Was someone in Louisiana able to get a mortgage without first proving financial worth and then getting flood insurance?
Of course not. This is because lenders must make sure that you can pay off the debt, especially if the worst happens. It is just part of the business in this region and in the country.
Well, unless you own an oil and gas company and want to drill in the Gulf of Mexico.
Then you can get that deal: if you go bankrupt, the taxpayers will help you pay to clean up any mess you leave behind, like polluting wells and corroded pipelines, even if that means less money for their people. schools, hospitals, roads. .. well, everything else.
What are you saying ? Are you a Louisiana taxpayer and you did not accept this terrible deal?
So you better wake up, because this is the deal that the politicians you sent to Baton Rouge and Washington have been signing on your behalf decades ago.
The latest example of this scam is exposed in federal court in Houston where, as part of its bankruptcy proceeding, Fieldwood Energy LLC has proposed to abandon up to 1,715 wells, 281 pipelines and 276 rigs and you let, as well as the former owners, recover the estimate. $ 9 billion tab to safely shut down all these potentially polluting properties.
But here’s the biggest blow for us suckers: This is the second bankruptcy that Fieldwood has claimed in less than three years.
Now you ask yourself: how can this happen?
Well, when the big oil companies regularly sell declining wells to smaller, less capitalized companies on federal or state land, the law says that the responsibility for properly closing that well rests with the new owner. But politicians made sure there were different rules for playing in the Gulf of Mexico so that local small businesses could join in the fun. So when leases change hands overseas, the responsibility for cleaning falls on the original owner.
In Fieldwood Bankruptcy, Judge “Freezes Time” on 1,700 Gulf of Mexico Oil Wells
But these original owners are some of the richest and most powerful companies in the world, and they often find ways to delay, reduce and absolve themselves of these costs and pass them on to the public. And that’s why industry insiders aren’t surprised that Fieldwood may get a second chance even after its recent first bankruptcy.
An ethical solution is not complicated, said Megan Milliken Biven, New Orleans who turned insider knowledge of the oil and gas industry gained while on the Bureau of Offshore Energy Management into a reformer role. innovative energy. She says the Government of Canada in Alberta – North Texas – has come up with a very simple and effective solution to relieve taxpayers while protecting the environment. It’s called “Sticky ARO”.
The “ARO” stands for the obligation to take out of service. And “sticky” means that a portion of the costs of that retreat remain with each of the owners until the property is properly closed.
“Let’s say a well is owned by Chevron for 60% of its life and two other companies for 20% each. At the time of decommissioning, they would each be responsible for this percentage of the costs, ”she explained.
“It’s a very fair way of sharing the costs of decommissioning based on the profits that each company has made from the property. “
Oil company plan to abandon 1,700 Gulf of Mexico wells could spell “environmental disaster”, rivals say
Equally important, of course, is making sure that each owner provides insurance to prove that they will have the funds to take care of their part before they are allowed to participate in the game – which is still not done. adequately by US or state agencies.
And don’t let the industry tell you it’s not a big deal. A federal audit showed that between 2009 and 2018, there were 22 corporate bankruptcies in federal waters, resulting in a decommissioning liability of $ 4.3 billion. This does not include the risk of 18,000 miles of inactive pipelines left since the 1960s in violation of federal laws requiring their removal. The same federal audit found the app to be almost non-existent.
It’s all part of the kind of socialism Louisiana and other Red states think is right. They think companies should be allowed to privatize their profits, but socialize their risks.
Bob Marshall, a Pulitzer Prize-winning Louisiana environmentalist journalist, can be reached at [email protected], and followed on Twitter @BMarshallEnviro.