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August 03 2012

12:00

Delaware Tax Haven: The Other Shale Gas Industry Loophole

Most people think of downtown Houston, Texas as ground zero for the oil and gas industry. Houston, after all, serves as home base for corporate headquarters of oil and gas giants, including the likes of BP America, ConocoPhillips, and Shell Oil Company, to name a few.

Comparably speaking, few would think of Wilmington, Delaware in a similar vein. But perhaps they should, according to a recent New York Times investigative report by Leslie Wayne.

Wayne's story revealed that Delaware serves as what journalist Nicholas Shaxson calls a "Treasure Island" in his recent book by that namesake. It's an "onshore tax haven" and an even more robust one than the Caymen Islands, to boot.

The Delaware "Island" is heavilized utilized by oil and gas majors, all of which are part of the "two-thirds of the Fortune 500" corporations parking their money in The First State.

Delaware is an outlier in the way it does business,” David Brunori, a professor at George Washington Law School told The Times. “What it offers is an opportunity to game the system and do it legally.”

The numbers are astounding. "Over the last decade, the Delaware loophole has enabled corporations to reduce the taxes paid to other states by an estimated $9.5 billion," Wayne wrote

"More than 900,000 business entities choose Delaware as a location to incorporate," explained another report. "The number…exceeds Delaware's human population of 850,000."

Marcellus Shale Frackers Utilize the "Delaware Loophole" 

The New York Times story also demonstrated that the shale gas industry has become an expert at utilizing the "Delaware Loophole" tax haven to dodge taxes, just as it is a champion at dodging chemical fluid disclosure and other accountability to the Safe Drinking Water Act, thanks to the "Halliburton Loophole." The latter is explained in great detail in DeSmogBlog's "Fracking the Future."

Utilization of the "Delaware Loophole" is far from the story of a few bad apples gone astray for the industry. As Wayne explains, the use of this "onshore tax haven" is the norm.

More than 400 corporate subsidiaries linked to Marcellus Shale gas exploration have been registered in Delaware, most within the last four years, according to the Pennsylvania Budget and Policy Center, a nonprofit group based in Harrisburg that studies the state’s tax policy.

In 2004, the center estimated that the Delaware loophole had cost the state $400 million annually in lost revenue — and that was before the energy boom.

More than two-thirds of the companies in the Marcellus Shale Coalition, an industry alliance based in Pittsburgh, are registered to a single address: 1209 North Orange Street, according to the center.

These fiscal figures, as Wayne points out, predate the ongoing shale gas "Gold Rush" in the Marcellus. SEIU of Pennsylvania has calculated $550 million/year in lost tax revenue in the state from the shale gas industry due to the loophole.

The Pennsylvania House of Representatives set out to tackle the "Delaware Loophole" quagmire in the spring of 2012, but merely offered half-measure legislation that would have allowed corporations - including the frackers - to continue gaming the system. Coryn S. Wolk of the activist group Protecting Our Waters summarized the bill in a recent post:

In March, 2012, the Pennsylvania House of Representatives created a bipartisan bill, HB 2150, aimed at closing corporate tax loopholes. However, as the Pennsylvania Budget and Policy Center noted in their detailed opposition to the bill, the bill would have cost Pennsylvania more money by soothing corporations with major tax cuts and leaving the loopholes accessible to any clever accountant.

Tax cheating in Delaware goes far above and beyond the Marcellus Shale. All of the oil and gas majors, with operations around the world, take full advantage of all Delaware has to offer.

"Piping Profits"

If things in this sphere were only limited to shale gas companies operating in the Marcellus Shale, the battle would seem big. Big, but not insurmountable.

Yet, as the Norway-based NGOPublish What You Pay points out in a recent report titled, "Piping profits: the secret world of oil, gas and mining giants," the game is more rigged than most would like to admit.

How rigged? Overwhelmingly so.

The report shows that ConocoPhillips, Chevron, and ExxonMobil have 439 out of their combined 783 subsidiaries located in well-known tax havens around the world, including in Delaware. All three companies maintain fracking operations, as well, meaning they benefit from both the Halliburton and Delaware Loopholes.

Adding BP and Shell into the mix, Publish What You Pay revealed that the five majors have 749 tax haven subsidiaries located in Delaware out of a grand total of 3,632 global tax haven subsidiaries. This amounts to 20.6-percent of them, to be precise.

These figures moved Publish What You Pay's Executive Director, Mona Thowsen, to conclude, “What this study shows is that the extractive industry ownership structure and its huge use of secrecy jurisdictions may work against the urgent need to reduce corruption and aggressive tax avoidance in this sector."

Tax Justice Network: $21-$32 Trillion Parked in Offshore Accounts

A recent lengthy report titled "The Price of Offshore Revisited" by the Tax Justice Network reveals just how big of a problem tax havens are on a global scale, reaching far beyond Delaware's boundaries.

As Democracy Now! explained,

[The] new report…reveals how wealthy individuals and their families have between $21 and $32 trillion of hidden financial assets around the world in what are known as offshore accounts or tax havens. The conservative estimate of $21 trillion—conservative estimate—is as much money as the entire annual economic output of the United States and Japan combined. The actual sums could be higher because the study only deals with financial wealth deposited in bank and investment accounts, and not other assets such as property and yachts.

The inquiry…is being touted as the most comprehensive report ever on the "offshore economy." 

The Democracy Now! interview below is worth watching on the whole, as oil and gas industry "offshoring" is but the tip of the iceberg.

Photo CreditGunnar Pippel | ShutterStock

Exhaustive Study Finds Global Elite

March 10 2012

22:42

Big Oil Rakes In Billions, Still Complains Taxes Are Too High

The President rolled out his FY2013 budget recently, which includes eliminating $40 billion in tax breaks from Big Oil companies, such as BP, Chevron, ConocoPhillips, ExxonMobil, and Shell. Meanwhile, the American Petroleum Institute's response would have you believe that cutting the subsidies would be the equivalent of moving back into their parents' basement.

It's propaganda at its most repetitive, crying that they are "job creators" and that it's so "unfair" to raise taxes because they already contribute millions to the economy every day, and if you do they swear to god prices will rise and the inevitable dependency on foreign oil will bring about the apocalypse itself if you don't let them have their way.

That's like Donald Trump begging to not get kicked out of rent-stabilized, low-income housing even when raking in billions annually, and then threatening to trash the place once the landlord actually puts up an eviction notice.

It's true. The combined profit of the "big 5" oil companies listed above was $137 billion last year, with ExxonMobil, Chevron, and ConocoPhillips coming in first, fourth, and 15th, respectively, on the Fortune 100 list of most profitable companies.

read more

February 14 2012

09:36

Unethical Oil: Why Is Canada Killing Wolves and Muzzling Scientists To Protect Tar Sands Interests?

In the latest and perhaps most astonishing display of the tar sands industry’s attacks on science and our democracy, the government of Alberta has made plans to initiate a large-scale wolf slaughter to provide cover for the destruction wrought by the industrialization of the boreal forest ecosystem.

In the coming years, an anticipated 6,000 wolves will be gunned down from helicopters above, or killed by poison strychnine bait planted deep in the forest. Biologists and other experts say the cull is misguided, and that their studies have been ignored or suppressed. Worse, they warn that although the government is framing the wolf cull as a temporary measure, it has no foreseeable end.

The Alberta government has already initiated the wolf cull in regions of Alberta heavily affected by industrial development. In the Little Smoky region, an area heavily affected by the forestry, oil and gas industries and just a few hundred kilometeres away from the tar sands region, a broad wolf cull has already begun, claiming the lives of more than 500 wolves.

Recently the Alberta government proposed a plan to open this brutal form of 'wildlife management' to other regions, suggesting an extensive and costly cull in place of more responsible industrial development.

This is clear evidence of the fact that Alberta’s tar sands oil is unquestionably conflict oil, despite the propaganda spouted by the “ethical oil” deception campaign. Aside from its desruptive affects on wildlife, tar sands oil is dirty, carbon intensive and energy inefficient from cradle to grave.

And that’s without mentioning the role the tar sands boom has played in Canada’s slide from climate leader to key villain on the international stage. Beyond its environmental consequences, tar sands extraction has negatively affected local tourism and recreation-based economies, impacted public health and torn at the rich fabric of cultural diversity and pride among Albertans and all Canadians. 

Behind the Harper administration’s unbounded drive to drown Canada’s reputation in tar sands oil pollution lies the political corruption characteristic of the classic petro-state. Free speech is being oppressed, while respected members of the scientific community claim they are being muzzled, ignored and intimidated.
 
Conservation and environmental groups are being falsely attacked as ‘radical ideologues' and 'saboteurs'. Neighbors are pitted against each other while important decisions about the future prosperity of all Canadians are rigged to favor the interests of multinational oil companies and foreign investors.
 
The wolf cull is ostensibly designed to protect northern Alberta’s woodland caribou, a species that in recent years has become critically threatened. But scientists have ridiculed the plan, saying this sort of ‘wildlife management’ turns the wolf into an innocent scapegoat, while the real culprit – the province’s aggressive timber, oil and gas development – is spared any real scrutiny or accountability.
 
According to this strategy, caribou and wolf alike fall prey to another kind of predator: multinational corporations.

read more

February 03 2012

21:00

Warren Buffett Exposed: The Oracle of Omaha and the Tar Sands

On January 23, Bloomberg News reported Warren Buffett's Burlington Northern Santa Fe Railway (BNSF), owned by his lucrative holding company Berkshire Hathaway, stands to benefit greatly from President Barack Obama’s recent cancellation of the Keystone XL pipeline

If built, TransCanada's Keystone XL (KXL) pipeline would carry tar sands crude, or bitumen (“dilbit”) from Alberta, B.C. down to Port Arthur, Texas, where it would be sold on the global export market

If not built, as revealed recently by DeSmogBlog, the grass is not necessarily greener on the other side, and could include increased levels of ecologically hazardous gas flaring in the Bakken Shale, or else many other pipeline routes moving the prized dilbit to crucial global markets.

Rail is among the most important infrastructure options for ensuring tar sands crude still moves to key global markets, and the industry is pursuing rail actively. But transporting tar sands crude via rail is in many ways a dirtier alternative to the KXL pipeline. “Railroads too present environmental issues. Moving crude on trains produces more global warming gases than a pipeline,” explained Bloomberg.

A key mover and shaker behind the push for more rail shipments is Warren Buffett, known by some as the “Oracle of Omaha” — of "Buffett Tax" fame — and the third richest man in the world, with a net worth of $39 billion. With or without Keystone XL, Warren Buffett stands to profit enormously from multiple aspects of the Alberta Tar Sands project. He also, importantly, maintains close ties with President Barack Obama.

read more

November 29 2011

23:06

To Understand What's Happening with Fracking Decisions in New York, Follow the Money

In a November 25 article titled, "Millions Spent in Albany Fight to Drill for Gas," The New York Times reported:

Companies that drill for natural gas have spent more than $3.2 million lobbying state government since the beginning of last year, according to a review of public records. The broader natural gas industry has been giving hundreds of thousands of dollars to the campaign accounts of lawmakers and the governor…The companies and industry groups have donated more than $430,000 to New York candidates and political parties, including over $106,000 to Mr. Cuomo, since the beginning of last year, according to a coming analysis of campaign finance records by Common Cause.

Those who were wondering the motive behind NY Democratic Governor Anthony Cuomo's decision to lift New York's moratorium on fracking now have a better sense for his enthusiasm: campaign cash.

Back in June, I wrote,

Despite the copiously-documented ecological danger inherent in the unconventional drilling process and in the…gas emissions process, as well as the visible anti-fracking sentiment of the people living in the Marcellus Shale region, Cuomo has decided it's 'go time.' Other than in New York City's watershed, inside a watershed used in the city of Syracuse, in underground water sources deemed important in cities and towns, as well on state lands, spanning from parks and wildlife preserves, 85% of the state's lands are now fair game for fracking, according to the New York State Department of Environmental Conservation (DEC).

It is clear that Cuomo did not have science on the top of his priority list when making his decision to lift the moratorium. 

But as any good reporter knows, possibly one of the most crucial tenets of good jouranlism is to follow the money, which is just what the Times and Common Cause did. 

What we are seeing is the concerted application of really a substantial amount of money to try to move public policy into a pro-fracking stance. It is a tremendous amount of pressure on our state government," said Susan Lerner, Executive Director of Common Cause New York, to The New York Times.

Common Cause and The New York Times, then, have shed more light as to why Cuomo decided to make this decision and the light is colored green, the color of money

November 18 2011

13:15

ExxonMobil and Shell Eyeing North American LNG Export Deals

Yesterday, LNG World News reported that ExxonMobil Vice President Andrew Swiger announced, at a conference hosted by Bank of America Merrill Lynch, that it was actively seeking LNG (liquefied natural gas) export terminals throughout North America, including, but not limited to, in British Columbia and on the Gulf Coast.

In terms of exports from North America, whether it is the Gulf Coast or whether it is Western Canada, it’s something we’re actively looking at,” said Swiger.

So, where are these prospective export terminals located, what are the key pipelines carrying the unconventional gas produced from shale basins, and what are the key shale basins in the mix? Hold tight for an explanation.

Golden Pass LNG Terminal and Golden Pass Pipeline

The LNG World News article explains that ExxonMobil "has a stake in the Golden Pass LNG Terminal in Texas," but does not explain exactly what the "stake" is.

A bit of research shows that ExxonMobil is a 17.6% stakeholder in the Golden Pass LNG Terminal, according to a March 2011 article publshed by Platts. It is co-owned by ConocoPhillips and Qatar Petroleum, who own a 12.4% and 70% stake in Golden Pass LNG, respectively.

Golden Pass LNG is stationed in Sabine Pass, TX, located on the Gulf Coast on the Texas-Louisiana border, which is in close proximity to Cheniere's Sabine Pass LNG export terminal, a terminal which has been written about in-depth by DeSmogBlog.

As of now, Golden Pass is an import terminal, and "is among the largest LNG import facilities worldwide, with the capacity to import 15.6 million metric tons of LNG annually," explains LNG World News. But many import facilities have turned into export facilities, including the Jordan Cove LNG terminal in Coos Bay, Oregon, the Dominion Cove LNG terminal in Lusby, Maryland, and Kitimat LNG terminal in Kitimat, British Columbia. Gas corporations often execute the bait-and-switch, transforming what were originally import terminals into export terminals.

If history repeats itself, which is highly likely based on this latest report from LNG World News, then the Golden Pass LNG Terminal could soon be transformed into an export terminal, making it export terminal number two in Sabine Pass.

It appears for now that the gas would come from the shale basins surrounding Sabine Pass, meaning the Barnett Shale, the Eagle Ford Shale, the Haynesville Shale, and the Fayetteville Shale, and flow out these respective shale basins via an extensive pipeline system, to the key Golden Pass and Sabine Pass hubs. 

For example, Golden Pass also owns Golden Pass Pipeline, which runs from the Haynesville Shale down to the Golden Pass LNG terminal.

Horn River Basin Shale and Pacific Trail Pipelines

LNG World News' article also mentions that ExxonMobil "has 340,000 shale gas acres in Western Canada’s Horn River Basin." The Horn River Shale Basin is located in northeastern British Columbia and sits on 250 trillion cubic feet of unconventional gas, producred through the toxic hydraulic fracturing, or fracking process. 

Assuming ExxonMobil holds true to the pronouncement made by Swiger, much of the gas produced in the Horn River Basin will flow westward to Kitimat LNG export terminal, which ships gas to the Asian market. 

One of these facilities is co-owned by EOG Resources (EOG), EnCana Corporation (EnCana), and Apache Corporation (Apache). In October 2011, Canada’s National Energy Board, the Canadian equivalent to the U.S. Federal Energy Regulatory Commission, granted Kitimat LNG a 20-year Export Licence to serve international markets. The Pacific Trail Pipelines connect the Horn River Basin to the Kitimat LNG facility and are also co-owned by EOG, EnCana, and Apache. 

Another key LNG export terminal in the works will be co-owned by Shell, Korea Gas Corporation, China National Petroleum Corporation, and Mitsubishi Corporation.

The Globe and Mail explained the looming deal, writing

Shell is examining plans for a 3.6 billion cubic feet a day project, which would be among the largest under consideration in the world…Kitimat LNG intends to build a 700-million cubic foot facility first, at a cost greater than $5-billion, but has received an export licence that allows it to double that. The partnership intends to make a final investment decision early next year, but is already spending several hundred million dollars to terrace the sloped site of the intended terminal, the first step in construction.

A pipeline arrangement paralleling the EOG, EnCana, Apache agreement will likely follow the Shell export deal announcement, carrying gas fracked from the Horn River Shale Basin to Kitimat, in order to be exported, in the form of LNG, to the profitable Asian market. 

North American Export Market a Huge Racket

As is now perfectly clear and has been made clear by DeSmogBlog on multiple occasions, not only is the unconventional gas industry unconcerned with the "domestic consumption" of gas for "national security" purposes, but perhaps even more importantly, two of the largest fossil fuel corporations in the world, Shell and ExxonMobil, are now in the fray of the export game.

Deals of this nature will likely proliferate as time progresses, with what has been coined the "one-percent" by the Occupy Wall Street movement, standing with the most to gain from them.

January 28 2011

14:05

Oil Equipment Foes Stand Down, for Now

After months of wrangling, opponents of planned shipments of massive oil equipment through rural Idaho are resigned to the fact that at least some of those shipments will go forward. But they say the fight is not over.

January 19 2011

13:13

Idaho Approves Giant Refinery Shipments

The state's transportation department said it would grant two permits to ConocoPhillips to begin moving giant loads of oil equipment along a disputed route.

June 30 2010

21:23

Canadian oil lobby trying to kill US clean energy policy

Who knew the tentacles of the Canadian oil lobby could reach all the way down to Washington, DC?

And who knew they were so powerful?

I am sure many Americans will find it rather disturbing that a foreign entity (no matter how friendly they may be - full disclosure: I am Canadian) is holding so much sway over the clean energy future of their country.

In a lengthy and well-researched new expose on the Canada oil sands industry's lobbying activities in Washington, DC, reporter Geoff Dembicki untangles a complicated web that includes former Republican insiders, dirty energy front groups and powerful politicians on both sides of the border that are doing their best to kill US clean energy legislation.

Take former Republican Congressman Tom Corcoran for instance. Ironically, Corcoran was born in Ottawa, Illinois which shares its name with Ottawa, Ontario the capitol of Canada. It seems a little Canadian patriotism has rubbed off on Corcoran because he is now working on behalf of that country's oil sands lobby and against clean energy for his own country.

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Corcoran heads an organization called the "Center for North American Energy Security [pdf]." His group's membership includes heavyweights of the Canadian oil sand operations like ExxonMobil and ConocoPhillips.

Corcoran successfully lobbied to have a low-carbon fuel standard removed from the clean energy bill that passed through Congress last Fall.

"Ultimately, we got that deleted. And so what passed the House does not contain a low carbon fuel standard, and what is being considered in the Senate at the moment does not contain that either," bragged Corcoran at the time.

The low-carbon fuel standard is a policy that would put a heavy price on the use of the most intensive carbon emitting fuels, which would include oil produced from Canada's tar sands.

The process for making a barrel of oil from tar sands is very dirty and energy intensive. Think of taking a bucket of roof tar, dumping it into a sand box and then stirring it around until it forms giant glob of black sandy goo - that's tar sand.

Now put that sandy goo in your sink and dump super-hot water on it until the oil separates from the sand - that's how tar sand is made into oil. Now imagine that process being done day in and day out in on an industrial scale so large that it can be seen from space.

All that water and sand left over from the process - laden with heavy metals and toxins - is pumped into giant holding areas that form massive lakes of sludge. These lakes are so large that they are considered one of the largest human-built projects in the world.

These "lakes" of sludge are so toxic that one of the oil sands companies, Syncrude, was just charged in the death of 1,600 migrating ducks that landed on the sludge and died.

Lobbyists like Tom Corcoran are helping to make sure that this dirty oil continues to flow South to the United States free-and-clear of any penalties being imposed on these oil companies for using our water, land and air as their free dumping ground.

In fact, Corcoran is so motivated that he hired another former Republican insider, Mike Whatley to help him out. According to the Lobbyist Disclosure database, Corcoran hired Mike Whatley and his DC lobby firm HBW Resources to work over Senators and members of Congress on behalf of "heavy oils, oil sands and oil shale."

Whatley in turn has his own pro-oil front group called the Consumer Energy Alliance that just so happens *surprise* to be supported by big players in the Canadian tar sands, like ConnocoPhlilips, ExxonMobil, BP (yes, that BP) and Chevron. 

That's Whatley's photo inset, he might be a familiar face to DC insiders because prior to defending the interests of foreign dirty oil companies, Whatley was the Chief of Staff to former Republican Senator Elizabeth Dole.

I have always been amazed by the intertwined school of oil lobbyists, political insiders and sympathetic front groups that plow the waters of Washington, DC politics, but who knew that oily tentacles of the Canadian tar sands had such a grasp on the US capitol.

June 17 2010

19:05

On a Wing and a Prayer: Chevron's Deep Well

One of the deepest offshore oil fields in the Gulf of Mexico lies beneath 7,000 feet of water and under more than 20,000 feet of rock and sand. Operated by Chevron, it is less than 20 miles west of the unstoppable Deepwater Horizon blowout. And the name of the field and the rig anchored above it is Blind Faith.
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