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The Fallacy of the Jobs Hype

Keystone XL Contractor Green-Lighted BP’s Explosive Caspian Pipeline

by STEVE HORN

The more things change, the more they stay the same.

Almost 11 years ago in June 2002, Environmental Resources Management (ERM) Group declared the controversial 1,300 mile-long Baku–Tbilisi–Ceyhan (BTC) Pipeline environmentally and socio-economically sound, a tube which brings oil and gas produced in the Caspian Sea to the export market.

On March 1, it said the same of the proposed 1,179 mile-long TransCanada Keystone XL (KXL) Pipeline on behalf of an Obama State Department that has the final say on whether the northern segment of the KXL pipeline becomes a reality. KXL would carry diluted bitumen or “dilbit” from the Alberta tar sands down to Port Arthur, Texas, after which it will be exported to the global market.

ERM Group, a recent DeSmogBlog investigation revealed, has historical ties to Big Tobacco and its clients include ExxonMobil, ConocoPhillips and Koch IndustriesMother Jones also revealed that ERM – the firm the State Dept. allowed TransCanada to choose on its behalf – has a key personnel tie to TransCanada.

Unexamined thus far in the KXL scandal is ERM’s past green-light report on the BTC Pipeline – hailed as the “Contract of the Century” – which has yet to be put into proper perspective.

ERM is a key player in what PLATFORM London describes as the “Carbon Web,” shorthand for “the network of relationships between oil and gas companies and the government departments, regulators, cultural institutions, banks and other institutions that surround them.”

In the short time it has been on-line, the geostrategically important BTC pipeline – coined the “New Silk Road” by The Financial Times – has proven environmentally volatile. A full review of the costs and consequences of ERM’s penchant for rubber-stamping troubling oil and gas infrastructure is in order.

Massive Pipeline, Massive Hype: Sound Familiar?

Like the Keystone XL, the BTC Pipeline – owned by a consortium of 11 oil and gas corporations, including BP, State Oil Company of Azerbaijan (SOCAR), Chevron, ConocoPhillips, Eni and Total – was controversial and inspired a bout of activism in the attempt to defeat its construction.

Referred to as “BP’s Time Bomb” by CorpWatch, the BTC Pipeline was first proposed in 1992, began construction in May 2003 and opened for business two years later in May 2005. BTC carries oil and gas from the Azeri-Chirag-Gunashli (ACG) Caspian Sea oil field, co-owned by Chevron, SOCAR, ExxonMobil, Devon Energy and others, which contains 5.4 billion recoverable barrels of oil.

Paralleling the prospective 36-inch diameter Keystone XL that would carry 830,000 barrels per day of tar sands bitumen through the U.S. heartland, the BTC serves as a 42-inch diameter export pipeline and moves 1 million barrels of oil per day to market.

Like today’s KXL proposal – which would only create 35 full-time jobs – the false promise of thousands of jobs also served as the dominant discourse for BTC Pipeline proponents. The reality, like KXL, was more dim. The Christian Science Monitor pointed out in 2005 that only 100 people were hired full-time in Georgia, the second destination for BTC.

“People were told that there would be 70,000 Georgians that were going to be employed because of this pipeline,” Ed Johnson, BP’s former project manager in Georgia told the St. Petersburg Times in 2005. “The (Georgian) government needed to sell the project to its own people so some of the benefits were overblown.”

Massive Ecological Costs and Consequences

Part of the BTC Pipeline’s circuit runs through the Borjomi Mountain Gorge, an area known for its landslide hazards, and the source of Georgia’s massive bounty of mineral water. The pipeline also makes over 1,500 river crossings, according to the St. Petersburg Times.

Spills and explosions, both in the Caspian Sea that feeds the pipeline with oil and gas and in the pipeline itself, have also occurred.

The most prominent blowout, subject to a mainstream media blackout, was the 2008 BP Caspian Sea oil platform explosion that preceded the infamous 2010 BP oil disaster in the Gulf of Mexico. BP, to this day has never admitted it was an explosion – describing it simply as “a gas leak” – but its plausible deniability cover was blown in the form of a Wikileaks cable discussing the matter, and via whistleblowers who contacted investigative reporter Greg Palast.

Palast obtained information from whistleblowers in Baku who said that, rather than a minor “gas leak,” there was a serious well blowout akin to the Gulf disaster two years later. As in the Gulf, the well-capping cement had failed. A methane explosion from the well “engulfed the platform.”

“In fact, the workers themselves said that, like the workers on the Deepwater Horizon, they were one spark away from death, with frightened minutes to escape,” Palast wrote for EcoWatch. “More seriously, [its] official filing to the U.S. Securities Exchange Commission…again talked about a ‘subsurface release,’ concealing that the methane blew out through its drilling stack.”

BTC itself also had a major explosion in its first decade of existence.

An Aug. 2008 Wikileaks cable discusses a BTC explosion in a mountainous area of eastern Turkey – where ERM said the pipeline was environmentally sound – which spewed 70,000 barrels of oil into the surrounding area.

Massive Landowner and Human Rights Costs and Consequences

Eminent domain – or the right of corporations to expropriate private land to build projects claimed to serve the public good – is a major concern for landowners living along the path of the Keystone XL. A parallel situation occurred for citizens living along BTC’s route, with private property rights essentially eliminated to make way for the pipeline.

“Host Government Agreement – the legal document on which the pipeline is based…[is a] document [that] is not simply a contract, but has the status of an international treaty, and over-rides all other national laws (except the constitution),” explained PLATFORM London. “It denies all future governments the right to introduce any new taxes or laws – including environmental, human rights or labour laws – which reduce the pipeline’s profitability.”

Environmental critics described it as the oil and gas industry becoming akin to a sovereign nation along BTC’s route.

“Turkey is now divided into three countries: the area where Turkish law applies, the Kurdish areas under official or de facto military rule; and a strip running across the entire length of the country where BP is the effective government,” Nick Hildyard of Cornerstone told The Guardian in 2002, speaking to Turkey specifically but which can be applied to all countries which cross paths with the BTC due to the dictates of the Host Government Agreement.

Getting rich quick has also turned out to be more rhetoric than reality for citizens whose property sits along BTC’s path.

“One landowner in northeast Turkey reports that he was paid the price of 7 pieces of chewing gum per square metre of his land. In some cases, no compensation has been paid at all,” PLATFORM wrote.

Activists working on behalf of human rights for Kurds explained BTC’s impacts in stark terms, with the Kurdish Human Rights Project (KHPR) filing cases in the European Court of Human Rights on behalf of 38 affected villagers along the route.

KHPR “alleg[ed] multiple violations of the European Convention on Human Rights including the illegal use of land without payment of compensation or expropriation, underpayment for land, intimidation, lack of public consultation, involuntary resettlement and damage to land and property,” CorpWatch wrote.

The most shocking example of the BTC’s human rights impact is explained in investigative journalist Jeremy Scahill’s book “Blackwater: The Rise of the World’s Most Powerful Mercenary Army.” He explains that the U.S. military contracted out the infamous Blackwater USA to guard Azerbaijan’s portion of the BTC Pipeline and the area surrounding it.

“Beginning in July 2004, Blackwater forces were contracted to work in the heart of the oil- and gas-rich Caspian Sea region, where they would quietly train a force modeled after the Navy SEALs…[to] protect…the West’s new profitable oil and gas exploitation in [the] region,” Scahill wrote.

Grassroots Response to ERM Group in 2003

As noted here on DeSmogBlog, grassroots activists responded to ERM’s claim that the BTC Pipeline’s Turkey portion was safe by occupying ERM’s office headquarters located in the City of London, a 1-square-mile subsection of London that serves as a tax shelter for multinational corporations.

It still remains to be seen what activists will do about ERM’s bogus KXL study in the U.S., with the Obama State Department expected to confer with the study’s “findings” in issuing a decision on the KXL pipeline by October.

BTC’s sordid history – which ERM helped ensure – should also enter into any honest KXL assessment.

“ERM played a crucial role in gaining approval for the BTC by presenting it as a sustainable success. But this doesn’t represent the reality of violence and pollution we have witnessed,” PLATFORM‘s Mika Minio-Paluello, co-author of The Oil Road - a new book documenting the slew of destructive impacts of BTC – told DeSmogBlog in an interview. “Supposedly an environmental consultancy, in practice ERM operated more like a PR firm representing BP and now they’re fulfilling a similar role for TransCanada.”

Steve Horn is a Madison, WI-based freelance investigative journalist and Research Fellow at DeSmogBlog.