Investors Press Gas Drillers on Fracking
Washington PA Observer
Reporter
22 January 2011
Associated Press
ALLENTOWN - Activist shareholder groups want energy companies to do a
better job of reducing the risks of hydraulic fracturing, the drilling
technique that's unlocked vast stores of previously inaccessible
natural gas while raising concerns about environmental contamination.
Investors announced Friday they have filed resolutions with nine oil
and gas companies that use hydraulic fracturing, or "fracking," to
extract gas from shale formations thousands of feet underground.
Critics contend that fracking has the potential to pollute groundwater.
The industry says it is safe.
The proposals ask drillers to explain how they plan to manage the
potential environmental consequences of fracking, and to go "above and
beyond" existing regulatory standards. The resolutions also demand a
reduction in the volume and toxicity of chemicals used in fracking;
improvements in well construction; and increased recycling of toxic
wastewater.
Recent technological advances have allowed drillers to reach gas
reserves in the gigantic Marcellus Shale - a rock formation beneath
Pennsylvania, New York, West Virginia and Ohio - and other shales in
the U.S. for the first time.
Energy companies combine horizontal drilling with fracking, in which
millions of gallons of water, along with sand and toxic chemicals, are
blasted underground to break up the rock and release the gas. The
Environmental Protection Agency is planning a study of its
environmental and health consequences.
The activist shareholders say drillers need to become more transparent
about their operations and take steps to reduce water, air and soil
pollution.
"Oil and gas firms are being too vague about how they will manage the
environmental challenges resulting from fracking," New York State
Comptroller Thomas DiNapoli, who manages the state's public worker
pension fund, said in a statement.
The fund's stake in two of the drillers - Carrizo Oil & Gas Inc.
and Cabot Oil & Gas Corp. - is valued at nearly $35 million. New
York, meanwhile, has declared a temporary moratorium on fracking to
allow state regulators to issue new guidelines for shale gas extraction.
"The risks associated with unconventional shale gas extraction have the
potential to negatively impact shareholder value," DiNapoli said. "I
urge companies working in this field to share their risk mitigation and
management strategies with investors and the public."
The American Petroleum Institute said fracking is already "carefully
regulated" by the states.
"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 API spokesman
Reid Porter. "The resolutions also threaten America's retirees who
depend on ... the good performance of energy stocks."
A raft of nearly identical shareholder proposals were offered last
year. None attracted a majority, though a resolution filed with
Williams Cos. - requesting an analysis of the impact of fracking -
garnered 42 percent of the vote. Williams subsequently improved its
disclosures about the drilling process, investor groups said.
"I think the goal is to really demonstrate to these companies that
there is significant investor concern around these issues and
significant investor support for the company being more transparent in
how they manage these risks," said Andrew Logan at Ceres, a
Boston-based investment network that focuses on environmental
sustainability.
Investor groups filing resolutions include the New York pension fund,
Domini Social Investments, Trillium Asset Management, and the Sisters
of St. Francis of Philadelphia. The companies they targeted, in
addition to Cabot and Carrizo, are Anadarko Petroleum Corp., Chevron
Corp., El Paso Corp., Energen Corp., ExxonMobil Corp., Southwestern
Energy Co., and Ultra Petroleum Corp.