You are Sam Crow, an executive for Queensbridge Contracting (QBC). QBC is North America’s leading oil exploration and oil extraction company, and the industry leader in hydraulic fracking. You are tasked with determining the future direction for your company, as QBC is trying to further entrench its market domination in the highly lucrative shale oil and hydraulic fracturing industry. You are acutely aware that QBC’s financial success is connected to the continued expansion of fracking in oil and gas wells, but still need to brief the board on the best direction for QBC moving forward. Your brief will help guide the board’s decision on the extent, all things considered, QBC should push for further expansion of industrial scale fracking in both Canadian and international sites.
Queensbridge Contracting: The Good
QBC, a 130 year old oil company, is the world’s most profitable hydraulic fracturing company. Hydraulic fracturing or “fracking” is a well stimulation technique for extracting vast reserves of oil and natural gas reserves from deeply embedded rock formations, sand, and shale or coal beds, where there is insufficient natural pressure to bring these reserves to the surface. In this process, rock is fractured by pressurized liquid; the process involves the injection of inordinately large volumes of fresh water, sand, chemicals, and fracking fluid (comprised of water, sand, and chemical thickening agents) deep underground into wells at very high pressure in order to create cracks, or fractures, in the rock formations, to allow natural gas, oil and petroleum to flow more freely and up wells. When the pressure is removed, further chemical proppants are injected to hold the fractures open and allow for the continued flow of oil and gas. The fracking process stimulates natural gas and oil in geothermal wells, thereby aiding oil companies in maximizing oil reserves in the shale gas, tight gas, tight oil, and coal seam gas wells extraction process.
In 1950, engineers at QBC, then an oil drilling and manufacturing company, conducted the first experiments that led to what fracking is today; fracturing as a method for stimulating shallow, hard rock wells began in the late 1850’s, with companies utilizing dynamite or nitroglycerine to stimulate oil and natural gas production by setting off controlled explosions. The use of controlled underground explosives in areas with volatile gases made this method unreasonably dangerous, and the resulting fractures from explosions did not hold open for very long. QBC engineers were the first to shift away from the use of explosives, and utilized an underground acid and chemical blend that stimulated oil and gas flow in wells. More important was the fact that these acids were able to hold fractures open much more effectively than explosions, and as a result, QBC wells became the most productive wells in the industry.
With oil production remaining steady throughout the 1950’s, QBC enjoyed immense profitability and was recognized as one of North America’s leading traditional oil companies.[1] Throughout this period, QBC began to invest significant resources into fracking research and development, as QBC recognized that demand for oil would only increase in the decades to come. The discovery of heavy crude oil deposits in the Athabasca Oil sands in Alberta in the early 1950’s was an important finding for North America’s oil industry, and further emphasized QBC’s need to focus on innovation. The energy crises of the late 1950’s spurred QBC’s biggest investment in fracking innovation and R&D, and this directly led to the creation of the chemical and water based injection method of fracking that predominates today. By the early 1960’s, fracking became a significant contributor to North America’s oil reserves, and QBC was North America’s single leading fracking company.
While much of the exact details of QBC’s fracking locations remain undisclosed, QBC fracking wells are prevalent throughout Canada and the U.S., producing billions of tonnes of shale gas, tight gas, tight oil, and coal seam gas, per year. QBC’s industry leading fracking fluid allows for much more continued flow of oil and gas than their competition, with QBC wells producing more than 500 million cubic feet of gas per day.[2] Fracking has proven highly valuable in helping Canada, and the United States, meets its energy needs, and is the single most influential force in securing North American energy independence. Daily oil consumption in the United States is now more than 4 times its daily oil production, and with the downturn of Alberta’s oil sands, Canadian consumption of traditional oil will soon outpace consumption. As a result, fracking allows Canada and the U.S. the ability to meet their oil needs within North America.
While most forms of energy extraction have its inherent risks, QBC has keyed in recent environmental disasters[3] and overall public dissatisfaction with the ecological cost of traditional oil exploration[4] to launch a massive PR campaign aimed at shaping public opinion on fracking. This new PR campaign focuses on the notion that North American mining of oil and gas directly supports ‘energy security’ in that both countries will no longer rely on foreign sources of oil. Truth be told, QBC’s PR campaign’s most compelling ads perpetuate the argument that a reliance on foreign oil is tantamount to implicitly and explicitly supporting repressive and authoritarian regimes, “that hate freedom.”[5] Fracking is said to be the single most important entity in maintaining Canada’s major role in international oil trade.
Queensbridge Contracting: Economic Implications
While “energy independence” is a compelling argument in and of itself, fracking’s economic implications are perhaps the beginning and end of the debate. QBC is responsible for strengthening trade and political ties between Canada and the U.S.; even the most ardent opponents of fracking cannot ignore the fact that operating fracking wells across Canada and the U.S. requires thousands of technically skilled employees at production sites to handle and monitor extraction. The construction and maintenance of fracking wells requires hundreds of thousands of employees more, and requires the construction of monitoring stations alongside the wells that require further, technically skilled operators.
QBC is Canada’s single largest employer (over 350,00 Canadians). Additionally, QBC is Canada’s single largest employers of Aboriginal Peoples; many Aboriginal communities are located in the most remote shale gas rich regions. QBC supports the communities that are in close proximity to shale gas rich areas where they set up the majority of their fracking wells. These Aboriginal communities benefit immensely, as fracking wells and monitoring stations that are located in close proximity to these communities are a boon to local communities, and stimulate economic growth for these regions, and Canada overall. While QBC does not publically reveal the overall number, or locations, of the vast majority of their wells, QBC invests heavily in these local communities that are directly impacted by hydraulic fracking. In areas already near fracking wells and monitoring stations, the nearby communities enjoy great economic stimulation, as industry to cater to QBC springs up to meet the sustained demand. QBC gives priority to local communities when building production sites, and contributes directly to improving the fortunes of otherwise marginalized Canadian communities. QBC touts the fact that the company has not hesitated to invest in remote Aboriginal communities that were, until then, marked by isolation, and deprivation. In these Aboriginal communities, before QBC builds fracking wells and monitoring stations, they make significant contributions to the region’s infrastructure, and routinely built schools, roadways, hospitals, research centres, and in a few examples, Universities. QBC holds that “a strong surrounding community is in Queensbridge’s best interest.”[6] These areas have industrial scale fracking, as a large portion of the shale gas that QBC produces can be found in remote areas.
An increased reliance on fracking, and QBC, simply means the creation of more highly skilled and technical jobs in Canada and the U.S., and as QBC mulls further expansion into the U.S. the potential for job creation increases exponentially. QBC holds it their “social responsibility [to] train and hire employees from local and neighbouring communities, and compensate them at a rate that allows us to recruit and retain the best talent in the industry.”[7] QBC’s first industrial scale fracking location, aided by their newly created fracking fluid, was established in 1965 in Cape Coquitla, a region located on the border between Manisoqua and Nunavut. Before QBC identified Coquitla as a prime area full of shale gas, the region had the country’s highest unemployment rate, the lowest literacy rate, had one dilapidated building that was both the school and hospital, and did not have running water. Now, Cape Coquitla is a major Canadian metropolis, with the world’s first Hydraulic Fracking Institute of Innovation and Technology (HFIT) funded entirely by QBC. QBC has not revealed how many fracking wells are located in Cape Coquitla, but industry insiders believe that Cape Coquitlais amongst the world’s single largest concentration of fracking wells. What is known, is that 85% of the QBC employees at the Cape Coquitla industrial fracking site are local residents.
In areas near industrial scale fracking sites, QBC builds industrial scale processing sites. QBC industrial sites are where equipment used in the oil and gas fields (high volume fracturing pumps, slurry blenders, fracturing tanks, and units for storage and handling of proppants) are stored. Chemical proppants, and QBC’s industry leading fracking fluids are also produced at these processing sites, and transported to the nearby fracking wells as needed. QBC routinely refers to their larger processing sites as campuses, and each campus has lavish production sites, and areas designated specifically for QBC’s industry leading R&D. It is from here that QBC engineers continue working on improving the chemical composition of their fracking fluid to aid in the pressurization process and create more sustained, long lasting fractures (that will allow for increased flow of gas), the design and further innovation of wellbores[8] and sleeves that are set into the drilled holes, and seek improvements in the microseismic monitoring capabilities to estimate the size and orientation of induced fractures.
It is from these campuses that QBC makes lasting contributions to international hydraulic fracking advances oil extraction policy. QBC is the single largest employer of environmental engineers, Fracking Management Scientists, geologists, and seismologists[9] in North America; 21% of QBC workforce is geared towards hydraulic fracking innovation and R&D and 10% of its workforce is geared towards microseismic fracturing R&D. Because fracking, and its geologic seismic effects research, requires highly trained and technically specialized employees, QBC has become the foremost leader in training the world’s most sought after Microseismic and Geologic fracking experts, with QBC funding additional Ph.Ds. for their employees.
Queensbridge Contracting: Political Clout:
QBC has helped establish Canada as the international leader in hydraulic fracking; the Canadian government continues to partner with QBC on many successful research ventures that have increased Canada’s international profile in all things related to fracking, oil exploration, and oil extraction. QBC has always been an easy company for Canada’s federal government to support; at its heart, QBC remains Canada’s oldest oil company, and the principles that underlie Canada’s National Energy Policy[10] are the principles that necessitate support of QBC. Over the last 50 years, the Canadian government, interested in Canadian energy independence with increasing its international profile, have consistently provided federal funding for QBC’s innovative research into oil extraction, and more recently, fracking. With each passing decade, QBC has become further entrenched in Canada’s energy sector, as QBC’s factors into almost 17% of oil all production on Canadian soil. The Canadian government continues to grant QBC autonomy and independence, under the idea that all of QBC’s progress in oil exploration further establishes Canada as an international player. QBC has access to government resources, facilities, and researchers, and is able to make use of the collaborative possibilities that are a result of Canada’s place within the larger international oil exploration network. The Canadian government has provided QBC with more grants and funding than any other Canadian organization, and QBC undoubtedly relies on the Federal government to help cover some of the costs associated with pursuing further research. In the wake of the collapse of Alberta’s oil sands, QBC has stepped in, and seamlessly maintained Canada’s market dominance in the oil industry.
It was actually QBC employees that first began noticing an alarming increase in destructive temblors[11] within close proximity of fracking wells. This information was then forwarded to QBC funded HFIT scientists that observed a fundamental shift in the frequency, and intensity, of destructive temblors in regions that had previously never even had tremors. “Incidents of temblors and earthquakes have increased dramatically over the years, with some areas in Western Canada that recorded 2 or 3 tremors a year, reporting up to 915 quakes in a single year.”[12] To their credit, QBC sounded the international alarm on these seismic events when their occurrence increased across North America in the late 1990’s. QBC researchers advised the government’s decision to impose more stringent rules on fracking in specific regions of the country, and supported the UN’s worldwide moratorium on Industrial scale fracking in geological sensitive areas of the world. In conjunction with QBC and the UN, the federal government imposed stringent regulations on the types of fracking fluids that can be used, and the scale of industrial fracking, in Canada.
QBC’s concern for the increase in tremors and earthquakes in heavily fracked areas was motivated largely by internal research that the increase in the number of small, human-caused quakes in heavily fracked areas may have set the stage for a larger, more destructive earthquakes to come. Aware that QBC’s fortunes are directly tied to public support, QBC then began researching whether differences in the chemical composition of pressurized fracking fluids would affect the increase in earthquakes, and it was is through this research that the international community created standards for what types of chemicals could be used in fracking fluids. Though there is much disagreement in the scientific community[13] over whether differences in the chemical composition of the fracking fluids has any effect on incidences of temblors, tremors, and earthquakes (all referred to as ‘seismic activity’), and QBC scientists themselves have not yet come up with a conclusive answer, but in the interim, QBC does not release data on whether incidents of seismic activity have decreased.
There were few fracking companies that had the resource backing to withstand the sustained losses that the new government imposed regulations would have on their ability to produce fracking fluid. The Canadian government was well aware of QBC’s importance to the Canadian economy in terms of the gas it produces, the number of Canadians it employs, and the revenue the company generates, and thus, the government gave QBC its full support and resource backing when it came time put forth the resources to ensure that QBC would remain a significant contributor to Canada’s GDP.[14] The Federal government further reflected QBC’s interests in creating fracking fluid regulations, as they exempted specific chemical compound found in QBC’s industrial scale fracking fluid (worldwide industrial scale fracking decreased significantly after the imposition of the UN’s fracking fuel regulations) from regulation. When HFIT researchers started conducting tests on the effects of curtailed pressurized fracking fluids on geological stability in Cape Coquitla, the government exempted this research from the third party oversight against the will of the Geological Survey of Canadian Scientists, an unprecedented move that continues to be a source of major controversy across Canada. The federal government claimed that “QBC’s interests are Canadian interests.”[15] In many cases, the Federal government defers to research produced by HFIT funded institutions when implementing policy aimed at regulating fracking. Federally funded research into fracking related inquires has QBC representation throughout, with several QBC executives and stakeholders on the board.
Queensbridge Contracting: Philanthropy
QBC is the single largest contributor to sustainable oil exploration and oil extraction research, and has donated hundreds of millions of dollars to climate change research, and was the first oil company to embrace the Kyoto Protocol, and carbon cap and trade programs. QBC is also the company that spurred the idea behind ‘sustainable’ hydraulic fracking.
Much of QBC’s international philanthropic initiatives focus on ecosystem recovery programs in areas that have been devastated by oil exploration.[16] QBC has donated over 1.8 billion dollars to ecosystem recovery programs worldwide (but mostly in the developing world), and has donated millions of dollars in resources to governments in the developing world that are affected by drought, famine, and starvation. QBC is singlehandedly responsible for the Niger Delta’s water reclamation project[17], and then providing these regions with the infrastructure to have clean water and reclaimed ecosystems for future generations. QBC simply looks at it is an investment in future markets, and in exchange QBC simply requires that these governments allow for QBC to further invest in the country, and scout locations for future fracking sites, sites where they will build processing plants, create jobs, and infuse the local economy with revenue, oil reserves, and increases in their GDP. QBC created the UN’s worldwide oil assistance programme, and maintains the international market where many of these countries trade the goods that they produce for steeply discounted oil for their cars, homes, and businesses. Nationally, QBC has consistently appeared on Canadian lists of its most charitable organizations, with donations towards marginalized communities throughout Canada. All told, BKH, since 1988, has not donated less than $100 million dollars a year to its various social initiatives.
QBC continues to fund HFIT, and has successfully hired all of the leading environmental engineers, geologic and seismic researchers in oil exploration, and is now said to dictate international oil exploration research. QBC is responsible for the ‘Sustainability Council,’ a UN sponsored panel on sustainable oil production that contributes to international oil exploration and extraction policy. In fact, QBC has lobbied the Canadian government to gain control of the hydraulic oil exploration and extraction industry, and become their own industry watchdogs, as they claim that they have the most vested interest in “guiding the issues surrounding fracking internationally, and nationally.”[18]
Queensbridge Contracting: The Bad
Speaking off the record (for fear of reprisal from QBC), oil industry executives, lobbyists, researchers, industry insiders, government officials, and environmentalists have all expressed concern with QBC’s refusal to comply with expectations of increased transparency in their research into the connection between fracking and earthquakes. These stakeholders point to the fact that QBC does not even release data about the number of wells its operates, and because QBC has most of the world’s wells (disproportionately located in North America) there is no accurate worldwide data that even connects where tremblors, tremors, and earthquakes occur, and their proximity to fracking wells. These critics claim that QBC’s conduct alone has stalled progress towards mitigation methods for combatting potential man-made earthquakes, and they express concern that QBC’s unwillingness to share their data is keeping the international community from working together to face what is a worldwide issue, an issue that they do not know the size or scope of. QBC’s position is that they are the industry leader in everything fracking, and they therefore are in the best scientifically backed position to conduct this research.
Furthermore, QBC resists calls from health advisors, doctors, and environmentalists to include them in their research into the huge environmental risks associated with fracking. Although QBC industry has strongly defended the use of fracking as an environmentally safe technique, it has consistently refused to disclose the full range of chemicals used in the process. While the specific composition of chemical mixture being pumped into ground is protected by proprietary data, there are documented reports that the mixture contains methane, disulphides, benzene, xylene, naphthalene, lead, ethylene glycol, methanol, boric acid 2-butoxyethanol, and phthalates. Those of which that are not known carcinogens, or known as posing serious health risks, are so because the research on their health effects on human is being conducted by QBC funded scientists, and they have yet to release any data. QBC, however, argues that they have the most qualified researchers, engineers, scientists, and geologists, and adding in more oversight would simply add an unnecessary layer of bureaucracy that would slow down the entire process. Industry insiders, however, argue that QBC is simply trying to hide facts that are relevant to stakeholders.
In fact, QBC rejects the claim that their company has had any connection to man-made earthquakes whatsoever; QBC argues that no fracking related earthquakes have occurred near their wells[19] and blames their competition for the vast majority of quakes. The first reports from geological researchers into QBC’s connection to earthquakes were met with legal action on the part of QBC; lawyers for QBC successfully argued that any discussion of any of their practices that included the use of their fracking fluid constituted a violation of their legally protected proprietary data and trade secrets. In the second instance, in the days leading up to the Geological and Seismic Research Society (GSRS) publishing an explosive piece on QBC and earthquakes, the Canadian government allowed QBC to take over the GSRS research (under the auspices of their agreed upon settlement that QBC is best served to be their own industry watchdogs). This report was never released, and the Organization’s facilities were shuttered, with the CEO and board members of GSRS all becoming high ranking officials at QBC at nearly triple their previous salaries. QBC then produced an HFIT sponsored research paper that investigated QBC business practices and earthquakes, and dismissed any connection between the two.[20] QBC cautions against jumping to conclusions and argue that evidence of the environmental and ecological dangers of fracking is not yet available (20 to 40% of the injected chemicals can remain trapped in the rocks for decades, and as a result, the level of contamination is nearly impossible to measure).[21] The industry is further buoyed by the fact that, as a result of forceful lobbying practices, the industry succeeded in 2005 in having the process of fracturing exempted from regulation under Canadian and U.S. Safe Drinking Water Acts.
Fracking uses a large volume of water and creates toxic and radioactive waste water that, even after treatment, poses serious health risk if released back into waterways. Once injected, a portion of the chemical sludge pumped into the fragmented rock remains trapped underground, which allows hazardous carcinogens to leech into, and contaminate, groundwater. There is documented evidence that concentrations of methane near a small number of fracking sites are potential explosion hazards. Landowners near fracking sites have documented evidence of being able to light tap water on fire, developed chemical burns from showering, and had significant amounts of livestock die off. Leeching groundwater threatens clean drinking water, and has devastating potential ecological effects.
The process of fracking is also a heavy polluter, and a significant source of greenhouse gas. The emissions during natural gas development and production include particulate matter, nitrogen oxides, sulfur oxide, carbon dioxide, carbon monoxide methane, ethane, liquid condensate, volatile organic compounds (VOCs), benzene, toluene, ethyl benzene, and xylene (referred to as a group, called BTEX). Health effects of exposure to these chemicals include neurological problems, birth defects, and cancer. Moreover, VOCs, including BTEX, mixed with nitrogen oxides from combustion and combined with sunlight can lead to ozone formation. Ozone has been shown to impact lung function, increase respiratory illness, and is particularly dangerous to lung development in children.
The heavy pollutants emitted during the fracking process has led to serious concern throughout the company about fracking’s apparent connection to Argsepherin-D (AS-D), a type of chemical that is released during the fracking process. The scientists who are researching AS-D are QBC employees, and have signed confidentiality waivers that preclude them from reporting their findings to third parties. Their most recent findings conclude that a new aggressive type of cancer has begun appearing in a statistically significant portion of field workers who work on site during the fracking process. These workers are disproportionately being diagnosed with this new, rare form of cancer, but at a slightly low rate. QBC, however, has hired all of the leading environmental scientists in the field; most environmental advisory boards have not yet identified AS-D as a chemical compound, let alone a cancer causing agent, and for this reason it will be decades before this chemical is even identified as a concern requiring further investigation, and in that timeframe QBC will continue to further their oil exploration efforts. Unreleased documents detail that QBC’s CEO L. Rozay became concerned when she learned of AS-D, and commissioned a secretive health and safety report, with the results only available to the board. While the results are not widely known, QBC has significantly improved the ventilation systems in 7% of their fracking sites, but this option is not widely available as the cost is said to be prohibitive. QBC benefits largely from the fact that the vast majority of QBC employees that work in close proximity to fracking wells are Aboriginals, who shun traditional Western medicine. This fact alone may obscure the real prevalence (or lack thereof) of AS-D.
While QBC has not acknowledged a connection between fracking wells and AS-D during the process, the board is undergoing serious discussions about curtailing the use of their most effective fracking fluids. QBC-40SS, the fluid used in industrial scaled fracking is said to be of greatest concern to the board, but restricting use of QBC-40SS would directly impact their ability to operate industrial sized fracked sites, and QBC’s would no longer have the ability to operate wells that produce hundreds of millions more cubic feet of gas per day than their competition, thereby eliminating QBC’s greatest market advantage. Studies into the health risks associated with exposure to AS-D are further hampered by the death of every worker who handled QBC-25SS to QBC-34SS, the 6 previous iterations of their most effective industrial scale fracking fluids.[22] The board is also contemplating shifting industrial scale fracking to regions of the developing world where QBC will invest billions of dollars in infrastructure, and create jobs in a highly competitive marketplace that does not apply the same harsh regulatory requirements that North America imposes. QBC will most likely move production to those countries where they have made their biggest philanthropic donations. In all cases, employees are legally prohibited from discussing what QBC deems ‘workplace issues’ as QBC has also successfully legally defined these as proprietary data and trade secrets
Lastly, QBC does not acknowledge publically (or even to its employees) that they are making no virtually no progress in isolating the connection between temblors, tremors, and earthquakes, fracking fluid, or the company’s potential role in their genesis. Additionally, QBC does not release data that accurately reflects their staggering yearly worldwide increase in seismic activity. In truth, QBC has begun producing almost 16% of its oil production off shore and on remote isolated locations that are almost entire continents away from geologists and seismic researchers[23], and use scientists lack of data to argue that they are making progress in reducing seismic activities. Releasing data about the prevalence of seismic activity would lead to much more scrutiny in the industry, so QBC simply produces more of their fracked oil away from the scrutiny of industry insiders, placating consumers, shareholders, and stakeholders, while racing to find a connection between seismic activity and prevalence in fracking. It should be noted that QBC’s competition is faring no better, does not present a viable alternative, and does not engage in any philanthropic activities. It should also be noted that, for all of its faults, QBC executives make (unverified) claims that seismic activity occurs at much lower rates around QBC fracking wells than their competition.
In truth, if QBC were more transparent, and opened up their research to oversight and contributions from the international community, the company would still maintain its dominant position in the marketplace, and QBC would still be able to leverage their control over the fracking industry to dominate the market to maintain immense profitability. If anything, the major threat facing QBC is the fact that your competition would likely seize on the previous secrecy that QBC benefitted from, and mislead consumers into believing that QBC was engaged in a large scale cover up (which may well be the case) that minimized the damage associated with fracking, it is then likely that you will lose those customers to your competition.
The Dilemma:
To put it bluntly, you can advise QBC to further invest heavily in industrial scale fracking (and the consequent increase in the use of QBC-40SS), while offshoring a portion of oil production and continuing to utilize undisclosed remote isolated locations that generate billions of dollars of profit, and can be used for testing grounds for increasing volatile types of fracking away from stakeholder scrutiny, while dedicating significant resources towards researching fracking and environmental hazards. Or, you can defend opening up QBC to government and third party oversight, which will lead to a slight loss of consumer trust in the marketplace and a slight loss of marketshare (marketshare that your competition will very quickly snap up). Regardless of your choice, QBC will maintain itself as an international leader in oil production, the only difference is whether the company will pursue solutions for the connection between fracking and earthquakes independently, or open itself up for third party oversight, which may not actually aid in the process as QBC already employs the world’s leading scientists and researchers. Success is certain, but any loss in marketshare would also be reflected in QBC’s commitment to philanthropy. Maintaining control of QBC’s research has the further benefit of allowing QBC to position itself as being the only company committed to ‘sustainable fracking’ and reaping the PR that comes with that. If research into connections between fracking and earthquakes is inconclusive, QBC can simply continue to shift the majority of their fracking to the developing world, and remote island locations away from geologists and seismic researchers, and point to the resultant decrease in recorded earthquakes as evidence that they have made progress (though the ecological, geological, and seismic consequences of continued earthquakes away from the purview of researchers may bring with it its own host of issues in the longer term).
It must be duly noted that, although QBC would still remain an international leader in oil production, opening itself up to third party oversight would reveal facts that industry insiders and stakeholders already know, fracking presents significant environmental risks, and its connection to earthquakes makes the entire industry, as it is now constituted, unsustainable. This admission, however, can help spur QBC’s long term decision to divest itself from fossil fuels, and begin using its significant financial resources to make inroads in sustainable energy. QBC can position itself to be the international leader in the production of sustainable energy (a vision that is most in tune with K. Rozay’s original vision of the company; because fossil fuels are finite and evidence of climate change is forcing a rethink of fossil fuel dependency, sustainable energy is the long-term inevitable direction of the energy industry) an industry that has the potential to creates a similar number of jobs, but generate less profit. Any decision to move away from fossil fuels will be a long term decision[24] but there are whispers throughout the industry that QBC’s competition, which themselves have a far worse environmental record (they focus strictly on Economic growth), will snap up any marketshare that QBC divests. In fact, QBC’s competition have also explored the idea of setting up industrial sized fracking farms on remote Island, as most of their competition rejects the idea that externalities should be factored into business decisions. It must be further noted that regardless of QBC’s choice, industrial scale fracking will continue (with QBC leading the industry, it does not make cents(sic) for their competition to undertake industrial scale fracking, but if they were to begin reducing industrial scale fracking, their competition will most certainly step in in their absence).
Instructions for completing assignment (important, please read carefully):
In no more than a total of 1,875 words (please indicate your total word count at the end of the analysis. Assignments that do not indicate the word count will not be graded.) analyze the following ethical issue: Which position should you defend to the board, supporting increased production of all facets fracking and pursuing research into fracking and earthquakes independently, or accepting government oversight in QBC operations, and the consequent loss in profits and autonomy that will ultimately result in long-term divestment away from the billion dollar oil industry? To answer this question, students should do the following: (please provide a brief introduction, that states the issue, and your position approx. 75 words).
- Apply any six of the seven moral standards (i.e. utilitarianism, moral rights, the principle of justice, principle of care, virtue ethics, Kantianism, the golden rule), to the full extent that they are applicable, to both support and critique your position on the ethical issue (clearly state your position and clearly indicate which moral standards you are applying) (approx. 1,200 words);
- Indicate whether Milton Friedman would agree or disagree with your position on the issue and why, based on his criteria and constraints (approx. 200 words); and
- Make reference to any other relevant cases and/or theoretical concepts discussed in the course to support and/or critique your position (approx. 400 words).
[1] Traditional in the sense that QBC relied on ddrilling and using a conventional pumpjacks to bring petroleum oil hydrocarbons to the surface, and was immensely profitable.
[2] Wells that produce more than 300 million cubic feet of gas per day are the industry benchmark; QBC has wells that produce up to 500 million cubic feet of gas per day, and for this reason, they dominate the industry.
[3] BP’s massive 5 million barrels of oil spill in the Gulf of Mexico in April-July of 2010 for one.
[4] The ecological disasters that Shell left in the Niger Delta, and Texaco left in Ecuador are routinely cited.
[5] QBC’s ‘The Case Against Foreign Oil’ ad campaign.
[6] Kuyebi, A. ‘QBC, Our Story.’ Olumide Printing. Queensbridge, USA. 1995, P. 6.
[7] Ibid. 14.
[8] Wellbores are a narrow shaft bored in the ground, either vertically or horizontally. A borehole may be constructed for many different purposes, including the extraction of water, other liquids (such as petroleum) or gases (such as natural gas.)
[9] QBC does not shy away from the earthquake based threats that fracking may incur. In its simplest form, fracking requires drilling into rock formations thousands of feet below the surface, which increases the pressure on existing subterranean faults, which causes them to slip and produce tremors.
[10] Canada is the 5th largest producer of energy in the world, producing about 6% of global energy supplies
[11] At their most intense, a destructive temblor is an earthquake.
[12] Internal QBC memo. Fracking and Earthquakes, April 5th, 2001.
[13] The split is essentially between those two have economic ties to the oil industry, and those that don’t.
[14] Conservative estimates put QBC’s yearly contribution to Canda’s GDP as upwards of 4%
[15] Ministry of the Environment Fracking Press Release, 1998.
[16] QBC blames much of the world’s ecological destruction on their competition, and argue that they have guilt by association, and thereby pledge to ‘right the wrongs of the industry.’
[17] This is a direct result of an acknowledgement of the vast amounts of fresh water that fracking relies upon. Approximately 2-9 million litres of water are required for a single well.
[18] Ayodele, R. (2003) QBC wants to be become their own watchdogs. Globe and Mail. April 27th, C8
[19] A highly improbable position to maintain, but QBC benefits from the fact that they do not publish data about the number of fracking wells they have, or their locations, so their claims cannot be challenged.
[20] A report that was written in opposition to the findings in internal QBC memos. This report led to the resignation of every member of QBC’s geological division.
[21] They are also able to cite a recent environmental report that highlights the lack of long-term evidence of the dangers of fracking (a report written by BIT researchers).
[22] QBC employees have the industry’s most generous highest medical leave packages; in the event of death of a former worker, their families are often significant sums of money through QBC’s insurance policy. The rate of these settlement packages alone would bankrupt nearly every other North American oil company, but because QBC is North America’s most valuable oil company, they handle these payments without worry. However, QBC requires that those in receipt of settlement packages sign confidentiality waivers.
[23] QBC executives have wrestled with the idea of buying entire islands located in the Pacific Ocean, and converting these island to the world’s most densely populated industrial scale fracking farms. These farms would be accessible to only contracted QBC employees, and away from the international spotlight.
[24] This divestment would occur over a 75-100 year time frame.
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