Green investors target financial risks of hydraulic fracturing of gas wells
Tuesday, January 26, 2010 at 3:18 pm
Green investment groups representing shareholders in the cleaner-than-coal natural gas industry are pressuring the nation’s major drilling companies to come clean on the process of hydraulic fracturing, which is the subject of a controversial bill introduced last summer by Colorado Reps. Diana DeGette and Jared Polis.
The two Dems, from Denver and Boulder respectively, are seeking to remove a Safe Drinking Water Act exemption granted the process (also known as fracking) during the Bush administration in 2005.
Investors led by Green Century Capital Management and the Investor Environmental Health Network are concerned that an increasingly hostile regulatory environment and potential litigation stemming from the process, which has been linked to groundwater contamination in several states, including Colorado, could hurt the financial future of natural gas.
“It is critical that shareholders of natural gas companies understand and address the business risks associated with this type of gas drilling,” Larisa Ruoff, director of shareholder advocacy for Green Century Capital Management said in a release Tuesday. “Companies and regulators must ensure this development is done in a way that protects the environment, especially our drinking water, and mitigates potential financial risks.”
State regulators in Colorado oppose DeGette and Polis’s FRAC (Fracturing Responsibility and Awareness of Chemicals) Act because they say they’ve never been able to verify fracking has led to any groundwater contamination in Colorado and that it would impose a burdensome layer of federal regulation on a state that has done more to address environmental impacts from drilling than anywhere else in the nation.
Democratic congressman John Salazar, whose district represents many of the drilling hotspots on the Western Slope, has not supported the FRAC Act, even though surveys in his Third Congressional District show residents favor increased regulation of the process, which involves injecting water, sand and undisclosed chemicals into gas wells to free up more gas.
Tuesday’s shareholder campaign targets more than 20 companies, including some such as Chesapeake Energy whose executives have publicly stated there should be more transparency in the process.
The vast majority of companies, however, resist greater scrutiny of the increasingly popular process, which opens up vast new gas reserves once thought out of reach. That’s led to mounting environmental pressure and a slew of studies showing fracking does introduce harmful toxins such as benzene into groundwater supplies. The Environmental Working Group just released a study
to that effect last week (pdf).