actual quotation.

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  The way Harold Hamm saw it, folks just didn’t understand what a
dire threat all this earthquake talk posed. They didn’t seem to appreciate what a ferocious multifront battle he was engaged in and how vigilant he had to be in controlling the narrative. It wasn’t just the seismology crowd—the earthquake geeks. It was the politicians and the do-gooders. The entire Obama administration, he sometimes complained, was hostile to oil and gas. “The response by this Administration has been to put the foot on your neck,” Hamm would say to his nodding cheerleaders on the business channels. There were people out there who wanted to tear him down, to tear down the idea at the heart of his America, to obstruct American progress. “Continued threats against business is not what makes your economy grow.”

  Hamm, the founder and chairman of Continental Resources, was working like hell to protect all that was great and good in the U.S. of A., which meant he had to keep telling his own story. And inspiring as it was, he felt the burden to keep improving on it. That wasn’t easy, or cheap. Hamm and his wife, Sue Ann, had donated $20 million to the University of Oklahoma Health Sciences Center—the biggest gift in the history of the institution, several million more than they had just paid for a lovely sixty-four-hundred-acre cattle ranch in Carmel, California—to fight a disease that menaced more than 600,000 people in his home state. “The Harold Hamm Oklahoma Diabetes Center is on a mission to find a cure,” OU’s president, David Boren, said in announcing the donation in 2011. “While we work toward that goal, we are educating people about the challenges of living with diabetes, teaching them how to prevent the development of diabetes and its complications and providing the best possible diabetes care.”