One of the US oil industry’s most successful chief executives has warned that Washington’s energy and environment policy risks plunging the US into an economic tailspin that could turn it into “the world’s cleanest third world country”.
James Hackett, chairman and chief executive of Anadarko, one of the US’s largest independent oil and gas companies, said in an interview: “The histrionic and maniacal focus on carbon dioxide is intellectually repugnant to me.” It was “taking the economy into a tailspin”.
Mr Hackett’s assessment echoes the private views of many oilmen less willing to be quite so direct and reveals the fissure developing between the industry and Washington. His views contrast with those of cautious, politically and environmentally correct European oil executives.
Mr Hackett opposes a cap and trade system, unlike executives at many European companies, such as the one included in legislation recently introduced by Democrats in the House of Representatives. He said it was an indirect tax on individuals that would be as open to manipulation as the European model.
As with many industry veterans and proponents of improved energy security, he warns government officials and environmental advocates to stop suggesting that solar and wind could reduce the US’s need for petrol.
Instead, he said focusing on solar and wind would work against Washington’s goal of reducing the US’s dependence on foreign oil as it would displace sources of energy produced domestically, such as uranium, natural gas and coal. Rather predictably his solution is to open more US land to drilling.
Mr Hackett is widely respected within his industry and he is also chairman of the Dallas Federal Reserve Bank. In the past five years he has used an aggressive, sometimes risky, acquisition and disposal strategy to turn failing Anadarko into the US independent oil company with one of the strongest asset portfolios.
Under his leadership the company’s exploration success more than doubled its resource base. The company is active in all the most important new oil regions, including Ghana and the new finds in Brazil, places none of the world’s biggest oil companies helped discover. Mr Hackett has been amply compensated. His total pay package grew by 42 per cent last year to $21.3m making him one of the most generously paid of his peers.
Benjamin Dell, analyst at Sanford Bernstein, the financial services group, said: “Structurally, he has done very well turning the company around. In the last 12 months in particular, this has paid off with finds in Ghana and Brazil.”
Wearing black alligator-skin cowboy boots below his dark suit and a startlingly white smile above it, Mr Hackett says he doesn’t believe anyone should make more than $250,000. But he makes no apologies about his own pay, pointing out he could make more by managing money. “I chose to manage 4,400 people instead of being an investor. I don’t just want to be a financial shuffler.” But his job has not only entailed drilling ships and seismic maps, Anadarko is embroiled in a legal battle that will decide the fate of many of its peers.
It is battling the US government over leases in the Gulf of Mexico in which the Department of Interior waived royalty payments in the early 1990s to attract companies at a time of very low oil prices. But in many of these leases – not just Anadarko’s – the government omitted a clause that would have obliged companies to pay up if oil prices rose, as they eventually did. So far the courts have ruled Anadarko does not have to pay $350m in royalties.
But the government is not giving up. For the Department of the Interior, losing the battle with Anadarko presents a potential loss of tens of billions of dollars because other oil companies will also escape having to pay royalties. Last week the Department of Justice said it would take the issue to the next court of appeals; Anadarko expects it to go all the way to the Supreme Court.