On the shale gas patch, the twain decidedly do not meet: Shale gas drillers, on the receiving end of two years of withering attacks by anti-fracking elements, have launched a counter-offensive. A special-purposed group of 11 big industry players including ExxonMobil, Shell, Chevron and Anadarko issued an eight-page code of conduct for hydraulic fracturing in Pennsylvania and New York (pictured above, outside the town of Waynesburg, Pa.). I spoke with Anadarko CEO James Hackett, a leader of the group, before the Obama administration's release today of somewhat stiff rules governing fracking on federal land. As I wrote at EnergyWire, Hackett said the group wished to "set a good example" -- a high bar for all operators on the patch in order to reassure public opinion. But Hackett's vituperative description of critics suggests little room for conciliation between the sides. In a nutshell, Hackett sees himself as a patriot, and his critics as anti-science extremists, and worse.
The industry embarked on the standards as part of studies requested by the Department of Energy and a diverse group called the National Petroleum Council. But it was all against the backdrop of hyper-critical media like "Gasland," Josh Fox's much-watched 2010 documentary on fracking. The companies felt that shale gas "can be developed responsibly, but you had a slew of articles coming out from the New York Times. Whether they were fact-based or not didn't seem to matter," Hackett told me. "The Cornell study, the Duke study, the hysteria that people were trying to create around hydraulic fracturing, which was scientifically misplaced."
So there was industry interest in counter-attacking, Hackett said. But once they were into the process, the CEOs started thinking more broadly that they had something to gain by conceding to regulation. Hackett:
There was a feeling that this could be a useful way for us to proceed long term, because the truth is that the technology does keep changing and the practices keep changing. And we have every bit or more a stake of how the regulatory process evolves and society's acceptances of our industry. We have a bigger stake than I'd say than anyone else but the citizenry that we want to make sure is educated about what the benefits of this are so that they don't just say, ‘You lose your license to operate,' without understanding what it means when they say that.
Read on for more of James Hackett, and the rest of the Wrap.
Mladen Antonov AFP/Getty Images
"It is too late to try to build ‘Afghanistan right,'" Anthony Cordesman concludes in an exceptionally clear piece for the Center for Strategic and International Studies. Cordesman ticks off the crippling weak spots that fatally undermine peace with honor in Afghanistan. Without saying so explicitly, he forecasts a best-case return to the pre-9/11 status quo -- the Taliban in the center, vying for national power against canton-based local strongmen around the country, anchored by a refortified Northern Alliance.
Cordesman is right as far as he goes. Yet like numerous wise hands weighing in similarly in the wake of President Barack Obama's weekend accord with Afghan President Hamid Karzai, Cordesman is reluctant to draw a line under his stacked-up facts and provide the sum of the parts: There is no further constructive role for the U.S. military in Afghanistan. If American troops leave, Afghanistan is likely to devolve into civil war; if they stay, there will be the same outcome.
But there is an upside of U.S. troops leaving entirely that is absent from the alternative: The mayhem potentially has an endpoint of Afghan-run stability, albeit many years hence probably. With a continued U.S. military umbilical cord in place, that is far less likely.
For those who were on the ground in the first years after the Soviets left, this is easy enough to see. A year ago, on the killing of Osama bin Ladin, this blog suggested declaring victory and getting out. It simply is folly to suggest that the U.S. will avoid the experience of the Soviets, and the British before them. U.S. foreign assistance -- for construction and civil support -- will be welcome, but not a military presence in any form.
I caught up to the Obama-ate-dog story only in replays of the White House correspondents dinner, but this is important: I confess that I ate dog meat, too. It was in the Philippines, in my first foreign posting. I was wandering through the mountains of Cebu province, looking for members of the outlawed New People's Army (remember them?) to interview. The owner of the hut in which we stayed one night offered up breakfast on our way out. "It's black dog," the fellow said, smiling and holding out the delicacy with both hands. "Why thank you," I replied. I dined gratefully. This is called going with the flow. (Memo on how to eat black dog meat while searching for rebel fighters in mountain hideouts: Don't think. Eat. Smile at host.)
My next posting was Pakistan. On a trip through Afghanistan
during the Najibullah days (remember him?), I was the guest of some mujahedin
in Kandahar province. Near the end of an outdoor dinner, the local commander
bestowed on me the most honored morsel he could think of -- a fistful of raw
sheep's fat. Mmmmmm. Scrumptious. (Memo on how to eat fistful of raw sheep's
fat while with Pathans: Wrap it in naan. Eat fast. Smile at host.)
that came the former Soviet Union, and fresh camel's milk in Turkmenistan,
horse meat in Kazakhstan, and who-knows-what-kind-of-innards in Chechnya.
I was never offered in Kazakhstan or Kyrgyzstan was the most delectable nomad
delicacy of all -- sheep's eyeball. In my first book, there is a photo of
then-BP CEO John Browne (remember him?) being handed one during dinner over a
big Kazakh oil deal that he desperately wanted. When you want an oil deal, you
eat the eyeball, and Browne did.
(Memo on how to eat an eyeball -- or a sheep's ear -- during oil negotiations in Kazakhstan: Don't chew. Swallow fast. Smile at host.)
Saul Loeb AFP/Getty Images
David Biello is associate editor for environment and energy at Scientific American magazine.
So far in 2012, ExxonMobil has made $104 million a day -- and that's an off year. In 2005, the oil giant earned a net profit of $36.1 billion, or "more money than any corporation had made in history," writes Steve Coll in his illuminating saga of the most successful and largest heir to John D. Rockefeller's strangling monopoly, Standard Oil. Simply put, ExxonMobil has been among the world's largest and most profitable companies since the 1950s, and it is so confident of its future that it recently raised the dividend paid to shareholders by a whopping 21 percent.
Private Empire begins in 1989 with the tale of the Exxon Valdez, the company oil tanker that ran aground in Alaska's Prince William Sound, and ends 22 years later with ExxonMobil's credit rating surpassing that of the U.S. government. The title derives from the company's need to control actual physical territory in order to profitably pump. The result is amassed power and influence, used mostly for ill (if one's interest is human rights, economic development or combating climate change), or good (if one's focus is cheap gasoline).
Coll, a two-time Pulitzer Prize-winning author of previous books on the CIA's history in Afghanistan and on the Bin Ladin family, here weaves a work around a profile of the reigns of two emperors. There is South Dakotan Lee "Iron Ass" Raymond, who parlays a relentless focus on safety in the wake of the Exxon Valdez into imperial corporate control, whether it is the initiation of a "safety minute" at the start of any meeting or the installation of tracking devices in the vehicles of known speeders. Raymond's successor, the Texan Rex Tillerson (the "Eagle Scout"), attempts to soften the company's image by doling out medals for good work, an incentive reminiscent of scout merit badges, and embracing a carbon tax to control greenhouse gas emissions.
ExxonMobil perhaps looms largest in the U.S. on this subject of climate change. Early in the book, Coll lays out the company's apparent objectives via an American Petroleum Institute memo from the 1990s:
Average citizen "understands" (recognizes) uncertainties in climate science; Recognition of uncertainties becomes part of the "conventional wisdom"; media "understands" (recognizes) uncertainties in climate science; media coverage reflects balance on climate science and recognition of the validity of viewpoints challenging current "conventional wisdom"; those promoting the Kyoto treaty on the basis of extant science appear to be out of touch with reality.
If that was also ExxonMobil's goal, the many millions of dollars that the oil company spent worked. Each item on that memo can be checked off -- thanks largely to Raymond's close relationship with then-Vice President Dick Cheney. "We just gave away the environment," observed then-Treasury Secretary Paul O'Neill after the Bush Administration repudiated action on climate change in 2001.
Similarly, just 12 days before Obama's inauguration, Tillerson publicly advocated a carbon tax. In fact, that thumbs up seemed to have more to do with further delay of any regulation than a change of heart on climate change. As Coll puts it nicely, quoting a company lobbying meeting with the new Administration, Tillerson "was happy to have a position that nobody was going to embrace."
The irony is that ExxonMobil found good use for climate change: It cut its greenhouse gas emissions as a result of its focus on profits, largely by avoiding the flaring of natural gas co-produced with oil. It even used climate predictions to inform exploration, banking on global warming to melt more ice and thus allow access to Arctic oil, a nice side benefit of the company's intransigence on climate change. "Don't believe for a second that ExxonMobil doesn't think climate change is real," Coll quotes a former manager.
Such quotations as well as anecdotes humanize the massive cast of characters in this sprawling book. Raymond is revealed as kind to the air crew of his private corporate jet while routinely excoriating journalists, analysts and underlings for alleged stupidity. Fine phrases -- "Chad's politicians and labor leaders might be poor and some of them might be unsophisticated, but they had been schooled in obduracy and provocation by French colonialists, which made them formidable" -- leaven the work. And Coll puts the reader inside very closed rooms, such as a barbecue thrown for Russian President Vladimir Putin by U.S. President George W. Bush in November of 2001.
The book reads much like Dan Yergin's magisterial The Prize, absent the zest of conquest and with just a whiff of distaste. Coll handles science -- whether climate change, endocrine disrupting chemicals or geologic estimates of natural gas reserves -- with clarity and power. There are tantalizing hints of massive technological feats, such as Sakhalin I, ExxonMobil's massive engineering project off the western coast of Russia. Yet the poetry of the vast machines that enable oil's journey from well to gas tank is foregone in favor of the endless mundanity of bureaucratic power.
Twenty months after China began to ratchet down its exports of rare-earth elements, the first new Western-run mine is more or less ready to crank out refined metals used in high-tech products including wind turbines, electric cars and missiles. But a delay in Malaysian permission to start the refinery illustrates how the West got into this fix in the first place -- rare-earth mining is among the dirtiest and stigmatized enterprises on the planet.
Australian-run Lynas has been the most aggressive Western company working to pivot off of draconian export reductions imposed by China in September 2010. The result is its rare-earth operations in Malaysia. It has been mining tons of ore in Australia in preparation for refining in the Malaysian town of Gebeng -- it expects the ore to yield a relatively high 7.9 percent of rare-earth metals. But the refinery has been the subject of fierce public Malaysian protests (pictured above, a protest earlier this month), and government permission to open it has not yet been granted.
A mine in California called Mountain Pass used to be the world's biggest rare-earth mine -- until it was discovered that there had been enormous spills of radioactive waste-laced water into Ivanpah Dry Lake. The environmental backlash, in addition to plummeting global prices for rare-earth elements, resulted in the mine closing in 2002.
China picked up the slack. Since the 1990s, China had been on its own rare-earth mining buildup, and now it came to dominate the global industry. But in September 2010, China began a cutoff of rare-earths to Japan in a diplomatic spat over the East China Sea, and a general export reduction followed.
Part of Beijing's export reduction has been a tough-guy inducement for Western companies using the elements to relocate factories to China, where they are offered cheap and liberal allotments of rare-earths.
Saeed Khan AFP/Getty Images
Testing out a fuel cell-driven vehicle: General Motors lent me a hydrogen fuel cell-powered Equinox for the last three days for a test drive around Washington (that is the car above, but not the time I drove it). These are cars powered by an electric motor, and fueled by four tanks of compressed hydrogen (see technical description at Edmunds.com). They are alternatives to battery-powered electric cars. They can technically go 200 miles or so on a single fill up, and be refueled in minutes. GM and most of the rest of the major carmakers are pushing the fuel-cell case pretty hard -- in the U.S., they feel they have to if they are to meet tough 2025 car-efficiency standards. In addition, California, the ultra-important, cutting-edge global vehicle market, is insisting that 15 percent of all cars sold in the state in 2025 be either electric, plug-in hybrids or hydrogen fuel-cell. In Germany, Daimler is aggressively advancing a fuel cell-driven fleet, writes Scientific American, as is Honda in Japan. GM and Mercedes plan to roll out fuel-cell driven vehicles in three years or so, if everything goes well.
So what about the Equinox? To clear one thing out of the way, it is a 2008 model -- GM says it has not yet decided which vehicle it will use for its rollout. So what you are doing is testing not the comfort of the seats, the ride or the internal gizmos, but the propulsion. The first thing that you notice about the system is the gurgle when the car is idling and shutting down -- as my wife described it, like a rattling refrigerator (I at first thought it was more like a garbage disposal, but then decided she was right). After the second day, I got used to the sound, but it is not the sort of thing that you want to get used to, or think that you ought to get used to. People go bonkers at the slightest squeak in their cars, and it is back to the dealer with them. One presumes that GM will engineer that away, as Mercedes has already done with its test vehicle, according to Popular Mechanics.
The ride itself is quiet and pleasant. I am not a green fanatic, but there is something placidly cool about knowing you are not burning a teaspoon of gasoline. When the girls and I were driving Wednesday, a fellow on the East-West Highway asked us to roll down the window. "You are not burning any gasoline?" he asked. Zero, I said. He and the other guys in his car laughed. They liked the idea. "So you just plug it in?" was his second question. I did not have the heart to tell this fellow that, yes, technically you can rapidly pump in your hydrogen fuel -- except that there are no hydrogen fueling stations in Washington. Not one! (There used to be, but it has shut down as of 2010. In case you are curious, here is an international list of hydrogen fuel filling stations.)
Much is made of this lack of fueling stations -- that the government must get behind their construction, or carmakers won't build a lot of vehicles. I personally think that, when profit-minded filling-station owners sense these vehicles coming on the market, they themselves will gradually, and perhaps more than gradually, install hydrogen tanks.
One item: When I picked up the car, it registered 177 miles of hydrogen remaining in the tanks. I had to leave 50 in the car so that, when it was picked up by the GM representative, it could be returned to its Virginia resting spot. I drove 89 miles, and left 54 in the tank. So I lost 34 miles, or 19 percent of the capacity, and this was almost wholly tame driving -- I did not accelerate out the wazoo or hang tight corners. I drove a tiny bit fast once (okay, maybe twice). The performance improves when you figure out how to modulate the accelerator.
One can imagine that these vehicles will take off at once, presuming they are marketed to the right niche, at the right price point, and that they will do really well when they are priced competitively. And when those profit-minded filling station owners get their hydrogen tanks.
Go to the Jump for the rest of the Wrap.
Chip Somodevilla/Getty Images
Since its birth as Standard Oil in the 19th century, ExxonMobil has been at once the most profitable, demonized, secretive and uncompromising corporation on the planet, a black box that muckraker Ida Tarbell famously penetrated in the early 1900s, and no one since has managed. After books on the CIA in Afghanistan and the family of Osama bin Ladin, two-time Pulitzer Prize winner Steve Coll describes Exxon as the most-resistent of all to inquiry. His new book, Private Empire: ExxonMobil and American Power goes on sale Tuesday. Below, Coll replies to questions from the Oil and the Glory.
O&G: Of all the oil companies targeted for grievances, Exxon seems unusually stigmatized. Is it deserving of such criticism?
Coll: Yes and no. On the yes side, they are unusually, fiercely partisan; for example, their Political Action Committee effectively acts as a finance arm of the Republican Party in the United States, and until about 2006 they made aggressive investments in free market groups trying to combat mainstream climate science that I personally think will look pretty embarrassing for years to come. These are not the kinds of aggressive, one-sided interventions in American politics that you would expect from the country's largest or near-largest corporation (depending on the year and the method of measure), a corporation that has diverse employees and is very broadly owned by individual shareholders, government pension funds, mutual funds, and so on. Also, they are their own worst enemy in public relations -- remorselessly aggressive, arrogant, and often self-defeating. So in that self-inflicted sense, they also deserve their reputation.
On the no side, they have a pretty impressive operating record since the  Valdez [tanker] spill, if not as perfect as they sometimes seem to claim for themselves, and their internal discipline has produced a better environmental and worker safety record than their peers. They deserve more credit for that than they get. They've taken human rights where they work in conflict zones more seriously, too, and although they were late, they have adopted some of the better corporate responsibility standards in that area, although they are nowhere near the leaders that they might be. Also, they are stigmatized just for being huge, and I am sympathetic to their arguments that a) while they make large profits in number terms, their profit-margins are not especially high; and b) they get blamed by the public for a lot of things they really can't control, like retail gasoline prices.
Former CEO Lee Raymond seems the most interesting character in the book. What is your take on him? And is he responsible for Mikhail Khodorkovsky's imprisonment in Russia?
He's a fascinating character, larger than life. As a writer, you love anyone who is truly comfortable in his own skin -- not trying to shade or hide himself from the world, and that is certainly Lee Raymond. He was ruthless, effective, difficult, sentimental, loyal and enormously successful as chairman and chief executive, certainly on the operating and profit-making side of the business, although he is criticized by some for not doing enough to position ExxonMobil for the future in the upstream, and on reserve replacement, an issue on which he struggled. Given my main interests in the corporation as a kind of independent sovereign, Raymond is fascinating because that is really how he carried out his role, how he acted in the world -- as a kind of head of state.
You mention the Khodorkovsky case, which is an example. Of course, [Russian leader] Vladimir Putin and his henchmen are responsible for Khodorkovsky's imprisonment, and Khodorkovsky himself miscalculated in the game of political chicken he played with Putin prior to his arrest. But Raymond figures in the story in a fascinating way. I don't want to give away too much of the fun stuff in the book. But in short, Raymond was negotiating to acquire a stake in Khodorkovsky's company, Yukos, in the weeks prior to his arrest. Raymond and Putin had a fascinating one-on-one at the New York Stock Exchange, which I recount, and which reads basically as an encounter between two very powerful men who see themselves as sovereigns.
Just how powerful is Exxon?
I think it depends on the setting. In some of the weak, poor countries where they produce oil -- a place like Chad, for example -- they are immensely powerful, almost comparable to the colonial powers of yore. Chad is one of the world's poorest countries -- Fourth World, really. The United States gives just a few million dollars a year in aid; ExxonMobil's tax and royalty checks in good years recently were higher than five hundred million dollars. If you're the president of Chad, whom do you care about, and whom are you going to listen to? In fact, ExxonMobil allowed Chad's authoritarian president, Idris Deby, to defy the Bush Administration and the World Bank during 2006 because of the sheer size of the cash flow the corporation delivered to Deby, and the way it collaborated with him at the Bush Administration's expense -- I found that an amazing story.
Overseas, in general, ExxonMobil finds its match when governments are well-funded and confident, such as in Russia, or where it is competing with other capable oil companies. It has more clout when it is the big fish in a smaller pond, as in Africa and in some of the weaker states in the Persian Gulf where it has established a huge presence, as in Qatar. Within the United States, ExxonMobil is powerful, yes, especially when it zeroes in to lobby in Congress on an issue that it really cares about, such as tax or climate, and when it is just trying to block legislative outcomes, rather than create them. In those circumstances the corporation can be very hard to defeat. But its power is constrained, as we were mentioning above, by its poor public reputation.
Go to the Jump for the rest of the Coll interview.
Peter Diamandis, chairman of the X-Prize Foundation, single-handedly popularized his vision of a commercial space industry. He is an unmatched titan of Silicon Valley-networking, pulling together high-tech goliaths into enterprises and initiatives with great vision. No one will ever accuse him of failing to think big about truly important problems. But can I be the only one who thinks that his latest idea -- mining asteroids -- is stretching the acceptable definition of entrepreneur?
Diamandis, who plans to do his asteroid mining over the coming decades through a company he has just announced called Planetary Resources Inc., might reply simply that his business partners and advisers are Larry Page, Eric Schmidt and James Cameron (pictured above, his co-founder, Eric Anderson, at the announcement). He might cite the straight-faced news coverage of his new venture, and the commentary on Twitter, hundreds and hundreds of admiring tweets and reports, including the phrases "risky," "daring," and "truly amazing."
On the other hand, there is also a pretty good blog called Do the Math, written by Tom Murphy, a physics professor at the University of California at San Diego, who in a post last October did said math on the subject of asteroid mining. Take a look. (For those lacking the patience to wade through the advanced math, Murphy's conclusion: "The resources of space are effectively stranded in place.")
Stephen Brashear/Getty Images
Steve LeVine is the author of The Oil and the Glory and a longtime foreign correspondent.