Los Angeles Business Journal

Oil Giant Dug Its Own Hole

COMMENT By Charles Crumpley Monday, March 24, 2014

Trust seemed to be at the heart of the issue last week when the Carson City Council voted to ban, at least temporarily, all new drilling in that oil-sodden city. Occidental Petroleum had vowed it would not use fracking in its big oil field there, but the City Council simply didn’t believe Oxy.

“We don’t trust them at all,” one resident was quoted as saying in the Los Angeles Times.

Let me stop here and relate a little story.

In December, we got a tip from a known and credible source that Oxy had told at least some employees to prepare to move to Texas in 2014 because the company was planning to relocate its headquarters to Houston. Our reporter, Howard Fine, corroborated the story and found some other evidence: Oxy has been expanding its presence in Houston while it had slowly depopulated its headquarters in Westwood; Stephen Chazen, Oxy’s chief executive, had bought a house in Houston in June, etc.

Fine contacted Oxy about its seemingly imminent move to Texas. He fully expected the old “no comment” response, which is what a company should say in this situation.

Instead, a spokeswoman said, “We do not have any current plans to move our corporate headquarters out of Los Angeles.” She would not elaborate.

That statement stopped us cold. Internally, we had a debate. My belief was that a big company like Oxy wouldn’t say it had no plans if it did have plans. I mean, a trustworthy company wouldn’t (I’m trying not to use the word “lie”) be so intentionally misleading. In the end, we did publish the story in the Dec. 16 issue, but we downplayed it.

Two months later, the company announced it was moving its headquarters to Houston. (As you might know, it’s a little more complicated. Oxy will split off its California operations, and it plans to place the headquarters for that entity somewhere in California.)

After that announcement, I sent an email to the spokeswoman, Melissa Schoeb, asking why she said in December that the company had no plans to move its headquarters when the company apparently did have plans. She responded March 5 thusly: “Thanks for your note. On Feb.14, 2014, Occidental’s Board of Directors announced that Occidental would move its corporate headquarters from Los Angeles to Houston. Regards, Melissa.”

I sent a note back to her saying that perhaps my question wasn’t clear, so I re-asked it as directly as I could. Since then: crickets.

Look, there’s a froth of politicized hysteria over fracking. Until a detached adult credibly shows that fracking can cause a real and proximate hazard, bans on fracking are premature and kind of silly. Not to mention economically dangerous for a town like Carson.

But at the same time, trust is really at the heart of the issue here. Carson seems to be suspicious of the company; the City Council voted unanimously against it, after all. Did they somehow get the sense that Oxy has the capacity to be intentionally misleading?

I don’t get the ban on fracking. I do get the apprehension about Oxy.

If this is the question: “Can Occidental Petroleum be trusted?” In my opinion, the answer is no.

Charles Crumpley is editor of the Business Journal. He can be reached at ccrumpley@labusinessjournal.com.