In the USA...
February 3, 2013
Broad Powers Seen for Obama in Cyberstrikes
By DAVID E. SANGER and THOM SHANKER
WASHINGTON — A secret legal review on the use of America’s growing arsenal of cyberweapons has concluded that President Obama has the broad power to order a pre-emptive strike if the United States detects credible evidence of a major digital attack looming from abroad, according to officials involved in the review.
That decision is among several reached in recent months as the administration moves, in the next few weeks, to approve the nation’s first rules for how the military can defend, or retaliate, against a major cyberattack. New policies will also govern how the intelligence agencies can carry out searches of faraway computer networks for signs of potential attacks on the United States and, if the president approves, attack adversaries by injecting them with destructive code — even if there is no declared war.
The rules will be highly classified, just as those governing drone strikes have been closely held. John O. Brennan, Mr. Obama’s chief counterterrorism adviser and his nominee to run the Central Intelligence Agency, played a central role in developing the administration’s policies regarding both drones and cyberwarfare, the two newest and most politically sensitive weapons in the American arsenal.
Cyberweaponry is the newest and perhaps most complex arms race under way. The Pentagon has created a new Cyber Command, and computer network warfare is one of the few parts of the military budget that is expected to grow. Officials said that the new cyberpolicies had been guided by a decade of evolution in counterterrorism policy, particularly on the division of authority between the military and the intelligence agencies in deploying cyberweapons. Officials spoke on condition of anonymity because they were not authorized to talk on the record.
Under current rules, the military can openly carry out counterterrorism missions in nations where the United States operates under the rules of war, like Afghanistan. But the intelligence agencies have the authority to carry out clandestine drone strikes and commando raids in places like Pakistan and Yemen, which are not declared war zones. The results have provoked wide protests.
Mr. Obama is known to have approved the use of cyberweapons only once, early in his presidency, when he ordered an escalating series of cyberattacks against Iran’s nuclear enrichment facilities. The operation was code-named Olympic Games, and while it began inside the Pentagon under President George W. Bush, it was quickly taken over by the National Security Agency, the largest of the intelligence agencies, under the president’s authority to conduct covert action.
As the process of defining the rules of engagement began more than a year ago, one senior administration official emphasized that the United States had restrained its use of cyberweapons. “There are levels of cyberwarfare that are far more aggressive than anything that has been used or recommended to be done,” the official said.
The attacks on Iran illustrated that a nation’s infrastructure can be destroyed without bombing it or sending in saboteurs.
While many potential targets are military, a country’s power grids, financial systems and communications networks can also be crippled. Even more complex, nonstate actors, like terrorists or criminal groups, can mount attacks, and it is often difficult to tell who is responsible. Some critics have said the cyberthreat is being exaggerated by contractors and consultants who see billions in potential earnings.
One senior American official said that officials quickly determined that the cyberweapons were so powerful that — like nuclear weapons — they should be unleashed only on the direct orders of the commander in chief.
A possible exception would be in cases of narrowly targeted tactical strikes by the military, like turning off an air defense system during a conventional strike against an adversary.
“There are very, very few instances in cyberoperations in which the decision will be made at a level below the president,” the official said. That means the administration has ruled out the use of “automatic” retaliation if a cyberattack on America’s infrastructure is detected, even if the virus is traveling at network speeds.
While the rules have been in development for more than two years, they are coming out at a time of greatly increased cyberattacks on American companies and critical infrastructure. The Department of Homeland Security recently announced that an American power station, which it did not name, was crippled for weeks by cyberattacks. The New York Times reported last week that it had been struck, for more than four months, by a cyberattack emanating from China. The Wall Street Journal and The Washington Post have reported similar attacks on their systems.
“While this is all described in neutral terms — what are we going to do about cyberattacks — the underlying question is, ‘What are we going to do about China?’ ” said Richard Falkenrath, a senior fellow at the Council on Foreign Relations. “There’s a lot of signaling going on between the two countries on this subject.”
International law allows any nation to defend itself from threats, and the United States has applied that concept to conduct pre-emptive attacks.
Pre-emption always has been a disputed legal concept. Most recently Mr. Bush made it a central justification for the invasion of Iraq in 2003, based on faulty intelligence about that country’s weapons of mass destruction. Pre-emption in the context of cyberwar raises a potentially bigger quandary, because a country hit by a pre-emptive cyberstrike could easily claim that it was innocent, undermining the justification for the attack. “It would be very hard to provide evidence to the world that you hit some deadly dangerous computer code,” one senior official said.
The implications of pre-emption in cyberwar were specifically analyzed at length in writing the new rules. One major issue involved in the administration’s review, according to one official involved, was defining “what constitutes reasonable and proportionate force” in halting or retaliating against a cyberattack.
During the attacks on Iran’s facilities, which the United States never acknowledged, Mr. Obama insisted that cyberweapons be targeted narrowly, so that they did not affect hospitals or power supplies. Mr. Obama frequently voiced concerns that America’s use of cyberweapons could be used by others as justification for attacks on the United States. The American effort was exposed when the cyberweapon leaked out of the Iranian enrichment center that was attacked, and the “Stuxnet” code replicated millions of times on the Internet.
Under the new guidelines, the Pentagon would not be involved in defending against ordinary cyberattacks on American companies or individuals, even though it has the largest array of cybertools. Domestically, that responsibility falls to the Department of Homeland Security, and investigations of cyberattacks or theft are carried out by the F.B.I.
But the military, barred from actions within the United States without a presidential order, would become involved in cases of a major cyberattack within the United States. To maintain ambiguity in an adversary’s mind, officials have kept secret what that threshold would be; so far, Defense Secretary Leon E. Panetta has only described the “red line” in the vaguest of terms — as a “cyber 9/11.”
The Obama administration has urged stronger firewalls and other systems to provide a first line of defense, and then “resiliency” in the face of cyberattacks. It failed to get Congress to pass cybersecurity legislation that would have allowed the government to mandate standards.
January 27, 2013
Pentagon Expanding Cybersecurity Force to Protect Networks Against Attacks
By ELISABETH BUMILLER
WASHINGTON — The Pentagon is moving toward a major expansion of its cybersecurity force to counter increasing attacks on the nation’s computer networks, as well as to expand offensive computer operations on foreign adversaries, defense officials said Sunday.
The expansion would increase the Defense Department’s Cyber Command by more than 4,000 people, up from the current 900, an American official said. Defense officials acknowledged that a formidable challenge in the growth of the command would be finding, training and holding onto such a large number of qualified people.
The Pentagon “is constantly looking to recruit, train and retain world class cyberpersonnel,” a defense official said Sunday.
“The threat is real and we need to react to it,” said William J. Lynn III, a former deputy defense secretary who worked on the Pentagon’s cybersecurity strategy.
As part of the expansion, officials said the Pentagon was planning three different forces under Cyber Command: “national mission forces” to protect computer systems that support the nation’s power grid and critical infrastructure; “combat mission forces” to plan and execute attacks on adversaries; and “cyber protection forces” to secure the Pentagon’s computer systems.
The move, part of a push by Defense Secretary Leon E. Panetta to bolster the Pentagon’s cyberoperations, was first reported on The Washington Post’s Web site.
In October, Mr. Panetta warned in dire terms that the United States was facing the possibility of a “cyber-Pearl Harbor” and was increasingly vulnerable to foreign computer hackers who could dismantle the nation’s power grid, transportation system, financial network and government. He said that “an aggressor nation” or extremist group could cause a national catastrophe, and that he was reacting to increasing assertiveness and technological advances by the nation’s adversaries, which officials identified as China, Russia, Iran and militant groups.
Defense officials said that Mr. Panetta was particularly concerned about a computer attack last August on the state oil company Saudi Aramco, which infected and made useless more than 30,000 computers. In October, American intelligence officials said they were increasingly convinced that the Saudi attacks originated in Iran. They described an emerging shadow war of attacks and counterattacks already under way between the United States and Iran in cyberspace.
Among American officials, suspicion has focused on the “cybercorps” created in 2011 by Iran’s military, partly in response to American and Israeli cyberattacks on the Iranian nuclear enrichment plan at Natanz. There is no hard evidence, however, that the attacks were sanctioned by the Iranian government.
The attacks emanating from Iran have inflicted only modest damage. Iran’s cyberwarfare capabilities are weaker than those of China and Russia, which intelligence officials believe are the sources of a significant number of attacks on American companies and government agencies.
The expansion of Cyber Command comes as the Pentagon is making cuts elsewhere, including in the size of its conventional armed forces.
Al Gore: Democracy has been ‘hacked’ by big business
By The Guardian
Sunday, February 3, 2013 11:51 EST
US democracy has been “hacked” by big business and needs to be reclaimed using the power of the internet to hold politicians to account, according to former US vice-president Al Gore.
He gave a blunt assessment of the extent to which private companies influence decision making in the US. “American politics has fallen into a state of disrepair,” Gore told the BBC’s Andrew Marr Show in an interview to mark the publication of his new book The Future.
He added: “It can be fixed, but we need to recognise that our democracy has been hacked … It has been taken over … and is being operated for purposes other than those for which it was intended.”
In the interview, Gore alluded to a 2010 US supreme court decision that banned restrictions on political donations by corporations in the name of free speech.
He agreed that US politics has become more divisive. “Certainly the level of partisanship and vitriol has been growing,” Gore said. “And I think it is directly connected to the influence of big money – anonymous contributors, corporations pretending to be people and pursuing their business plans in the guise of politics and encouraging many politicians to say things and do things that would not have been seen in the best interests of the public in years past.”
Gore said his own political ambitions had switched from trying to gain elected office to influencing events from the outside.
He said: “I think you can change [politics] from the outside as well. I think a grassroots movement to demand that politics be opened up, and the role of money be diminished, is really more needed now than anything else.”
Gore said the internet and the revolution in the way we communicate provided a means to rekindle democracy and purge it of corporate influence. His new book identifies global electronic communications as one of six drivers of change.
He told the BBC that it had the potential to be a force for good. “For a variety of reasons democracy has not flourished in the age of television, but the internet changes that, and once again empowers individuals to take part in a robust give-and-take that gives rise to a greater appreciation for the role of reason and facts and logic,” he said.
Gore added: “We see individual bloggers having an impact on policy debates. We see factchecking taking place on the internet that actually does change the way issues are dealt with. Television is still the dominant medium, but particularly with young people the internet is growing by leaps and bounds and I think soon will justify the optimism that individuals empowered by this new communications infrastructure will be able to reclaim their birthrights as free citizens and redeem the promise of representative democracy.”
Gore’s 2006 hit film and book, An Inconvenient Truth, did much to raise awareness of the dangers of climate change.
On the Marr show, stand-in presenter Sian Williams asked Gore to defend the sale last month of his Current TV channel to al-Jazeera – the satellite TV network partly owned by Qatar, a country with the largest per capita carbon footprint in the world.
Gore said that unlike US news networks, al-Jazeera does not carry extensive advertisements from oil companies. “Its climate coverage has been outstanding, and I hope that other networks will be encouraged by the addition of al-Jazeera to the television dial to upgrade their own climate reporting,” Gore said.
guardian.co.uk © Guardian News and Media 2013
Harry Reid endorses universal background checks for gun purchases
By Eric W. Dolan
Sunday, February 3, 2013 10:46 EST
Senate Majority Leader Harry Reid (D-NV) said Sunday he supported requiring background checks for all gun purchases, but refused to endorse other proposals to curb gun violence.
Licensed gun dealers are required to run federal background checks, but private sellers at gun shows and other venues do not have the same requirement, an issue known as the gun show loophole.
“I think everyone acknowledges we should do something with background checks… We need to increase that,” Reid acknowledged on ABC’s This Week with George Stephanopoulos. “I’m still a supporter of the Second Amendment, but you can do things like that.”
The Democratic leader, however, refused to support the proposed assault weapons ban or restrictions on high-capacity magazines. Reid has voted against similar legislation in the past. He told Stephanopoulos he still needed to review the current gun control proposals.
“Let’s not limit this conversation to only guns,” he added. “There are other issues, very important this issue — mental health. I mean, gee whiz. We’ve gotta do something on that. That’s certainly the truth.”
At a breakfast meeting sponsored by the Christian Science Monitor last week, NRA president David Keene noted the organization had a “relatively friendly relationship with” Reid. Keene said that the senator was “under incredible pressure” over the issue of gun control and it was “anybody’s guess” on whether he would support the current proposals.
February 3, 2013
From State to State, Varied Responses to the Issue of Gun Violence
By MICHAEL COOPER
Although the debate over curbing gun violence after the massacre in Newtown, Conn., is breaking down mostly along partisan lines in the nation’s statehouses — with several Democratic governors calling for stricter gun laws and most Republicans urging tighter security or revamped mental health policies — the handful of exceptions show the political and geographical complexities of the issue.
More than a dozen governors invoked the Newtown school shooting in their State of the State addresses in recent weeks, and most have weighed in on the shooting in other forums.
Several Democratic governors, mainly along the East Coast, are calling for banning some semiautomatic weapons or large-capacity magazines, while several Republican governors have pressed for other measures, noting their opposition to more restrictive gun laws.
But the state-level debate has not always followed party lines.
Gov. Chris Christie of New Jersey, a Republican who is mentioned as a possible presidential candidate, recently noted that he had long supported his state’s laws, which he described as “some of the toughest gun-control measures in place in the country.”
Gov. Mark Dayton of Minnesota, a Democrat, was quoted after the shooting as saying that his “reading of the Constitution is that it provides a complete permission for any law-abiding citizen to possess firearms, whichever ones he or she chooses, and the ammunition to go with that.”
Another Democrat, Gov. Mike Beebe of Arkansas, is likely to sign a bill working its way through the Republican-controlled legislature that would allow people to take concealed handguns into churches that choose to allow them.
But a more traditional party-line approach is being taken elsewhere. Democratic governors in Colorado, Connecticut, Delaware, Maryland and Massachusetts are among those calling for stricter gun laws, and Gov. Andrew M. Cuomo of New York has already won the passage of sweeping gun measures since the Newtown shooting.
“Who can watch the sad images of the last several weeks, who can see the pictures of those young faces, and honestly say that we are doing enough?” Gov. Martin O’Malley of Maryland, a Democrat, asked in his State of the State address last week. Mr. O’Malley urged state lawmakers to ban the sale of “military-style assault weapons,” require licenses for buying handguns, bolster mental health treatment and information sharing, and spend more on school security.
Gov. Mike Pence of Indiana, a Republican who took office this year, said in his speech that he would seek additional money in the state budget for “a comprehensive school safety review,” but he made it clear that he would oppose limiting access to guns.
“All of us were heartbroken after every parent’s worst nightmare unfolded in Newtown, Conn.,” said Mr. Pence, a former congressman. “While others have rushed to the well-worn arguments over gun control, Hoosiers know this is not about access to firearms. It is about access to schools. Hoosiers have responsibilities to protect our kids, and Hoosiers have rights. We will protect our kids, and we will protect our rights.”
On the federal level, the Obama administration’s push for stronger gun laws faces tough opposition in the Republican-controlled House and garnered a muted reaction even from the Senate’s top Democrat.
Senator Harry Reid of Nevada, in an appearance Sunday on ABC’s “This Week,” said, “I want to get something done on guns.” But on specific measures, his language was guarded.
He noted that he had opposed the 1994 ban on assault weapons but would consider one now. On restricting high-capacity magazines, he said, “I think that’s something we definitely have to take a look at.” Regarding universal background checks, he said, “Yeah, we need to increase that.”
But as a gun owner himself, Mr. Reid said he would not allow the influence of the National Rifle Association to prevent the Senate from acting.
As a polarized Washington debates President Obama’s proposals, the state-level debate is also unfolding at an unusually partisan moment, with more states controlled by just one party than at any time in the past six decades. Republicans have the upper hand, holding the governor’s office and legislative majorities in 24 states, while the Democrats control both the executive and legislative branches in just 13 states. The stark divide can be seen in many of the bills being weighed in states this year.
In Tennessee, which is controlled by Republicans, lawmakers have introduced bills that would allow school employees to carry guns, let people keep guns and ammunition locked in their cars in public and private parking lots, and bar state money from being used to enforce any new federal law or executive order that “imposes restrictions on citizens who lawfully possess or carry firearms in this state.”
In heavily Democratic Massachusetts, Gov. Deval Patrick is calling for legislation to ban magazines containing more than seven rounds, require background checks for private gun sales and limit people to buying one gun a month. In his address to lawmakers, he said the proposals would “help stop tragedies like Newtown or the recent shooting of a 13-year-old boy in Roxbury on his way to choir practice.”
Most Republicans said they had drawn other lessons from the Newtown shooting. Gov. Jan Brewer of Arizona, a Republican, said in her speech that “the massacre at Sandy Hook Elementary was unimaginable” but rejected calls for stricter gun laws.
“Arizonans have reduced crime by punishing criminals, and not by infringing on the rights of law-abiding gun owners,” she said.
Ms. Brewer focused instead on school safety, saying her budget would call for more money for school resource officers to provide security. “Our job now is to take common-sense steps that lessen the likelihood of a similar tragedy striking Arizona — while resisting the urge to turn a school into a fortress,” she said.
Gov. C. L. Otter of Idaho alluded to the Newtown shooting in his address as he called for building a 579-bed mental health facility at a prison complex south of Boise.
“We all saw just a few weeks ago the terrible impact on a community and a nation when mental illness leads to tragedy,” Mr. Otter said, echoing a commonly held belief, although the authorities have not described the mental state of Adam Lanza, the Newtown gunman, or said if he suffered from mental illness. Mr. Otter also ordered a review of school safety.
Some Democratic governors have said they are holding out hope for a federal law. Gov. Peter Shumlin of Vermont, the chairman of the Democratic Governors Association who was endorsed last year by the National Rifle Association Political Victory Fund, has opposed taking action on gun laws at the state level but has said he supports Mr. Obama’s recommendations.
And Gov. Dannel P. Malloy of Connecticut, a Democrat who has said he would pursue measures on gun control, school safety and mental health in response to the shooting that killed 20 first graders and six educators in his state, said those issues must be addressed at the national level. “As long as weapons continue to travel up and down I-95,” he told lawmakers, “what is available for sale in Florida or Virginia can have devastating consequences here in Connecticut.”
February 3, 2013
Tax Loopholes May Be Next, Obama Says
By MARK LANDLER
WASHINGTON — President Obama said in a televised interview on Sunday that he could foresee a budget deal in Congress that did not include further increases in tax rates but instead focused on eliminating loopholes and deductions.
Mr. Obama has generally insisted that all revenue options, including higher rates, should be considered to slow the rise of federal budget deficits. But in the interview with Scott Pelley of CBS News, he said, “I don’t think the issue right now is raising rates.”
Having just raised rates on people earning more than $450,000 a year, Mr. Obama said the focus now should be on targeted spending cuts and changes to the tax code, which he said favored the wealthy.
“Can we close some loopholes and deductions that folks who are well connected and have a lot of accountants and lawyers can take advantage of so they end up paying lower rates than a bus driver or a cop?” Mr. Obama said in the 10-minute interview in the White House.
“If you combine those things together,” Mr. Obama said, a budget deal could reduce the deficit “without raising rates again.”
Still, Mr. Obama did not rule out tax increases, saying, “There’s no doubt we need additional revenue.”
Republicans, having acquiesced to the tax increase in the year-end budget deal, are now insisting that further deficit reduction must come through spending cuts.
Budget experts say that to raise substantial revenue through loopholes and deductions, lawmakers would have to focus on deductions on mortgage interest payments and charitable donations.
Mr. Obama said the continuing fiscal crisis in Washington was to blame for the contraction in the nation’s economy in the last quarter of 2012.
February 3, 2013
Vast Oil Reserve May Now Be Within Reach, and Battle Heats Up
By NORIMITSU ONISHI
FELLOWS, Calif. — Secure in this state’s history and mythology, the venerable Midway-Sunset oil field near here keeps producing crude more than a century after Southern California’s oil boom. Many of its bobbing pump jacks are relatively short, a telltale sign of the shallowness of the wells and the ease of extracting their prize.
But away from this forest of pump jacks on a flat, brown landscape, a road snakes up into nearby hills that are largely untouched — save for a handful of exploratory wells pumping oil from depths many times those of Midway-Sunset’s. These wells are tapping crude directly from what is called the Monterey Shale, which could represent the future of California’s oil industry — and a potential arena for conflict between drillers and the state’s powerful environmental interests.
At one such exploratory site, tall pump jacks stood above two active wells on a small patch of federal land. For now, the operator, Venoco, has been storing the oil in two large tanks. But construction is scheduled to start soon on pipelines, and more wells are planned.
Comprising two-thirds of the United States’s total estimated shale oil reserves and covering 1,750 square miles from Southern to Central California, the Monterey Shale could turn California into the nation’s top oil-producing state and yield the kind of riches that far smaller shale oil deposits have showered on North Dakota and Texas.
For decades, oilmen have been unable to extricate the Monterey Shale’s crude because of its complex geological formation, which makes extraction quite expensive. But as the oil industry’s technological advances succeed in unlocking oil from increasingly difficult locations, there is heady talk that California could be in store for a new oil boom.
Established companies are expanding into the Monterey Shale, while newcomers are opening offices in Bakersfield, the capital of California’s oil industry, about 40 miles east of here. With oil prices remaining high, landmen are buying up leases on federal land, sometimes bidding more than a thousand dollars an acre in auctions that used to fetch the minimum of $2.
“We’ve seen a significant increase in the last three to five years in the price paid from our sales,” said Gabriel Garcia, assistant field manager at the federal Bureau of Land Management’s office in Bakersfield. “Some of that has to do with speculation on new technologies, and some of that has to do with the high price of oil.”
The Monterey Shale has also galvanized California’s powerful environmental groups. They are pressing the state to strictly regulate hydraulic fracturing, or fracking, the drilling technique that has fueled the shale oil and gas boom elsewhere but has drawn opposition from many environmentalists. In December, the State Department of Conservation released a draft of fracking rules, the first step in a yearlong process to establish regulations.
Severin Borenstein, a co-director of the Energy Institute at the Haas School of Business at the University of California, Berkeley, said technological advances and the high price of oil were driving interest in the Monterey Shale, just as elsewhere.
“Everyone has known that there is shale oil not just in the Monterey Shale but also in North Dakota and Wyoming and all over the country,” he said. “Back in the ‘70s, there were discussions that there’s all this oil and all we’ve got to do is get it. Now 40 years later, the technologies have become available to actually get it in a cost-effective way.”
While oil is found less than 2,000 feet below the surface in fields like Midway-Sunset, companies must pump down to between 6,000 and 15,000 to tap shale oil in the Monterey.
Though production has been declining for years, California remains the country’s fourth-largest oil-producing state, after Texas, North Dakota and Alaska. So far, little of the crude is derived from the Monterey Shale, whose untapped deposits are estimated at 15.4 billion barrels, or more than four times the reserves of the Bakken Shale in North Dakota, according to the United States Energy Information Administration.
“There are billions of barrels of oil buried in the Monterey Shale, and as far as I know, nobody’s been able to find it yet,” said Neil Ormond, the president of Petroleum Land Management, a company based in Clovis, Calif. “But I think there’s going to be more people looking for it. You can’t let a few dry holes discourage the whole thing, because if you find oil, you make money.”
A landman, Mr. Ormond bought leases on more than 10,000 acres of federal land in an auction organized by the Bureau of Land Management. Landmen usually work for oil companies, acquiring leases that allow them to explore and drill for oil.
Landmen have also been increasingly approaching individual landowners and buying mineral rights, though these private transactions are hard to track, said Tim Kustic, California’s state oil and gas supervisor.
“That’s an early precursor to an increase in exploration and drilling activity,” Mr. Kustic said.
The two companies with the biggest stakes in the Monterey Shale, Occidental Petroleum and Venoco, are increasing their exploration efforts, including a joint three-dimensional seismic survey of one area.
Companies with experience exploiting the Bakken Shale, including the New York-based Hess, have recently set up operations in Bakersfield, too. Jon Pepper, a spokesman for Hess, said it was “too early to talk in any definitive way” about the company’s plans in the Monterey Shale.
But the oil companies’ plans for the Monterey Shale are already drawing increasing scrutiny from environmental groups. Though oil companies have engaged in fracking in California for decades, the process was only loosely monitored by state regulators.
The Monterey Shale’s geological formation will require companies to engage in more intensive fracking and deeper, horizontal drilling, a dangerous prospect in a seismically active region like California, environmental groups say.
Environmental groups, including the Sierra Club and the Center for Biological Diversity, are suing the Bureau of Land Management and the Department of Conservation to prevent the opening up of further land to oil exploration and to enforce stricter environmental practices.
“If and when the oil companies figure out how to exploit that shale oil, California could be transformed almost overnight,” said Kassie Siegel, a lawyer at the Center for Biological Diversity. “Fracking poisons the air we breathe and the water we drink. It is one of the most, if not the most, important environmental issue in California.”
Tupper Hull, a spokesman for the Western States Petroleum Association, an industry lobbying group, said oil companies had safely used fracking for decades in California, mostly combined with traditional vertical drilling.
“Nobody can point to any incident or impact that has taken place,” Mr. Hull said.
After the California Department of Conservation released its draft of fracking regulations, environmental groups criticized a clause that would allow companies not to disclose the chemicals used in fracking to protect trade secrets.
Jason Marshall, chief deputy director of the Department of Conservation, said companies seeking to withhold such information would have to adhere to the state’s trade secret protection laws.
“The baseline assumption of these regulations is the disclosure of what’s in the fluids,” he said. “It should be the exception when someone is trying to exercise a trade secret protection.”
January 31, 2013
North Dakota Went Boom
By CHIP BROWN
Long before the full frenzy of the boom, you could see its harbingers at the Mountrail County courthouse in Stanley, N.D. Geologists had pored over core samples and log signatures and had made their educated guesses, and now it was the hour of the “landmen,” the men and women whose job was to dig through courthouse books for the often-tangled history of mineral title and surface rights.
Apart from a few fanatics who sometimes turned up at midnight, the landmen would begin arriving at the courthouse around 6 a.m. In the dead of winter, it would still be dark and often 20 or 30 below zero, and because the courthouse didn’t open until 7:30, the landmen would leave their briefcases outside the entrance, on the steps, in the order they arrived. And then they would go back to their cars and trucks to wait with the engines running, their faces wreathed in coffee steam. Sometimes there were more than 20 briefcases filed on the courthouse steps. The former landman who told me this — Brent Brannan, now director of the North Dakota Oil and Gas Research Program — said he sometimes thought he could see the whole boom in that one image, briefcases waiting for the day to start, and it killed him a little that he never took a picture.
For many years North Dakota has been a frontier — not the classic 19th-century kind based on American avarice and the lure of opportunity in unsettled lands, but the kind that comes afterward, when a place has been stripped bare or just forgotten because it was a hard garden that no one wanted too much to begin with, and now it has reverted to the wilderness that widens around dying towns. In a way, of course, this kind of frontier is as much a state of mind as an actual place, a melancholy mood you can’t shake as you drive all day in a raw spring rain with nothing but fence posts and featureless cattle range for company thinking, Is this all there is? until finally you get out at some windswept intersection and gratefully fall on the fellowship of a dog-faced bar with a jukebox of songs about people on their way to somewhere else.
All of which may explain the shock of coming around a bend and suddenly finding a derrick illuminated at night, or a gas flare framed by stars, or dozens of neatly ranked trailers in a “man camp,” or a vast yard of drill pipe, or a herd of water trucks, or tracts of almost-finished single-family homes with Tyvek paper flapping in the wind of what just yesterday was a wheat field. North Dakota has had oil booms before but never one so big, never one that rivaled the land rush precipitated more than a century ago by the transcontinental railroads, never one that so radically changed the subtext of the Dakota frontier from the Bitter Past That Was to the Better Future That May Yet Be.
It’s hard to think of what oil hasn’t done to life in the small communities of western North Dakota, good and bad. It has minted millionaires, paid off mortgages, created businesses; it has raised rents, stressed roads, vexed planners and overwhelmed schools; it has polluted streams, spoiled fields and boosted crime. It has confounded kids running lemonade stands: 50 cents a cup but your customer has only hundreds in his payday wallet. Oil has financed multimillion-dollar recreation centers and new hospital wings. It has fitted highways with passing lanes and rumble strips. It has forced McDonald’s to offer bonuses and brought job seekers from all over the country — truck drivers, frack hands, pipe fitters, teachers, manicurists, strippers. It has ginned up an unreleased reality show called “Boomtown Girls,” which follows the lives of “five bold and brave sisters” in the formerly drowsy farm center of Williston, N.D. Williston, whose population has tripled in the past 10 years, lies in the middle of the 150,000-square-mile Williston Basin, a depression in the crust of the earth that geologists now believe contains one of the largest oil fields in the world.
In the fall of 2011 in Crosby, N.D., Continental Resources, the oil company with the most acreage leased in the basin, erected a self-congratulatory granite monument celebrating its work in the so-called Bakken Formation, the Williston Basin rocks that, as Continental put it, ushered in “a new era in the American oil industry.” The number of rigs drilling new wells in North Dakota’s part of the basin reached a record 218 last May. It has now leveled off at around 200, as thousands of wells have been completed under deadline pressure to secure expiring mineral leases. Many thousands more will be spudded in the next two years as the boom moves from discovery to production and crews drill “infill” wells, complete pipelines, fortify roads, enlarge refineries and build natural-gas pumping stations and oil-loading train yards.
North Dakota’s last oil boom, 30 years ago, collapsed so quickly when prices crashed that workers in the small city of Dickinson left the coffee in their cups when they quit their trailers. Apostles of “Bakken gold” insist that what’s different this time is that this time is different, the history of frontier avarice notwithstanding. This is the boom that is going to change everything without the remorse and misgivings that have marked the aftermath of so many past orgies of resource extraction. This is the boom that won’t leave the land trashed, won’t destroy communities, won’t afflict the state with the so-called Dutch Disease in which natural-resource development and the sugar rush of fast cash paradoxically make other parts of the economy less competitive and more difficult to sustain. This is the boom being managed by local people certain they know how to look after their interests and safeguard the land they live on. This is the Big One that North Dakota has been waiting for for more than a century.
“This is our time,” Clay S. Jenkinson told me one morning over coffee at a Bismarck Starbucks, where he often goes to write. Jenkinson, a humanities professor, is a North Dakota author and columnist best known for his impersonation of Thomas Jefferson on public radio. “It’s our gold rush, our Silicon Valley. It reverses decades of anxiety about out-migration and rural decline and death. Suddenly the state that never had anything is in the middle of an oil boom that is larger than anybody could have predicted. We aren’t going to do anything to jeopardize it. People aren’t interested in stepping back.”
You won’t find a better ambassador of what the oil industry calls “the play” in western North Dakota than Loren Kopseng. Kopseng — 65, a deer hunter, a Bud Light drinker, a profane churchgoer with four kids and two ex-wives — refers to himself as a “petro-preneur.” The oil company he started almost 30 years ago is headquartered in Bismarck, but the thrilling part of his billion-dollar business is based 100 miles northwest in the Williston Basin. Kopseng is a conservative Republican, and like many North Dakotans, he includes government regulation in the same category of pleasant experiences as droughts, floods, grasshoppers and prairie fires. But he’s honest enough to concede (with an anguished moan) that his private-enterprise principles aren’t hypocrisy-free, given that his own bacon has been saved “many times” by the state-owned Bank of North Dakota, which became prominent when North Dakota was a bastion of radical agrarian populism in the 1930s.
It was with a touch of truant glee that Kopseng skipped out of his office to fly me around the oil fields on a windy morning last spring. He pulled on a green Fighting Sioux sweatshirt and climbed into the cockpit of his Aviat Husky, a maroon-and-yellow single-engine plane with two seats, one behind the other.
And then we were off, banking over the low-slung rooftops that ring the state’s Capitol, an 18-story stone-and-concrete landmark built in 1934. North Dakotans are as proud of their Capitol as they are of their boom-based unemployment rate (3.2 percent, lowest in the nation), and many were stung when a Minnesota state legislator last spring compared it to the headquarters of an insurance company.
We crossed the Missouri River, the plane beating on above a sea of grass. Infinity nagged at the scale of things. It was almost possible to imagine the land as it appeared to Lewis and Clark when the Corps of Discovery came up the Missouri in 1804 — but only if you looked past the toy-size trucks crawling west on Interstate 94 with drill pipe and water tanks; and the locomotives lumbering east with hundred-unit trains of black oil-tanker cars in tow. The westward march of American industry was written in the quarters of plowed earth and section line roads, in the power-transmission towers and smoke-signal steam puffs drifting from a Tesoro refinery; it was visible even on the far horizon, at the edge of a fretted but still bracing emptiness, in the shape of giant windmills and the silhouette of a coal gasification plant. Each and all were contemporary manifestations of an economic imperative that dates back to the triumph of the treaty breakers who usurped the Native Americans and commodified the land, and to the waves that came in their wake, the great white hunters who cleaned out the buffalo, the agents of the bone boom that followed who sent trainloads of buffalo skeletons back East to be used to refine sugar, the iron-horse magnates, the immigrant farmers and pioneer ranchers ruined by the “dirty ’30s,” and later the first oil and lignite coal barons and the government dam builders who tamed the Missouri.
“Keep an eye out for radio towers,” Kopseng said over the headset.
Flying was Kopseng’s dream job before he got the idea of building an oil company. He began studying for his pilot’s license as a freshman in college. When he graduated (sidetracked for a year and a half by a stint in the Army that included seven months in Vietnam), one of his first jobs was flying a small plane for a highway contractor. He always worked — he helped his parents run apartment buildings in Bismarck, and for six summers starting at age 12, he fed the chickens and pigs and bucked hay and branded cattle at his grandparents’ ranch in Slope County in the western part of the state.
Kopseng first came down with oil fever in the late 1970s, when fortunes were being made domestically in the wake of the OPEC oil embargo. He struggled for five years, learning expensive lessons. “I had a lot of lemonade wells,” he sighed. He went broke twice, maxed out his credit cards and even borrowed money from his mother — loans that came with sharp remarks about his clothes and hair. After he married and started a family, it was his wife’s friends who looked at him sideways. While they were buying houses and investing in mutual funds, he was in debt-work-out negotiations with Halliburton.
“I embarrassed myself,” he said.
In 1984, at a particularly low ebb, he met Don Russell, a merchant from Mandan, who’d done well in the not-obviously-related businesses of peddling tires and packing meat. Russell, who died in 2011, also wanted to get into oil and gas. The timing might not have seemed auspicious; companies were quitting the Williston Basin, unable to sell their product for more than it cost to produce. But with Russell handling the financial end, Kopseng began accumulating distressed oil and gas wells. He brokered oil-field equipment; he bought and sold leases; he jumped into the natural-gas market just as it was being deregulated. In 1997 he and Russell consolidated various energy-related businesses into the privately held United Energy Corporation.
U.E.C. hasn’t drilled a well of its own since 1998, but today it holds a nonoperating interest in close to 2,000 oil and gas wells. It transports by rail 82,000 barrels of oil a day to refineries. In 2012 the company earned a net profit of $44.8 million on revenues of $5.7 billion. Best of all, in a state where until recently young people often had to leave to find work, his two sons — Ryan, an oilman, and Sander, a lawyer — joined the company and built successful careers down the hall.
As the Husky droned west, the land began to change, growing drier, farms giving way to ranches. Below was the country of the Missouri Slope, where homesteaders discovered the fallacy that rain followed the plow.
And then suddenly there were oil wells. Well after well, 6,000 or more. Many were production wells — weathered pump jacks pulling up oil (or natural gas and natural-gas liquids) from holes drilled over the years. New or freshly painted pump jacks were nodding over recent discoveries. At that moment, 209 rigs were drilling fresh holes. Wells being hydraulically fractured were ringed by 20 or more water tanks spread out on square mounds of brick-red “scoria” — a clay sintered by underground coal fires and used for drill pads and roads in North Dakota. Some well sites were tucked in the lee of ravines or perched on bluffs or strung out along the line of a county road, one per mile, like square coasters on a bar.
North of the Missouri River, around the town of Parshall in Mountrail County, the wells started almost on a line that coincided roughly with the 102nd meridian. South of the river, the boundary was marked by Highway 49.
“That’s the line of death,” Kopseng said. “The edge of the thermally mature part of the oil field. If you drill to the east of that, you’re dead.”
He banked the Husky over a pennant of flare gas fire, and from the size of the flame estimated the well was producing 1,500 barrels of oil per day. More than a third of the gas that comes out of the oil wells in the basin was being flared off, but that percentage is declining as pipelines and facilities to process it come online. Night satellite photographs that were once pitch-black now show a massive gas flare luminance in the northwest corner of the state. In July the World Bank reported that flared gas from the Williston Basin was the main reason the United States has jumped to 5th from 14th (behind Russia, Nigeria, Iran and Iraq) on the list of gas-flaring nations. This practice raises the atmospheric levels of carbon dioxide, the gas primarily responsible for global warming.
Yet in the midst of so much empty, untrammeled land, the roaring fires and messy drill pads didn’t evoke images of industrial blight like the apocalyptic black wastes of the Alberta tar-sands operations or the eaten-off mountaintops of West Virginia coal country, or for that matter, the landscape of New Jersey around the port of Newark. From the Husky, it was easy to overlook environmental issues and fathom the appeal of oil development — easy to see the allure of a derrick dressed up in lights and looming 10 stories over a desolate landscape where the leading academic solution to social and economic stagnation had been to surrender and let the land lapse into buffalo commons.
We circled around the southern end of the basin above Dickinson, then flew west and north above the willows in the ravines and coulees of the Little Missouri River. Green junipers blazed on the broken rainbow clay and sandstone cliffs of the North Dakota Badlands, where 26-year-old Theodore Roosevelt came in 1884 to recuperate after the deaths of his wife and his mother on the same day. The two ranches he acquired are now part of Theodore Roosevelt National Park.
We skimmed along the Montana border, then banked east over the confluence of the Yellowstone and Missouri Rivers. Kopseng took pictures — he’d done all the aerial photography for U.E.C.’s annual report. Rodeo winds were bucking the Husky all over the sky, but nothing could dampen his enthusiasm for the sights of the basin — nothing save my stomach. There was undisguised horror in Kopseng’s voice when he realized I had been obliged to open an airsickness bag in the back seat.
We put down at the Williston airport and hiked across a dirt lot full of mud-caked water trucks. Two dozen horn-handed men were bent over their lunches in an airport-motel restaurant; the only women in the place were the waitresses.
“People asked me why I don’t gamble,” Kopseng said, digging into his lunch. “I don’t need to gamble because the oil and gas business is gambling. But it’s also geology, chemistry, business. Every day is different.”
After the plane was replenished with $147 worth of aviation gas, we headed east toward Bismarck. Down below, dust clouds were boiling around a convoy of trucks hauling frack water and equipment on a county road. A decade ago you could have spread a picnic blanket on a lot of back roads in western North Dakota and safely taken a nap.
They have been through this before, the people of North Dakota, first in the ’60s, a decade after oil was discovered in the state. And then again in the late ’70s, when the boom was driven by rising oil prices. Monthly oil production, which peaked in 1984 at 4.6 million barrels, fell to half and then went sideways for nearly a quarter-century. By February 1999, there wasn’t a single rig drilling new wells in the state, and oil development looked to be yet another cautionary tale in the familiar boom-and-bust history of the region — no better than previous resource bonanzas at stemming the exodus of young people, or at halting the decline of prairie towns, or at doing much of anything to ameliorate the image of a place where the Legislature brooded over the icy connotations of the word “North” and twice entertained the idea of simply calling the state “Dakota.”
And then around seven years ago — driven by technological refinements that have made North Dakota a premier laboratory for coaxing oil from stingy rocks — the state’s Bakken boom began in Mountrail County. At the time, North Dakota was ranked ninth among U.S. oil-producing states. By 2010 it had climbed to fourth. In July 2012, monthly oil output reached 20.97 million barrels, and North Dakota was the largest oil producer in the country after Texas.
Viewed in the global market, the state’s oil output isn’t huge — Saudi Arabia produces about 10 million barrels a day — but North Dakota’s oil boom now accounts for 11 percent of U.S. oil production, and it is the main reason the state government currently has a $3.8 billion surplus.
What may be even more remarkable than the growth of the past two years is the extent to which the oil comes from one group of rocks. Of the 20 oil-producing geological formations in the Williston Basin — including some like the Madison that have yielded large volumes of oil for decades — the Bakken Formation now accounts for 91 percent of North Dakota’s oil production.
None of the Bakken rocks are visible on the surface — at their deepest they lie more than two miles underground — but outcrops of the brand can be seen everywhere in restaurants like Bakken Buffet, Bakken Residence Suites and a plague of Rockin’ the Bakken bumper stickers. The formation, named for Henry O. Bakken, a farmer who leased his land for an early well, consists of three layers, sandwiched, in a commonly used analogy, like an Oreo cookie. The Middle Bakken layer, a band of grayish dolomitic sandstone and siltstone from 30 to 70 feet thick, sits between the Upper and Lower Bakken intervals, carbon-rich beds of black shale between 20 and 50 feet thick.
Petroleum geologists have known the cookie was full of light, sulfur-free oil since 1953, but they didn’t know exactly how much or how to extract it economically. Most of the Bakken oil is “tight.” The rocks are not porous and permeable enough for the oil to flow on its own. If you hold a piece of Middle Bakken, it’s hard to believe it contains oil at all, or that it could function as a “reservoir” for oil migrating under pressure from the carbon-rich shale around it. It feels as hard as a flagstone terrace. But under ultraviolet light, you can see telltale “oil shows,” and it has a faint smell of diesel fuel.
Significant amounts of Bakken oil were produced from conventional vertical wells beginning in 1961, but for many years the formation was considered problematic: you had to be lucky or skillful enough to find an area of the shale that was naturally fractured. Generally the formation was too thin to provide a worthwhile pay zone for a vertical well.
What made people rethink the viability of the Bakken was horizontal drilling. The first horizontal well in the Bakken was spudded by Meridian Oil in 1987, long before the current boom. Meridian engineers went down more than 10,000 feet and then burrowed sideways into a bed of Upper Bakken shale that was only eight feet thick. Later, as improved instruments gave drillers a more precise sense of where they were and what kind of rock they were in, they were able to steer drill bits between the black halves of the Oreo. The sandstone of the Middle Bakken retained the shape of the drill bore better than the Bakken shale. Approached from the side with a horizontal shaft, the reservoir rock could be contacted for thousands of feet rather than for the hundred or so feet a vertical well would afford. The Bakken today contains some of the longest horizontal wells in the world, “laterals” that extend as far as three miles from the drill pad to otherwise unreachable oil under Lake Sakakawea or beneath the Williston airport.
Impressive as it is to execute a 90-degree turn in a well bore thousands of feet underground, horizontal drilling alone was not enough to tap the tight oil in the Bakken. About 95 percent of the Bakken won’t yield its oil unless millions of gallons of pressurized water full of sand and various chemicals are pumped down the well to crack open hairline channels. (The sand, or proppant, props the channels open.) The first areas of the Bakken to be hydraulically fractured were on the Montana side of the Williston Basin in the Elm Coulee Field, where oil was discovered in 2000. Early treatments there were called “Hail Mary fracks” because geologists and engineers would just drill a well, pump in frack fluid and pray for a robust result. The technique is more exact now. Certain grades of sand or sometimes proppant made of ceramic beads are matched to certain kinds of rock, and the wells are fracked in stages, as many as 40 stages per well.
Just how much oil is in the Bakken is still unknown. Estimates have been continuously revised upward since a 1974 figure of 10 billion barrels. Leigh Price, a United States Geological Survey geochemist, was initially greeted with skepticism when, about 13 years ago, he came to the conclusion that the Bakken might hold as much as 503 billion barrels of oil. Now people don’t think that number is as crazy as it seemed.
“Right now our best guess is there are 169 billion barrels of oil in the Bakken, and that’s undoubtedly wrong,” says Ed Murphy, state geologist at the North Dakota Geological Survey. “There’s no way to be right. It’s like guessing how many jelly beans are in a jar.”
The current recovery rates for Bakken reserves typically range from 1 to 6 percent, but recovery rates are a function of both technology and market prices. “With the best technology, we can recover 4 to 8 out of every 100 barrels of oil in the Bakken,” says Ron Ness, president of the North Dakota Petroleum Council. “Every 1 percent increase in the rate of recovery means another billion barrels.”
As long as prices stay above $60 a barrel or so, oil will be a mainstay of the North Dakota economy for a generation or more. After drilling companies finish securing leased acreage, it will take 20 years to develop the 35,000 to 40,000 production wells needed to fully exploit the “thermally mature” part of the Bakken shale, an area about the size of West Virginia. Production from a typical Bakken well declines rapidly but on average produces modest amounts of oil for 45 years and earns a profit of $20 million. But as the volume of oil in the Bakken shale is still a moving target, and recovery techniques are increasingly sophisticated, some estimates put the life of the Bakken play, and the attendant upheaval it is causing in North Dakota, at upward of a hundred years.
One rainy May morning, I headed out to see the oil patch by car, driving north from Bismarck 110 miles to Minot, then west on Route 2. Some of the most tangible effects of the boom have been tattooed into the roads. Officials calculate that each well in western North Dakota requires about 2,000 truck trips in its first year of operation. Multiply that by hundreds of annual new wells, and it’s clear why county and state highway departments are engaged in an epic struggle against potholes, rutting, asphalt shoving, alligator cracking and other pavement maladies. The biggest danger on many dirt and gravel roads is blinding plumes of dust. Many potions have been concocted to suppress the stuff. The dust busters in Williams County discovered that spraying a soy-based oil works well, but it isn’t practical because it makes the roads taste so good that cows come out of the fields and try to eat them.
Traffic used to be so scarce that drivers would wave as they passed an oncoming car; now there are record numbers of accidents. To assess the impact, the state highway department has a special van that drives around with an onboard computer, an infrared detector and six cameras and produces a ride rating for every mile of the region’s highways; the higher the number, the worse the ride. “I said I was just going to coast into retirement, and then all hell broke loose,” says Walt Peterson, the Williston district engineer for the highway department.
The rain lifted outside Stanley at the junction of Route 2 and Highway 8 — stretches of which had the worst road ratings in the state. I stopped for gas at a Cenex convenience store called Bakken Central, where help was wanted for all days, all shifts. Water trucks in the parking lot wore petticoats of mud. Inside, sooty-faced roughnecks with pale circles around their eyes and dazed expressions wandered through the aisles with armloads of beef jerky and 20-ounce cans of malt liquor. The store was selling showers: a half-hour of hot water for 10 bucks; $15 for a couple. Across the highway, workers were pouring concrete for a new Fuel Force gas station and rolling out sod on a fresh tract of homes.
Seventy-two miles beyond Stanley, I pulled into Williston, which proudly advertises itself as the boyhood home of the N.B.A. coach Phil Jackson. It’s all but impossible to find a place to stay in Williston, but on weekends many oil workers clear out, and I was lucky to get a motel room with a cracked plastic bathtub that had been cleverly patched with duct tape. Pickup trucks were waiting in long lines for drive-through dinners at Hardee’s.
One morning, Ward Koeser, president of the Williston City Commission, offered to show me around. Koeser, a 63-year-old former math teacher whose grandfather came to North Dakota to farm in 1901, started a communications company that sold field radios during the oil boom of the early ’80s. He was elected to the Board of Commissioners in 1994 and returned to office five times.
“We had 12,500 people in the 2000 census, and we wanted to grow beyond that,” he said, heading to the northern edge of town. “We tried to diversify our economy and create more permanent jobs. We brought in a plant to split and polish peas. We hosted events for developers and growers — farmers in the area grow lentils and potatoes and durum wheat — but we couldn’t get beyond 12,500. The downtown area was struggling for 25 years. Young people were leaving and not coming back, and farmers were moving to town and retiring. We were a graying community. Now. . . . ”
He seemed stunned by the pace of change; or maybe just exhausted. The twice-a-month town-commissioner meetings that used to take 45 minutes can now run from 6 p.m. to midnight. “We have 800 to 900 new houses coming onto the city tax rolls by the end of the summer,” Koeser told me as we drove around some of the embryonic neighborhoods. They had names like Bakken Heights and Harvest Hills. The city had to be careful, he said, because during the last boom, Williston got stuck with $28 million in debt after putting in streets and sewers for housing developers who bailed when oil prices collapsed. But now, land near the airport that was $500 an acre a decade ago was selling for as much as $180,000 an acre; the airport itself was slated for relocation. The town bought a 20-room apartment complex so that new city workers could have a place to live and was obliged to offer prospective police officers a housing allowance of $350 a month. Williston has hired nine cops in the last two years, trying to keep up with the crime rate, which was booming along with everything else. (Aggravated assaults in the oil patch doubled in four years.)
Koeser pulled over in the middle of a neighborhood that was nothing but curbs and driveways and empty lots.
“This whole area was a field two years ago,” he said. “By this fall every one of these lots will have a house. I love construction and new buildings. It’s new life, new families moving in. But it’s just happening too fast. Every master plan the city has prepared is obsolete by the time it’s printed. You’d like to have more time to think things through, but everybody is in such a rush.”