Shareholders press energy companies on risks associated with gas-extraction method
Friday, January 21, 2011; 11:34 PM
Shareholder groups have filed resolutions with major oil and gas companies urging them to disclose their plans for managing water pollution and financial risks associated with hydraulic fracturing, a technique used to extract natural gas from shale.
The resolutions announced Friday, filed with companies such as Chevron and Exxon Mobil, take aim at an increasingly common industry practice that has been blamed for tainting water supplies and land with chemicals.
Under hydraulic fracturing, known as fracking, high-pressure water, chemicals and particles are injected deep underground to break up shale formations and release natural gas. Companies are turning to fracking because more-accessible deposits of natural gas have dwindled.
The practice has caught the attention of regulators and politicians. New York state placed a temporary moratorium on new fracking permits, lawsuits have been filed against operations in Pennsylvania, and Philadelphia's city council has discussed banning the practice in the Delaware River Basin until studies show that it is safe.
The shareholder groups include the New York state pension fund, Domini Social Investments, Trillium Asset Management and The Sisters of St. Francis of Philadelphia. The resolutions called on the companies to recycle waste water, disclose the type of chemicals used in the operations and lessen their toxicity.
"This is really about enhancing the long term-value of these companies," said Andrew Logan, director of the oil and gas program for Ceres, a coalition of investors and environmental groups that works with companies to improve their business practices.
"They want to see these companies succeed," Logan said. "The industry's ability to continue to develop shale gas reserves depend on the public's acceptance of fracking that it's safe."
According to the Department of Energy, the available supply of shale gas is twice as large as estimates from a year ago. In its annual energy outlook released last month, the agency said the supply of shale gas is 827 trillion cubic feet, the energy equivalent of 140 billion barrels of oil.
Over the next 10 years, the majority of natural gas wells will require fracking, according to the American Petroleum Institute. The API said hydraulic drilling is already safe, and the resolutions filed by the investors were unnecessary.
"These kinds of resolutions could interfere with use of a tried-and-true technology that promises thousands of new jobs and vast and indispensable supplies of clean-burning energy," said Carlton Carroll, an API spokesman.