As we follow what’s happening on the ground as indigenous people and others from all over join the Standing Rock Sioux in opposition to the Dakota Access Pipeline, it’s easy to forget to ask where the money’s coming from.
As it turns out (and I’m sorry to say), the largest chunks of the money behind DAPL come from California, in particular hedge funds in the San Francisco Bay Area.
Journaiist Will Parrish, writing for the North Bay Bohemian, digs up a whole lot of surprises about the “Bay Area investment [that] fuels America’s tracking boom — and the pipeline protests” in this investigative report, “The Spigot.” Here’s the link:
He begins with “SPO Partners, the North Bay’s largest hedge fund.”
The $5.2 billion investment firm is among the country’s leading financial backers of oil and natural gas fracking. Its web of financial connections tie it directly to the country’s most controversial infrastructure project—the $3.7 billion, 1,134-mile Dakota Access Pipeline—and even Republican Party presidential candidate Donald Trump’s economic policy team.
SPO Partners is the largest investor in Oasis Petroleum of Houston, Texas, which controls more than 400,000 acres within the Bakken and Three Forks oil basins of North Dakota and Montana. Oasis is working to complete a 19-mile oil transmission system from its North Dakota petroleum handling facility to the Dakota Access Pipeline, thus positioning it to supply roughly one-ninth of the pipeline’s estimated 470,000 barrels of daily crude oil deliveries, records with the North Dakota Public Service Commission show.
And who else has invested in Oasis Petroleum?
Wall Street tycoon John Paulson, a key member of Donald Trump’s economic policy council, is also a major investor in Oasis Petroleum. According to Oasis Petroleum’s most recent financial filings, SPO Partners owns the largest share of the company, while Paulson’s hedge fund owns the fourth largest. Trump himself has invested between $3 million and $15 million in Paulson’s hedge funds, a 2015 federal campaign disclosure form reveals, raising the possibility that the Republican candidate is also an investor in Oasis Petroleum.
But there’s more money flowing to the Dakotas, in what Parrish describes as “a river of investment capital flowing from the San Francisco Bay Area to the Dakota Access Pipeline and the associated fracking boom.”
These investors include other hedge and pension funds, as well as San Francisco–based Wells Fargo. The bank was the largest U.S.-based financier of oil and gas production and infrastructure as of 2014, according to a presentation given by Wells Fargo executive vice president Mike Johnson.
Another reason to close any accounts you may have with Wells Fargo? But 37 other banks have directly financed DAPL. (I’ll list some of them below.) Parrish explains the process of fracking, and notes that in 2014 the U.S. became the world’s biggest producer of oil — passing Saudi Arabia — and passed Russia as the biggest producer of both oil and gas. (My bold.)
Large financial institutions have actively cultivated the North American oil boom. A 2012 Citibank report called “Energy 2020: North America, the New Middle East” notes that “the economic consequences” of the oil and gas industry’s “supply and demand revolution are potentially extraordinary,” and touts that “infrastructure investments ease the transport bottlenecks in bringing supply to demand centers.”
It also sounds a cautionary note: “The only thing that can stop this is politics—environmentalists getting the upper hand over supply in the U.S., for instance; or First Nations impeding pipeline expansion in Canada.”
National and global efforts to cap and reduce greenhouse gas emissions include treaties, taxes and investments in alternative-energy sources and non-automobile transportation. But infrastructure investments that require large, long-term commitments of capital are also crucial indicators of national intent, which is why President Barack Obama choose to reject the Keystone XL tar sands oil pipeline on the eve of the 2015 Paris climate summit involving 191 of the world’s nations.
By completing the Dakota Access Pipeline, one of the longest oil pipelines in North America, the United States would signal to investors its intention to maintain high oil production—and, by extension, high greenhouse gas emission levels. Construction of the pipeline would lead to corresponding increases in fracking, which tend to produce greater emissions than conventional oil.
So banks oppose political efforts to keep fossil fuels — and the money they will make from them — in the ground.
According to a 2015 estimate by the Wall Street Journal, banks made about $1 trillion in investments in the energy industry worldwide between 2005 and 2014. In that time, Wells Fargo had seized its position as the top U.S.-based oil and gas banker, with more than $40 billion in investments, according to information published by the data firm Thomson Reuters.
It turns out that Wells Fargo hosts “the annual Wells Fargo West Coast Energy Conference in San Francisco, which brings together leading investors and professionals from across the oil, gas and coal sectors, as well as some who are involved in renewables.“
And there’s more….
The San Francisco–based banking giant has loaned roughly $467 million to the pipeline’s builder, Energy Transfer Partners (ETP), and its family of companies; ETP is among the county’s largest pipeline operators, with a spider-web-like network of other pipelines throughout the Gulf Coast and southwest.
Wells Fargo is more than just a financier of the project. It also acts as ETP’s administrative loan agent, meaning it performs the record-keeping associated with all the company’s loans, handles the interest and principal payments made in connection with those loans, and monitors their ongoing administration. In other words, all bank financing ETP receives passes through Wells Fargo.
There are smaller companies from the Bay Area chipping in, too (including, I’m sorry to say, Hall Capital Partners, who own the Napa Valley winery not all that far from me where HC and Bill have come for fundraisers. Kathryn Hall also served as Ambassador to Austria during Bill Clinton’s presidency. Could this be why Hillary has remained silent about DAPL?)
Others include BlackRock Fund Advisors, an SF-based hedge fund, Farallon Capital Management, Warburg Pincus, Hellman & Friedman, and Think Investments.
Unfortunately, the California Public Employees Retirement System, CalPERS, is invested in ETP — and the California State Teachers’ Retirement System, CalSTRS, has also invested in fossil fuels, though it’s not clear in the article as to whether it also has a stake in ETP.
But there is some good news coming from California, too.
While California investment capital has flowed to the pipeline, the state has also been a well-spring of resistance to it.
“There have been more people from California out at Standing Rock than from almost anywhere else,” says Sierra Alexander, a Northern Cheyenne tribal member who lives in Willits.
And California indigenous people have gained experience fighting Warren Buffett’s company, Berkshire Hathaway, in its running of hydroelectric dams that disrupt the running of salmon. Now they’re working together with the people at Standing Rock.
The author’s point is, however, the importance of looking at where the money is coming from. The investors are the people behind the scenes — they need to be exposed.
I heartily encourage you to read the article! I’ve only synopsized a portion of it. The author, Will Parrish, has done an excellent job of following the money.
I’ll add a complete list of the banks involved in a comment below.