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Is the U.S. Fracking Boom Based on Fraud?

Is the U.S. Fracking Boom Based on Fraud?

typewriter reading 'fraud'

In a 2016 interview with Fraud Magazine, former Enron CFO Andrew Fastow explained what he thought made him so successful while at the former energy corporation that’s now infamous for financial scandal.

“I think my ability to do structured financing, to finance things off-balance sheet and to find ways to manipulate financial statements — there’s no nice way to say it. Like I said at the conference, I was good at finding loopholes.”

As Fastow explained, in finance, the difference between a loophole and fraud isn’t always easy to identify. And that may be something the U.S. fracking industry is working to its advantage.

Fastow, the convicted fraudster, does admit that what they did at Enron misled investors. “We created something that was monstrously misleading, but any one of those deals alone wasn’t necessarily considered fraudulent,” he said.

Fast-forward to today and a different part of the energy industry: The U.S. shale oil and gas industry has lost more than a quarter trillion dollars since 2007, while being sold to investors as an economic boom, even at oil prices much lower than those of recent years. Does that financial mismatch seem misleading? Or perhaps, familiar?

In an unexpected twist, Fastow now gives talks to the energy industry on ethical leadership.

Sounding the Alarm

Bethany McLean was the first reporter to question whether Enron was a financially sound company in a 2001 article for Fortune magazine. McLean went on to co-author the book The Smartest Guys in the Room, which documented the fall of Enron due to its fraudulent practices, including the ones Fastow engineered.

…click on the above link to read the rest of the article…

How Has the US Fracking Boom Affected Air Pollution in Shale Areas?

How Has the US Fracking Boom Affected Air Pollution in Shale Areas?

Trucks in front of a flare at a fracking site

Urban air pollution in the U.S. has been decreasing near continuously since the 1970s.

Federal regulations, notably the Clean Air Act passed by President Nixon, to reduce toxic air pollutants such as benzene, a hydrocarbon, and ozone, a strong oxidant, effectively lowered their abundance in ambient air with steady progress.

But about 10 years ago, the picture on air pollutants in the U.S. started to change. The “fracking boom” in several different parts of the nation led to a new source of hydrocarbons to the atmosphere, affecting abundances of both toxic benzene and ozone, including in areas that were not previously affected much by such air pollution.

As a result, in recent years there has been a spike of research to determine what the extent of emissions are from fracked oil and gas wells — called “unconventional” sources in the industry. While much discussion has surrounded methane emissions, a greenhouse gas, less attention has been paid to air toxics.

Upstream Emissions

Fracking is a term that can stir strong emotions among its opponents and proponents. It is actually a combination of techniques, including hydraulic fracturing, that has allowed drillers to draw hydrocarbons from rock formations which were once not profitable to tap.

Drillers shatter layers of shale rock with high-pressure water, sand and chemicals to start the flow of hydrocarbons from a well. The hydraulic fracturing process itself, aside from its large demand for water, is possibly the least environmentally impactful step along the complete operational chain of drilling for hydrocarbons. Arguably, the more relevant environmental effects are wastewater handling and disposal, as well as the release of vapors from oil and gas storage and distribution.

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Top Drillers Shut Down U.S. Fracking Operations as Oil Prices Continue to Tank

Top Drillers Shut Down U.S. Fracking Operations as Oil Prices Continue to Tank

Among them: Chesapeake EnergyContinental Resources and Whiting Petroleum. Chesapeake formerly sat as the second most prolific fracker in the U.S. behind ExxonMobil, while Continental has been hailed by many as the “King of the Bakken” shale basin located primarily in North Dakota.

Halliburton too, the drilling services goliath and namesake of the “Halliburton Loophole” exempting the industry from U.S. Environmental Protection Agency (EPA) enforcement of the Safe Drinking Water Act as it applies to fracking operations, has recently announced it will cut 5,000 drilling jobs globally (8 percent of its workforce).

“Continental Resources Inc., the shale oil pioneer controlled by billionaire wildcatter Harold Hamm, halted all fracking in the Bakken shale formation in the U.S. Williston Basin after posting its first annual loss since the company’s public debut in 2007,” wrote Bloomberg. “Continental said it has no fracking crews currently working in the Bakken. The company continues to drill there, focusing on areas with the highest returns, but will leave most wells unfinished this year.”

Chesapeake’s immediate future is just as bleak, if not more so, and it will halt drilling in the Marcellus Shale, Utica Shale, Eagle Ford Shale and elsewhere. The company sits as the top-producing driller in both the Utica and the Marcellus.

Whiting, the most prolific shale oil producer in the Bakken, will halt all of its fracking in the near-future. The company, 83 percent of whose produced oil comes from fracking the Bakken, will simultaneously slash its spending budget by 80 percent.

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