You might expect the biggest lease owner in Canada’s oil sands, or tar sands, to be one of the international oil giants, like Exxon Mobil or Royal Dutch Shell. But that isn’t the case. The biggest lease holder in the northern Alberta oil sands is a subsidiary of Koch Industries, the privately-owned cornerstone of the fortune of conservative Koch brothers Charles and David.
The story then claimed that a Koch subsidiary “holds leases on 1.1 million acres — an area nearly the size of Delaware — in the oil sands region of Alberta, Canada,” citing to “an activist group that studied Alberta provincial records.” It also cited unnamed industry sources speculating that “Koch’s lease holdings could be closer to two million acres.”
The story received a fair amount of attention. If the Kochs stand to profit from Keystone, that would be newsworthy. Ditto if some prominent Democratic donors stand to profit from a Keystone defeat. The story also received some pushback.
Writing on Powerline, attorney John Hinderaker challenged the accuracy of the Mufson-Eilperin report and questioned whether one of the authors (Eilperin) has a conflict of interest. Hinderaker attacked the claim that the Kochs are largest lease holder in the Canadian oil sands, noted that the 1.1 million acres leased by a Koch subsidiary represent less than 3 percent of the oil sands (which stretch over 35 million acres), and questioned whether the Kochs stand to benefit from Keystone. Among other things, the Koch subsidiary has not reserved any space int he pipeline and the influx of oil from Canada’s oil sands could adversely affect Koch investments in domestic markets.
Yesterday, Mufson and Eilperin posted a brief response to criticism of their article. Of note, the two backed off the central claim of their initial post, writing:
if Koch’s lease holdings are 1.1 million acres, that would make it one of the region’s largest, rivaled only by Shell (1 million net acres through an Athabasca joint venture and perhaps 1.3 million net acres altogether), Cenovus Energy (1.5 million net acres), and perhaps Canadian Natural Resources (717,000 net undeveloped acres plus an undetermined number of developed acres). Shell declined to release its total acreage figures. If Koch’s lease holdings are “closer to two million,” as has been said by industry sources we consider highly authoritative, then Koch is indeed the largest lease holder in the province.
Where the first story proclaimed the Kochs are the largest lease holder in the Canadian oil sands, Mufson and Eilperin now say they are “one of the region’s largest.” That’s quite a difference. Indeed, if the Kochs own leases for 1.1 million acres, as claimed in the original story, they are not “the biggest lease holder in Canada’s oil sands.” At least two other companies (Shell and Cenovus) hold more. Further, the data Mufson and Eilperin offer on one company, Canadian Natural Resources, is incomplete. That may matter as CNR appears to have quite extensive holdings based upon maps posted by Hinderaker. Hinderaker also has a surreply on Powerline here.
Perhaps it is true that the Kochs really are the largest lease holder, and really own close to 2 million acres, but Eilperin and Mufson aren’t willing to stand behind this claim. Their original charge was based upon the Kochs owning 1.1 million acres, and yet others own more (as they now acknowledge). As in the original story, the follow-up cites unnamed “industry sources we consider highly authoritative” claiming that the Koch holdings are larger, but there’s a big difference between saying the Koch brothers are the largest lease holder and saying that they might be if the unconfirmed claims of unnamed sources about some indeterminate amount of additional lease holdings are accurate. If the larger number can be substantiated, then let’s see it. If not, and if Mufson and Eilperin are no longer willing to attest that the Kochs are the largest lease holder in the oil sands, then it seems a true correction is in order. A follow-up defending the reporters’ choice of subject matter, while interesting, does not suffice.
UPDATE: It appears that the Kochs may not be the largest leaseholder even if they own leases covering “close to 2 million acres,” as alleged by unidentified “industry sources.” Phil Kerpen sought to replicate the analysis upon which the original claims were based and found that Canadian Natural Resources holds leases for just over 2.5 million acres. I have not independently verified his analysis, but would note that Mufson and Eilperin acknowledged in their follow-up that they had not accounted for all of CNR’s holdings.