As the politics of US oil grow uglier, revelations from the North Dakota boom

Last week’s Senate vote on the Keystone XL pipeline may have been utterly lacking in significance, so much sound and fury signifying merely … theater. 

But surely it can be taken as the official opening performance in a dramatic season of increasingly brutal oil politics, as Republicans prepare their agenda for congressional control and Democrats try to agree on what to give up in the bargaining.

Monday’s discouraging headline, from The Hill, was about the likelihood that the GOP will reopen the fight over drilling in the Arctic National Wildlife Refuge.

Republicans are looking at their best chance in many years to overturn the refuge’s protections, in the Hill’s analysis, and this seems to be among the first items of business for an Energy and Natural Resources Committee realigned under the leadership of Alaska’s Sen. Lisa Murkowski.

Like many, I happen to think this part of the Arctic coastal plain is the absolute last place we should place new oil wells.

Even oil development that went perfectly according to plan would still be destructive to this fragile environment. But oil development never goes according to plan, and accidents that would be merely serious in a Texas or North Dakota oilfield become catastrophic in the harsh conditions of the Arctic.

Abandoning offshore leases

The economics of oil development  in the Arctic are also difficult, and over the last six months there have been reports of major oil companies backing away from full development of their offshore leases — or even abandoning them — as they confront the costs and operational realities of  perhaps the world’s worst climate for oil production.

Yet Arctic National Wildlife Refuge is the very first place where the Senate Republicans will be looking to remake the landscape of  U.S. oil production, for perhaps no reason other than it’s a battle they’ve been fighting so long they just can’t give it up.

Even during times of Democratic control, Murkowski has kept a pair of bills in play. One would permit new wells sunk from sites within the refuge, the other would allow oil beneath the refuge to be tapped by directional drilling from pads outside its borders.

And the arguments for tapping refuge oil never really change: New techniques make oil development environmentally benign; producing our own oil makes us less dependent on imports from unfriendly countries; oilfield jobs are good jobs; state and federal regulators will ensure that the companies do a good job and natural resources are protected.

The last time Congress came close to lifting the refuge’s protections, in 2005, it was clear that refuge oil would be economically attractive only if world oil prices stayed really high for a really long time. I have not dug into those figures for a while, but surging production from North Dakota and Alberta can’t be making Alaska’s coastal plain look better on a balance sheet.

Naturally, Murkowski is already positioning her next push as a bipartisan congressional move that faces a potential veto from President Barack Obama — a veto that I frankly wish were as much a certainty as some seem to think.

The shame of North Dakota

Speaking of North Dakota’s oil fields, a remarkable piece of investigative reporting — and solid public service — turned up over the weekend in the New York Times’ two-day report, “The Downside of the Boom.”

The series summary is that “North Dakota took on the oversight of a multibillion-dollar oil industry with a  regulatory system built on trust, warnings and second chances,” and by my lights that’s putting it mildly.

The principal reporters, Deborah Sontag and Robert Gebeloff, show that North Dakota regulators haven’t been naive so much as actively disengaged as problems in the oil patch have mushroomed. They have refused to use the regulatory tools available to them, and have punished a wide range of critics and challengers who found the courage to step forward and speak up against an industry that occupies an almost sacred place in the state’s civic culture.

Whether you care particularly about what happens in North Dakota or not, I think this project is worth your time for the insights it gives into the utter falsity of the chatter raised by, say, virtually every Republican politician breathing today about the supposed stranglehold of excessive regulation on American industries.

And not just environmental regulation, for this series goes deeply into issues of public health, workplace safety and private-property protections as well.

A few statistics:

  • Though state regulators routinely assert that oil spills are steady or declining, on a per-well basis, figures assembled by The Times “from estimates, and sometimes serious underestimates, reported to the state by the industry”  show exactly the opposite. In the first nine months of 2014, oil spills totaling 3.8 million gallons were reported, nearly as much as in 2011 and 2012 combined.
  • The rate of spills, explosions, fires and other “environmental incidents” has nearly doubled; it was about one incident for each 11 wells in 2006, but had risen to one for every six in 2013.
  • Though many of the spills occur at pipelines, especially the “gathering lines” that bring oil to central places for long-distance distribution, there are no federal pipeline inspectors stationed in North Dakota because the state was permitted to supply its own, but hasn’t done so.
  • When North Dakota fines an oil producer for a violation, it nearly always forgives all but 10 percent of the penalty, and since 2006 has collected about $1.1 million in fines; Texas, which is the country’s No. 1 oil state to North Dakota’s No. 2, produced four times as much oil and collected 30 times as much through enforcement actions. (The apparent worst offender, Continental Resources, racked up 937 spills and incidents from 2006 through 2013 — more than any other company — while paying a mere $20,000 in fines out of the $2.8 billion, with a “B,” in net income it took from the ground.)
  • Three-quarters of those fines were collected not by the state’s Industrial Commission, which has primary oversight authority on oil and consists of the governor, attorney general and ag commissioner, but by the Health Department, “overseen by civil servants and not elected officials.” Most of the penalties came from a single, industry-requested enforcement action that, according to a department official, was intended to limit liability in lawsuits over the industry practice of venting volatile, untreated well gases directly into the open air.

A story long untold

There is extensive and illuminating examination of some of the state’s marquee mishaps, like  the Tesoro Logistics spill last fall that appears to be the largest in recent American history; it spread 865,000 gallons across farmland equivalent to six football fields and was disclosed only after local reporters started making inquiries.

But it is also clear that much of the Times report will be news even to North Dakotans, along with the rest of us, and not only because the state’s major media have been less than relentless in covering this story. Explaining why it had to construct its own databases from fragmentary state statistics, the paper observed:

For a North Dakotan trying to make sense of the state’s environmental and enforcement records, numbers are essentially inaccessible. The state spills site posts incidents in chronological order, without summary statistics, and it is not searchable.

 Oil and gas enforcement data is not made public at all, unlike in Texas, where the legislature mandates quarterly reports.

There are plentiful personal stories, too, of deaths and injury, of property poisoned and lost, but I’ve gone on long enough. I’ll just say that the second day’s installment features a cautionary tale of how individual property rights in oil leases don’t mean much when a big company organizes a group of neighbors to undermine them — with official state support.