Mayo’s oil and gas wells are pumping out revenue, while climate change activists call for divestiture
ROCHESTER, Minn. -- As climate change activists call for the wholesale divestiture of fossil fuel investments, Mayo Clinic’s 87 Texas wells are pumping out an estimated 45,000 gallons of oil and 13 million cubic feet of natural gas a day, tallying up to $28 million in revenue in 2018.
The American Medical Association labels climate change as a “public health emergency.” Climate change activists, like Greta Thunberg, are calling for organizations to divest of fossil fuel investments. Harvard University and Georgetown University both recently announced plans to stop investing in fossil fuel companies.
Given the climate, is profiting from fossil fuels appropriate for Mayo Clinic? A local activist says no and calls Mayo Clinic’s oil and gas holdings “problematic” and “frustrating.”
“There’s a certain moral failing for the world’s leading health care organization to remain silent on issues of climate change, which is the world’s most pressing health care disaster in history,” said Rick Morris, Rochester’s Sierra organizing representative and clean energy campaign organizer. “And beyond that to actively profit from the central cause of climate change ... It seems to violate the ‘First Do No Harm’ oath every doctor vows.”
The oil and gas production is under the umbrella of Latigo Petroleum LLC, based in Texas. The oil and natural gas wells are all on land in Roberts and Ochiltree counties in the Texas panhandle.
Latigo has operated 87 active wells in 2019, according to ShaleXP, a news site that tracks wells. ShaleXP data shows that Latigo wells have produced 97.61 million gallons of oil and 18.6 billion cubic feet of natural gas, since 2013.
Mayo Clinic reported its revenue from the fossil fuels production in 2018 — $28 million — as the highest in the history of the seven-year-old venture. That’s up from $18 million in 2017.
Oil and gas revenue collected by Mayo Clinic has fluctuated in recent years. It reported revenue of $11 million in 2016, $14 million in 2015 and $23.8 million in 2014.
Mayo Clinic inherited the Texas property from Barbara Woodward Lips in 1997. The clinic and other investors formed Latigo to manage the fossil fuel holdings in 2013.
Urging companies and nonprofit organizations to pull the plug on oil and gas investments has become an international movement in recent months.
La Crosse, Wis.-based Gundersen Health took a different approach in 2014. While it didn’t get rid of its investments, it decided to freeze all future investments in fossil fuels as part of a strategy to “set the standard for environmental stewardship in health care.”
Mayo Clinic declined to answer questions about any possibility of selling its oil and gas wells, or the specifics of its ongoing fossil fuels investment with Latigo in Texas. It referred to information it provided for a 2017 Post Bulletin article about the oil and gas wells.
“Latigo’s status has not changed. It is a minor holding in Mayo’s investment portfolio. We do not operate the company; it is a passive investment. Per Mayo policies, detailed information on Mayo Clinic’s investment portfolios is confidential. We do not disclose publicly any more about our investments than is included in our audited financial statements,” wrote Mayo Clinic’s Kelley Luckstein last week. “All proceeds from our investments are used to support Mayo Clinic’s mission of research, education and clinical care.”
In 2017, Mayo Clinic spokeswoman Susan Barber Lindquist wrote that “Latigo’s oil and gas development activities will enhance the future mineral interest royalties that flow to Mayo in addition to generating a minor amount of operating income.”
No matter the size of the investment, Morris believes profiting from fossil fuel is hypocritical for Mayo Clinic and it should divest itself of the oil and gas holdings.
Mayo Clinic has touted its reduction of energy consumption by 20% and has received awards for its “green” environmentally friendly projects. It is supportive of the City of Rochester’s pledge to get 100% of its electricity from carbon-free sources by 2030.
“We’re doing all of this work in town (to reduce fossil fuel usage) ... and with two pumps of a Mayo Clinic oil derrick, it’s undone,” he said. “Mayo Clinic is ‘green washing.’ It only wants the good PR, while what they are actually doing is causing far more harm than their publicity stunts help.”
Latigo and the Permian Basin
Latigo is led by longtime Texas oil man D. Kirk Edwards, who previously managed Mayo Clinic’s oil assets before becoming president and CEO of Latigo. In 2015, Edwards received the Entrepreneur of the Year award from the Odessa, Texas, Chamber of Commerce.
Edwards told the chamber audience that he sold his oil conglomerate of Las Colinas Energy Partners, with more than 9,000 wells, so he could work for Mayo Clinic full time.
“Latigo had grown so big, so fast with the drilling we were doing that it was time to concentrate on that part of my business,” Edwards said in an article in the Odessa American newspaper.
He added that Latigo developed an estimated $50 million worth of oil wells in 2014, though it slowed down after prices dropped below $50 per barrel.
In July 2019, Latigo drilled a new horizontal well at a depth of 6,900 feet. It drilled nine new horizontal wells in 2018 and 12 in 2017.
All of the wells are located in the Permian Basin oil field, which is known for its use of fracking to produce natural gas as well as the widespread usage of “flaring” to burn off excess natural gas.
“I’d say right now — everybody, operators, people that are living here, probably feel that we are flaring more than we’d like to,” ” Edwards was quoted in a KMID-ABC 2 TV report as saying in May 2019. “It’s a black eye of the industry.”
The same KMID-ABC 2 piece estimated that 300 million cubic feet of natural gas is being burned in the Permian Basin.
“To put that in perspective, a billion cubic feet a day heats about 5 million homes, so it’s the equivalent of heating about 2.5 million homes a day,” the report quoted Edwards as saying.
To help transport that excess natural gas, as well as oil, several pipelines are under construction into the Permian Basin, near Mayo Clinic’s property.
While Edwards is the top executive at Latigo, Rochester-based Mayo Clinic Senior Investment Officer and Assistant Treasurer Ricky J. Haeflinger serves as a director and vice president of the oil company. He has worked with the firm since 2013. He was paid a total salary of $641,711 by Mayo Clinic in 2018.
Mayo Clinic also reports that the primary activity of a related organization — BWL Holdings, Inc. — is “oil and gas exploration.”
The directors of BWL include Haeflinger, Mayo Clinic Treasurer Harry N. Hoffman and Mayo Clinic Investment Officer Jonah Waxman. Mayo Clinic paid Hoffman $1.33 million in 2018. In an interview with students from his alma mater, Colby College, Waxman described his duties at Mayo Clinic as “co-managing the real assets portfolio, with a primary focus on oil and gas …”
Requests for more information about BWL and its relationship with Mayo Clinic were denied.
Would divestiture help?
Given Mayo Clinic’s position that its investment in fossil fuels is small and passive, would divesting of the Latigo and BWL holdings actually help the environment?
“Divestment has a real effect ... real consequences. Divestment is one of the ways that we can actually take a systematic approach to stopping climate change,” Morris said. “We can run around and exhaust ourselves putting in energy-efficient light bulbs, but it’s not going to do much if the oil keeps getting pumped out of the ground.”
He points out that continuing to invest in health-damaging fossil fuels is not about the patients, but solely an economic choice.
“These are dollar and cents decisions,” he said. “It’s not peanuts ... To say the investments are such small peanuts because they are such a big organization is to ignore their actual practices on the ground.”
Mayo Clinic oil and gas revenue
Mayo Clinic and other investors formed Latigo Petroleum LLC in 2013 to manage its oil and gas holdings in Texas.
It reports the revenue from Latigo in annual audited reports.
2018: $28 million
2017: $18 million
2016: $11 million
2015: $14 million
2014: $23 million