Archive

Posts Tagged ‘Economics’

Oil & Infrastructure

It seems that nowhere is safe from oil spills. An Exxon-Mobil pipeline ruptured Friday night, leaking approximately 1000 barrels of crude into the Yellowstone River. Luckily, this name-sake of the National Park flows away from the park at this point and towards its confluence with the Missouri River in North Dakota.  The pipeline gushed for about 30 minutes before being shut down. The plume stretches for 25 miles along the river and is expanding rapidly. This spill took place within the longest stretch of undammed river in the US. This lack of dams makes stopping the spread difficult, so its likely the oil will reach the Missouri by the end of the week.

This spill comes at a terrible time as both the Yellowstone and Missouri rivers are in floodstage. This means the damage is spread farther overbank, and will travel downstream much more rapidly. This spill is similar to the Enbridge Spill that occured in Michigan last July where an estimated 1,000,000 gallons of crude was released into the Kalamazoo river while in floodstage. 1 year later, the Kalamazoo river is still closed.

What do both these oil spills have in common? Outdated Infrastructure.

The Enbridge pipeline was built in 1969, the Yellowstone pipeline was built in 1954, and both these pieces of infrastructure were well past the end their design life. Yet, the oil companies kept the pipelines in play, only developing replacement plans after disaster struck. While dilapidated infrastructure is not unique to oil pipelines, these cases do highlight the issue in very real, very devastating terms. If we continue to allow infrastructure to be pushed the literal breaking point, the costs will be much greater than just replacement. Both these companies will bear the majority of clean up costs, but clean ups are always far from sufficient, leaving the real costs uncounted and real payer the environment.

Massey Energy: A rose by any other name…

3 June 2011 1 comment

The recent acquisition of violation-ridden Massey Energy by Alpha Natural Resources highlights an simple and effective technique of repenting for a companies sins: change your name.

Background:

Massey Energy, one of the world’s most heavily fined coal companies was acquired by Alpha Natural Resources through a friendly takeover valued at $7.1 billion. This merger of the 6th and 4th largest US coal producers will bring an end to the long-standing, long-tarnished Massey name. Massey made headlines in 2006 and 2010 with fatal explosions in two of its West Virgina mines.

In the 15 years leading up to the deadly explosion in its Upper Big Branch mine in 2010, Massey had received over 3000 safety violations for that mine alone.  Even with a tome of violations stacked against it, Massey continued to operate the mine until its fatal conclusion. This shear hubris and lack of respect for human life and working conditions (not to mention the environment) lead to the deadliest US coal mining accident in over 30 years.

Will this merger reform Massey’s stance on safety? Alpha initially planned to retain 4 Massey executives including former Massey VP of Operations Chris Adkins, who helped shape Massey’s safety policy. Adkins was quickly and abruptly dismissed before the June 1 stockholder vote which approved the merger. Alpha’s PR statements regarding the merger have promised a commitment to “running right” but are largely devoid of any substantive plan to reshape Massey’s safety-last culture.  So, will this merger bring about change?  Hopefully. But most likely, what was Massey will continue to operate as Massey, though without that pesky history of deadly mining accidents. And a violation-ridden-energy-company by any other name, will actually smell much sweeter to its stock holders.

Categories: Energy Tags: , ,