Nation’s Biggest Nat Gas Co Racks Up $2.3 Million Fracking Fine
The biggest natural gas company in the US would be XTO Energy, a subsidiary of ExxonMobil, so when you’re looking at the $2.3 million fine for environmental damage related to natural gas fracking announced just yesterday by the US Environmental Protection Agency, you’re looking at a very small drop in a very large bucket. However, when you take a closer look at the settlement, you can also see that EPA has been slowly but steadily chipping away at the myth of cheap, “clean” natural gas.
Let’s call this the Al Capone strategy…
When Is A Fracking Fine Not A Fracking Fine
Before we get into the gist of the case, let’s make it clear that EPA did not bring it in relation to any of the most-discussed issues involved in the gas and oil drilling method known as hydraulic fracturing, or fracking for short.
Those issues include contamination of drinking water wells and other groundwater resources during and after drilling, contamination of surface water by storage or disposal of fracking wastewater, earthquake hazards typically caused by disposal of fracking wastewater, and “fugitive” emissions from drilling sites and elsewhere along the supply chain.
For those of you new to the topic, EPA has been carefully pussyfooting around the fracking issue for years because its hands are tied by an enormous pollution loophole engineered during the Bush Administration by then-Vice President Dick Cheney, who left his post as CEO of the drilling industry services company Halliburton to run for office in 2000.
That’s where the Al Capone strategy comes in. Instead of making straight for the drilling operation itself, EPA went after XTO/ExxonMobil for ordinary construction-related damage, namely this:
…the company impacted streams and discharged sand, dirt, rocks and other fill material into streams and wetlands without a federal permit in order to construct well pads, road crossings, freshwater pits, and other facilities related to natural gas extraction.
If that rings a bell, you may recall that EPA brought an action against another major fracking company, Chesapeake, on identical grounds last year.
That case resulted in a $6.5 million settlement to restore 27 sites and a civil penalty of $3.2 million, which according to EPA was “one of the largest ever levied by the federal government for violations of the Clean Water Act (CWA), under the Section 404 program.”
Section 404, btw, is the one that says you need a permit from the US Army Corps of Engineers before you can alter any kind of waterway — wetlands, rivers, streams, you name it.
The XTO/ExxonMobil Fracking Fine
As with the Chesapeake case, the XTO/ExxonMobil case covered drilling operations in West Virginia.
It involved eight sites in Harrison, Marion and Upshur counties, with the impacted areas totaling about 5,300 linear feet of streams and 3.38 acres of wetland. In addition to the $2.3 million fine, XTO agreed to pay $3 million in restoration costs.
At this point you may be thinking wait — what!? More than $5 million for a measly 3.38 acres and like one mile of streams? It seems that XTO/ExxonMobil could have saved some big bucks if they asked the US Army Corps of Engineers (USACE) for a permit.
On the other hand, given the transition of USACE to an environmental stewardship model, it seems that drilling companies are more likely to risk having their application denied nowadays. That doesn’t necessarily meant that the drilling couldn’t take place, but it does mean that the cost of drilling would go up, to absorb any additional construction costs (including construction debris disposal) needed to avoid impacts on wetlands and other waterways.
For that matter, USACE co-discovered the violations during routine inspections with EPA officials, and it has been aggressively supporting EPA and the Department of Justice in pursuit of the case.
XTO has been working with EPA for several years on cleanup and compliance on those sites, and it also reached a settlement with EPA last year on fracking wastewater contamination in the Susquehanna River in Pennsylvania, relating to a discharge from a storage facility.
This case also skirted around issues related directly to fracking and simply addressed the basics of spill-related contamination. Here’s the goods:
…the spill impacted those waters for a period of roughly 65 days. Elevated levels of pollutants indicative of a spill of flowback and produced fluid, such as strontium, chloride, bromide, barium, and total dissolved solids (TDS), were present in both a surface stream (i.e., tributary of the Susquehanna River) and subsurface spring (i.e., hydraulic connection to the tributary).
Yech. Nevertheless, even as the gas bubble has been on the verge of busting over the past couple of years, ExxonMobil has continued to gobble up additional reserves. Let’s see how that works out if and when that fracking loophole finally closes.
And…if you’d like to weigh in on the new case, the consent decree was lodged in the Northern District of West Virginia yesterday, so there’s 29 more days for public comment.
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Outstanding write up. I still don’t understand positions taken by Oil and Gas on the issue of environmental protection. Construction and operating permits can be procured easily. Demonstration of an industrial endeavour being environmentally protective and safe human health wise isn’t that big of a burden. Sometimes there are real issues, but this is the US and there’s always issues when one party wants to encroach on another party’s land, water or air space. Unlike say countries with dictators and similar. USACE and US EPA are pretty supportive of development as long as all the i’s dotted and t’s crossed. My guess environmental regulation workarounds are more philosophical than practical. Grover Norquist acolytes have broad brushed hatred of all regulation and taxes as its platform. Environmental regulation can be industry’s best friend. Regulations as enforced by governmental agency are basically public’s tacit and explicit approval.
Anyway, given that gas is trading around $3.40 Henry Hub and less than $2.00 for Marcellus hubs, it’s time to revisit environmental protection on oil and gas exploitation. We’d all be able to take the hit of a couple cents per MMBTU to study and implement environmental and human health protection measures on a national level. O&G execs can still live large. Traders and Wall Street may have to take a hit, but it’s not like those folks are added too much value.
Even with fines in the millions, it’s still usually cheaper for these rogue companies to break laws than to comply. That was the whole business model of the Koch brothers companies (see http://www.rollingstone.com/politics/news/inside-the-koch-brothers-toxic-empire-20140924). It took years and the death (murder, in my opinion) of many people at the hands of their regulation-dodging policies to finally get them to reduce their violations. I think it was the $296 million wrongful death judgement that probably started to really cut into their profits. In fact, they mostly got out of the oil pipeline business and moved into shady wall street derivatives trading, then later started buying up tons of non-oil companies like Angel soft, Brawny, Dixie cups, etc (see http://www.boycottkochbrothers.com/).
Years before fracking became a household (curse) word, I mentioned “peak oil” to someone who told me about fracking and how it would solve all the world’s problems.
I looked it up and concluded that if it was half as bad as it seemed, no one would ever risk the water contamination, and the ground poisoning so it would never be allowed. Well I was as wrong as one can be (obviously). It isn’t half as bad – it’s twice as bad, and half or more of the country is cheering it on.
When Gov. Cuomo (reluctantly) banned fracking in NY, local communities’ politicians complained they were missing out on all the money No. Pennsylvania was getting. That they were almost simultaneously denied casinos seemed to make it worse. Not only do they have to have clean water, but they don’t get the mafia, petty crime, and all the other wonders that come with gambling.
“Clean Technica” needs a sister site – call it “Local-polticians-who-can-see-past-the-end-of-their-nose”. I am afraid it won’t have many posts. If the GOP wins any more governorships, it won’t have any.
Excuse me, but I’ve been led to believe that Cheney left Halliburton because he was unhappy with the company (and the company with him), not in order to run for office. Have I been misled or are you spewing left-wing propaganda?
“August (2000): Cheney leaves his position as Halliburton’s CEO to run as Bush’s Vice President. Halliburton announces that it is giving Cheney a retirement package worth more than $33.7 million.19 Under public pressure, Cheney sells company stock worth $30 million. ”
http://www.halliburtonwatch.org/about_hal/chronology.html
—
Bush and Cheney were nominated during four nights of voting July 31 – August 3.
http://en.wikipedia.org/wiki/2000_Republican_National_Convention
—
August 16, 2000
“Republican vice presidential candidate Dick Cheney spent his last day on the job Wednesday as chairman and CEO of Halliburton Co., an oil-services giant, and walked away a far richer man.”
http://money.cnn.com/2000/08/16/companies/cheney/
Clearly Cheney left Halliburton only after he had become the Republican candidate for vice president. And Halliburton must not have been too unhappy with Dick. They gave him a $33.7 million going away present.
While checking facts I also found this tasty morsel…
1995
“Without any previous business experience, Cheney leaves the Department of Defense to become the CEO of Halliburton Co., one of the biggest oil-services companies in the world. He will be chairman of the company from 1996 to October 1998 and from February to August 2000. Under Cheney’s leadership, Halliburton moves up from 73rd to 18th on the Pentagon’s list of top contractors. The company garners $2.3 billion in U.S. government contracts, which almost doubles the $1.2 billion it earned from the government previously”
http://www.halliburtonwatch.org/about_hal/chronology.html
You might wish to read that page. It’s clearly a site that doesn’t hold Halliburton in high esteem, but I suspect they’ve done a good job of getting their facts straight.
Thanks for the enlightenment.