Blowout
Page 43
And how about this for a statistical trend? Magnitude 3.0 earthquakes in Oklahoma have dropped from that all-time high of 900 in 2015, to 623 in 2016, to 302 in 2017, to 196 in 2018. Interested observers have not chalked this up to Governor Mary Fallin’s statewide all-faiths-welcome Oilfield Prayer Day. It happened because the constituency in Oklahoma—of all faiths—was pretty damn restless. Town halls on the earthquake problem were punctuated by chants of “Moratorium now!” “I am scared to death, and I think that echoes the sentiment of many in this room,” one woman explained to Representative Lewis “the Science of How Everything Works Is So Big” Moore, at a town hall in Edmond, just outside the capital city. “Until there is a comprehensive, implementable, affordable plan to deal with this water, why do you not support a moratorium?” she asked. Moore fumfered out a nonanswer and was cut off by his constituent. “This is an issue that will turn a red state blue. And every one of you who needs to get reelected needs to take that very closely to heart. This is a state where the legislature, the government, and the Oklahoma Corporation Commission and David Boren—everyone down there at OU—have put the interests of the oil companies in front of that of the constituency and the electorate.”
Ultimately, even Governor Mary Fallin heard their civic prayer, if only because the shift in the political winds was too real and too strong to resist. Once she finally acknowledged, after years of foot-dragging, that drilling operations were triggering earthquakes, she empowered the Oklahoma Corporation Commission to take active steps to try to fix the problem. The governor also got the commission a little seed money of $1.4 million to start the job. Since 2015, the commission has compelled operators to prove that they are not injecting wastewater into the basement rocks, where added pressure is likely to increase the danger of triggering earthquakes. The commission can—and does—issue orders to operators near active faults, or “Areas in Interest,” to shut down injection wells or prescribe volume limits for the amount of gunk they’re shooting back down into the earth. When an earthquake does happen, the OCC is authorized (and expected) to shut down all the injection wells in the surrounding area.
The commission also published new guidelines for monitoring and controlling fracking operations in areas of particular concern in the state. Drillers are now required to notify the OCC of their hydraulic fracturing schedules and to allow for real-time monitoring of pressure, flow rates, and volumes of sand injected at each separate stage along a horizontal well. The OCC has the authority to shut down any hydraulic fracturing operation in the case of induced seismicity (a.k.a. a frack-quake), which studies now suggest happens in a little more than one in every twenty fracking jobs. The drillers, even the biggest ones, with the most money and the most sway, are no longer actively resisting every tough regulatory action in dark red Oklahoma. “The earthquake issue is serious enough that it has captured the public’s attention, so there is a heavy pressure from the public,” says Jake Walter, who is Austin Holland’s replacement as the Oklahoma state seismologist. The industry is “more willing,” says Dr. Walter, to bow to public safety concerns. “Nobody wants to be having their name stained by being associated with a particular earthquake.”
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It’s comforting to hear that the oil and gas industry has a sense of shame. But the truth is, it probably doesn’t. Counting on the industry’s sense of human responsibility—counting on it to act responsibly simply on its own recognizance—has proven to be a losing proposition. Oil and gas are valuable everywhere in the world, but with only a few exceptions the industry that produces them has shaped nations and states in ways that serve itself while screwing pretty much everybody else. As if its life depended on it, the industry has argued that it needs government off its back, it needs freedom and space to operate as it sees fit, and only the industry itself has the technological know-how to set the boundaries and expectations for how it behaves. And yes, energy exploration and production require some high-tech science and know-how, but it is not some freaking mission to Mars. Despite its gee-whiz nerds-R-us advertising and its self-proclaimed technical genius, this is an industry that can barely launch a mission to Alaska, one that still uses paper towels and dish soap as its highest-tech and most effective cleanup tools when something goes wrong.
The real genius of the oil and gas industry is the magic trick it does—again and again—in which it uses the hugely remunerative prospect of oil and gas profits to hypnotize otherwise sentient landowners and lawmakers and even whole countries into plighting their troth to the drillers. (Remember, the U.S. government willingly supplied the industry with a small arsenal of nuclear bombs at one point.)
That’s how we get the twin engines of petroleum-powered governance, which suck the life out of democracies everywhere: corruption, in which the industry effectively owns politicians; and capture, in which the industry effectively owns the whole government. The result is everything the oil and gas producers need to get by and cash in—predictable government that responds to the industry and not to any other stakeholders that might get in its way. And one size doesn’t necessarily fit all; the industry can work as happily with a weak and feckless government as it can with a dictatorial authoritarian regime, as long as it’s at least in cahoots with (if not fully driving) government decisions. This isn’t to say that the oil and gas industry is hell-bent on bad government for some ideological reason; it’s just practical business sense. Democratically responsive government not only turns over whenever its people want change; it also creates the prospect of all these too-hard-to-plan-for X factors, like independent, non-industry-friendly regulations, or a legislature deciding to calculate the full publicly borne costs of oil and gas exploration and production, or a government even deciding to take the expanding costs of global warming out of the hide of the industry that brought it down upon us. The industry will be sure to stop that kind of government activity in its tracks. Oil and gas producers will spare no expense in that enterprise. As long as they’ve got the power to do it.
It’s easy to work up some proper indignation over the damage wrought by America’s biggest producers of oil and gas. They’ve managed to stunt developing countries on almost every continent and to prop up authoritarian thieves and killers all along the number line from Obiang to Putin. They’ve fouled oceans, gulfs, lakes, rivers, and streams around the world. They’ve induced man-made earthquakes; strewn radioactive waste about the landscape; killed off family pets and farm animals; sickened schoolchildren; turned state governments into impotent little quisling servants that rip off their own people to make sure the industry gets everything it wants, and more. And that’s not even to consider the Big One: they are the chief drivers of the global climate catastrophe. While fueling that catastrophe—literally—they have also funded a decades-long campaign of denial that ensures the climate problem will get worse and that any solutions to it are seen as politically and economically impossible.
But ask yourself this: What is the point of outrage at oil and gas producers? What good can possibly come of it? It’s like being indignant when a lion takes down and eats a gazelle. You can’t really blame the lion. It’s who she is; it’s in her nature.
The nature of Big Oil and Gas hasn’t much changed since its inception at the end of the nineteenth century. The entire point, and therefore the controlling instinct and the base ethos, is to make money—as much money as possible. That’s true in theory for every industry, but the amount of money potentially at hand for producers of oil and gas sets these particular products apart from every other low-tech filthy widget in the world. Combine that with the inherently destructive and polluting nature of production, and you end up in a relentlessly, recklessly driven cost-cutting environment in which it’s probably mathematically worth it to try to get away with almost anything. In the most profit-making industry on earth, there is still no meaningful R&D investment in cleanup technology, nor has there ever been any measurable slowdown
in the pace or number of disasters that need cleaning up. That applies both to unseen accidents and missteps that happen almost every day and to epic media-frenzy disasters like the Deepwater Horizon oil spill. Consider also this remarkable fact: the Deepwater Horizon is about to lose its place as the largest known oil spill in U.S. history—to another spill in the Gulf of Mexico. Turns out an oil rig toppled by Hurricane Ivan in 2004 has been leaking, twelve miles off the coast of Louisiana, every day since then. The spill remained a secret until 2010, when environmental scientists spotted an entirely separate oil slick during the Deepwater Horizon great paper towel cleanup. An analysis by an independent geoscientist in October 2018 found that the rig was still leaking as much as seven hundred barrels of oil into the Gulf every single day, which means, after nearly fifteen years, the record was in its sights.
When The Washington Post first reported this story in 2018, it noted for context the overall offshore drilling statistics compiled by the federal government’s Bureau of Safety and Environmental Enforcement. “For every 1,000 wells in state and federal waters, there’s an average of 20 uncontrolled releases—or blowouts—every year. A fire erupts offshore every three days, on average, and hundreds of workers are injured annually.” But the Post also noted statistics that the oil and gas producers found much more compelling. The Gulf of Mexico, said the Post, is “expected to yield more than 600 million barrels this year alone, nearly 20 percent of the total U.S. oil production. Another 40 billion barrels rest underground, waiting to be recovered, government analysts say.”
And it is in the nature of the beast to go get those barrels, so long as there is money to be made. In fact, the breakthrough technologies of hydraulic fracking and horizontal drilling in the last generation have made the industry more energetically predatory than ever before. And even more delusional. “Every time we can’t drill a well in America, terrorism is being funded,” Harold Hamm said at the 2016 Republican National Convention. “Every onerous regulation puts American lives at risk.” This is an industry that has demanded and received special treatment for more than a century and regards this private right as its due. But even if “energy independence” is our international relations insurance policy and the safety of our energy supply is a core national security issue, why are oil and gas the only energy sources to which those imperatives redound? Why are oil and gas the only energy sources seen as appropriate tools to reach these two national goals? Heaven forbid the government instead offers breaks and incentives to, say, renewable energy. Then suddenly the industry becomes the champion of the free market. Government should not be in the business of picking winners!
The oil and gas industry, as ever, is wholly incapable of any real self-examination, or of policing or reforming itself. Might as well ask the lions to take up a plant-based diet. If we want the most powerful and consequential industry on our planet to operate safely, and rationally, and with actual accountability, well, make it. It’s not mission-to-Mars complicated either, but it works.
Elections have consequences, pols from both of America’s major parties like to say. Especially after they win. And this adage has proved demonstrably true, even when the winners have encouraged and accepted illegal aid from the military intelligence services of a sworn enemy of the United States. Take, for instance, the first fruits of the most unlikely electoral victory in modern U.S. history, harvested just a few weeks into the presidential administration of Donald J. Trump and tucked into a gift basket presented to the American oil and gas industry: “Resolved by the Senate and House of Representatives of the United States of America in Congress assembled, That Congress disapproves the rule submitted by the Securities and Exchange Commission relating to ‘Disclosure of Payments by Resource Extraction Issuers’ and such rule shall have no force or effect.” Oklahoma’s senior senator, James Inhofe, had already put his own headline on the resolution, in plain language, and resolutely. “Overturning this SEC rule,” he wrote, “is another important step to ending the Obama Administration’s war on fossil fuels.”
In U.S. election cycles from 2012 to 2016, the oil and gas industry upped its already considerable spending on candidates protective of its prerogatives, while loudly decrying that so-called Obama war: the industry contributed $152 million to Republican candidates, as compared with $21 million for Democrats. Nine of every ten campaign dollars from the ExxonMobil PAC went to Republican candidates in 2016. And investments like that tend to pay off, both well and quickly. For Harold Hamm, the 2016 election cycle was like winning the daily double. First, his ex-wife Sue Ann lost her appeal of their billion-dollar divorce settlement. And then, jackpot, a Republican administration rode back into the White House. Donald Trump would surely strip away all those nettlesome Obama-era regulations. Trump “absolutely gets it,” Hamm explained. “He believes in American energy for America’s future.” Whether or not Donald Trump absolutely got that or anything, it says something about the industry’s mad skillz that the first legislation out of the new session was its baby. Its seemingly arcane but absolutely beautiful baby.
Rex Tillerson was confirmed as secretary of state on the day the “end the war on fossil fuels” resolution passed the House. He issued no public statement, even after Trump signed the bill into law on Valentine’s Day 2017. But if anybody was due a victory lap, if only around his new government-issue desk at Foggy Bottom, it was longtime ExxonMobil CEO Tillerson. The quiet little, below-the-radar, technical-seeming resolution was narrowly targeted to steamroll the one speed bump Congress had finally come up with to try to slow the ability of the most powerful industry on earth to warp nations in its own interests, to eat governance for breakfast so it could poop out royalties by lunchtime. That quiet little boring measure that so thrilled Senator Inhofe—the curtain-raising legislation of the 115th Congress—nullified a provision in the 2010 Dodd-Frank Wall Street reform law that required oil and gas companies listed on the American stock exchange to publicly report all taxes, royalties, licensing fees, dividends, and bonuses paid to foreign governments or foreign government officials with whom they were doing business. This provision in Dodd-Frank, Section 1504, was designed to induce financial transparency for oil and gas industry operations in developing countries like Nigeria, Liberia, Guyana, Azerbaijan, and, Exhibit A, Equatorial Guinea. They were all Resource Curse case studies by then—revenues from oil and gas enriching the lucky few at the tippy-top of the government pyramid structure while the rest of their countrymen festered in worsening indigence and privation.
Section 1504 had been a first step toward the U.S. government finally taking responsibility for the role of American companies in those corruption disasters, by at least forcing them to disclose whom they were paying and how much. How does the GDP of a country rise by more than 5,000 percent but the poverty rate doesn’t drop and the infant mortality rate actually gets worse in that time? Equatoguineans might want to know. Specifically. Section 1504 would give them—and all of us—real data to work with to figure it out.
It’s worth repeating what the late Republican senator Richard Lugar wrote when he sponsored the measure: “When oil revenue in a producing country can be easily tracked, that nation’s elite are more likely to use revenues for the vital needs of their citizens and less likely to squander newfound wealth for self-aggrandizing projects.” Lugar had also been clear-eyed about the cost to the United States of allowing corrupt government actors in those countries to consistently fail their own citizens. The Resource Curse, Lugar wrote, “exacerbates global poverty which can be a seedbed for terrorism, it dulls the effect of our foreign assistance, it empowers autocrats and dictators, and it can crimp the world petroleum supplies by breeding instability.”
Rex Tillerson had begged to differ, rather vociferously, back in 2009 and 2010, when Section 1504 was heading toward becoming law. That was when the ExxonMobil chief had thrown his uncharacteristic fit of red-faced apoplexy over the provision in a personal meeting with Senator Lugar�
�at least according to Lugar’s staff. This sort of enforced reporting requirement would disadvantage American companies against competitors from the world’s other major oil-producing nations, Tillerson had argued. And continued to argue. For the next six years. Why should the United States go all goody-two-shoes when oil- and gas-producing titans in Saudi Arabia and Venezuela and China and wherever else weren’t compelled to do the same? And so no, ExxonMobil did not want to explain, exactly, how it was that it managed to secure twenty years’ worth of oil rights in Nigeria despite reportedly being outbid by a Chinese-led consortium by more than double—by more than $2.25 billion. Is it possible that there was a little sweetener there for someone in a decision-making capacity over that contract? Maybe? Anyone want to check the books? Did every Nigerian official who looked at that potential deal just independently—and for the good of his or her country—decide to give away $2.25 billion?
How about the details of the production agreement ExxonMobil had negotiated with Guyana, which included an $18 million “signing bonus” to the Guyanese government (anyone in the Guyanese government looking to buy some Michael Jackson memorabilia?). No, ExxonMobil would not be disclosing the amazing footwork that must have led to those improbable deals. “We are a commercial enterprise and we have competitors,” Exxon’s Man in Guyana explained. “And learning bits of information about how other negotiations have worked or how our negotiations work—the things that we value—provide kind of intellectual property to competitors.”
KFC has its secret herbs and spices, fracking companies have their proprietary slickwater goo, and apparently Exxon has its secret special menu of which exact government officials or proxies an American oil company must pay off—and how well—in order to secure the right to profit from a country’s natural resources. Without hassle from said government.