Fracking destroys communities, endangers health, and perpetuates our addiction to fossil fuels. Yet, US tax dollars are still being poured into these destructive projects.
Recently, the Overseas Private Investment Corporation (OPIC) voted to exacerbate the climate crisis, approving over $450 million of US taxpayer dollars to finance two large fracking projects in the region of Vaca Muerta in Argentina. These projects would entail building 110 wells, developing infrastructure for processing and transporting oil and gas, and updating existing facilities to drive additional production. This decision was made despite strong opposition to the project due to serious concerns about human rights violations and environmental harms.
In anticipation of the OPIC decision, CIEL has been working with our partners at Friends of the Earth and Fundación Ambiente y Recursos Naturales (FARN), among others, to block this project. Opponents of the project cited numerous concerns, from the rights of indigenous people in the area to the environmental risks of fracking. Even the UN Committee on Economic, Social and Cultural Rights urged Argentina to reconsider the exploitation of Vaca Muerta’s natural resources.
The fracking projects in Vaca Muerta are more than just the newest project of a fossil fuel company trying to maximize profit. These projects symbolize a profound failure to protect human rights, a blatant disregard for climate science and for sustainable development, and a pernicious misunderstanding of sound investment practices by OPIC.
Fracking corporations have a history of suppressing indigenous resistance in the region.
The Vaca Muerta region of Argentina has already been the site of clashes between local indigenous communities and fracking corporations. Because of the large amount of shale oil and gas in the region, the Mapuche people have a long history of fighting fossil fuel companies, sometimes even risking their own lives to defend their land and heritage. Mapuche people have been systematically displaced from their lands in order to make space for the exploitation of Vaca Muerta.
In 2013, members of the indigenous Mapuche community led a peaceful demonstration against a new fracking project and were brutally suppressed by local police, who injured over 25 people using rubber bullets and tear gas. A few days after the incident, four homes of Campo Maripe Mapuche community members were burnt to the ground in apparent retaliation for their resistance to the project.
And Mapuche communities have already reported harms caused by existing fracking operations. Since 2013, when fracking development began in the region, Mapuche communities have reported that polluted water from fracking sites has caused birth defects among their livestock, as well as increased rates of cancer and physical defects among the people living in the region. Plus, in 2018 alone, 934 incidents were reported in Vaca Muerta oil wells, including fires and oil leaks. For years, the Mapuche communities in the region of Vaca Muerta have resisted fracking, but their rights have continued to be sidelined by international corporations.
Adding insult to injury, the Environment and Social Impact Assessment (ESIA) falsely claimed that no indigenous communities had ever been identified near the project site, despite the well-documented current and historical stewardship of the region by Mapuche people. Despite this oversight and other glaring inaccuracies repeatedly flagged by CIEL, FARN, and Friends of the Earth, OPIC approved the project.
Fracking has devastating consequences for human health and climate change.
Fracking, short for hydraulic fracturing, is a method of extraction of natural gas and crude oil through the injection of water, chemicals, and sand blasted into sedimentary rock, allowing the trapped materials to surface.
While fracking development has surged, serious concerns abound regarding its dangers for human health and the climate. First, fracking consumes enormous amounts of water: up to 16 million gallons of water can be used to frack a single well. And once it is used for fracking, this water cannot return to the freshwater cycle because it is contaminated. Yet dangerously toxic wastewater often makes its way into the water supply, leaking into creeks, streams, and other bodies of water through human error or mechanical failure.
Water contamination is not the only health risk posed by fracking. Noxious gases and toxic chemicals from fracking sites cause a range of respiratory issues, from coughing to severe asthma. And, even when present only at very low concentrations, fracking chemicals endanger pregnant women and babies, causing a 30% chance of experiencing a “high-risk pregnancy” according to a Johns Hopkins study.
And fracking projects don’t just harm the communities and ecosystems surrounding them. This technology also has devastating implications for climate change. In fact, the expansion of fracking as an energy practice has caused a rise in global methane emissions. Increasing the supply of fossil fuels only perpetuates our dependence on them.
This is important because in order to fight climate change, we are going to have to drastically reduce greenhouse gas emissions, which means eliminating the use of fossil fuels altogether. In fact, an Oxford University study found that for the world to have even a 50% chance of staying within the internationally agreed upon limits to global warming, no new fossil fuel plants can be built after 2017. In spite of all this, two years later, OPIC elected to pour money into a catastrophically damaging industry, putting profit over planet once again.
Fracking is a bad investment.
Ignoring the rights violations and its danger to human health and the survival of our planet, fracking is simply a bad investment.
Fracking is a money loser. Fracking companies consistently spend more money than they generate. In 2018, fracking companies spent billions of dollars more on drilling than they generated from oil and gas sales. When the Wall Street Journal reviewed a selection of oil and gas companies, they discovered $280 billion in negative cash flows from 2007 to 2017. So, why is the industry still raking in billions of investor dollars?
The short answer is that these companies use every accounting trick allowed by the law to make themselves appear more profitable to investors. The most common tricks are to overstate the productivity of wells while simultaneously understating annual depreciation expenses, and cherry picking from select hotspots to extrapolate promising data to a whole oil field. These practices are used to trick investors into thinking that fracking is a good place to put their money.
In reality, many fracking companies are only able to stay afloat because of government subsidies. In 2017, Argentina gave almost 6% of its budget, or $9.48 billion, to fossil fuel companies in the form of subsidies. And last year, following the $57 billion bailout from the International Monetary Fund –– the largest in its history –– the IMF demanded the country dramatically reduce oil and gas subsidies. This worried investors, making them lose confidence in the viability of fracking projects in Vaca Muerta. But somehow, the new proposals managed to pull an astonishing $450 million out of OPIC’s (and US taxpayers’) pockets.
OPIC is the most recent investor that has been duped into dumping millions of taxpayer dollars into a failing industry. But let us be clear: OPIC isn’t the victim here; it is part of the problem. Its decision to support fracking in Vaca Muerta endangers local indigenous communities. It threatens to pollute water and air for generations and accelerate the global climate crisis. It is time to stop investing in fictional fracking profits and prioritize the very real lives of people in Argentina and around the world who are most impacted by this damaging industry and the climate chaos it perpetuates.
By Adele Shraiman, Communications Intern
Originally posted on November 7, 2019