Thursday, August 08, 2013

How to Make Money from Fracking.

Set up a hydrocarbons exploration and development company.  The important thing is to make it look credible.  The Board of Directors and senior management need to have excellent credentials; the majority should have been practising geologists, geophysicists and engineers working in senior positions in big oil companies, a few should be experienced lawyers and accountants. This may be the sort of crew you should be looking for.
Acquire Petroleum Exploration and Development Licences.
Borrow lots of money.
It is probably best to work with other similar companies, either letting them buy a slice of your action or buy into theirs.
The important thing is to make it look credible.  You can only borrow seriously lots of money if the City, or whoever, believes they will get a great return.  (That’s not too hard when bank rate is what it is.)  So, not only do you have to demonstrate that you are a competent company you also have to persuade everybody that your licence area will deliver lots of valuable hydrocarbons.
Now, and this is important so pay attention, it does not actually matter (to you) whether or not your fields deliver.  The important thing is to ensure that people believe they will deliver so they lend you lots of money.  You can use the money to pay handsome salaries (and have fun with an imaginative bonus scheme that pays out still more) to all your directors and managers, including, most importantly, yourself.  You’ll also be able to pay generously to all your other staff and contractors.
There could eventually be one of two outcomes.  It might turn out that there are no hydrocarbons found, not even with fracking.  The company folds and the good folk who bought shares or otherwise lent you money are disappointed.  But you’ve been paid and so have the rest of your board of directors including a nice little nest-egg squirreled away for pensions all round.  Staff and contractors have had a good few years.  Only the money-lenders are sad, now realising the whole affair was an over-hyped scam of a scheme.
The other outcome is that you do, after all, strike it rich.  You are able to produce hydrocarbons at a profit.  Extra bonuses all round and dividends for shareholders with a windfall as a global oil corporation buys you out.
Either way, it’s win-win for you and your company.
So what’s the risk?  The International Court might enact the crime of ecocide, turning all who produce greenhouse gasses guilty of a crime against humanity.  Or pigs might fly.
The Big Qestion is: Is this the way fracking firms operate?
Meanwhile, come and join the conversation on Frack Free Licolnshire.
And here's a bit of pertinent further reading. Prof Paul Ekins from UCL and Nicole Foss at Automatic Earth.  Both, of course, much more sensible than what you've just been reading. 


2 Comments:

Anonymous Anonymous said...

Brilliant!
Count me in...

8:50 pm  
Blogger biffvernon said...

Good to see the Archdruid has written something similar (but with more words) at http://thearchdruidreport.blogspot.co.uk/2013/08/well-and-truly-fracked.html

10:23 pm  

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