Private Empire: ExxonMobil and American Power
Page 1
ALSO BY STEVE COLL
The Bin Ladens
Ghost Wars
On the Grand Trunk Road
Eagle on the Street (with David A. Vise)
The Taking of Getty Oil
The Deal of the Century
PRIVATE EMPIRE
EXXONMOBIL AND AMERICAN POWER
Steve Coll
THE PENGUIN PRESS
NEW YORK
2012
THE PENGUIN PRESS
Published by the Penguin Group
Penguin Group (USA) Inc., 375 Hudson Street, New York, New York 10014, U.S.A. • Penguin Group (Canada), 90 Eglinton Avenue East, Suite 700, Toronto, Ontario, Canada M4P 2Y3 (a division of Pearson Penguin Canada Inc.) • Penguin Books Ltd, 80 Strand, London WC2R 0RL, England • Penguin Ireland, 25 St. Stephen’s Green, Dublin 2, Ireland (a division of Penguin Books Ltd) • Penguin Books Australia Ltd, 250 Camberwell Road, Camberwell, Victoria 3124, Australia (a division of Pearson Australia Group Pty Ltd)• Penguin Books India Pvt Ltd, 11 Community Centre, Panchsheel Park, New Delhi – 110 017, India • Penguin Group (NZ), 67 Apollo Drive, Rosedale, Auckland 0632, New Zealand (a division of Pearson New Zealand Ltd) • Penguin Books (South Africa) (Pty) Ltd, 24 Sturdee Avenue, Rosebank, Johannesburg 2196, South Africa
Penguin Books Ltd, Registered Offices:
80 Strand, London WC2R 0RL, England
First published in 2012 by The Penguin Press,
a member of Penguin Group (USA) Inc.
Copyright © Steve Coll, 2012
All rights reserved
Map illustrations by Gene Thorpe
LIBRARY OF CONGRESS CATALOGING IN PUBLICATION DATA
Coll, Steve.
Private empire : ExxonMobil and American power / by Steve Coll.
p. cm.
Includes bibliographical references and index.
ISBN 978-1-101-57214-6
1. Exxon Corporation. 2. Exxon Mobil Corporation. 3. Petroleum industry and trade—Political aspects—United States. 4. Corporate power—United States. 5. Big business—United States. I. Title.
HD9569.E95C65 2012
338.7'6223380973—dc23
2011044722
No part of this book may be reproduced, scanned, or distributed in any printed or electronic form without permission. Please do not participate in or encourage piracy of copyrighted materials in violation of the author’s rights. Purchase only authorized editions.
While the author has made every effort to provide accurate telephone numbers, Internet addresses, and other contact information at the time of publication, neither the publisher nor the author assumes any responsibility for errors, or for changes that occur after publication. Further, publisher does not have any control over and does not assume any responsibility for author or third-party Web sites or their content.
Contents
LIST OF MAPS
AUTHOR’S NOTE
SELECTED CAST OF CHARACTERS
Prologue. “I’m Going to the White House on This”
PART ONE: THE END OF EASY OIL
One. “One Right Answer”
Two. “Iron Ass”
Three. “Is the Earth Really Warming?”
Four. “Do You Really Want Us as an Enemy?”
Five. “Unknown Injury”
Six. “E.G. Month!”
Seven. “The Camel and the Jackal”
Eight. “We Target Oil Companies”
Nine. “Real Men—They Discover Oil”
Ten. “It’s Not Quite as Bad as It Sounds”
Eleven. “The Haifa Pipeline”
Twelve. “How High Can We Fly?”
Thirteen. “Assisted Regime Change”
Fourteen. “Informed Influentials”
PART TWO: THE RISK CYCLE
Fifteen. “On My Honor”
Sixteen. “Chad Can Live Without Oil”
Seventeen. “I Pray for Exxon”
Eighteen. “We Will Need Witnesses”
Nineteen. “The Cash Waterfall”
Twenty. “Moonshine”
Twenty-one. “Can’t the C.I.A. and the Navy Solve This Problem?”
Twenty-two. “A Person Would Have to Eat More Than 3,400 Rubber Ducks”
Twenty-three. “We Must End the Age of Oil”
Twenty-four. “Are We Out? Or In?”
Twenty-five. “It’s Not My Money to Tithe”
Twenty-six. “We’re Confident You Can Book the Reserves”
Twenty-seven. “One Plus One Has Got to Equal Three”
Twenty-eight. “It Just Happened”
ACKNOWLEDGMENTS
NOTES
BIBLIOGRAPHY
INDEX
List of Maps
Upstream Investments of Exxon and Mobil Before Merger
Indonesia
Equatorial Guinea
Chad
Exxon Spill in Jacksonville, Maryland
Venezuela
Author’s Note
Four journalists made important contributions to this book while working as researchers during the four-year life of the project. Ben Van Huevelen, who is now the managing editor of the Iraq Oil Report, worked on that subject and ExxonMobil’s litigation with Venezuela, as well as on corporate responsibility issues in Africa and Indonesia. Megha Rajagopalan, a 2008 graduate of the University of Maryland who is now studying in China under the Fulbright Scholar Program, worked on global warming, the Exxon Valdez spill, and phthalate regulation; chapters five and twenty-two benefited greatly from her research. Ann O’Hanlon, a former Washington Post reporter who now works at the Justice Department, reported on many subjects, but especially on campaign finance and lobbying; her work particularly supported chapters three, seventeen, twenty-two, and twenty-three. Haley Cohen, a 2011 graduate of Yale University who is now on a university fellowship in Latin America, recontacted many interview subjects, checked facts and interpretations, and added fresh reporting throughout. The book benefited from other supporters and collaborators; the acknowledgments provide an accounting. I am grateful and deeply indebted to all.
Selected Cast of Characters
AT EXXONMOBIL
Russell Bowen, Maryland territory manager
John Paul Chaplin, lead country manager, Nigeria, circa 2005–2009
Ken Cohen, vice president of public affairs
Tim Cutt, lead country manager, Venezuela, 2005–2007
Steven K. Davidson, outside lawyer in Venezuelan litigation
Theresa Fariello, director of the Washington office, 2009 to present
Brian Flannery, astrophysicist, climate policy adviser
Rosemarie Forsythe, Russia adviser, planner for international political strategy
Edward G. Galante, senior executive, contender to succeed Raymond, retired 2006
Otto Harrison, lead executive on Exxon Valdez cleanup
Ralph Daniel Nelson, lead country manager, Saudi Arabia, 2001–2004, director of the Washington office, 2005–2009
Lee R. Raymond, chairman and chief executive, 1993–2005
James Rouse, director of the Washington office, late 1990s–2005
Ron Royal, lead country manager, Chad, circa 2006
James F. Sanders, lead outside lawyer, Alban v. ExxonMobil
Frank Sprow, vice president, Safety, Health, and Environment, 2000–2005
Sherri Stuewer, senior executive, environmental policy, 2006 to present
Rex Tillerson, upstream executive with responsibility for Russia, later chairman and chief executive, 2006 to present
Glenn Waller, lead country manager, Russia, circa 2003
Martin J. Weinstein, lead outside lawyer, John Doe v
. ExxonMobil
Ronald I. Wilson, lead country manager, Indonesia
IN THE U.S. GOVERNMENT
Representative Joe Barton, R-Texas, 1984 to present
George W. Bush, president, 2001–2009
Richard B. Cheney, vice president, 2001–2009
Representative John Dingell, D-Mich., 1955 to present
Don Evans, secretary of commerce, 2001–2005
Douglas Feith, undersecretary of defense for policy, 2001–2005
Robert Gelbard, ambassador to Indonesia, 1999–2001
Christopher Goldthwait, ambassador to Chad, 1999–2004
Barack Obama, president, 2009–
Judge Louis F. Oberdorfer, United States District Court, Washington, D.C.
Colin Powell, secretary of state, 2001–2005
Anton Smith, United States chargé d’affaires, Equatorial Guinea, 2008–2009
Alexander Vershbow, ambassador to Russia, 2001–2005
Marc Wall, ambassador to Chad, 2004–2007
Paul Wolfowitz, deputy secretary of defense, 2001–2005; president, World Bank, 2005–2007
IN AFRICA
Victor Attah, governor of Akwa Ibom State, Nigeria, 1999–2007
Idris Déby, president of Chad, 1990 to present
Simon Mann, former British Army officer, led coup attempt in Equatorial Guinea
Teodoro Obiang Nguema, president of Equatorial Guinea, 1979 to present
IN ALASKA
Joseph Hazelwood, Jr., captain, Exxon Valdez
Mandy Lindeberg, biologist, N.O.A.A.
Jeffrey Short, chemist, N.O.A.A.
IN INDONESIA
Abu Jack, guerrilla commander, Free Aceh Movement
Hasan di Tiro, leader of Free Aceh Movement
IN MARYLAND
Andrea Loiero, manager, Jacksonville Exxon
Stephen Snyder, plaintiffs’ lawyer
IN THE MIDDLE EAST
Abdullah Bin Abdul Aziz, crown prince, later king of Saudi Arabia
Thamir Ghadhban, senior official, Iraq Ministry of Oil
Ali Al-Naimi, oil minister of Saudi Arabia
Prince Saud Al-Faisal, foreign minister of Saudi Arabia
Hussain Al-Shahristani, deputy prime minister, Iraq
IN RUSSIA
Mikhail Khodorkovsky, president, Yukos Oil
Bruce Misamore, chief financial officer, Yukos Oil
Vladimir Putin, president, Russian Federation, 2000–2008
IN VENEZUELA
Hugo Chavez, president, Venezuela, 1999 to present
Joseph Pizzurro, Venezuela’s outside lawyer in litigation with ExxonMobil
Prologue
“I’m Going to the White House on This”
As the Exxon Valdez churned through chalky turquoise port waters toward the Gulf of Alaska, Captain Joseph Hazelwood descended to his quarters. It was shortly after 9:30 p.m. on the evening of March 23, 1989, and he had some paperwork to complete, he told his subordinates. He was a taciturn man, forty-two years old, balding, about six feet and 180 pounds. He dangled the Marlboro cigarette he smoked on the corner of his lips. His father had flown torpedo bombers for the United States Marine Corps in the Western Pacific and then served as an international pilot for Pan American World Airways. Joseph Jr. won admission to the elite State University of New York Maritime College; the carefree notation in his college yearbook read, “It Will Never Happen to Me.” He scored 138 on an I.Q. test. While at sea he read widely; in conversation, he quoted Stonewall Jackson and Oscar Wilde. He had by now sailed for the Exxon Corporation for twenty-one years, ten of those as an oil tanker captain.1
He was attempting to recover that spring from what he would later call a “midlife crisis.” It had taken hold of him several years before. Long stretches at sea had caused him to miss much of his daughter’s childhood, and this weighed on him. His wife, he recalled later, “detected that I was moodier than I had been before.” He drank heavily—four or five doubles before dinner, wine with the meal, then several doubles afterward—but he did not feel immobilized by alcohol. Even after such a drinking regimen, although he could “detect a little clumsiness on my part,” he “didn’t trip over any furniture” and he “wasn’t blotto,” as he put it. While ashore, he periodically drove while intoxicated, attracted the attention of police several times, and lost his driver’s license. He sensed that he might be in some sort of descent: “I didn’t know what I was suffering from, if I was suffering from something.” An Exxon supervisor told him, “If you’ve got a problem, take care of it.” In 1985, he had checked himself into a New York hospital and underwent treatment for mild depression and alcohol abuse. Afterward he attended Alcoholics Anonymous meetings but continued periodically to drink. Exxon executives said that they had started to monitor his alcohol intake, prompted by incidents such as one in which the captain was overheard ordering beer over an Exxon ship’s radio, but Hazelwood remained in service as a tanker captain and said he had no indication that he was being monitored by anyone. In the port town of Valdez on the afternoon of March 23 he drank what he would recall as two or three vodkas at the Pipeline Club before passing unexamined through the oil terminal gate and boarding his ship.2
The livelihood Hazelwood put at risk by his drinking was a privileged one; his salary at Exxon was about $180,000 a year, including benefits. He was one among many thousands of Americans whose incomes that spring could be traced in part to the work of a British Petroleum geologic field party that had surveyed Alaska’s Brooks Range, north of the Arctic Circle, in the summer of 1958. The Suez Crisis and turmoil in Iran (the latter partially engineered by the Central Intelligence Agency) had made plain to B.P.’s executives that their oil holdings in the Middle East were politically insecure. Alaska’s storm-swept seas and icy glaciers might look forbidding, but at least they were situated in a nation that welcomed private capital. American government surveys had suggested for years that Alaska’s north was rich with oil and natural gas; B.P. was among the first of the major international oil companies to bear the uncertainties of the harsh climate and invest. By the early 1970s, it had established a large position as a leaseholder on Alaska’s North Slope. Transport was the major obstacle to maximized profits in a region iced over for months at a time. Oilmen had talked for years about wild-eyed schemes to build an overland pipeline from the Arctic to the south, but the project would require money and political alignments that seemed preposterously ambitious. Only another Middle Eastern crisis—the oil embargo of 1973, directed by Arab producers at the United States over its support of Israel—at last spurred construction of the Trans-Alaska Pipeline System to carry crude eight hundred miles from Prudhoe Bay across permafrost to the ice-free port of Valdez. To finance and operate the pipeline, B.P. formed a consortium with Exxon’s precursor Humble Oil and with Atlantic Richfield. The first oil flowed in June and reached the Valdez Marine Terminal on July 28, 1977.3
A dozen years later, it poured through Valdez at a rate of about 2 million barrels per day—an amount equal to more than a quarter of all of America’s domestic crude oil production. The Valdez terminal had grown into a labyrinth of pipes, oval storage tanks, and strings of festive-looking white safety lights—an improbable man-made installation tucked on a rise amid snow-draped mountain crags and majestic glaciers. Tankers as long as several football fields passed to and from the docks one after another. The Coast Guard funneled them through a ten-mile-wide shipping lane in Prince William Sound, an inland sea teeming with salmon, halibut, whales, seals, sea lions, porpoises, and sea otters. Inbound traffic traveled in a corridor to the east, outbound traffic to the west. That Thursday, the Brooklyn and the ARCO Juneau had departed Valdez for the Pacific only hours before Hazelwood embarked with a load of 1,264,155 barrels of crude. It was a misty night, but the winds were light, the seas were calm, and visibility extended eight miles. Hazelwood had navigated this passage at least a hundred times before.4
He returned to the bridge shortly after 11 p.m. His Valdez p
ort pilot had disembarked, and a tugboat escort had also peeled away. Bligh Island now lay ahead to the southeast, shaped in the water like a sleeping crocodile with a curling snout. To the island’s west a red light pulsed every four seconds to mark Bligh Reef, which spread beneath the surface at between one quarter and nine fathoms. (The draft of a loaded oil tanker could be ten fathoms or more.) White icebergs from the Columbia Glacier bobbed ahead as well, visible to eye and radar, and several of them now appeared to block the outbound shipping lane. Hazelwood decided on a common maneuver, one taken earlier without incident by the two ships ahead of him. The Exxon Valdez would turn south across the inbound shipping lane toward Busby Island, near Bligh, evade the ice, and then turn back to the outbound corridor toward the Hinchinbrook Entrance and the open sea. The captain radioed the Coast Guard’s Vessel Traffic Service to secure permission. “Judging by our radar, I will probably divert . . . and end up in the inbound lane if there’s no conflicting traffic—over,” he announced.5