Exxon Mobil Investigated for Possible Climate Change Lies by New York Attorney General
By Justin Gillis and Cllifford Krauss, November 5, 2015
An Exxon Mobil refinery in Los Angeles, Calif. The New York attorney general is investigating the oil and gas company. Credit T. Fallon / Bloomberg, via Getty Images
The New York attorney general has begun an investigation of Exxon Mobil to determine whether the company lied to the public about the risks of climate change or to investors about how such risks might hurt the oil business.
According to people with knowledge of the investigation, Attorney General Eric T. Schneiderman issued a subpoena Wednesday evening to Exxon Mobil, demanding extensive financial records, emails and other documents.
The investigation focuses on whether statements the company made to investors about climate risks as recently as this year were consistent with the company’s own long-running scientific research.
The people said the inquiry would include a period of at least a decade during which Exxon Mobil funded outside groups that sought to undermine climate science, even as its in-house scientists were outlining the potential consequences — and uncertainties — to company executives.
As crude oil prices hang low, about $43 per barrel Monday, some North Dakota operators are trying to divest interests in the Bakken.
Two debt-heavy operators in the state, Tulsa, Okla.-based Samson Resources and Denver-based American Eagle Energy, filed for Chapter 11 bankruptcy, planning to sell off Bakken assets to pay back what they owe.
Samson, with production acres in the Three Forks and Middle Bakken plays, has not yet succeeded in selling off acreage, spokesman Brian Maddox said.
“We have not currently entered into agreements to divest other larger packages, including our Bakken, Wamsutter, San Juan and non-core Mid-Con assets, because we perceived the value offered was less than the value of retaining those properties when economic factors and the impact to our credit position were considered,” the company said in first-quarter 2015 filings with the U.S. Securities and Exchange Commission.
“Even if we are successful at reducing our costs and increasing our liquidity through asset sales, we do not expect to have sufficient liquidity to satisfy our debt service obligations, meet other financial obligations and comply with restrictive covenants contained in our various credit facilities.”
The company is the most recent operator in the state to declare bankruptcy, filing in mid-September in hopes of clearing more than $3.25 billion in debt.
As part of the company’s restructuring agreement, second lien lenders own all of the equity of the reorganized company in exchange for providing at least $450 million of new capital to increase liquidity.
“The steps we are taking will allow our company to maximize future opportunities and compete more effectively with significantly less debt on our balance sheet,” Randy Limbacher, CEO of Samson Resources, said in a statement. “We fully expect to operate our business as usual throughout this process and to emerge as a financially stronger company.”
According to 2012 reports, Samson had 400,000 acres in the Bakken. Later that year, it would sell 116,000 acres, primarily in Divide and Williams counties, to Continental Resources for $650 million. No other sale of assets has been reported by the company since then.
And no substantial plans have been announced as to the fate of what does remain, Maddox said.
“We are planning on a Dec. 3 emergence date,” he said of bankruptcy proceedings.
Between June and late September, 10 oil and gas companies have filed for bankruptcy — 19 have filed in the past year since mid-October.
American Eagle Energy, which buys and develops oil wells in the Bakken, was the fourth, filing in mid-May.
American Eagle missed an interest payment on its debt. It listed assets of $222 million and liabilities of $215 million at the time of filing.
American Eagle held 54,262 acres in the Bakken in late 2014. In early 2015, it sold 1,185 leasehold acres in Divide County for $9.5 million.
American Eagle could not be reached for comment.
Outside of those companies filing for bankruptcy, Occidental Petroleum Corp. agreed to sell all of its North Dakota shale oil acreage and assets to private equity fund Lime Rock Resources for $500 million, according to the Reuters news agency. The sale includes 300,000 acres and a recently built, 21,000-square-foot regional office building in Dickinson.
Locally based MDU Resources Corp. is also trying to sell off its oil and gas exploration subsidiary, Fidelity Exploration and Production Co., but has not announced a deal to date.
MDU is scheduled to report its most recent quarterly results next week.
Editorial: California should stick with clean-fuel rule
San Francisco Chronicle, September 22, 2015
Though state lawmakers caved to the oil industry by spiking a plan to sharply reduce gasoline use, there’s another option for Sacramento in reducing climate change and promoting alternative sources to fill gas tanks. State regulators are close to extending a measure that cuts carbon levels in everyday driving fuel.
The low-carbon standard is among a batch of policies designed to cut carbon dioxide, the chief greenhouse-gas culprit blamed for rising temperatures and whipsawing weather. Extending the mandate to cut levels in gas is an essential part of state strategies to curb climate change.
Reducing the carbon level in gas has other benefits. It spurs development of alternative biofuels to wean California off its petroleum diet. The skies will be clearer and public health improved. It nudges the state toward more low-emission vehicles by showcasing the innovation needed to change gas-burning habits.
It’s not without controversy. Oil producers and Midwest ethanol producers say the plan is too flawed and complicated to work, an argument that failed in court last year. But this week, a string of major businesses — eBay, KB Home and Dignity Health among them — is backing the fuel rule. “It’s a practical, gradual and manageable transition,” said Anne Kelly, director of the employer coalition known as Business for Innovative Climate and Energy Policy.
Later this week the state Air Resources Board will consider extending the low-carbon standard, first promulgated in 2007. It’s almost certain to renew the policy, which aims to lower carbon levels by 10 percent by 2020.
The larger picture should be unmistakable. California is pushing ahead on major climate-change measures that Washington is too timid to undertake. The state is increasing renewable energy to light homes and businesses. Rules to encourage thriftier ways of heating and cooling will be strengthened. The worries about lost jobs and shuttered businesses aren’t proving true as the state’s economy gathers steam.
Changing the ingredients in gas-pump fuels should be part of this overall trend. Renewing the low-carbon standard will be good for California’s future.
Fired regulator: Governor pushed to waive oil safeguards
By Ellen Knickmeyer, Sep 4, 3:32 PM EDT
FILE – In this Wednesday May 27, 2015 file photo, California Gov. Jerry Brown addresses the California State Association of Counties Legislative Conference in Sacramento, Calif. California’s top oil and gas regulators repeatedly warned Gov. Jerry Brown’s senior aides in 2011 that the governor’s orders to override key safeguards in granting oil industry permits would violate state and federal laws protecting the state’s groundwater from contamination, one of the former officials has testified. (AP Photo/Rich Pedroncelli, File)
SAN FRANCISCO (AP) — California’s top oil and gas regulators repeatedly warned Gov. Jerry Brown’s senior aides in 2011 that the governor’s orders to override key environmental safeguards in granting oil industry permits would violate state and federal laws protecting groundwater from contamination, one of the former officials has testified.
Brown fired the regulators on Nov. 3, 2011, one day after what the official says was a final order from the governor to bypass provisions of the federal Safe Drinking Water Act and grant permits for oilfield injection wells. Brown later boasted publicly that the dismissals led to a speed up of oilfield permitting.
In a newly filed court declaration, Derek Chernow, Brown’s former acting director of the state Department of Conservation, also alleged that former Gov. Gray Davis urged fellow Democrat Brown in a phone call to fire Chernow and Elena Miller, the state’s oil and gas supervisor.
Brown’s spokesman, Evan Westrup, labeled the allegations “baseless.”
“The expectation – clearly communicated – was and always has been full compliance with the Safe Drinking Water Act,” Westrup said Thursday.
This year, however, the state acknowledged that hundreds of the oilfield operations approved after the firings are now polluting the state’s federally protected underground supplies of water for drinking and irrigation.
The U.S. Environmental Protection Agency has given the state until 2017 to resolve what state officials conceded were more than 2,000 permits improperly given to oil companies to inject oilfield production fluid and waste into protected water aquifers. An earlier AP analysis of the permits found state records showed more than 40 percent of those were granted in the four years since Brown took office.
Chernow’s declaration, obtained by The Associated Press, was contained in an Aug. 21 court filing in a lawsuit brought by a group of Central Valley farmers who allege that oil production approved by Brown’s administration has contaminated their water wells. The lawsuit also cites at least $750,000 in contributions that oil companies made within months of the firings to Brown’s campaign for a state income tax increase.
Westrup denied the oil companies’ support for Brown’s tax-increase campaign was related to the firings, saying, “the governor’s focus is doing what’s best for California, and that’s what informs his decisions.”
Robert Stern, former general counsel of the state’s ethics agency and the architect of a 1970s state political reform act, said there was nothing illegal about Brown receiving the oil industry contributions for his tax campaign unless they were explicitly in return for firing the oil regulators.
Chernow’s statement describes for the first time the alleged back story of the controversial permit approvals. He declined to comment to the AP and Miller did not respond to interview requests.
Brown’s boasting about the firings to speed up permitting is at odds with his image as a leading proponent of renewable energy and reduced fossil fuel consumption. That reputation led to a recent meeting with Pope Francis to discuss climate change.
Westrup said an ongoing effort by Brown to reduce consumption of fossil fuels in the state by up to 50 percent and the oil industry’s fight against elements of Brown’s climate-change campaign shows “where the administration stands and what it’s fighting for.”
The firings occurred as the governor was scrambling to drum up energy sources, jobs and business and to win support for the ultimately successful statewide vote on tax increases to tackle state budget woes.
Today, with the state in the fourth year of drought and a state of emergency declared by Brown, protecting the adequacy and purity of water supplies for farms and cities is a paramount priority.
In the declaration in the farmers’ case, Chernow said he and Miller were under intense pressure from the oil industry as well as the Brown administration to relax permitting standards for injection wells that oil companies use to pump production fluid and waste underground.
Chernow testified he was in the office of John Laird, Brown’s secretary of Natural Resources, in early October 2011 when Laird took a call from Brown. Laird told Chernow that Brown said he had just received a call from Davis, then acting as legal counsel for Occidental Petroleum, the country’s fourth-biggest oil Company.
Brown said Davis and Occidental had demanded Brown fire Chernow and Miller over what Occidental complained was the slow pace of issuing drilling permits, according to Chernow.
Davis declined to comment Thursday.
A few weeks later, on Nov. 2, 2011, Chernow and Miller received a call from Brown’s energy adviser, Cliff Rechtschaffen, who urged the regulators to “immediately fast-track” approval of new oilfield permits, according to Chernow’s filing.
Miller replied that what Brown aides and the oil industry were pressing for “violated the Safe Drinking Water Act, and that the EPA agreed” with that conclusion, Chernow said. In response, according to Chernow, Rechtschaffen told them “this was an order from Governor Brown, and must be obeyed.”
Chernow and Miller were fired the following day.
Memos sent to Department of Conservation staff the next month – obtained through state public records laws by lawyers for the farmers – allegedly detail some ways state oilfield regulators were told they could now bypass some federally mandated environmental reviews and approve permits.
The state, under increasing pressure from the EPA, this year and last ordered the shutdown of 23 improperly permitted oilfield wells posing the most immediate threat to nearby water wells.
Current officials in the Department of Conservation said they believe the actual number of flawed permits granted under Brown is lower than the 46 percent the state records show, but they have not provided alternate figures.
The state improperly issued permits, they said, because of misunderstandings and poor record-keeping, rather than willful decisions by Brown’s administration.
The safeguards at issue in the alleged permitting dispute were a “very fundamental” part of the federal Safe Drinking Water Act’s protections against oilfield contamination, said David Albright, manager of the EPA’s California groundwater office, this week.
California “has a huge amount of work to do” to bring its regulation of oilfield injection wells into compliance with federal law, said Jared Blumenfeld, the regional EPA administrator in California. Blumenfeld cited a “sea change” over the past year in state compliance efforts, however.
Executives of Occidental and Aera Energy at the time thanked Brown for his involvement in the oilfield permitting process, as Occidental CEO Steven Chazren noted in a January 2012 call with financial analysts, two months after top regulators were fired.
That month, Occidental became the first major oil company to come out in support of the Brown’s tax measure and donated the first of $500,000 to Brown’s campaign for the tax referendum. A month later, Aera donated $250,000.
Margita Thompson, a spokeswoman at what is now the independent California spin-off of Occidental, California Resources Council, said that all the farmers’ allegations were “wholly without merit.” Cindy Pollard, spokeswoman for Aera, said the company often donates to revenue-raising state campaigns. “Aera’s contributions were not quid pro quo,” she said.
As crude oil prices hang low, about $43 per barrel Monday, some North Dakota operators are trying to divest interests in the Bakken.