Who Fracked Mitt Romney? Meet his top energy adviser: billionaire oil tycoon Harold Hamm by Josh Harkinson, November/December 2012 Issue, Mother Jones
After passing sloughs full of coots and mallards, we arrive at the dusty pad where an Oklahoma-based oil company called Continental Resources has hit pay dirt. A gleaming new jack pump siphons up crude and flares off fireballs of gas. All over this part of the state, Continental’s rigs have corkscrewed through nearly two miles of limestone, gravel, and sandstone to tap the Bakken and Three Forks reservoirs, oil-rich bands of shale that formed millions of years ago from what was once an inland sea.
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Ranching hamlets that once had five-minute rush hours now endure endless caravans of exhaust-spewing tanker trucks filled with oil, fracking fluids, and “hot loads” of drilling waste.
Some North Dakotans question whether their newfound prosperity is worth the price. Grote complains that Continental, which has leased rights to the minerals under his soil, is blanketing his fields with dust and oil waste. “They come in, you know, just balls to the wall and tear it up, do what they want, get their money out of it as quick as they can.” When a Continental pickup pulls up behind us at a pump jack, I walk over with Grote to hear the company’s side of the story, but the worker rolls down his window and tells us to leave. “Continental didn’t buy this land,” Grote reminds him. “From what I understand, this spot is Continental’s,” the worker insists. Grote stares back in icy silence, stroking his ZZ Top beard while displaying a bicep as thick as a cottonwood bough.
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Battles between ranchers and oilmen might sound like relics of the Wild West—the stuff of films such as There Will Be Blood—but in North Dakota, they’re all too current. Continental beat other oil companies to the punch by signing more leases and pumping oil faster and more aggressively than anyone. But in its rush to cash in, the company has sometimes thwarted environmental laws, endangered workers, and overwhelmed small towns with more people and problems than they can handle. Hamm—who declined to be interviewed for this story—is a man on a mission, one of the most outspoken evangelizers of a push to extract as much domestic oil as quickly as possible. … Over the past two years, Harold Hamm has given at least $1 million to the Koch brothers’ causes—and nearly as much to Mitt Romney.
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In March, Mitt Romney named Hamm his top energy adviser. Though a largely ceremonial post, the choice signaled that Romney, who had advocated for clean power as governor of Massachusetts, was casting his lot with the oil and gas industry. Barely a month later, Hamm contributed $985,000 to Romney’s super-PAC. Shortly after that, Romney, in a speech in Virginia, extolled Hamm’s tale of hitting “that black gold” as the triumph of the little guy over big government.
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“I can promise that you will have direct access to our state government at the highest level,” North Dakota’s governor told a crowd of oil executives. In Bismarck, North Dakota’s capital, the oil industry’s need for speed has created fundraising opportunities for politicians.
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Much of Dalrymple’s support involves looking the other way. Despite more than 3,300 oil field spills* in North Dakota since 2009, his Industrial Commission, which oversees drilling-related activities, has issued only 45 enforcement actions. Nor has the governor done much to discourage Continental and his other petroleum donors from squandering the natural gas that bubbles up with their oil—enough to power nearly 550,000 homes. Drillers recover most of that gas in oil states like Alaska, California, and Texas, but to do so here would require building pipelines and plants, forcing Continental to slow down. … In its rush, Continental has ridden roughshod over environmental laws. Documents acquired by ProPublica show that it has spilled at least 200,000 gallons of oil in North Dakota since 2009, far more than any other company. That year, in one of its few formal citations against oil companies, the state’s health department fined Continental $428,500 for poisoning two creeks with thousands of gallons of brine and crude, but later reduced the amount to $35,000. Around the same time, during a thaw, four Continental waste pits overflowed, spilling a toxic soup onto the surrounding land. The Industrial Commission said it would fine the company $125,000, but it ultimately reduced the sum to less than $14,000, since “the wet conditions created circumstances that were unforeseen by Continental.”
The company’s rapid expansion also has coincided with a spike in accidents. In July 2011, a Continental rig exploded near the town of Beach, badly injuring three men—two had burns covering more than half their bodies. Hamm told a reporter that it was the first rig explosion in company history—although one rig worker had been crushed to death back in 2007¬—but two months later a second rig blew up, forcing the evacuation of 25 homes. Last year, the Occupational Safety and Health Administration cited Continental for a dozen workplace safety violations.
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The company’s workers in North Dakota are not allowed to speak with the press, a secretary in the company’s Tioga field branch explains as she hands over a card with phone numbers for an Oklahoma PR office. When I turn it over, I realize the card was meant not for reporters, but Continental employees. It counsels against providing the press with “unnecessary elaboration,” details on “extent of injuries/fatalities” from accidents, or “statements reflecting fault or blame.”
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Hamm and his company also have doled out school backpacks with Continental logos, donated $50,000 to the Tioga fire department, and regraded miles of public roads needed to service Continental’s wells. A renovated emergency room in the town of Crosby will bear Continental’s name. But Hamm’s largesse has also raised eyebrows in this fiercely independent state. “He wouldn’t be giving that contribution unless he wanted something for it,” says Don Morrison, executive director of the Dakota Resource Council, an environmental group representing farmers and ranchers. Hamm’s top political priority here is to reduce North Dakota’s 11.5 percent oil tax—fairly high by national standards—which accounted for most of the $50 million Continental reportedly paid in state taxes last year. He has joined forces with Ed Schafer, the state’s former GOP governor, who in January 2011—just as the Legislature was debating how to dole out thebudget surplus—founded a one-cause advocacy group called Fix the Tax. “If you’ve had enough about high taxes allowing more spending each year, then join us,” Schafer beckons in a YouTube clip. Late last year, he joined Continental’s board of directors with a compensation package worth more than $770,000.
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Continental, which has vastly outperformed its rivals in the five years since it went public, has shed more than a fifth of its stock value since February—costing Hamm and his family some $2.5 billion. Hamm is lobbying hard for the Keystone XL pipeline, which could reduce his costs dramatically.
The company is now in a bit of a pickle. It can no longer hope to ink sweetheart mineral leases like the ones Hamm snatched up early on, and it faces far higher operating costs than its rivals with conventional drilling operations. Lacking sufficient pipelines, Continental exports much of its Bakken crude by truck and train, which adds as much as 30 percent to its costs. Fixing that, Hamm seems to have concluded, merits a bit of arm-twisting.
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“I don’t mind the man camps,” Darrington adds, but “our roads are crap and our grass is gone.”
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“This place is a shithole, and it’s a really expensive shithole,” says Pepper, a veteran roustabout from Oklahoma who is loading up her car on the crowded gravel lot where she and her husband pay $900 a month just to park their Prowler. They were hoping to save up enough money to open a bar and grill, but not in North Dakota. “Who really wants to move up here?” [Emphasis added]