Energy companies plow some profits back into Western ground

 

Note: This article is a sidebar to this issue's feature story, "Gold from the Gas Fields."

As he sat in his Houston office on Nov. 10, Raymond Plank, the chairman of Apache Corporation, tracked news reports about the Washington, D.C., hearing, in which members of the U.S. Senate scolded five of his fellow oil-company executives.

Their companies, including Exxon Mobil and BP, had just reported an astronomical combined profit of $33 billion for the three-month period that ended Sept. 30. To many people, the oil industry seemed to be taking advantage of everyone else’s bad news: Energy prices were already high and worldwide demand was rising, when hurricane damage to Gulf Coast refineries led to yet-greater price hikes.

"My constituents think (they’re) getting ripped off," said Sen. Pete Domenici, R-N.M., during the hearing, according to The New York Times.

Plank, whose company will take home about $1 billion from its worldwide energy operations this year, saw the criticism as misguided political posturing.

Recent profits make up for long spells in which oil companies did not perform as well financially, Plank explains. During the 1980s and 1990s, global oil prices fluctuated wildly, from a record high of nearly $100 per barrel in 1980 to a low of $10 per barrel in 1999 (both prices adjusted for inflation, stated in today’s dollars). Banks, insurance companies, pharmaceutical companies, and even McDonald’s Corp. and Coca-Cola make a higher rate of profit on their total sales than do oil companies.

Even so, Plank says that some companies ought to reduce their impacts on the land, and plow more of their profits back into the local communities. In fact, he says, this is already beginning to happen, at least in the Rockies, where "a trend has begun for more responsible development" of oil and gas.

Industry needs to "give back"

Linda Baker, an organizer for the Upper Green River Valley Coalition, an environmental group based in Pinedale, Wyo., is worried: Locally, pollution from the industry causes increasing haze, and a deer herd wintering on the nearby Pinedale Anticline gas field has declined by nearly half during the past three years (HCN, 10/31/05: Oil and gas drilling clouds the West's air). "It’s absurd not to provide more balance," she says.

She points to Ultra Petroleum, a company that has 10 drilling rigs in the Anticline field and plans to drill more than 2,000 wells there eventually. Ultra boasts that it has the lowest overhead in the industry, and that it would still make a profit on its gas wells even if the price of gas were one-sixth of the current price, she says. In other words, the company could do a lot more to minimize its impacts.

"It makes me sick to know how much we’re pulling out of the ground and how little we’re giving back," a former Ultra vice president, Brian Ault, told the Pinedale Roundup in July.

CEO Mike Watford took over Houston-based Ultra in 1999, when it was nearly bankrupt. Since then, Ultra’s stock price has shot from 78 cents per share to about $50 per share. During the runup, Ultra rolled almost all its profits into more drilling, Watford says, while deferring its federal income-tax obligations to future years, using a form of industry tax break.

"Now (that) we’re flourishing, we have to change our mindset," Watford says. Ultra may soon pump money into affordable housing projects for industry workers in Pinedale, he says: "We’re going to do more."

There are some encouraging signs around Pinedale: EnCana Oil & Gas USA Inc. is experimenting with a drilling rig that runs on natural gas, instead of diesel fuel, to limit increases in air pollution. Many companies use directional drilling, to keep the number of new well pads to a minimum. Shell donated a total of $2 million this year to two foundations; one helps preserve habitat for sage grouse, and the other helps communities deal with an influx of gas-field workers.

Still, the companies will pull about $3 billion worth of gas from the fields around Pinedale this year. Oil and gas companies typically make at least 10 percent profit on their total sales, so that means the local profits this year will likely total about $300 million. Their spending on environmental measures and donations is only a tiny fraction of that.

A responsible oilman

Eighty-three-year-old Raymond Plank of Apache offers a glimpse of what is possible. He’s worked to protect Wyoming landscapes, consulting with a series of governors and working with the Sierra Club to preserve roadless forest in the Bighorn Mountains. The Ucross Foundation, which he founded, runs a 22,000-acre ranch near Sheridan that’s a model of holistic land management.

Plank and the ranch manager are even battling coalbed methane companies that have laid three pipelines, built roads and drilled about 20 wells on parts of the ranch where Ucross doesn’t own the mineral rights. "It’s been a disaster," Plank says. The drillers cut roads and pipeline paths 50 feet wide, causing scars and erosion.

Not that Plank opposes coalbed methane development; his company plans to drill about 2,000 coalbed methane wells this year in Canada. Apache, however, follows the industry’s "best practices," according to Plank; it clears pipeline cuts only four to six feet wide, and reinjects wastewater from the wells into the ground, to replenish aquifers and keep salts in the water out of streams.

Plank and others at his company have advised Wyoming state officials about how to tighten state oversight of drillers, he says. Apache and two other companies are also spending about $1 million to put out a report and a video contrasting best practices with irresponsible drilling.

Plank, who helped launch Apache in 1954, now helps guide donations from his Ucross Foundation, including support for a High Country News series on preserving ranchland, printed in 2004 and 2005. "There’s a big difference" among energy companies, he says. "We’re not Enron. Yet sometimes we’re treated as if we are."

High Country News Classifieds
  • YELLOWSTONE TREASURES: THE TRAVELER'S COMPANION TO THE NATIONAL PARK
    Dreaming of a trip to Yellowstone Park? This book makes you the tour guide for your group! Janet Chapple shares plenty of history anecdotes and...
  • OLIVERBRANCH CONSULTING
    Non-Profit Management Professional specializing in Transitional Leadership, Strategic Collaborations, Communications and Grant Management/Writing.
  • SAGE GROUSE CCAA COORDINATOR
    The Powder Basin Watershed Council, headquartered in Baker City, Oregon, seeks a full-time Sage Grouse CCAA Coordinator. This position is part of a collaborative effort...
  • MARKETING COMMUNICATIONS MANAGER
    High Country News, an award-winning media organization covering the communities and environment of the Western United States, seeks a Marketing Communications Manager to join our...
  • EXECUTIVE DIRECTOR - OKANOGAN LAND TRUST
    Executive Director, Okanogan Land Trust Position Announcement Do you enjoy rural living, wild places, family farms, challenging politics, and big conservation opportunities? Do you have...
  • GREAT VIEWS, SMALL FOOTPRINT
    Close to town but with a secluded feel, this eco-friendly home includes solar panels, a graywater reuse system, tankless hot water, solar tubes, and rainwater...
  • EXECUTIVE DIRECTOR
    Powder River Basin Resource Council, a progressive non-profit conservation organization based in Sheridan, Wyoming, seeks an Executive Director, preferably with grassroots organizing experience, excellent communication...
  • COMMUNITY ORGANIZER- NORTHERN PLAINS RESOURCE COUNCIL
    Organize with Northern Plains Resource Council to protect Montana's water quality, family farms and ranches, & unique quality of life. Starts $35.5k. Apply now- northernplains.org/careers
  • BEAUTIFUL, AUTHENTIC LIVE YULE LOG CENTERPIECE
    - beautiful 12" yule log made from holly wood, live fragrant firs, rich green and white holly, pinecones and red berries. $78 includes shipping. Our...
  • CRAZY HORSE MEMORIAL DIRECTOR OF PROGRAMS FOR THE INDIAN UNIVERSITY OF NORTH AMERICA
    Crazy Horse Memorial, in the Black Hills of South Dakota, is currently accepting applications and nominations for the Director of Programs for The Indian University...
  • CRAZY HORSE MEMORIAL® MANAGER OF RESIDENCE LIFE FOR THE INDIAN UNIVERSITY OF NORTH AMERICA®
    Crazy Horse Memorial is currently accepting applications for the Manager of Residence Life for The Indian University of North America. This position is responsible for...
  • EXECUTIVE DIRECTOR
    Are you an art lover who dreams of living in the mountains? Is fundraising second nature to you? Do you have experience managing creative people?...
  • EXECUTIVE DIRECTOR
    The Public Lands Foundation, a non-profit organization supporting the multiple-use management of public lands managed by the Bureau of Land Management, seeks an experienced leader...
  • COLD WEATHER CRAFTS
    Unique handmade gifts from the Gunnison Valley. Soy lotion candles, jewelry, art, custom photo mandalas and more. Check out the website and buy Christmas locally...
  • EDITOR-IN-CHIEF
    High Country News, an award-winning media organization covering the communities and environment of the Western United States, seeks an Editor-In-Chief to join our senior team...
  • LENDER OWNED FIX & FLIP
    2 houses on 37+ acres. Gated subdivision, Penrose Colorado. $400k. Possible lender financing. Bob Kunkler Brokers Welcome.
  • HISTORIC LODGE AND RESTAURANT - FULLY EQUIPPED
    Built in 1901, The Crazy Mountain Inn has 11 guest rooms in a town-center building on 7 city lots (.58 acres). The inn and restaurant...
  • POLLINATOR OASIS
    Seeking an experienced, hardworking partner to help restore a desert watershed/wetland while also creating a pollinator oasis at the mouth of an upland canyon. Compensation:...
  • ELLIE SAYS IT'S SAFE! A GUIDE DOG'S JOURNEY THROUGH LIFE
    by Don Hagedorn. A story of how lives of the visually impaired are improved through the love and courage of guide dogs. Available on Amazon.
  • COMING TO TUCSON?
    Popular vacation house, furnished, 2 bed/1 bath, yard, dog-friendly. Lee at [email protected] or 520-791-9246.