June/July/Aug 2012

Power Mongers

Steve Coll reports from inside the ExxonMobil Death Star

Coral Davenport


ExxonMobil, the worlds’s biggest and most profitable corporation, is used to being viewed as the bad guy. Every time recession-strapped Americans face new spikes in the cost of gas, the oil giant’s profits ratchet up even more. In 2008, record-high gasoline prices were the direct driver of ExxonMobil’s forty-five billion dollars in profit, the largest total in corporate history.

The company also occupies an outsize role in the nation’s politics—as you’d expect would be the case for any firm booking profits in the mid-eleven-figure range. Since 1998, ExxonMobil has pumped $9.4 million into congressional and presidential campaigns—87 percent of that to Republicans—and spent $169 million on lobbying Washington. The company was responsible for soaking Alaskan sea otters with spilled crude, its former CEO was hunting buddies with Dick Cheney, and it has paid scientists to intentionally spread uncertainty about global warming. Its sleek white corporate headquarters in Irving, Texas, are known to employees as the “Death Star.”

But beyond the contours of the company’s public record—its profits and political contributions, the names of its officials and lobbyists, its sales and stock values—investigators have long found it very difficult to quantify what exactly ExxonMobil does: how the company makes decisions, the details of its many foreign drilling operations, its internal policies and politics, its long-term strategies, and the behind-the-scenes moves it makes to fulfill them.

That’s by design. As two-time Pulitzer Prize winner Steve Coll writes in Private Empire, the company has intentionally sought to operate as a black box. Coll writes that former CIA and White House officials who’ve gone to work for ExxonMobil marvel that its protocols of secrecy and concealment are even more extreme than those required by the nation’s top security agencies. In this exhaustive, fascinating account, Coll provides the first definitive look inside the company’s operations.

Coll, who won his most recent Pulitzer for Ghost Wars (2004), his account of the modern ideological battle over Afghanistan, is lately best known for his coverage of terrorism, espionage, and national security for the New Yorker. And that’s the approach he brings to writing about this corporation, whose vast size, profits, and influence essentially allow it to operate as a freestanding corporate state within the American system, but largely exempt from the scrutiny and oversight to which governments are subject. Indeed, Coll writes that in some countries where it does business, ExxonMobil’s sway over its host governments is far greater than that of the US embassy, thanks to the sheer size and scale of its investments. Coll dug through thousands of previously classified government documents and traveled to Indonesia, Equatorial Guinea, Chad, Nigeria, and elsewhere in Europe and the Middle East to uncover a multitude of eye-opening and sometimes shocking and disturbing details of how the company does business.

Coll starts his story in March 1989, with the episode that helped make Exxon the most hated company in America: the Valdez tanker spill, which sent at least eleven million gallons of oil into Alaska’s pristine Prince William Sound. The Valdez spill gave Exxon a PR black eye that endured for more than a decade, but an event that took place seven months later ultimately had an even greater impact on the company’s fortunes: the November 1989 fall of the Berlin Wall and the end of the cold war. “An age of empire beckoned America and Exxon alike,” Coll writes. “Brand new nations brimming with oil and gas and others previously closed to Western corporations hung out FOR LEASE signs to lure geologists from Houston and London: Russia, Kazakhstan, Azerbaijan, Angola, Qatar and tiny Equatorial Guinea.” Then in 1999 came another crucial event: Exxon’s merger with Mobil, which created the world’s largest nongovernment producer of oil and gas, and the largest company of any kind headquartered in the United States—an entity effectively unparalleled in corporate power, profit, and influence.

Coll fills in the well-known outlines of ExxonMobil’s story with prodigiously reported details and vivid characters, starting with Lee Raymond, CEO of the company from 1999 to 2005. Raymond had been friends with former Halliburton CEO Cheney for more than a decade by the time Cheney became vice president—and head of George W. Bush’s White House Energy Task Force. Deeply respected but also feared by his colleagues, Raymond oversaw ExxonMobil’s aggressive international expansion after the end of the cold war. Coll writes that Raymond’s driving goal was the relentless acquisition of “replacement reserves”—i.e., reserves booked for future oil development that equal or exceed the amount of oil the company is currently exploiting. The higher a company’s proven replacement reserves, the greater its stock value; hence Raymond’s almost single-minded pursuit to lock down new supply, even as that quest took the company into ever more unstable territory—shaky African states, the middle of guerrilla wars, ultradeep waters where drilling had never been proved environmentally safe. The drive to prove the company’s supply of replacement reserves also pushed Raymond into shaky legal territory, including, for many years, tricky accounting in the company’s reports to the Securities and Exchange Commission.

Coll’s background as a foreign-intelligence reporter comes to the fore in his descriptions of the oil company’s global operations. In Aceh, Indonesia, for example, ExxonMobil’s interests became deeply embedded in US diplomatic and intelligence priorities—and ultimately exerted extraordinary control over the Bush administration’s own statecraft. After Acehnese rebels attacked ExxonMobil’s gas fields in their war for independence from Indonesia, diplomats with the Bush White House stepped in and negotiated with the rebels to leave the company alone. ExxonMobil then hired sectors of the Indonesian military to provide security for its drilling operations—which Indonesian forces did in typically brutal fashion, using their notorious tactics of torturing and executing rebel guerrillas, sometimes piling them in mass graves. Coll tracks down Indonesian and Acehnese witnesses and pores through legal documents and human rights groups’ accounts to vividly describe these chilling episodes.

Coll also takes us inside Raymond’s meetings with his friend Cheney, and into ExxonMobil’s K Street offices in Washington, where the company has long been a lobbying powerhouse. But it’s clear, as he says, “ExxonMobil’s strategy was not so much to dazzle or manipulate Washington as to manage and outlast it.” As Lee Raymond said: “Presidents come and go; ExxonMobil doesn’t come and go.”

One subject Raymond and Cheney frequently discussed was the politics of climate change. Both viewed any serious effort to scale back carbon emissions—which would have a profound effect on the oil industry—as anathema to the interests of the American economy, oil profits, and (by extension) the Bush administration. During the late 1990s and early 2000s, ExxonMobil engaged external scientists to spread uncertainty about the science of climate change. But internally, Coll reports for the first time, the company’s own scientists understood that climate change was real, and were engaged in researching how they could exploit the coming changes—for example, the widespread melting of ice in the Arctic—to lock down new replacement reserves.

Even when reporting episodes such as this, Coll employs language that’s plain, clear, and free of accusation. Though some of the details recounted across the sprawling narrative of Private Empire are outrageous, the reporting is deep and fair. That’s especially evident in Coll’s chronicle of the discussions between the Bush administration and the oil company over the invasion of Iraq. Although there remains a public perception that Bush’s Iraq invasion was done to lock down oil supplies for companies such as ExxonMobil, Coll’s account finds the company deeply wary of the entire endeavor.

After the Iraq invasion was under way, the Bush administration urged ExxonMobil to open a Baghdad office. But the company said no. “Throughout his cultivation of the Bush administration . . . Raymond purposefully kept ExxonMobil at arm’s length from the administration’s attempts to remake post–Saddam Hussein Iraq,” Coll writes. “It was not in ExxonMobil’s interests to become tainted by failed nation-building projects in a country that held one of the world’s largest unproduced oil and gas resource bases.”

Perhaps the most surprising part of Coll’s story is his description of the company’s transition from the era of Lee Raymond to the present regime, headed up by CEO Rex Tillerson. Like his predecessor, Tillerson has pushed aggressively for the company to hold fast to its replacement reserves, ensured that it’s remained a lobbying colossus in Washington, and overseen the donation of millions of dollars to Republican candidates. That’s in large part the agenda you’d expect from Raymond’s successor—a Texan and former Eagle Scout whose favorite book is Ayn Rand’s Atlas Shrugged.

But under Tillerson, the company has also undergone a quiet but foundation-shaking transition. While ExxonMobil’s internal scientists realized a long time ago that fossil fuel–induced climate change was real, the company has now stopped paying for scientists to spread information to the contrary—and is potentially poised to become a leader in pushing for legislation to stop the problem.

In the same way that the company has always planned its global oil exploration strategies on long-term time frames that far outstrip the term of any US president, it is now planning for the inevitability of a carbon constraint law to fight climate change—even if such legislation won’t materialize in the next few years. And ExxonMobil’s powerful lobbying shop (which, under Tillerson, has been beefed up with a number of high-powered Democrats) has even started pushing a carbon-tax bill for whenever Congress will be able to take up the issue again. At the same time, the company has begun investing millions of research dollars to develop synthetic algae-based biofuels.

In 2010, Tillerson oversaw another profound change: ExxonMobil merged with XTO, the nation’s biggest developer of unconventional and shale gas. The buy came at a time when the company’s drive to replace its reserves was foundering—after the merger, natural gas made up 45 percent of the corporation’s holdings, and ExxonMobil effectively became the largest natural gas producer in America.

Although natural gas produces carbon emissions, it emits only about half the amount that coal does and 30 percent the amount produced by oil. It is, in effect, the cleanest fossil fuel—meaning, in turn, that the companies producing it are poised to be blockbuster winners in any future legal regime that fights climate change by, say, taxing carbon pollution.

The twentieth century, the age of oil, gave rise to the powerful corporate giant that is ExxonMobil. But even as we look toward the slow, expensive sunset of oil, the biggest corporation in the nation seems poised to continue to grow even richer and more powerful.

Coral Davenport is the energy and environment correspondent at National Journal.

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