So much for the vaunted Free Enterprise system:
The day the debt-ridden Texas oil producer MDC Energy filed for bankruptcy eight months ago, a tank at one of its wells was furiously leaking methane, a potent greenhouse gas, into the atmosphere. As of last week, dangerous, invisible gases were still spewing into the air.
By one estimate, the company would need more than $40 million to clean up its wells if they were permanently closed. But the debts of MDC’s parent company now exceed the value of its assets by more than $180 million.
Had another discussion recently about "flaring," wherein the oil/gas drillers burn gas in a spectacular display of sometimes 30 ft flames. I agreed that it was wasteful, but it's what you can't see that is the problem. Venting that gas without flaring it does much more damage than burning it off, and there is not nearly enough attention paid to this problem. Or the irresponsible behavior of the companies who should be forced to cap those wells:
In the months before its bankruptcy filing, though, the company managed to pay its chief executive $8.5 million in consulting fees, its top lender, the French investment bank Natixis, later alleged in bankruptcy court.
Whiting Petroleum, a major shale driller in North Dakota that sought bankruptcy protection in April, approved almost $15 million in cash bonuses for its top executives six days before its bankruptcy filing. Chesapeake Energy, a shale pioneer, declared bankruptcy last month, just weeks after it paid $25 million in bonuses to a group of executives. And Diamond Offshore Drilling secured a $9.7 million tax refund under the Covid-19 stimulus bill Congress passed in March, before filing to reorganize in bankruptcy court the next month. Then it won approval from a bankruptcy judge to pay its executives the same amount, as cash incentives.
“It seems outrageous that these executives pay themselves before filing for bankruptcy,” said Kathy Hipple, an analyst at the Institute for Energy Economics and Financial Analysis and a finance professor at Bard College. “These are the same managers who ran these companies into bankruptcy to begin with,” she said.
The industry’s decline may be just beginning. Almost 250 oil and gas companies could file for bankruptcy protection by the end of next year, more than the previous five years combined, according to Rystad Energy, an analytics company.
And each of those 250 companies have anywhere from a dozen to several hundred active or inactive wells, each one leaking at least some fugitive methane into the atmosphere. Just a friendly reminder: Methane is somewhere between 40 and 60 times worse of a greenhouse gas than carbon dioxide. While it does have a relatively short half-life (10 years), methane doesn't just go away, it converts to Co2 at the end of that period. This is another BS talking point from the fossil fuel industry, that it's "gone after ten years." Nope, that's not how (any of this) works.