Hydraulic fracturing, or fracking, the natural gas drilling technique in which millions of gallons of water and chemicals are injected deep underground under high pressure, is coming under scrutiny from an unusual source. Shareholders in the very energy companies engaged in fracking have filed resolutions demanding that the companies work to reduce risks posed by their drilling.
Shareholders filing the resolutions include the New York State Comptroller, Domini Social Investments, Trillium Asset Management, Miller/Howard Investments, corporate accountability campaigners As You Sow and the Sisters of St. Francis of Philadelphia.
Nine energy companies were targeted. The include: ExxonMobil, Chevron, Ultra Petroleum, El Paso, Cabot Oil & Gas, Southwestern Energy, Energen, Anadarko and Carrizo Oil & Gas.
The shareholder proposals ask the companies to disclose their policies and strategies for reducing environmental and financial risks from chemicals used, water impacts and a host of other issues. The resolutions also request adoption of best management practices, such as:
â€¢ Recycling and reusing waste waters;
â€¢ Reducing the volumes and toxicity of chemicals;
â€¢ Disclosing the chemicals used in fracturing operations; and
â€¢ Assuring the integrity of well cementing through pressure testing and other methods.
â€œOil and gas firms are being too vague about how they will manage the environmental challenges resulting from fracking,â€ said New York comptroller Thomas DiNapoli. â€œThe risks associated with unconventional shale gas extraction have the potential to negatively impact shareholder value.â€
A statement from the investor groups points out that fracking’s environmental risks stem largely from poor well-construction practices, which can lead to drinking water contamination, well blowouts and gas leaks, and from inadequate wastewater recycling and management practices. Concerns about water contamination incidents are growing as operations expand, creating reputational and litigation liabilities for companies.
Lawsuits have been filed against four companies over alleged water contamination in Pennsylvania, the group said. New York State adopted a temporary moratorium on new permits for fracking. Philadelphiaâ€™s city council has urged a ban on fracking in the Delaware River Basin until environmental studies have been completed, and Pittsburgh, which sits atop gas deposits, has banned fracking within city limits.
â€œHigh profile water contamination incidents, new litigation, and public protests that include calls for moratoria on natural gas permitting all suggest sizeable and rising business risks to companies and attendant threats to shareholder value,â€ said Richard Liroff, executive director of the Investor Environmental Health Network (IEHN), which helped coordinate the resolutions. â€œShareholders need assurance that companies are candidly disclosing these risks and are adopting best management practices to minimize them.â€
Fracking is exempt from federal regulation under the Safe Drinking Water Act. As a result, drillers are not required to disclose the chemicals that make up fracking fluids. Some studies have found that fracking fluids contain toxic chemicals, including benzene glycol-ethers, toluene, 2-(2-methoxyethoxy) ethanol, and nonylphenols.
Last year, the U.S. Environmental Protection Agency embarked on a major study to assess the environmental impacts of fracking. Fracking opponents hope it will lead to more regulation of the industry.