JUICE: Scandalous Behavior

By Published On: November 21, 2013

California is about to redesign its climate change policy. As the usual suspects return to the scene of the old Teapot Dome scandal, will it constitute a new outrage? Today, the change in direction revolves around SCS Energy. It’s planning a so-called “power plant” in Kern County next to the old Elk Hills Naval Petroleum Reserve, now owned by Occidental Petroleum. It was there in 1922 that oil magnates Edward Doheny and Harry Sinclair bribed Albert Fall, the Interior Secretary during the reign of President Warren G. Harding. Fall accepted $300,000 from the two men to give them secret drilling rights on the Navy-owned land. He went to prison when it was revealed. In 1995, vice president Al Gore Jr. recommended selling the 70 year-old oil reserve in his 1995 reinventing government report. President Bill Clinton followed through, offering the 47,000 acre field to Occidental for $3.65 billion in 1997. An oil industry group said the federal government was getting a great price at the time. Occidental has been happily pumping oil and gas there ever since. Now, along comes SCS Energy with its proposed Hydrogen Energy California project next door to Occidental’s field. It is set to capture carbon dioxide for Occidental to inject to pressurize the field and recover an extra $15 billion worth of oil out of the ground. The Hydrogen Energy California Project is subsidized by more than $400 million in federal financing under the Department of Energy’s “clean coal” program. The SCS plant also will produce fertilizer. It is set to use coal from New Mexico as a feedstock. As the saying goes, it pays to have friends in high places. Occidental has long been chummy with the Gore family. When Albert Gore Sr. retired from the Senate in 1970, Occidental president Armand Hammer hired him for $500,000 a year to chair one of his subsidiaries, the Island Coal Creek Co, according to the Center for Public Integrity. Before that, Hammer arranged to purchase land rich in zinc near Gore Sr.’s home in Tennessee, which he then sold to him for $160,000. Next, Gore Sr. sold it to junior for $140,000. Ever since, according to the center, Occidental has sent junior $20,000/year for mineral rights, although it’s never bothered to mine any ore. Ironically, the same day Occidental closed on its purchase of Elk Hills, junior lectured about the evils of global warming in Washington, urging humanity to turn away from fossil fuels, like oil. “If we ignore the scientific warnings and continue stubbornly on our current course,” he said, “our children and grandchildren might fairly ask, ‘If you knew all that, why didn’t you do something about it?’” California Air Resources Board chair Mary Nichols served under Clinton and Gore at the time as the assistant administrator for air & radiation at the U.S. Environmental Protection Agency. She returned to California where she became chair of the Air Board in charge of carrying out the state’s landmark climate change law, AB 32. It aims to cut greenhouse gas emissions 80 percent by 2050. Fast forward to this year, when the California Energy Commission appears to have bought hook, line, and sinker a claim by SCS that its plant, which is being permitted as a power plant, would sequester 90 percent of the carbon emissions it would produce. What might our children and grandchildren someday ask about the plant? Venerable environmental historian and analyst Peter Montague has come up with an answer. The Energy Commission, other state agencies, and DOE are ignoring the real emissions numbers, according to Montague, thus undercutting the intent of AB 32. In reality, he wrote to the Energy Commission, only a quarter of the emissions attributable to building Hydrogen Energy California will be sequestered because the commission isn’t counting those from the nitrogen fertilizer the plant will produce or emissions from the extra oil Occidental will pump. Counting those emissions, the total amount will equal 11.9 million tons/year. Only 3.6 million tons/year would be captured and sequestered. That leaves 8.3 million tons/year to go to the atmosphere. On top of that, the Energy Commission’s own analysis shows the 400 plus MW power plant will use almost all the electricity it produces to make fertilizer and capture and pump the captured carbon dioxide into the oil field. CEC’s analysis shows it will produce just 52.5 MW for the grid, except at times when it’s at its maximum fertilizer production capacity, when it actually will consume 61.8 MW from the grid. The numbers lead Montague to reason that in building the plant SCS isn’t really going into the power business, but the chemical business and a partnership with Occidental to produce petroleum. In essence, permitting the plant in a state that’s committed to cutting greenhouse gases 80 percent would be a scandal, perhaps even bigger than Teapot Dome. In a conclusion worthy of Al Gore Jr. himself, Montague deduces the “project will contribute very substantially to the problem of global warming, year after year for the next 50 years. . . . . Our young children and grandchildren will despise and denounce us . . . . because we are doing it with full knowledge of the serious negative consequences. We cannot say ‘We didn't know.’ We know.”

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