Read the following and answer the 6 questions below. Thank you.

During the summer of 2008, people living near the Pinedale

Mesa (sometimes called the Pinedale Anticline) in

Wyoming were anxiously waiting for the Bureau of Land

Management (BLM) to issue a decision regarding whether

Questar and other energy companies would be allowed

to drill thousands of ugly natural gas wells all over the

serene wilderness that lay atop the mesa. The Pinedale

Mesa is a 40-mile-long, 300-square-mile plateau extending

north and south along the eastern side of Wyoming’s

Green River Basin, an area that is famous as the gateway to

the hunting, fishing, and hiking treasures of the Bridger-

Teton wilderness. The city of Pinedale, which sits below

the mesa, a short distance from its northern end, was already

surrounded by hundreds of recently drilled wells

that ceaselessly pumped natural gas from the vast pockets

that are buried underneath the region and which are estimated

to contain 25 trillion cubit feet of gas worth billions

of dollars.

Questar Corporation, an energy company with assets

valued at about $4 billion, is the main developer of the gas

wells around the city and had already drilled several wells

up on the mesa that overlooked the city. Occasionally elk,

mule deer, pronghorn antelope, and other wildlife, including

the imperiled greater sage grouse, descend from their

habitats atop the mesa and gingerly pick their way around

and between the wells Questar drilled around Pinedale.

Not surprisingly, environmentalists were at war with Questar

and the other energy companies, whose plans to expand

their operations on the mesa, they claimed, would

have serious negative effects on the wildlife on the mesa as

well as on the beauty of the area.

The federal government’s Bureau of Land Management

(BLM) was responsible for deciding what was done

with the acreage on the mesa. Of 198,034 acres on the

mesa, the federal government owns 158,000, Wyoming

owns 9,800, and 29,800 are privately owned. In 2000, the BLM had authorized limited drilling on the mesa, but had

imposed several restrictions that protected wildlife from

the full impact of the drilling. In 2008, the Bureau was being

asked by Questar and the other companies who wanted

to drill on the mesa to remove its limits on drilling by allowing

more than 4,300 additional wells, as well as to lift

one of the restrictions that cushioned the drilling’s impact

on wildlife but had proven very costly to the companies.

Headquartered in Salt Lake City, Questar Corporation

drilled its first successful test well on the Pinedale

Mesa in 1998. Extracting the gas under the mesa was

not feasible earlier because the gas was trapped in tightly

packed sandstone that prevented it from flowing to the

wells and no one knew how to get it out. It was not until

the mid-1990s that the industry developed techniques

for fracturing the sandstone and freeing the gas. Full-scale

drilling had to await the completion of an environmental

impact statement, which the Bureau of Land Management

(BLM) finished in mid-2000 when it approved drilling up

to 900 wells on the federally owned acreage on the Pinedale

Mesa. By the beginning of 2004, Questar had drilled

76 wells on the 14,800 acres it leased from the federal government

and from the state of Wyoming and the company

had plans to eventually drill at least 400 more wells. Energy

experts around the country welcomed the new supply

of natural gas, which, because of its simple molecular

structure (CH 4 ), burns much more cleanly than any other

fossil fuels. Moreover, because natural gas is extracted in

the United States, its use reduces U.S. reliance on foreign

energy supplies. Businesses in and around Pinedale also

welcomed the drilling activity, which brought numerous

benefits, including jobs, increased tax revenues, and

a booming local economy. Wyoming’s state government

likewise supported the activity since 60 percent of the state

budget is based on royalties the state receives from coal,

gas, and oil operations.

Questar’s wells on the mesa averaged 13,000 feet

deep and cost $2.8 to $3.6 million each, depending on

the amount of fracturing that had to be done. 1 Drilling a

well typically required clearing and leveling a 2- to 4-acre

“pad” to support the drilling rig and other equipment.

One or two wells could be drilled at each pad. Access roads

had to be run to the pad, and the well had to be connected

to a network of pipes that drew the gas from the wells and

carried it to where it could be stored and distributed. Each

well produced waste liquids that had to be stored in tanks

at the pad and periodically hauled away on tanker trucks.

The BLM, however, had imposed a significant restriction

on Questar’s operations on the mesa. Large

areas of the mesa provide habitat for mule deer, pronghorn

sheep, sage grouse, and other species, and the BLM

imposed drilling rules that were designed to protect this.

Chief among these species was the sage grouse.

The sage grouse is a colorful bird that today survives

only in scattered pockets in 11 states. The grouse, which

lives at elevations of 4,000 to 9,000 feet and is dependent

on increasingly rare old-growth sagebrush for food and to

screen itself from predators, is extremely sensitive to human

activity. Houses, telephone poles, or fences can draw

hawks and ravens, which prey on the ground-nesting grouse.

It is estimated that 200 years ago the birds—known for

their distinctive spring “strutting” mating dance—numbered

2 million and were common across the western

United States. By the 1970s, their numbers had fallen to

about 400,000. A study completed in June, 2004 by the

Western Association of Fish and Wildlife Agencies concluded

that there were only between 140,000 and 250,000

of the birds left and that “we are not optimistic about the

future.” The dramatic decline in their number was blamed

primarily on the destruction of 50 percent of their sagebrush

nesting and mating grounds (called leks ), which in

turn was blamed on livestock grazing, new home construction,

fires, and the expanding acreage being given over to

gas drilling and other mining activities. Biologists believe

that if its sagebrush habitats are not protected, the bird

will be so reduced in number by 2050 that it will never

recover. According to Pat Deibert, a U.S. Fish and Wildlife

Service biologist, “they need large stands of unbroken

sagebrush” and anything that breaks up those stands such

as roads, pipelines, or houses, affects them. 2

In order to protect the sage grouse, whose last robust

population had nested for thousands of years on the

ideal sagebrush fields up on the mesa, the BLM required

that Questar’s roads, wells, and other structures had to

be located a quarter mile or more from grouse breeding

grounds, and at least 2 miles from nesting areas during

breeding season. Some studies, however, concluded that

these protections were not sufficient to arrest the decline

in the grouse population. As wells proliferated in the area,

they were increasingly taking up land on which the grouse

foraged and nested and were disturbing the sensitive birds.

Conservationists said that the BLM should increase the

quarter-mile buffer areas around the grouse breeding

grounds to at least 2-mile buffers.

In May, 2004, the U.S. Fish and Wildlife Service

announced that it would begin the process of studying

whether the sage grouse should be categorized as

an endangered species, which would bring it under the

protection of the Endangered Species Act, something conservationists

had been urging the Service to do since 2000.

Questar and other gas, oil, and mining companies adamantly

opposed having the grouse listed as an endangered

species because once listed, the grouse would make large

areas of federal land off-limits to drilling, mining, and development.

Since 80 percent of Wyoming is considered

sage grouse habitat, including much of the Pinedale Mesa,

Questar’s drilling plans would be severely compromised.

ETHICS AND THE ENVIRONMENT 299

Questar and other companies formed a coalition—the

Partnership for the West—to lobby the Bush administration

to keep the grouse off the endangered species list. Led

by Jim Sims, a former communications director for President

George W. Bush’s Energy Task Force, the coalition

established a web site where they called on members to

lobby “key administration players in Washington” and to

“unleash grass-roots opposition to a listing, thus providing

some cover to the political leadership at Department of Interior

and throughout the administration.” The coalition

also suggested “funding scientific studies” that would be

designed to show that the sage grouse was not endangered.

According to Sims, the attempt to categorize the grouse as

an endangered species was spearheaded by “environmental

extremists who have converged on the American West

in an effort to stop virtually all economic growth and development.

They want to restrict business and industry at

every turn. They want to put our Western lands off-limits

to all of us.” 3 Dru Bower, vice president of the Petroleum

Association of Wyoming, said, “[endangered species] listings

are not good for the oil and gas industry, so anything

we can do to prevent a species from being listed is good

for the industry. If the sage grouse is listed, it would have

a dramatic effect on oil and gas development in the state of

Wyoming.” 4

The sage grouse was not the only species affected

by Questar’s drilling operations. The gas fields to which

Questar wanted additional drilling rights was an area

8 miles long and 3 miles wide, located on the northern end

of the mesa. This property was located in the middle of

the winter range used by mule deer and pronghorn antelope,

some of which migrate to the mesa area from as far away

as the Grand Teton National Park, 170 miles to the north.

Although the mesa was elevated and winters there were

harsh, it was much lower than the mountains where the

mule deer and pronghorn antelope lived in spring and

summer, and the mesa provided large fields of sagebrush

that fed the animals. Migration studies conducted between

1998 and 2001 revealed that the pronghorn antelope herds

make one of the longest annual migrations among North

American big game animals. The area around Pinedale is

laced with migration corridors used by thousands of mule

deer and pronghorn every fall as they make their way south

to their winter grounds on the mesa and the Green River

Basin. Traffic on Highway 191 which cuts across some of

the migration corridors sometimes has to be stopped to

let bunched-up pronghorn herds pass. 5 Environmentalists

feared that if the animals were prevented from reaching

their winter ranges or if the winter ranges became inhospitable,

the large herds would wither as the animals died off.

Unfortunately, drilling operations create a great deal of

noise and require the constant movement of many trucks

and other large machines, all of which can severely impact

animals during the winter when they are already physically

stressed and vulnerable due to their low calorie intake.

Some studies had suggested that even the mere presence

of humans disturbed the animals and led them to avoid an

area. Consequently, the BLM required Questar to cease all

drilling operations on the mesa each winter from November

15 to May 1. In fact, to protect the animals the BLM prohibited

all persons, whether on foot or on automobile, from

venturing into the area during winter. The BLM, however,

made an exception for Questar trucks and personnel who

had to continue to haul off liquid wastes from wells that had

already been drilled and that continued to operate during

the winter (the winter moratorium prohibited only drilling

operations, and completed wells were allowed to continue

to pump gas throughout the year).

Being forced to stop drilling operations during the

winter months was extremely frustrating and costly to Questar.

Drilling crews had to be laid off at the beginning of

winter, and new crews had to be hired and retrained every

spring. Every fall the company had to pack up several tons

of equipment, drilling rigs, and trucks and move them off

the mesa. Because of the seasonal interruption in its drilling

schedule, the full development of its oil fields was projected

to take 18 years, much longer than the company wanted.

In 2004, Questar submitted a proposal to the Bureau

of Land Management. Questar proposed to invest in a

new kind of drilling rig that allowed up to 16 wells to be

dug from a single pad, instead of the traditional 1 or 2.

The new technology (called directional drilling ) aimed the

drill underground at a slanted angle away from the pad,

so that by placing wells around the perimeter of the pad,

all at an underground slant leading away from the pad—

like the outstretched tentacles on an octopus—multiple

distant locations could be tapped by several wells branching

out from a single pad. This minimized the surface land

occupied by the wells: while traditional drilling required

16 separate 2–4 acre pads to support 16 wells, the new

“directional drilling” technology allowed a single pad to

hold 16 wells. The technology also reduced the number

of required roadways and distribution pipes since a single

access road and pipe could now service the same number

of wells that traditionally required 16 different roads and

16 different pipes. Questar also proposed that instead of

carrying liquid wastes away from operating wells on noisy

tanker trucks, the company would build a second pipe system

that would pump liquid wastes away automatically.

These innovations, Questar pointed out, would substantially

reduce any harmful impact that drilling and pumping

had on the wildlife inhabiting the mesa. Using the

new technology for the additional 400 wells the company

wanted to drill would require 61 pads instead of 150, and

the pads would occupy 533 acres instead of 1,474.

The new directional drilling technology added about

$500,000 to the cost of each well and required investing

in several new drilling rigs. The added cost for the 400

300 BUSINESS AND ITS EXTERNAL EXCHANGES: ECOLOGY AND CONSUMERS

additional wells Questar planned would total $185 million.

Questar noted, however, that “the company anticipates

that it can justify the extra cost if it can drill and complete

all the wells on a pad in one continuous operation” that

continued through the winter. 6 If the company was allowed

to drill continuously through the winter, it would

be able to finish drilling all its wells in 9 years instead of

18, thereby almost doubling the company’s revenues from

the project over those 9 years. This acceleration in its revenues,

coupled with other savings resulting from putting

16 wells on each pad, would enable it to justify the added

costs of directional drilling. In short, the company would

invest in the new technology that reduced the impact on

wildlife, but only if it was allowed to drill on the mesa during

the winter months.

In addition, Questar had requested that it be allowed to

increase the number of wells it was allowed to drill on the

mesa. By now, several other energy companies were trying

to get permission to drill on the mesa, including Ultra

Resources, Shell, BP, Stone Energy, Newfield Exploration,

Yates Petroleum, and Anschutz. Together, the companies

asked the BLM that they be allowed to drill an additional

4,399 natural gas wells on the mesa. And all of them were also

requesting they be allowed to drill through the winter.

Although environmentalists welcomed Questar’s willingness

to invest in directional drilling, they strongly opposed

allowing it or the other companies to operate on the

mesa during the winter when mule deer and antelope were

there foraging for food and struggling to survive. The Upper

Green River Valley Coalition, a coalition of environmental

groups, issued a statement that read: “The company should

be lauded for using directional drilling, but technological

improvements should not come at the sacrifice of important

safeguards for Wyomings’s wildlife heritage.”

In order to allow Questar to test the feasability of

directional drilling and to study its effects on wintering

deer herds, the Bureau of Land Management decided to

let Questar drill wells at a single pad through the winter

of 2002–2003 and again through the winter of 2003–2004.

The Bureau would launch a 5-year study of the impact

of the drilling which would continue until 2007 (later

extended beyond 2010). Questar was glad it was at least

being given the chance to show that drilling through the

winter was compatible with the wildlife living on the mesa.

Two of the other companies, Shell and Ultra were also allowed

to test winter drilling in 2005.

Before the Bureau made a final decision about

whether it would approve the companies’ requests to drill

thousands of additional wells and to drill them through the

winters, it had to again prepare an environmental impact

statement, this one called a “supplemental environmental

impact statement” or SEIS. 7 The Bureau therefore began

collecting information about the impact of increasing

the number of wells and allowing year-round drilling. Its

5-year study of the impact of winter drilling was expanded

to include on-going monitoring of wildlife on the mesa.

In a preliminary 2004 report on the results of its study,

the Bureau of Land Management said that it had found

“no conclusive data to indicate quantifiable, adverse effects

to deer” due to drilling. The Bureau was clearly anxious

to avoid the public dismay that it had created when it had

first opened up the mesa to drilling by Questar and it was

trying to be as open as possible. During the winter of

2005 and the spring of 2006, the Bureau held several open

meetings at which the public was invited to comment on

the requests of Quesar and the other companies. In December,

2006, the Bureau completed the first draft of its

environmental statement and released it to the public for

more comments. Based on this additional input, a second

preliminary draft was issued for public comment in December,

2007 and the Bureau held additional public meetings

on the second draft during early 2008.

Finally, on September 12, 2008, the Bureau issued its

decision on the requests of the drilling companies, along

with the final draft of its environmental impact statement.

Its decision assumed that future drilling would use the new

drilling technology Quesar had proposed. According to

the Bureau, it had studied the impact of five main alternative

decisions it could render: (1) continue to prohibit winter

drilling and allow no additional wells; (2) allow winter

drilling and allow 4,399 more wells on a maximum of 600

drilling pads all located within a large “core area” in the

central part of the mesa; (3) allow winter drilling and 4,399

more wells on a maximum 600 pads plus : confine drilling

to specific parts of the “core area” and prohibit drilling or

disturbance of any areas that were “crucial winter ranges”

for mule deer and pronghorn antelope, or mating and

nesting areas of the sage grouse; (4) allow winter drilling

and 4,399 wells on 600 pads, confine drilling to parts of

the core area, prohibit drilling or disturbance of winter

ranges of mule deer or pronghorn antelope or mating and

nesting areas of sage grouse, plus: prohibit drilling on the

thousands of acres (the “flank area”) surrounding the “core

area” where drilling was allowed, require annual review of

wildlife impacts, and require the companies to establish a

fund (with an initial contribution of $4.2 million and annual

payments of $7,500 per well) to monitor wildlife and

to pay for the costs of mitigating any impacts on wildlife

that monitoring detected; (5) Allow drilling only within

the “core area” and prohibit drilling in the area around the

periphery, but: permit fewer than 4,399 wells and less than

600 pads and limit the total acreage devoted to wells.

The BLM admitted that under all alternatives but

(1), the deer and antelope “would continue to be adversely

affected,” and “decreased habitat” would result for the

sage grouse. Also “surface disturbance is expected to adversely

affect migratory birds,” and sediment from drilling

that entered rivers could lead to “decreased reproductive

ETHICS AND THE ENVIRONMENT 301

success in spring-spawning native salmon species.” Nevertheless,

the BLM decided to choose alternative (4), saying

that it provided the best balance between protecting

the natural environment and allowing access to the natural

gas that was so valuable to the United States. In its official

statement of its decision, the BLM added, in an important

“appendix B,” that if the number of mule deer or antelope

declined by 15 percent in any one year or from their levels

in 2005/2006, or if the number of sage grouse declined

by 30 percent in any two-year period, then the BLM was

required, and had the right, to take a number of “mitigation

responses.” Specifically, the BLM had to first try to

expand the habitat of the declining species by removing all

human disturbances from the large “flank area” surrounding

the “core” and by enhancing these areas so they could

provide additional habitat by, for example, planting more

sagebrush and other edible vegetation. But if this did not

work, then the BLM could change where wells were allowed

and how fast new wells could be added, as needed to

protect wildlife.

Questar and the other companies were pleased with

the outcome. They had, essentially, gotten what they had

asked for, even if there were limits to where they could

drill their wells. The companies quickly moved into the

“core areas” and began building and drilling, and continued

through the winter of 2009. But on October 28, 2010,

Western Ecosystems Technology, the group monitoring

wildlife on the Pinedale Mesa, announced that in 2009

mule deer on the mesa had declined by 60 percent compared

to their numbers in 2001, and by 28 percent compared to

their number in 2005. 8 The Western Ecosystem Technology

study also found that in 2009 less than 70 percent of

adult female mule deer survived the winter on the mesa,

compared to a normal survival rate of 85 percent. A representative

of Shell, one of the companies drilling on

the mesa, reacted by saying more research was needed:

“Let’s see what the results are before we start reacting too

much to what could be naturally caused variation.” But

a local Bureau official responded that since the decline

in deer numbers had passed the threshold of 15 percent,

“aggressive and positive action” on mitigation measures

was required.

Questions

1. What are the systemic, corporate, and individual issues

raised in this case?

2. How should wildlife species like grouse or deer be valued,

and how should that value be balanced against

the economic interests of a society or of a company

like Questar? What principles or rules would you

propose we use to balance the value of wildlife species

against economic interests?

3. In light of the fact that natural gas reduces the U.S.’s

undesirable dependence on foreign oil and the fact

that natural gas produces less greenhouse gases than

coal, oil, and other fuels, should Questar continue its

drilling operations? Does the environmental impact

of Questar’s drilling operations imply that Questar is

morally obligated to stop drilling wells on the Pinedale

Mesa? Explain.

4. What, if anything, should Questar and the other companies

be doing differently?

5. From an ethical point of view, was alternative (4) the

best option among those from which the BLM chose?

Is another alternative better from an ethical point of

view? Explain your answer.

6. Should the loss of species produced by the drilling

operations of Questar be considered a problem

of pollution or a problem of conservation? Can the

loss of species by evaluated as an “external cost”?

Explain.