Pretending to Forget What’s Right Under Our Feet Until theGround Gives Way: EXCO’s Marcellus Gambit, the SAGO Mine

Disaster, and the Price of Natural Gas

Wendy Lynne LeeBloomsburg University of Pennsylvania

wlee@bloomu.edu

Pretending to Forget What’s Right Under Our Feet Until theGround Gives Way: EXCO’s Marcellus Gambit, the SAGO Mine

Disaster, and the Price of Natural Gas

Why Philosophy Matters to Fracking: The Past is the Future

Long ago the foresightful German philosopher Friedrich

Nietzsche argued that human beings were the sorts of creatures

who, in the quest to advance their own self-aggrandizing

interests, were compelled to forget acts of violence willingly

committed to those ends. And not only acts of violence, but

also deceptions, corruptions, swindles, exaggerations,

extortions—in short all manner of iniquity for the sake of

“progress” or “freedom” or “beauty” or “truth.” The trick,

argued Nietzsche, is to insulate ourselves not merely from the

notion that ends do not always justify means, but from having

to remember the means at all. Glory, after all, sounds a bit

tinny heralded while walking over the bodies of the dead.

Better that we should forget to look under our feet. Better

that we should think of reason as an instrument of execution

rather than a directive to conscience.

Such, some argue, is the genius of capitalist enterprise:

if each of us as workers and consumers can be convinced that

what matters is the product—and not the process required to

achieve it—we might be able to be persuaded to participate in

all manner of atrocity. What we have to believe is that the

product is something we can’t live without, or that it makes

us better, or that wanting it is our moral or religious or

patriotic duty. That such an extortion of consent requires the

appropriation of reason to the task of “how” over “why” is

certainly an enormous task—one that arguably epitomizes a

variety of modern fascism as the corporatist domination of the

state. Put in simpler terms, what effective marketing depends

on is a kind of perverse social contract, one in which we

collectively agree to forget just what sort of wounds we are

willing to call mere “process” for the sake of a product upon

which our dependence—however real—is made not of need but of

created need. And that is not the same thing at all—but, I’ll

argue, it’s vital to the extraction industries that we should

forget the difference. Enter EXCO Resources, Inc, a natural

gas corporation who, like all of its compatriots engaged in

the Marcellus Shale Play, locates its raison d’être in the

assumption that our need for fossil fuels is so great that we

will sanction—forget—whatever EXCO does to get to the gas.

Like the addict who vanquishes all memory of the crimes they

committed to get the heroin into their veins, so too EXCO

counts on each of us—leased and un-leased, Shalers or non, gas

field workers or ordinary consumers—to forego remembering the

dirty lineage of that gas. The past, after all, portends the

future; better to forget the past. The trouble is that when

that future is climate change or war over access to the very

water perversely fueled by the gas extraction process that

destroyed it, the past will as surely return to haunt us as

the name of the future is ecocide.

Forgetting, #1: EXCO at Fake Community Meeting,

DCNR State Forest Headquarters, January 2013.

The central cast of this first story of forgetting includes

EXCO CEO Douglas Miller and Billionaire investor Wilbur Ross.

It begins at a Sullivan County Energy Taskforce Meeting, DCNR

(Department of Conservation and Natural Resources), January

8th, 2013 at the DCNR State Forest Headquarters in Laporte,

Pennsylvania. Despite the fact that it was advertised as a

“community meeting” aimed at providing information to its

audience about EXCO’s drilling plans for Sullivan County, it

became evident that the horizontal slickwater hydraulic

fracturing corporation’s real motive was to recruit audience

members—mostly older folks—to sign leases before they left the

building. Indeed, we were informed at the door sign-in that

landmen and EXCO lawyers would be available to negotiate

leases (http://blog.shaleshockmedia.org/2013/01/09/fake-

community-meeting-exco-lookin-for-some-love-money/). Nowhere,

however, was what is arguably a misuse of a public building

for purposes of marketing spelled out in the public

announcement of the “community meeting”:

January 8, 2013 (Tue) 7:00 pm

DCNR State Forest HQRoute 220, Laporte, PA

SULLIVAN COUNTY ENERGY TASK FORCE MEETING WITH EXCO

An opportunity will be available for EXCO Resource

lessors and SC Energy Task Force attendees to hear a

presentation from representatives of EXCO Resources. As

you may know, EXCO has purchased much of Chief O&G LLC

holdings in Sullivan County.

Presentation will include but not be limited to:

• How they do things

• Plans for 2013 for exploration in Sullivan County

• Price of Natural Gas

• Utilization of NG

• Pipeline construction

• Environmental and Safety and Traffic

• Water Well testing

• Questions and answers to follow

WHO: Adam Pope & other EXCO personnel.

The facilities are limited, so this is on a first respond

basis and an RSVP is requested to confirm a seat. Rsvp to

John Silla muncys [at] epix.net.

I suppose that the reference to “lessors” and the disclaimer

“but not be limited to” could be put to the service of “going

get you to sign your land to a lease.” But “lessors,” of

course, means “already leased” and “but not limited to” didn’t

really cover the fact that the “other EXCO personnel” numbered

as many as 20 landmen, a lease negotiations representative,

and a lawyer who did her level best to keep me from taking

photographs and fellow fracktivist Dean Marshall from filming—

in a public building.

But let us set aside this potential impropriety. What

followed was the predictable dog and pony show about the

safety of fracking, the jobs, the cheap energy, the flag-

waving patriotic appeal to national security, and the implicit

but potent pitch to what “good Americans” do. When it was

over, Adam Pope—folksy jeans-wearing PR guy for EXCO—asked for

questions, and to the credit of members of the well-prepared

members of the audience (and the evident consternation of the

EXCO lawyer), he got some. As I recounted in a piece for

Shaleshock about why a number of audience members got up and

left once EXCO’s record of environmental violations and fines

was laid out:

Did they not want to hear about the DEP/EPA fines

EXCO has paid within the last year of operations in

Pennsylvania?The Progress News: EPA enters into

agreement with EXCO Resources.

Were they disturbed when someone pointed out the

fact that, once you do the basic math, the “.05″

EXCO claims is the amount of chemical solution (they

called it “dish detergent”), amounts to hundreds of

thousands of gallons of carcinogens, surfactants,

and biocides for the millions and millions of

gallons (they acknowledged five million as average)

they use to frack a single well? ().

Were they taken aback by EXCO’s demonstrably false

claim (see links in comments below) that they

recycle “100%” of their waste water–when in fact

they operate deep injection wells? (EXCO Resources paysDEP fine – SunGazette.com | News, Sports, Jobs, Community

Information – Williamsport-Sun Gazette andBurning Question:

Where Are Pa.’s Deep Injection Wells? | StateImpact

Pennsylvania).

Did they wince at the point made that FracFocus

reveals only those chemicals used in fracking that

are not protected by EXCO’s proprietary property

“rights”? (Hydraulic fracturing: FracFocus can’t replacefull, public disclosure, groups say — 05/21/2012 —

www.eenews.net).

Did they wince some more when someone pointed out

that Act 13 requires physicians to sign

nondisclosure agreements in the course of treating

patients whose illnesses are traceable to exposure

to flowback?

Did the recoil at the revelation that, given its

history, EXCO will abandon its waste-water disposal

wells once its bonds expire, and once any regulatory

agency isn’t paying attention? (Wastewater Disposal

Wells Under Scrutiny Following Irvin Leak – Pittsburgh Post-

Gazette – 3 January 2012).

I don’t know why these folks left. Perhaps they were lessors

feeling a twinge of guilt they preferred to forget. Perhaps

they were future lessors avoiding what they knew they’d have

to pretend to forget. What I do know is that EXCO probably

didn’t get what they came for, and that the reason this

matters is because of what the EXCO CEO, Douglas Miller—who

was at the “community meeting” would probably like to be able

to forget.

Forgetting, #2: EXCO CEO, Douglas Miller, Tries to Leverage a

Buy-Out Bid While Billionaire Investor, “Distressed Company

Restructurer,” and SAGO Mine Owner, Wilbur Ross, Jr. Stands By

Like the Wolf at the Door

Fact is, Douglas Miller needs his wells to produce. In January,

2011, the New York Times reported that

The board of Exco Resources, an oil and gas producer

based in Dallas, said on Thursday that it was considering

a buyout offer made by Douglas H. Miller, the company’s

chief executive officer, which values Exco at $4.35

billion.

Mr. Miller told the board in October that he was

interested in buying the company. He offered $20.50 cash

for every share he did not already own, 38 percent above

the share price before his bid was announced. The offer

is yet another sign of the active management-led-buyout

market.

The board said that it had “determined it is in the best

interests of shareholders to commence a comprehensive and

independent review of strategic alternatives to maximize

shareholder value.”(http://dealbook.nytimes.com/2011/01/13/exco-board-is-

mulling-ceos-buyout-bid/)

It’s notable that Miller’s 38% premium ($20.58 per share)

offer to take publicly traded (2006) EXCO private was even

spicier than Exxon’s 2009 acquisition of XTO at a mere 25%

(http://dealbook.nytimes.com/2010/11/01/a-big-bet-on-exco-and-natural-gas/). Indeed,

despite the sharply falling price of natural gas, and even

despite Exxon’s shareholder displeasure with the acquisition

of XTO, Miller was apparently feeling pretty confident about

his bid. And why not? “Exco shares rose 26 cents, or 1.36

percent, to $19.34 on the news,”

(http://dealbook.nytimes.com/2011/01/13/exco-board-is-mulling-ceos-buyout-bid/),

sufficient to gain the support of support of T. Boone Pickens

who reportedly owns 9.2 million shares in the company. Plus,

Miller was receiving good news from the frack fields:

The company also announced significant increases in its

proved and unproved natural gas reserves, saying that

they had grown 28 percent and 114 percent, respectively,

from the previous year. Exco claimed 1.5 trillion cubic

feet of proved natural gas reserves as of December 31,

and said increases were coming from drilling in its

Haynesville shale assets. (http://dealbook.nytimes.com/2011/01/13/exco-

board-is-mulling-ceos-buyout-bid/).

The Haynesville “shale play,” however, is in Louisiana—not

Sullivan County (or anywhere county), Pennsylvania

(http://www.excoresources.com/east-texas-north-louisiana.htm).

Turns out that Miller’s confidence—and hence the money he

needs to make good on this bid—may have been a wee bit

premature. Almost exactly one year after the New York Times

reports that “Mr. Miller is hardly going out on a limb with

his offer” (http://dealbook.nytimes.com/2010/11/01/a-big-bet-on-exco-

and-natural-gas/), the Wall Street Journal reveals, November

2011, that he’s “licking his wounds from a botched effort to

take his natural-gas company private”(http://blogs.wsj.com/deals/2011/11/23/failure-has-its-rewards-exco-ceo-

gets-3-3-million/).

What happened?

Eight months go by, and no deal. Exco shareholders and

employees start to get a little antsy and curious when and

whether Miller was going to pull the trigger on a buyout. No

other suitors seem interested in offering a rival takeover

proposal. Then this summer, Miller made the unusual conclusion

that his own company wasn’t worth nearly as much as he

thought.

Or, rather, Miller realized he couldn’t borrow enough money to

buy Exco on the terms he initially proposed. Instead, Miller

tried to cobble together a deal to buy just a chunk of Exco, a

deal that would have been cheaper but still leave Miller in

charge. In July, Exco threw in the towel altogether on the

idea of selling the company.

And where did that leave Exco shareholders? With a

company whose market value has shriveled as much as $2

billion since Miller’s offer last fall.(http://blogs.wsj.com/deals/2011/11/23/failure-has-its-rewards-exco-

ceo-gets-3-3-million/)

Key Phrase: “Miller realized he couldn’t borrow enough money

to buy Exco,” not even a “chunk.” Incredibly, Miller is—true

to the new American Way—rewarded for this spectacular failure:

And for his good work this year, Miller is being handed cash

and stock awards with a current value of $3.26 million.

According to a regulatory filing today, the Exco board

approved a $500,000 cash bonus to Miller based on the

compensation committee’s “assessment of 2011

performance.” Miller also was awarded 266,317 shares of

restricted stock. At Exco’s closing stock price

Wednesday, those shares are valued at $2.76 million(http://blogs.wsj.com/deals/2011/11/23/failure-has-its-rewards-exco-

ceo-gets-3-3-million/).

Speaking of “chunks,” that’s quite a chunk-o-change—a fact

which doubtless creates considerably more pressure on Miller to

get those Sullivan County wells to come in. Enter Billionaire

Investor Wilbur Ross, Jr. who in the same week of July 2012,

not only buys a Rene Magritte painting valued at 11.3 million

but, according to Shane Sokol and Meena Krishnamsetty (who

“owns a long position” in Chesapeake) of Market Watch, purchased

a very large number of shares of natural gas producer EXCO

Resources, Inc. XCO +2.24%(http://www.marketwatch.com/story/billionaire-wilbur-rosss-latest-energy-

pick-2012-07-13):

From June 18 through June 20, Ross purchased 700,000

shares at an average price of $6.78 per share. His total

cost amounted to $4,746,751. Invesco's WL Ross & Co. is a

specialist in leading turnaround groups that invest in

and restructure distressed companies. The fund is managed

by Mr. Ross and has a sizable stake in the company(http://www.marketwatch.com/story/billionaire-wilbur-rosss-latest-

energy-pick-2012-07-13).

To be specific 29.5 million shares compared to T. Boone

Pickens’ paltry 9.2 million, purchased at $13.80 dollars less a

share. The highest in fact that Ross ever paid for a share of

EXCO was $14.00. Ouch. But that’s what you get for a company

“whose market value has shriveled as much as $2 billion.” How

did this happen? A familiar, all too familiar story—one the

fracking corporations would surely prefer to forget:

Over the previous year (2010-11), a supply glut of

natural gas drove the commodity to record low prices,

prompting many investors to sell their shares of XCO

without pause. The stock consequently fell off the

proverbial cliff, tumbling from a 52-week high of $16.70

reached last July, to a 52-week low of $5.74 touched on

both April 18 and 19 of this year. That is a drop of

65.6%, about two-thirds of the company's market value

wiped away in a few months. Since reaching those lows,

shares have recovered slightly, trading near $6.92.

However, that’s still 58.5% off its peak.(http://www.marketwatch.com/story/billionaire-wilbur-rosss-latest-energy-pick-2012-07-

13).

The mystery, then, is why Miller has persisted. After all, he

knows as well as anyone that “restructure distressed

companies,” is corporate-speak for “vulture” and Wilbur is

naught but the wolf at the door. Miller’s British—but the old

chestnut about how the British character soldiers on hardly

seems rational in this case. As Sokol and Krishnamsetty

continues, however:

There does appear to be light at the end of the tunnel

for XCO. Natural gas prices might be finding their

footing as a recent report found that power generation

plants used 40% more natural gas and 20% less coal this

past March. As that trend may continue, the glut in

natural gas supplies could be shrinking, helping to lift

or at least stabilize prices.

Several analysts have recently become more positive on

the stock as well. On May 8, KeyBanc upgraded XCO to a

buy. Not only did analyst Jack Aydin see better gas

prices coming, he sees opportunities others don't and

adjusted his 2012 earnings estimates from $0.04 to $0.16

per share, a 400% increase. Mr. Aydin stated this was an

environment where "XCO has a number of potential

transactions that are on the cusp of being consummated,

which could provide significant catalysts for shares if

executed to plan" (http://www.marketwatch.com/story/billionaire-wilbur-rosss-latest-energy-pick-2012-07-13).

That is, if the gas continues to roll in, if markets can be

created at home and/or abroad to buy it in large enough

quantities, and if Miller can hold out long enough, he may

just be able to keep the Wilbur-Wolf at bay and make an even

bigger bonus by 2014. No wonder he’s willing to get into some

uncomfortable looking jeans and slum it with the good folks of

rural Pennsylvania for an evening. Though he looked

alternately bored and dismayed, I imagine him musing—or

anguishing—over the latest Ross gambit. According to Michael

Merced of the New York Times, by August of 2011, Ross, once

dubbed “the King of Bankruptcy” by Fortune magazine, had

raised his EXCO stake to 12% of the company, up from 9.8%,

though his “purposes are unclear”

(ht tp://dealbook.nytimes.com/2011/08/08/wilbur-ross-raises-his-exco-stake-

to-12/). Indeed,

Exco announced late last month [July, 2011] that it had

reached a standstill agreement with WL Ross that

prohibits the firm from owning more than 20 percent. The

agreement extends to preventing the billionaire from

offering to buy Exco or working with any other potential

suitor. (http://dealbook.nytimes.com/2011/08/08/wilbur-ross-raises-

his-exco-stake-to-12/)

That’s right after “Exco’s decision last month to call off

efforts to sell itself. The company walked away from a $4

billion takeover bid led its chairman and chief executive,

Douglas H. Miller” (http://dealbook.nytimes.com/2011/08/08/wilbur-ross-

raises-his-exco-stake-to-12/).

And there’s this: Ross is the big bad wolf. Via subsidiary

corporations, Wolf Run Mining Corporation, itself a subsidiary of

Hunter Ridge Mining Corporation, both subsidiaries of ICG, Inc,

International Coal Group—formed in 2004 by Ross, Ross owns the Sago

mine in Upshur County, West Virginia where a 2006 explosion

was responsible for trapping thirteen miners—only one

surviving. “It was the worst mining disaster in the United

States since the Jim Walter Resources Mine Disaster in Alabama

on September 23, 2001,[1][2] and the worst disaster in West

Virginia since the 1968 Farmington Mine Disaster”

(http://en.wikipedia.org/wiki/Sago_Mine_disaster). The Sago mine had

been sited 208 times by the Mine Safety and Health Administration

(MSHA) in 2005, 96—nearly half—“serious and substantial

(S&S).”

The Charleston Gazette said "Sago mine has history of roof

falls". MSHA found 52 violations from April to June, of

which 31 were "serious and substantial" (S&S). From early

July to late September, MSHA found 70 violations, 42 of

which were S&S. MSHA inspections from early October to

late December resulted in 46 citations and three orders,

18 of which were S&S. Violations include failure to

follow the approved roof control and mine ventilation

plans and problems concerning emergency escapeways and

required pre-shift safety examinations. The Gazette

article explained that "S&S" violations are those that

MSHA believes are likely to cause an accident that would

seriously injure a miner… Davitt McAteer, MSHA chief

during the Clinton administration told The Gazette, "The

numbers don’t sound good....[they are] sufficiently high

that it should tip off management that there is something

amiss here. For a small operation, that is a significant

number of violations." McAteer said the roof fall

frequency "suggests that the roof is bad and that the

support system is not meeting the needs of the roof."

(http://en.wikipedia.org/wiki/Sago_Mine_disaster)

Yet when Ross was interviewed January 2006, by Brian Ross of

ABC, here’s what he had to say about safety at SAGO other than

“Oh, my God, it's the worst week of my entire life.”

BRIAN ROSS

Would you call this a safe mine?

WILBUR ROSS

I believed that the mine was fundamentally safe.

BRIAN ROSS

You really do?

WILBUR ROSS

Yeah, I really do. (http://abcnews.go.com/Primetime/story?

id=1872255&page=1).

Apparently, Ross is very good at forgetting.

Brian Ross went on to ask Wilbur Ross what he thought of his

Wall Street reputation as a vulture investor. The latter

responded “[n]o, I think if we had a bird, it wouldn't be the

vulture. A vulture picks flesh off a dead carcass.” But the

Sago mine “had been in bankruptcy for two years when Ross

bought it and bought into a mine that for its size may have

been the most dangerous coal mine in America”

(http://abcnews.go.com/Primetime/story?id=1872255&page=1). Moreover,

Ross knew Sago’s violation history—twenty roof collapses and

thirteen partial shutdowns just the previous year—and when

Brian Ross asked how he could operate a mine like that,

whether he was comfortable “sending men into that hole” the

possible next CEO of EXCO responded that

We were comfortable based on the assurances from our

management that they felt that it was a safe situation.

(http://abcnews.go.com/Primetime/story?id=1872255&page=2)

And that’s pretty much it. Wilbur Ross did establish a two

million dollar fund for the surviving families, but as Brian

Ross remarks “It seems, with all due respect, sir, sort of

cheap.” And, it turns out not one dime of that was Ross’ own

money—despite the fact that he controls ten billion dollars in

company assets (http://abcnews.go.com/Primetime/story?

id=1872255&page=3). Compare that to the original $4,746,751 he

put into EXCO. Were I Doug Miller, I’d be going to every

“community meeting” I could get myself invited to, and I’d be

bringing every one of my landmen with me. Wilbur Ross

epitomizes the good American of America, INC. not despite his

being the Big Bad Wolf, but precisely because he epitomizes the

“entrepreneurial spirit” captured in the cynical and extortive

use of extraction industry rhetoric like “Cheap! American!

Abundant!” No pitch more succinctly captures EXCO’s

“informational” show at the Sullivan County “community

meeting” replete with slide show including flags, gorgeous

vistas and grossly distorted graphics of the fracking process.

Douglas Miller—jeans and all—plays not only at Marcellus

extraction, but plays his audience in the hope of securing

leases, getting frack pads constructed, getting the profits

rolling in before his board of directors decides to lift its

moratorium against how much of the company stock Ross can buy.

As Miller certainly knows in his bones, Ross has plans

for EXCO. Reported by Reuters, September 24th, 2012:

“Billionaire investor Wilbur Ross plans to take part in

China's first shale gas tender open to foreign investors by

teaming up Exco Resources (XCO.N), a U.S. natural gas firm he

holds a stake in, with a Chinese partner”(http://www.reuters.com/article/2012/09/25/us-finance-wlross-

idUSBRE88O00G20120925). In other words, Ross is hedging his bets

against Miller’s gambit in the Marcellus by committing EXCO to

a “partnership” with the Chinese to frack China. That way,

even if Miller’s Marcellus shale play goes belly up, Ross will

make good on his 12% investment.

Ross, one of the world's best-known distressed-asset

investors, traveled to Beijing this week to find a joint

venture partner for Exco, which has been struggling with

a sharp decline in natural gas prices.

Ross, who owns at least 12 percent of the company through

his investment arm WL Ross & Co, became an Exco board

director in March.

"I think we will have a joint venture partner. Bids are

due in (late) October and we hope to be organized by

then," the WL Ross CEO told Reuters at a conference in

Singapore, though he declined to name the companies he

was talking to.

Ross: "There have only been 63 wells drilled with that

technology, whereas there have been over 1 million drills

in the United States. So I think there will be quite a

few joint ventures between Chinese companies and American

companies that have the technology."(http://www.reuters.com/article/2012/09/25/us-finance-wlross-

idUSBRE88O00G20120925)

And that is what fracking for natural gas production is all

about: the guarantee of profits regardless life, environmental

integrity, or human suffering. China has among the worst

environmental records with respect to extraction of fossil

fuels in the world (http://mondediplo.com/blogs/china-s-out-of-control-pollution).

But Ross apparently cares no more about that than he

apparently cares about the Sago mine workers or their

families. Wilbur Ross is not only the “King of Bankruptcy,”

he’s Douglas Miller’s best friend and worst nightmare. That’s

a lot to try to forget.

Forgetting #3: EXCO in Sullivan County, Pennsylvania

Were I Douglas Miller, I might be dreaming in the King’s

English, but I’d be having nightmares in Chinese. Or—nearly,

but not quite. As was reported in February 2013, if Miller

could get those Marcellus wells producing, connected to

pipeline, the gas ready for transport, he might yet be able to

pull out some sort of deal. Enter the one investor who

controls more EXCO stock than Wilbur Ross, Howard Marks of the

investment firm underwriting Miller’s buyout bid: Oaktree

Capital Investments (http://www.oaktreecapital.com/default.aspx?

AspxAutoDetectCookieSupport=1).“In addition to Wilbur Ross, Howard

Marks has also built a position in XCO of 37 million shares,

representing 5% of his portfolio according to Insider Monkey…

In fact, put together Ross' 32 million shares and Marks' 37

million shares and that accounts for more than half of the

float of 132 million shares. In July 2011, XCO's CEO put

together a deal to take the company private at $18.50/share.

Although the deal fell apart, Oaktree was one of the funds

enlisted to facilitate the buyout.”(http://seekingalpha.com/article/1154751-exco-resources-wilbur-ross-howard-

marks-all-in-on-this-beaten-up-stock?source=email_rt_article_title).

Could Marks keep the Ross-Wolf outside the EXCO door?

Perhaps. This seems clearly in the interests of Oaktree—but

what it all depends on is not just the success of the shale

play, but a rise in the price of natural gas, and this, of

course, depends upon creating both domestic and global markets

for it. Hence it’s no surprise that EXCO secured a recent 50%

interest in TGGT, a midstream “gathering system” pipeline in

North Louisiana and East Texas

(http://www.excoresources.com/midstream.htm), partnered with

Harbinger Group, Inc. to the tune of 597.5 million paid to

EXCO, and whose aim is to create “a private oil and gas jointventure that will buy and operate Exco properties in Texas and

Louisiana” (http://finance.yahoo.com/news/harbinger-exco-form-oil-gas-

203633750.html). It’s also no surprise that Wilbur Ross is

romancing the Chinese. With so much pressure to make his

Marcellus Shale Play come to fruition, it’s no wonder that

MIller might be willing to cut whatever corners he can to get

production moving. Indeed, he already has. Welcome to EXCO’s

newest “play” on PA State Game Lands: The EXCO Elk Grove

Hunting Club, Pad 1-9H. On January 12th, 2013 a friend and I

drove out to this new site because I wanted to begin the

process of photo-documenting a site whose suitability for

fracking I consider particularly troubling. Located on tax-

payer supported state game lands, just up-hill from a village

dependent almost entirely on outdoor recreation, adjacent to

the West Branch of Fishing Creek—a major water source which

feeds directly into the Susquehanna River—and criss-crossed up

to a mountain top pad by “exceptional value” trout streams

with pretty names like Painter’s Run, it’s hard to imagine a

more vulnerable location.

What our drive revealed was EXCO’s first stab at trading

expediency for environmental protection. As the photographs I

sent to a DEP agent (who will remain anonymous) show, EXCO had

provided little or no Erosion and Sediment (E&S) prevention to

keep mud—potentially contaminated with diesel—from washing

into the West Branch of Fishing Creek. We called DEP, and I

followed up January 15th with email to the agent. The agent

responded with a request to send the photographs, which I did.

What followed was an investigation by the agent, and an

ensuing “notice of violation”:

Remarks: This inspection (beginning at approximately

13:00 on a warm sunny day follow a major thaw) was

prompted by a complaint that E&S controls were lacking on

the site (Complaint #294285). A previous inspection

observed that the narrow Game Commission Rd (Forest Road)

leading to the site crosses a number of headwater

tributaries vulnerable to sediment discharges. EXCO site

manager Pat Weaver has been adding rock to the road, and

installing check damn and silt rock in roadside ditches

in an attempt to protect Waters of the Commonwealth...I

observed violations of PA environmental regulations on

the impoundment site. Currently the HWD11 Rig and

associated equipment is being stored on the impoundment

site. The impoundment site is still under construction.

There are large soil piles that need to be moved and

modified, the site is not at final grade, there is no

surface rock or gravel in place. Since there has been

snow, freezing rain and rain in this location, the

surface of the impoundment area is very wet. Much of the

rig equipment is on containment. However, during my

inspection I identified a number of areas on the

impoundment site where pollutional substances were

released or spilled onto the ground. These were spread

across the Southwest quadrant of the impoundment where

much of the equipment was stored. In particular, I

observed a pollutional substance on the ground and

downslope in puddles. There was also petroleum product

traveling in a small flow of water from underneath

containment. I could not tell if this was emanating from

a leak in the containment or from underneath the

containment. There were also several other small,

strongly iridescent puddles…In particular the petroleum

product sheens were thick, iridescent, reformed when

split apart, and gave off a string chemical odor. The

other pollutional substance was thick, white to cream or

off-white in color, slippery to the touch, and also gave

off a strong chemical odor. During my inspection, staff

called for a vac truck and crew began laying down

absorbent pads…I was told that the rig is onsite awaiting

completion of the pad so that drilling can begin. It is

also worth noting that this gas drilling is located in,

and is surrounded by, Exceptional Value watersheds which

contain a number of streams that support natural trout

reproduction and include a Class A trout stream.

I have included almost all of the notice to insure its

accurate representation with respect to its “exceptional”

location, and in order to make the following observation as

clearly as possible: EXCO had not yet even begun to drill, and

had not my friend and I taken the time to drive out to Elk

Grove, had we not reported the absence of an E&S plan, had we

not followed up by emailing the DEP agent, goading the agent

to visit the site, these streams might have already been

polluted. Indeed, they likely already have. But given the

pressure to “Frack, baby! Frack! which must surely govern

Douglas Miller’s every waking minute, and given that EXCO was

not fined in this incident, and given that DEP is governed by

a profoundly corrupt Corbett administration whose head,

Michael Krancer (Solicitor for Exelon) has made it his mission

to insure the Susquehanna River is not listed as impaired, my

bet is that a few “exceptional value” trout streams don’t even

generate a ripple in Miller’s conscience, much less his

wolfish-BFF, Wilbur Ross’.

I drove out again to the site on January 18th, and this

time I hiked the two miles up to the frack pad. What’s clear

is that the Game Commission road—Forest Road—is wholly

unprepared to absorb the truck traffic pounding up and down

this small mountain. Any accident along this road could prove

disastrous, and as the photographs illustrate, the trout

streams cross under the road over and over. The EXCO Elk Grove

Hunting Club frack pad is an environmental and economic

catastrophe waiting to happen. Any accident that runs

downhill, down stream, down creek is going to destroy the

recreational economy of the village below as surely as the

Spring thaw will arrive. And this is just one of hundreds of

well pads operated by EXCO who depends on there being

virtually no oversight, no substantive fines, no meaningful

regulation, and no meaningful will on the part of the state to

decline permits for wells, compressor stations, dehydrators,

water withdrawals, or pipelines.

We might be tempted to appeal to Act 13 on this score,

and argue that the dollars the Village of Elk Grove will

receive from its impact fee will off-set if not remediate any

negative effects from the drilling. But this too would be

short-sighted and economically mercenary at best since there

will simply be no amount of money sufficient to restore these

streams once they have been polluted—particularly if that

pollution involves the well-documented highly carcinogenic

chemicals utilized in the fracking process—many of which

remain protected both in identification, quantity, and

interactive effects by the G.W. Bush administration’s

strengthening of proprietary rights laws in 2005. Who,

moreover, would risk eating fish from these streams given Act

13’s gag order which criminalizes physicians who reveal the

potential amount or mix of the fracking chemicals to patients

demonstrably made sick by those chemicals? Perhaps, the pro-

gas advocate might argue, the possibility of damage to these

exceptional streams is too abstract—it hasn’t happened yet.

Such, of course, was Ross’ reasoning about the Sago mine—until

the roof caved in and suffocated twelve human lives. Such is

obviously Exco’s reasoning at the double-frack site one minute

over a narrow bridge shared by school buses just outside of

Lairdesville, PA—one minute from an elementary school. Let’s

imagine a second interview with Wilbur Ross, this time after,

say, a Minuteman Residual Waste Tanker and a school bus filled

with thirteen elementary school children collide on icy two

lane Rt. 118 just before the bridge into Lairdesville and the

school parking lot. Let’s say that after hours of attempting

to extract and revive the children, one survives.

ABC Reporter

Would you call this a safe route for residual waste tanker

trucks to share with school buses?

WILBUR ROSS

I believed that the road was fundamentally safe.

BRIAN ROSS

You really do?

WILBUR ROSS

Yeah, I really do.

Perhaps Ross will offer the parents two million dollars as

compensation. But why should this be any more the cold comfort

than the paltry two million he offered to the families of

Sago? Would two million make the residents of Elk Grove feel

better once they’ve lost their livelihoods to an “inadvertent

return to surface”? That tanker accident, explosion, “return

to surface” hasn’t happened yet. But if it does, there will be

no impact fee to return the lives of dead children to their

parents; no impact fee that can restore the communities

divided and conquered by the landmen; no impact fee that can

eradicate the breast cancer associated with exposure to

Benzene—just one of at least 27 carcinogens in the fracking

cocktail. There is no impact fee that can return “exceptional”

status to Pennsylvania’s waterways once they’re saturated by

the carcinogens, biocides, surfactants, and potentially

radioactive flowback seeping from fissures in cement casings

estimated by the industry itself to leak 6% of the time—right

from the start—and 100% of the time eventually. But what EXCO

asks us to forget is all of this for the sake of calculating

the value of our communities, our environments, and our lives

in terms of two things, jobs and an effective bribe that’s

nothing more than a cheap imitation of a severance tax.

Forgetting #4: Mountains of Charlatans

The scale of charlatans deployed throughout the Marcellus

shale play is impressive and plentiful. It includes those,

like Douglas Miller and Wilbur Ross, whose power and influence

can buy them cover behind the promise of things like jobs,

sponsored community events, new school buildings, improved

roads, donations to charitable organizations—all investments

in our complicity, our indebtedness, and our silence.

Organizations like the Marcellus Shale Coalition and the notorious

anti-regulation hit squad Energy in Depth run interference for an

industry seemingly intent on ripping the last fossil fuel

dollar from under our feet even at the risk of converting the

state into a future super fund site. The ace of the Marcellus

shale play, of course, lay in the promise of jobs. If we can

be persuaded to simply forget the role Big Energy played in

the 2007 banking crisis, the ensuing Great Recession, and the

stock market plummet, we can be convinced that corporations

like EXCO have our best interests at heart, and that the

evidence is in the well-paying proliferation of employment in

the enormous array of directly related—say, well-pad

construction—or ancillary industries—say, motels and taverns—

benefitting from fracking—at least during its boom.

It’s arguable, however, that when the value of a human

being becomes commodified as the exchange value of her or his

labor—once that exchange value is internalized—workers can be

counted on to identify their own interests with that of their

bosses, well, their bosses’ profits. Such was brought home to

me recently in a particularly crude attack on a photograph I

had posted in an album some months ago on Facebook. The

photograph depicts a mobile home being removed after the end

of the resistance at Riverdale Mobile Home Community when the

land was sold to Aqua America for the construction of a water

withdrawal site for frack operations near Williamsport. I had

tagged the picture with a critical appraisal of Aqua America’s

motives, and for reasons unknown to me a passel of fracking

industry workers alighted on it, and began what became 204

comments worth of declamatory assault which included calling

me a “scum-sucking bitch” and offering me salacious

opportunities to join them in their frack water hot tubs,

among other things. Clearly threatened by anyone who’d dare to

criticize the industry that paid for their RVs, their rifles,

their cars and trucks, they splattered out industry talking

points about “clean,” “American,” and “abundant” in between a

blue streak of invectives, taunts, and slurs.

These men—reckless, misogynist, and arrogant—provided a

picture of life on a drill pad that should leave all of us

chastened and circumspect about a worldview common to the

fracking industry. But—and this is the moral of my long story—

we would be forgetful fools if we thought that there existed a

morally relevant difference between these workers and the

Douglas Millers (EXCO), the Howard Marks (Oaktree), the Aubrey

McClendons (Chesapeake), the Dan O. Dinges (Cabot), the

Jeffrey Venturas (Range Resources), the James T. Hacketts

(Anadarko), the Jack Williams (XTO), the Nick DeBenedictis

(Aqua America), the John Shermans (Inergy), or the Wilber

Rosses of the world—all white, all male very much like the

vast majority of shale field workers who identify with them—

and haven’t a chance in the world of being them. The

difference is strictly economic. Corporations like EXCO can

afford to buy all the government collusion, the department of

environmental protection acquiescence, fake community

meetings, and recession-weary workers they want. But when the

price is the conversion of our state forests, game lands,

neighborhoods—especially poor ones—our roads, and fields, and

rural ways of life into, as geo-science professor and frack-

industry consultant Terry Engelder puts it, sacrifice zones—it’s

not just that the price is too high. It’s that while guys like

RJ Mundrick can call us names, Wilbur Ross can effectively

kill us. While reckless and exhausted frack field truck

drivers might be guilty of illegally dumping flowback water

onto forest roads, Douglas Miller can insure nothing is done

about it. While a roughneck might harass a local waitress—even

get away with it—Dan Dinges can preside over the operations

that destroyed an entire community—Dimock—and be rewarded with

millions in salary and stock options.

Calling me a “scum-sucking bitch” is at least an honest

use of the first amendment, and it brings me back-round to

Friedrich Nietzsche and forgetting. To be complicit in the face

of ruin is, I think, to be complicit in the fact of ruin. It

is, in other words, not merely cowardice to do nothing when

the facts arrayed before you spell destruction, it is

something yet more loathsome. It is willful forgetting. Wilbur

Ross counts on us to forget Sago. EXCO counts on us to forget

its record of environmental violation in, for example,

Clearfield and now Sullivan County. Cabot counts on us to

forget Dimock. Range Resources counts on us to forget its

record of illegal dumps of frack fluids, its contamination of

drinking water wells with benzene, or the personal injury

lawsuit in Washington County for exposure to “toxic leaks,

spills, and air pollutants from Range's fracking operations in

Yeager Marcellus Shale, Pennsylvania”

(http://www.sourcewatch.org/index.php?title=Range_Resources).

The only response I received from DEP concerning the 403

variations on “scum-sucking bitch” was “Hi Wendy, I would

ignore it. I think that it's First Amendment flaming. They can

say what they want about DEP.” They can, and they can count on

DEP to forget, right along with the citizens of the

Commonwealth, that our water is being poisoned, our property

values tanked, our air polluted, and our communities

destroyed. This response was from the same DEP agent who

promised to keep an eye on EXCO at Elk Run. what the frackingindustry counts on us to forget the most is that there exists

at least one value higher than money, namely, life. Slickwater

horizontal hydraulic fracturing threatens life. And if we

forget that we’ll end up with neither.