Hydraulic Fracturing Safeguards Go Unreported

November 7, 2013 10:07 AM

Hydraulic fracturing is a controversial topic and while the practice holds a great deal of promise for domestic fossil fuel utilization, a recent report says that fracking operations are falling behind in reporting their efforts to make fracking more environmentally friendly.

The survey, conducted by As You Sow, Boston Common Asset Management, Green Century and the Investor Environmental Health Network looked at 32 key indicators from 24 companies engaged in fracking. Not one of the 24 had reported on all 32 indicators and most fell into single digits.

"The results of this scorecard show that companies are failing to rigorously disclose the impacts of their hydraulic fracturing operations on communities and the environment," said Richard Liroff, executive director of IEHN. "Data on key metrics remain largely absent, making it difficult for investors and the public to assess and compare companies' performance."

The trouble is not with safety or compliance. The problem is that investors may have no idea to what lengths a particular operation has gone to reduce emissions, protect aquifers and minimize risk to the surrounding communities.

"We believe there is a great deal of good work being done in the industry to improve environmental performance of hydraulic fracturing operations and also lower their costs," said Steven Heim, a managing director of Boston Common Asset Management. "Absent disclosure however, investors have no way of knowing and crediting those companies making meaningful efforts to adopt best practices and mitigate their impacts on communities and the environment."

The industry most commonly reported on three metrics: whether executive compensation is linked to health, environment, and safety performance -- 71%; use of pipelines to transport water in lieu of diesel trucks to lower air emissions -- 62%; and company policies on use of non-potable water for hydraulic fracturing -- 46%. The report notes that companies are least transparent on their process for systematically identifying and addressing operational impacts on local communities, even though unaddressed community concerns are among the leading drivers of bans and regulations.

The point of the report is not to assail operational frackers. In fact, the study revealed more is being done to protect the environment and communities than has been reported by the frackers themselves.

The report also highlights noteworthy practices disclosed by 13 companies. These include: Apache Corp.'s review of its chemical use with the goal of relying solely on safer alternatives designated under US EPA's "Design for the Environment" Program; Anadarko Petroleum Corp.'s use of "green completions" at wells to reduce methane emissions by 2 billion cubic feet annually; Encana's use of treated industrial effluent for fracturing in the Haynesville Shale; and Devon Energy Corp.'s replacing 700 "high-bleed" valves with valves reducing methane emissions by about 50 metric tons of CO2 equivalent per valve. Devon plans to replace 3,000 additional valves, recouping the cost of each within two months.

As investors weigh their options, fracking could attract more investment dollars and less bad press with improved reporting on efforts to protect communities and the environment.

Read the full report here. The table below is based on the report data.

Score -- 32 possible
Encana Corp. (ECA)
Apache Corp. (APA)
Ultra Petroleum Corp. (UPL)
Hess Corp. (HES)
Noble Energy, Inc. (NBL)
Royal Dutch Shell plc (RDS)
EOG Resources, Inc. (EOG)
Cabot Oil & Gas Corp. (COG)
Chesapeake Energy Corp. (CHK)
ConocoPhillips Corp. (COP)
CONSOL Energy, Inc (CNX)
EQT Corp (EQT)
Anadarko Petroleum Corp. (APC)
Devon Energy Corp. (DVN)
Chevron Corp. (CVX)
Range Resources Corp. (RRC)
Talisman Energy, Inc. (TLM)
WPX Energy, Inc. (WPX)
BHP Billiton Ltd. (BHP)
BP plc (BP)
Exxon Mobil Corp. (XOM)
Occidental Petroleum Corp. (OXY)
Southwestern Energy Co. (SWN)
QEP Resources, Inc. (QEP)

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