by Robin Samuel
The author, Greg Palast, is a well known US investigative journalist who has been forced to operate from the United Kingdom because the media in the US were reluctant to carry his stories. Palast is not content with being a mouthpiece for government issued press releases, he actually digs, he is skeptical and he frequently offends people. He is a muck-raking journalist, almost an anachronism.
Vulture's Picnic is not an academic work. Some of the claims are based on circumstantial evidence and there are few footnotes. It has a casual tone and the author tries to make it read like a detective story, at times this proves to be a distraction. But, he does actually go to remote places to track down the story. This type of journalism costs money and most of today's media outlets are not willing to spend money to do investigative journalism. Nor are modern day media willing to ask tough questions and risk losing access to those in power.
Palast's work raises questions, it makes you think and provides the impetus for you to do additional research. The information presented helps you to connect the dots and to construct a model of how the world of big oil, politics and finance operates.
The main thread of the book deals with the BP Deepwater Horizon blowout and shows that this was not an isolated case. Prior to the Horizon blowout, BP had an almost identical problem with another of its deepwater wells located off the coast of Azerbaijan in the Caspian sea. The cause of the near disaster in the Caspian was the use of nitrogen in the cement used to cap the well. Nitrogen is used to hasten the drying process of the cement - it lessens the drying time from 4 days to one day. Being idle for one day instead of 4 days translates into money for BP.
The Caspian well cap failed, gas started to bubble up from beneath the platform and luckily everyone, about 150 workers, escaped unharmed. By law, BP was obliged to report this to the US authorities when applying for the permits to work in the Gulf of Mexico but BP omitted this information. People in the US administration like Condoleezza Rice were informed but did nothing with the information.
Azerbaijan has a large pool of undeveloped oil – Palast describes the bribery that occurred for BP to win the rights for development. A few "fall guys" eventually went to jail for this crime. The court documents provide a paper trail of the money paid. There is little doubt that bribery featured prominently in BP's win in Azerbaijan.
The description of the bribery involved with oil contracts made me wonder about our tar sands contracts. I don't believe that we have such different rules here in Canada: allegations about politicians in our recent past have made the public doubt the impartiality of some of our high officials.
.From Azerbaijan the story moves to Alaska where in 2006, BP was still cleaning up a pipeline spill that occurred 4 years earlier. The company was fined $20 million for failing to inspect the Alaska Pipeline for corrosion. The author makes the point that $20 million is a small fine when you consider that over half a trillion dollars was shipped through that pipeline.
One of the technologies used to inspect pipelines is a device called a PIG – a PIG runs inside the pipe and can detect corrosion and cracks. It costs about $1 million per mile to run a PIG. It would cost $400 million to inspect BP's 400 miles of pipeline. The records show that BP had not inspected the 400 miles of pipeline in over 8 years. BP must have realised that it is cheaper to just pay the fine of $20 million rather than spend $400 million to run a safe pipeline.
The book sheds light on the relationship between the companies that produce the PIGS and the oil companies that buy the PIGS. A software team working on the PIGS realised that the device could be made more accurate and proceeded to improve the sensitivity and accuracy of the PIG. The improvements never made it into production and the software team was fired for making improvements. Why? Because the oil companies would not buy a better PIG, it would mean more costly repairs due to better detection of problems. The PIG manufacturers would lose business and therefore there were no PIG improvements.
An editorial note: It is possible that the US legislators who framed the agreement for the pipeline in Alaska were asleep at the switch or that they were just innocents. How could they not realise that it would be cheaper for BP to pay the fines rather than pay the costs for running the PIGS? Canada is now in the midst of the Northern Gateway Pipeline, I wonder if our legislators will insist on regular use of PIGS and will they compel the company to make its records public. The Northern Gateway Pipeline will ship raw bitumen through its pipes. Bitumen is much more corrosive than oil and not much is known about how a pipeline degrades when bitumen is pumped through it.
The level of corruption that Palast documents is quite eye opening. In an effort to protect the coastline of Louisiana, sand berms were constructed at a cost of $360 million. Environmental experts said that the sand berms would be a waste although there was one dissenting voice from an organisation called "America's Wetlands". The sand berms eventually collected only 1000 barrels of oil – a meaningless amount of oil. The contract for constructing the sand berms went to Shaw Construction who was the biggest contributor to the governor of Louisiana's election campaign.
And what about that dissenting voice from "America's Wetlands"? It turns out that America's Wetlands is an organisation that is entirely funded by the oil companies.
Well before Hurricane Katrina, researchers at the Hurricane Centre at Louisiana State University developed models showing that New Orleans would be devastated by a major storm. The researchers showed that the destruction to the wetlands caused by the oil business was endangering New Orleans. After Katrina, the entire Hurricane Centre was shut down and all the researchers fired. Shortly after that, Louisiana State University received a cheque for $300,000 from America's Wetlands for the creation of a new "Wetlands Centre". The author shows how all of the $300,000 came not from America's Wetlands but from one source, Chevron Oil.
The closure of the Hurricane Centre is reminiscent of the Canadian government's Environment Ministry firing 700 scientists. Without experts to monitor, gather and analyse the data there is no one to raise the alarm bells and business can proceed unfettered by pesky environmental issues.
Of particular interest to me as a Canadian were the royalties paid to various countries by the oil companies. In Azerbaijan the government gets a 10% royalty for every barrel of oil produced, in Trinidad the government gets a 55% royalty. It appears that Canada gets a whopping 5% royalty for tar sands oil. How is it that Canada, with the second largest pool of oil, gets such a poor deal?
Vulture's Picnic is packed with tales of questionable behaviour by oil companies, descriptions of incredibly poor treatment of workers in disadvantaged lands, it describes governments looking the other way as their laws are broken and politicians who act against the interest of the people. It warns that when dealing with oil companies, we should not treat them as well intentioned corporate "citizens". Instead we should demand and enforce strict controls and we must have the means to meaningfully penalise corporate wrongdoings. Hopefully the Canadian government is up to the task.