Potential risks of hydraulic fracturing (hydrofracking) well stimulation -- particularly in natural gas shale plays -- remain on the minds of activist energy company investors, some of whom are seeking more information on the practice and measures that could reduce associated risks.
A spate of recent shareholder resolutions ask companies to disclose more information about the risks and potential liabilities of fracturing operations. The industry saw a number of similar resolutions last year but broad shareholder support was relatively tepid. This year's resolutions tend to single out energy company activities in the Marcellus Shale, where hydrofracking has tended to raise more concern among residents compared to other shale plays.
For instance, a new shareholder resolution led by the New York State Common Retirement Fund asks the board of Cabot Oil & Gas Corp. to examine "additional efforts to reduce toxicity of fracturing chemicals, recycle waste water, monitor water quality prior to drilling, cement bond logging, and other structural or procedural strategies to reduce environmental hazards and financial risks."
The New York fund recently made a similar appeal to Carrizo Oil & Gas. Miller/Howard Investments has filed a hydrofracking resolution with El Paso Corp. as well as Energen Corp. The group As You Sow recently filed a resolution with ExxonMobil Corp., and Domini Social Investments has a new resolution with Southwestern Energy Co.
In another resolution, the Sisters of St. Francis of Philadelphia remind Chevron's board that "high-profile contamination incidents, especially in Pennsylvania, have fueled public controversy.
"Chevron plans to acquire Atlas Resources [see Shale Daily, Nov. 10, 2010]. Atlas has been fined for spilling fracturing waste in Pennsylvania and is being sued by a Pennsylvania landowner alleging pollution of his water wells [see Shale Daily, Nov. 9, 2010]. In the opinion of the proponents, due diligence in the acquisition process should include review of potential environmental impacts and related risk management strategies associated with the planned acquisition."