Orphaned wells, oil assets, and debt: the competing ethics of value creation and care within petrocapitalist projects of return

Abstract

This essay explores the phenomenon known as ‘orphaned wells’, meaning unprofitable oil and gas wells (‘legacy wells’) that have become disentangled from their corporate owners owing to insolvency, or owing to a failure to comply with local regulations. Drawing from an ethnographic example of a near‐insolvent oil and gas corporation in Alberta, Canada, and its strategies of refinancing, the essay explores how value creation and the moral force of the obligation to create a financial return give rise to a ‘durational ethics’ that shapes corporate and financial performativities and prolongs the ‘life’ of legacy oil and gas assets. Legacy assets, understood as potential orphans, are thus caught up in a lively corporate practice of asset circulation and recombination often deployed by producers for the moral work of ‘cleaning balance sheets’. This essay calls for ‘thinking with orphans’ to recognize the competing ethical registers which produce them in addition to the growing need for responsibility and corporate care for legacy oil and gas assets.

Risk and responsibility: Private equity financiers and the US shale revolution

“…She shows that hydrocarbon E&P entails grappling with multiple externalized and internalized risks-ranging from market price volatility to competing corporate practices of evaluating the financial worth of hydrocarbons deep underground. These financial risks not only threaten investors' capital but are entangled with the moral obligation of managers to return capital to shareholders in ways that challenge their durational ethics of responsibility and commitment (Wood 2016). The point that Wood (2019) makes is that the disposition of these managers toward risk and responsibility can be conceptualized as a kind of "energy ethics," one that has broad-based implications that transverse "awkward scales" and ethical worlds (Comaroff and Comaroff 2003).…”

“…Established by experienced commercial oil and gas bankers, an interlocutor joked that the founders of these firms were a "bunch of unemployed bankers" who turned oil and gas PE into something that "you can make a lot of money" doing (interview, November 18, 2019). At first, they acted as private lenders and consultants, but they soon crafted a model to buy direct equity ownership in small-to medium-sized private companies, grow the prospective hydrocarbon assets of these companies, then sell these assets to larger companies to further exploit them, a process that my interlocutors called the "food chain" (see Wood 2016). Now numbering in the dozens, these US PE firms (many located in Texas, Houston in particular) compete with investment banks, such as JP Morgan and Goldman Sachs, to raise PE funds, then invest money from these funds into companies.…”

Power and precariousness in the expert hierarchies of the US hydrocarbon industry

“…Once produced, oil and gas enters a world of pipelines, pumping stations, storage tanks and refineries on the way to the point of consumption (High and Field, 2020; Simpson, 2019). From initial hydrocarbon exploration and the ‘potentiality’ of oil, to the marketing of refined oil and gas products, leagues of contractors and various experts are involved in the process – deriving a piece of the financial value that hydrocarbons generate in the form of compensation, fees, interest and profit sharing (Weszkalnys, 2015; Wood, 2019).…”

“…The precariousness experienced by Sam and Bob is not uncommon in expert hierarchies of the US hydrocarbon industry. The ‘utterly confusing’ and ‘mind-boggling’ volatility of hydrocarbon prices can lead to thousands of layoffs, challenging the moral ambitions of those working in the industry to persevere in the face of dismal personal financial prospects (Appel et al, 2015: 8; High, 2019; Wood, 2019). Recently, an analyst with a young family that I know found the entire oil and gas unit at the investment bank he worked for in Houston laid off, including him – to his surprise.…”

Exquisite Corpses and backward glances: European social anthropology 2019

“…Yet the assumption of unalloyed ‘good’ that underpins this vision is corrupted by the solar industry’s roots being mired in the systems of production and exchange that define contemporary capitalism with all of its ethical ambiguity. The question of ‘durational ethics’ is of profound consequence within energy global assemblages, where the power to pollute, contaminate and harm exists and continues into the longue durée , whether it be nuclear waste (Masco 2006) or the so‐called ‘orphaned wells’ described by Wood (2019) in her thoughtful ethnographic account of asset transfer and redundancy in the Alberta oilfields. Referencing Mauss’s description of Maori gifting, where the spirit of the gift propels its return, she identifies the hau of capitalism at work in the process and the ethics that keep these abandoned and unprofitable ‘orphaned wells’ in circulation and encapsulated within the balance sheets of companies dedicated to that hau of profit.…”