Is Fracking Even Worse Than Drilling?

NEW YORK -
With cleanup of the Gulf of Mexico barely underway, energy companies
are already assuming a crouching stance in anticipation of a
no-holds-barred attack by environmentalists on what the industry says
is the next major breakthrough in natural resource extraction.

The breakthrough is called fracking - short for hydraulic fracturing -
the process of injecting water and chemicals into reservoirs to
fracture rock and free up gas and oil.

Critics say fracking can
poison water supplies. They also say it uses large amounts of fresh
water and generates large amounts of wastewater with limited disposal
options. Hydraulic fracturing injects high volumes of water, chemicals
and particles underground to create fractures through which gas can
flow for collection.

According to the industry, fracturing has
been used in roughly 90 percent of wells in operation today and 60 to
80 percent of new wells will require fracturing to remain viable. The
industry contends the process is safe.

But hydraulic fracturing
operations have been linked to environmental risks that could have
significant financial implications for the companies involved and are
leading to increased regulatory scrutiny.

Congress has
directed the EPA to study the potential impact of fracking on drinking
water, human health and the environment after complaints by residents
were seen on the television programme, "Sixty Minutes".

The
publicity also captured the attention of shareholder groups, which
filed proposals this year affecting a dozen companies involved in
"fracking", in which they requested more disclosure on risks.

The
fracturing operations involve the movement, storage, and disposal of
millions of gallons of water and thousands to tens of thousands of
gallons of toxic chemicals.

But because of a lack of
transparency, it can be very difficult to learn what chemicals are used
by companies. Spills, regulatory penalties, and litigation linked to
fracturing operations in been reported in several states where natural
gas companies are active. Response votes were very favourable, the
groups say.

Of 12 proposals filed, six went to a shareholder
proxy vote and were supported by between 21 percent and 42 percent of
shareholders.

"We are pleased with the kind of votes we received
at the proxy season," says Larisa Ruoff of Green Century Capital
Management, a Boston investment advisory firm focused on
environmentally responsible investing. "With the resolution that went
to a vote, we're pleased with the amount of shareholder support for a
first-year environmental proposal. In general, most of the votes were
incredibly strong."

Consumer and industry interest has been
running so high that the EPA was forced forced to postpone its fourth
and final hearing for security reasons.

The decision came less
than 24 hours after the agency announced it was moving its hearing from
Binghamton University 65 miles north to a Syracuse, New York,
convention centre.

The EPA criticised Binghamton University,
saying the university wanted to raise the amount it was charging from
6,000 to 40,000 dollars.

The university said it anticipated as
many as 8,000 people and rallies by environmental groups and drilling
supporters, which would have required a switch to a bigger campus venue
and hiked insurance and security costs. A new date and location
haven't been set.

The hearing is the fourth and last by the EPA around the country as it prepares to launch a study of hydraulic fracturing,

The
hearings are intended to help shape the scope of the study. Previous
hearings were held in Fort Worth, Texas; Denver, Colorado; and
Canonsburg, Pennsylvania. The Pennsylvania hearing drew more than 1,200
participants.

The EPA is studying hydraulic fracturing as gas
drillers swarm to the lucrative Marcellus Shale region primarily
beneath Pennsylvania, New York, West Virginia and Ohio and blast into
other shale reserves around the country.

With public input
submitted in writing or at the four public meetings, the EPA had
planned to complete the study's design by September, initiate it in
January and have initial study results available by late 2012.

Investors
contend that recent events make company disclosures about the risks
more important than ever. Earlier this month, the Pennsylvania
Department of Environmental Protection (DEP) ordered EOG Resources to
suspend drilling in the state after a blowout at a company well.

According
to the DEP, "the incident presented a serious threat to life and
property." At EOG's annual meeting in April, over 30 percent of the
shares voted supported the proposal.

Media attention to
fracturing and levels of public concern about potential environmental
impacts have skyrocketed since 2007. In June, Sixty Minutes broadcast a
story on fracking which left the viewer largely uninformed about what
chemicals were being blasted into the ground.

Then a documentary
filmmaker, John Fox, took up the issue. His film, "Gasland", is now
available on HBO. It chronicles the recent catastrophic BP oil spill
and the environmental effects of the energy industry's efforts to
extract natural resources. Fox traveled the country exposing what he
says are the unsafe drilling practices of the natural gas industry and
its detrimental effects on the environment and communities.

In
communities where fracking is a common occurrence, negative effects
were common, he says - cancer rates were abnormally high, water could
actually be lit on fire, not to mention generally unsafe drinking
water, animals losing hair, and much more.

According to Fox,
there are 450,000 of these gas wells across the country, with a
proposal for 100,000 more in New York and 100,000 in Pennsylvania.

Not surprisingly, the natural gas industry sees things quite differently.

America's
Natural Gas Alliance, an industry lobbying group, says the flammable
water in Fox's film occurred because the home owner's water well was
drilled into a "natural gas pocket".

They say another damning
scene in the film, in which Fox blames natural gas drilling for a
massive fish kill, was also misplaced. An EPA report, they claim,
blames coal mine runoff, not natural gas drilling.