Category Archives: Fracking

Under Cover of Pandemic, Fossil Fuel Interests Unleash Lobbying Frenzy

DeSmogBlog, by Dana Drugmand, April 2, 2020
Worker power washing drill pipe
A worker power washes drill pipe at Citadel Rig 6 in the Alpine High region of the Permian Basin, Reeves County, Texas. Credit: Justin Hamel © 2020

Thousands of Americans are dying, millions have filed for unemployment, and frontline health care workers are risking their lives as the coronavirus pandemic sweeps across the U.S. In the midst of this crisis, the fossil fuel industry, particularly the oil and gas sector, has been actively seeking both financial relief and deregulation or dismantling of environmental protection measures.

A new briefing by UK-based think tank InfluenceMap summarizes this fossil fuel lobbying during the time of the pandemic, pointing to specific examples of how fossil fuel interests around the world are using the cover of the coronavirus crisis to advance their agenda.

InfluenceMap, which tracks and measures corporate influence over climate policy, focused on recent corporate lobbying for both financial interventions and relating to climate or energy regulations. “The oil and gas sector appears to be the most active globally in the above two lobbying areas, demanding both financial support and deregulation in response to the COVID-19 crisis,” the report states.

In the U.S., the top oil and gas producer in the world, this activity has been particularly pronounced. While the oil and gas sector is struggling amid plummeting prices and demand, the struggle is due to factors far beyond the pandemic, and mostly of the industry’s own making.

Many shale companies had amassed large debts that allowed them to rapidly spend and expand production, for example. And the oil and gas giant ExxonMobil’s stock hit a 10-year low in late January, and a 15-year low by March 5, before the pandemic reached a crisis point in the U.S.

Nevertheless, the Trump administration and Republican lawmakers have looked to use the COVID-19 crisis as an excuse to shore up the petroleum producers. In mid-March, the President announced his intention to buy up crude oil to fill the government’s Strategic Petroleum Reserve, which Democrats and climate advocates slammed as a reckless bailout of Big Oil.

Republicans in Congress tried unsuccessfully to give away $3 billion in the recent economic stimulus package to fund that emergency oil stock-up, but the package still contains nearly $500 billion for broad corporate interests with little oversight that oil companies will likely look to access. Senator Lisa Murkowski (R-AK), chair of the Senate Committee on Energy and Natural Resources, sent a letter on April 1 to Treasury Secretary Steve Mnuchin urging him to use the CARES Act stimulus funds to support oil and gas companies.

The rapidly declining coal industry, with many companies already bankrupt, has likewise turned to the government for financial assistance. The National Mining Association wrote to President Trump and Congress asking to suspend royalties and fees, including payments that support victims of black lung disease. Congress did not include the trade group’s requests in the stimulus package, but the group has said it will continue to make its demands.

Beyond seeking their own financial relief through the government’s coronavirus response, fossil fuel interests are using front groups to push back against attempts to include clean energy or climate-related measures in the economic relief bills.

U.S.-based think tanks linked to fossil fuel-based interests such as [the] Koch brothers have been active in opposing support for green energy programs in the U.S. federal government’s response to the crisis,” InfluenceMap said in a emailed statement. The InfluenceMap briefing cites a new project of the Texas Public Policy Foundation (TPPF) called Life:Powered, which promotes fossil fuels and was originally launched under the name “Fueling Freedom” in 2015 “to combat the Obama-era Clean Power Plan.”

A coalition of over two dozen right-wing, free market think tanks, led by TPPF and the Competitive Enterprise Institute, sent a letter to Congress on March 23 under the umbrella of the Life:Powered project urging lawmakers to reject any incentives or support for “unreliable ‘green’ energy” in the latest stimulus package. The letter includes several false claims about renewable energy and argues, “climate change is not an immediate threat to humanity.”

Some of these same conservative free market groups, members of the State Policy Network, have been buying ads on social media attacking efforts to use the COVID-19 economic relief efforts to also address climate change, which medical experts have said poses “unprecedented threats to public health and safety.”

Life:Powered Facebook ad about oil price war
A Facebook ad from Life:Powered and the Texas Public Policy Foundation, promoting a petition in favor of the U.S. oil industry.

Deregulation is another form of assistance the oil and gas industry has pursued. And whether by weakening existing climate policies like Obama-era clean car standards or waiving environmental compliance requirements, the Trump administration has granted much on the industry’s wish list.

One example cited in the InfluenceMap briefing is the Environmental Protection Agency’s (EPA) recent policy suspending civil enforcement of environmental rules and relaxing compliance requirements. The American Petroleum Institute sent a letter to President Trump and EPA Administrator Andrew Wheeler specifically asking for relief from environmental compliance.

Outside the U.S., corporate interests including oil and gas have also used the pandemic to lobby for their agendas, which run counter to the Paris climate agreement and actions necessary to address climate change. Examples cited in the InfluenceMap briefing include:

  • The European Automobile Manufacturers Association (ACEA) recently sent a letter to the president of the EU Commission asking for laxer timelines for complying with the EU vehicle climate regulations.
  • Oil and Gas UK produced a business outlook report that referenced the COVID-19 crisis, while arguing that protecting the UK oil and gas industry is essential in ensuring the sector can contribute to providing the UK with net-zero emissions solutions.”
  • The Australian Petroleum Production and Exploration Association Chief Executive Andrew McConville referenced the need for measures to ensure economic recovery from COVID-19 pandemic while commenting in favor of a draft government commission report published on Australian resource sector regulation. APPEA stated support for a number of findings, including advice against bans on natural gas exploration. McConville argued the report constituted an ‘an important contribution as we consider vital recovery measures.’”
  • Several Canadian oil and gas companies and the Business Council of Alberta are calling on the Canadian federal government to postpone any regulatory changes or tax increases including a planned increase to the carbon tax. The Canadian Association of Petroleum Producers has also been gunning for a $15 billion bailout package from the federal government.

Trump Meets With Oil CEOs

President Trump is scheduled to hold an in-person meeting Friday, April 3 with the heads of leading oil and gas companies to discuss their concerns, such as the Russia-Saudi Arabia oil price war and depressed demand as a result of the pandemic response.

According to Greenpeace USA, the executives expected to meet with Trump personally earned at least a combined $100 million in 2018 alone between salaries, bonuses, stock options, and other compensation.

Where the rest of the world sees a global health and economic crisis, fossil fuel CEOs see an opportunity to line their pockets,” Greenpeace USA Climate Campaign Director Janet Redman said in a statement. “We cannot let our government’s response to the COVID-19 pandemic be driven by corporate executives looking to exploit a crisis for their own gain instead of supporting health care providers and working families. Nurses need masks. Hospitals need ventilators. Workers need paychecks. People need help all over this country. And what is Trump doing? He’s making sure oil executives have golden pandemic parachutes. It’s disgraceful.”

Main image: A worker power washes drill pipe at Citadel Rig 6 in the Alpine High region of the Permian Basin, Reeves County, Texas. Credit: Justin Hamel © 2020

This Fracked Gas Well Has Been Burning 2 Weeks

Three important reports in an email from DeSmog, by Brendan DeMelle, Sept 14, 2019

Stopping the export of North American fossil fuels
As the Democratic presidential candidates were gathering for a debate in Houston on Thursday, Greenpeace activists were rappelling off a bridge over the city’s ship channel, blocking vessel traffic all the way to Galveston. Their aim? Shutting down this essential U.S. artery that exports fossil fuels to the world.

Fracked gas well burning
In neighboring Louisiana, Julie Dermansky has stunning drone footage of a fracked gas well that suffered a blowout and has been burning for more than two weeks. State officials, which have minimized concerns about air pollution, predict the well will continue burning for the next month

Unfair fees on electric vehicles
Meanwhile, Consumer Reports says the annual fees many states have slapped on electric car owners are unfair compared to the gas taxes paid by gas-guzzlers. Ben Jervey has the story of the corporate influence behind these punishing fees.

Have a story tip or feedback? Get in touch: editor@desmogblog.com.

Thanks,
Brendan DeMelle
Executive Director

P.S. Don’t forget to follow us on Facebook, Twitter, and YouTube to get the latest updates from DeSmog.

Trump to allow new oil drilling in NorCal – targets include Mt. Diablo State Park near Walnut Creek

Repost from the San Francisco Chronicle
[Editor:  See also a Center for Biological Diversity press release.  – R.S.]

New oil drilling in the Bay Area? Trump admin opens possibility

By Kurtis Alexander May 9, 2019 
The San Ardo, Ca. oil field in Central California which is located between King City and Paso Robles, as seen on Wed. May 6, 2015. Photo: Michael Macor / The Chronicle 2015

The Trump administration brought its pro-drilling agenda to Northern California on Thursday, disclosing a plan to make more land available for oil and gas development, including parts of the Santa Cruz Mountains and East Bay hills.

Documents released by the U.S. Bureau of Land Management show the agency is looking to nearly double the amount of federal property and mineral deposits in its Central Coast region that can be leased by fossil fuel companies compared to what was proposed by the previous administration.

Roughly 725,000 acres across 11 counties will be opened up for new leasing, according to the bureau’s preferred plan, including areas in or around Mount Diablo State Park near Walnut Creek and Butano State Park near Pescadero.

Industry experts say such spots, far beyond the major oil and gas fields in San Benito, Monterey and Fresno counties, are unlikely to attract interest from oil companies because of public outcry or engineering logistics — or because they don’t find petroleum. But environmentalists aren’t so sure.

“Many of these areas have drilling and active gas wells (nearby), so yes, there’s a real risk that these places will be developed,” said Clare Lakewood, a senior attorney at the Center for Biological Diversity.

The federal government’s new plan comes as part of an environmental report addressing a court ruling five years ago that essentially halted new drilling leases in California until the impacts of fracking were fully evaluated.

The Center for Biological Diversity and the Sierra Club had brought suit against the Bureau of Land management in 2013, alleging the agency had not sufficiently analyzed fracking’s toll.

Fracking is a method of extracting oil in rock with high-pressure water and chemicals. The practice has become an increasingly popular way to get at previously inaccessible mineral deposits, but it can tear up the landscape, pollute groundwater and trigger earthquakes.

While environmental groups say fracking’s impacts have become increasingly evident since the lawsuit, the Bureau of Land Management report outlines ways in which it says the technology can be safely deployed.

The fossil fuel industry praised the agency Thursday for moving forward with a plan that embraces fracking and advances the extraction of oil and gas.

“We’re pleased that after five years, the process worked and the federal government has reaffirmed that hydraulic fracturing is a safe method of production in California,” said Kara Greene, spokeswoman for the trade group Western States Petroleum Association.

The Bureau of Land Management’s new report comes in contrast to the agency’s initial environmental report, prepared under President Barack Obama and released in early 2017. That document proposed leasing about 400,000 acres in the Central Coast region for oil and gas development.

“For the BLM, the oil and gas program needs to align with new secretarial orders,” said agency spokeswoman Serena Baker, referring to the Trump administration’s aggressive push to expand energy production.

In the bureau’s Central Coast region, drilling operations are currently limited to Fresno, Monterey, San Benito, Alameda, Contra Costa and Santa Clara counties.

Industry experts say that while leases may be offered in additional parts of the region, which include the counties of Merced, San Joaquin, San Mateo, Santa Cruz and Stanislaus, it’s not likely.

“Drilling for oil is so expensive in California, it’s hard for me to believe that anyone is doing it,” said Amy Myers Jaffe, formerly with the UC Davis Institute of Transportation Studies and now a senior fellow at the nonprofit Council on Foreign Relations in New York. “There’s only going to be new drilling if there’s someone who has property nearby and they want to extend what they’re doing on the federal pocket next door.”

The Bureau of Land Management estimates that 37 new oil and gas wells will be drilled as a result of the new plan, a small fraction of the few thousand existing wells in the region.

Most of California’s oil operations are on state and private property, with California regulators dictating if and where new drilling proceeds. Like the Trump administration, officials in Sacramento have been supportive of fossil fuel extraction.

Environmental groups have pressed the state to limit or halt new drilling, citing not only the local problems but the contribution of fossil fuels to global warming.

“There are hundreds of organizations that have been coming together for years” to pressure California officials, said Monica Embrey, a spokeswoman for the Sierra Club. She’s hoping the Newsom administration will finally act.

The Bureau of Land Management’s new report is scheduled to be published Friday in the Federal Register, at which time a 30-day public comment period begins. The governor has 60 days to weigh in. After input is gathered, the agency will review any concerns and decide how to move forward.

Last month, the bureau released a similar document for Southern and Central California, clearing the way for new oil and gas development on more than 1 million acres of federal land and mineral deposits.

Kurtis Alexander is a San Francisco Chronicle staff writer.

GOP Tax Law Bails Out Fracking Companies Buried in Debt

Repost from DeSmogBlog
[Editor: See also the Pacific Standard report, Inside The Tax Bill’s $25 Billion Oil Company Bonanza.  – RS]

GOP Tax Law Bails Out Fracking Companies Buried in Debt

By Justin Mikulka • Thursday, April 26, 2018 – 08:44

A Scrabble board spells out 'Bankruptcy' overlaid on an unconventional oil and gas rigEOG Resources is one of the top companies in the fracking industry, and thanks to the new tax bill passed by Republicans and President Donald Trump at the end of last year, EOG had an exceptionally strong year compared to 2016.

In 2017, the company reported a net income of $2.6 billion. The previous year? A loss of $1.1 billion. That financial turnaround seems very impressive until you realize that $2.2 billion, or about 85 percent, of its 2017 income was the result of the new tax law. Without that gift from the GOP and Trump, EOG would have lost approximately $700 million between those two years. Instead they are $1.5 billion ahead of the game.

With numbers like these, it is easy to see how the Tax Cuts and Jobs Act of 2017 was a much-needed lifeline for the money-losing fracking industryEOG is routinely touted as one of the best shale oil and gas companies. Yet the company still lost $700 million in the past two years. Or at least it would have if not for the tax bill.

This is the same company that an analyst at the investment advice website Seeking Alpha says is “generally considered one of the best unconventional upstream oil and gas players in the business, and its financials back it up.” If those are the best financials in your industry, your industry has a big problem.

An interesting side note is that EOG stands for Enron Oil and Gas, which was spun off as its own company from Enron — the company notorious for one of the great energy Ponzi schemes of the 20th century. Today, an Enron spinoff company is being held up as the most fiscally sound in the shale oil industry.

And Seeking Alpha is now pushing EOG as a good investment and wondering when “the equities market will wake up and smell this opportunity” despite EOG still being over $6 billion in debt. Without the tax overhaul it would be much harder to make this argument.

There is one prominent person in the shale industry warning against rosy forecasts for shale oil, and that is Mark Papa, head of independent oil company Centennial Resource Development. Papa’s last job? CEO of EOG Resources.

Continental Resources is another of the shale companies being heralded as a good investment in 2018. Continental is run by Harold Hamm who was an advisor to the Trump campaign and has taken the title of “Shale King” that once belonged to Aubrey McClendon. Hamm’s net worth is estimated at over $13 billion.

Thanks to the new tax law, Continental took home an extra $700 million because its effective tax rate for 2017 was negative 406 percent.


Continental Resources 2017 Annual 10-K Filing

And Continental needed that money (although Hamm certainly doesn’t). In 2007 Continental had $165 million in debt and paid $13 million a year in interest on that debt. In 2016 its debt had ballooned to $6.5 billion and the annual interest payments rose to $321 million. The GOP tax law essentially pays off two years of Continental’s interest payments, allowing this failing business model to continue because Continental has not been generating enough income to pay even the annual interest on its debt.

While the company he leads is drowning in $6.5 billion of debt, Harold Hamm is personally worth twice that amount. He’ll be fine. He was easily able to afford one of the most expensive divorce settlements ever.

These are just two examples of shale companies receiving an immediate financial lifeline from the GOP tax bill. These companies also will benefit from lowered tax rates in future years. However, this one-time handout simply masks the reality that the shale revolution looks a lot like a Ponzi scheme enriching CEOs and Wall Street financiers by producing oil and gas with borrowed money that is unlikely to be paid back in the future.

And Hamm and the Wall Street financiers have no incentive to do anything differently. Sure bankrupt energy companies destroy worker pensions, wipe out investors equity, layoff thousands of workers — but if we use the coal industry as an example — CEOs will still get bonuses after driving their companies into bankruptcy.

Tax Bill Especially Beneficial to Oil Companies

The benefits of the new tax bill are certainly not unique to oil and gas companies. Utility companies did even better and the big Wall Street banks who are financing the cash-burning shale industry also are awash in new profits thanks to the GOPtax overhaul.

However, due to the nature of how oil and gas companies book profits and losses — and the epic money-losing streak the shale industry created over the past few years — these companies benefited more than most.

To be clear — this bill which was signed at the end of 2017 was applied to the deferred tax liabilities that were already on the books — thus erasing a large chunk of the liabilities for these companies that had built up while the industry kept borrowing to drill more and ultimately lose more money. Simply a bailout of reckless financial behavior by any other name.

And it wasn’t just the companies primarily working in shale that benefited. ExxonMobil raked in a $6 billion benefit from the new tax law, which even CNN Money referred to as a “gift.”

Industry Will Use Bailout to Borrow and Drill More 

In discussing the trade deficit President Trump recently tweeted the following:

Coming from a man whose career includes multiple bankruptcies, this shouldn’t be surprising. The shale oil industry definitely has a kindred spirit in the White House.

What happens when you give free money to gamblers on an epic losing streak? In the shale industry, they double down.

ExxonMobil has promised to use the billions it gained from the tax bill to … drill and frack more shale oil. Which is likely to result in further discounts of Permian Shale oil, which will lower the price of oil and put more pressure on the heavily leveraged shale companies.

While the mainstream media is pushing the industry message that shale companies now are focused on profits instead of just production volume, record U.S. oil production and predictions for even greater increases would appear to reveal the lie in that promise. Just as most sharks must swim to stay alive, shale companies must drill to preserve CEO bonuses, which are often tied to oil production, not profits. So, they drill. Even when that means losing money on nearly every barrel of oil they pump.

A graphic from the Wall Street Journal reveals just how much money the shale industry has been losing compared to traditional oil — all while CEOs such as Harold Hamm were amassing billions in personal wealth. The shale oil industry generated free cash flow pumping oil for one brief period in the last seven years. Hamm has done a bit better personally during that time frame.

Shortly after President Trump signed the new tax bill, he took another vacation to Mar-a-Lago where he reportedly told those in attendance: “You all just got a lot richer.”

A rare moment of honesty from the President. And while he wasn’t speaking specifically to shale oil CEOs — it’s safe to say they got the message loud and clear.


Follow the DeSmog investigative series: Finances of Fracking: Shale Industry Drills More Debt Than Profit