Fine distinctions crucial in issues of transparency

Sept. 3, 2012
In the era of Twitter and Facebook, with information increasingly flashy and decreasingly illuminating, fine distinctions too often yield to the blur.

In the era of Twitter and Facebook, with information increasingly flashy and decreasingly illuminating, fine distinctions too often yield to the blur. The oil and gas industry still must keep pressing for clarification in two issues related to transparency. The public suspicion that everywhere stalks the oil and gas business feeds off the industry's native circumspection about its work and money. Political opponents know this. They gain leverage when oil and gas companies argue for the right to keep the secrets they must. They regularly exploit this vulnerability in their campaign to demonize hydraulic fracturing and stifle the well-completion technique with regulation.

To demands for disclosure of the chemicals used in frac fluids, the industry has responded with long lists of substances and descriptions, along with typical fluid compositions. The information should be sufficient to guide public decision-making. For detractors, however, it isn't enough. They won't be satisfied until companies disclose proprietary fluid formulations. "Aha!" they say when the industry invokes the very real competitive problem. "What are they trying to hide?" And suspicion about fracing grows. A similar dilemma ensnared the industry as it sought to keep regulation of foreign-payment disclosures under the Dodd-Frank financial reform law adequate for public decisions and commercially reasonable at the same time.

The Securities and Exchange Commission, which is implementing the 2010 law, on Aug. 22 said oil and gas companies must report payments over $100,000 to foreign governments project by project. Disclosure at that level will put some companies afoul of contracts with host-country governments. And it will shift competitive advantage strongly toward international operators not covered by the rule, especially national oil companies. Industry representatives did a good—if ultimately unsuccessful—job resisting project-level disclosure while supporting less-granular transparency. They consistently expressed support of disclosure requirements of the international Extractive Industries Transparency Initiative, for example. But that's a fine distinction. If past foreshadows future, the industry will receive groundless public scorn for opposing transparency anyway.

About the Author

Bob Tippee | Editor

Bob Tippee has been chief editor of Oil & Gas Journal since January 1999 and a member of the Journal staff since October 1977. Before joining the magazine, he worked as a reporter at the Tulsa World and served for four years as an officer in the US Air Force. A native of St. Louis, he holds a degree in journalism from the University of Tulsa.