They will frack. They will frack during the day, they will frack at night, they will frack when it is hot and they will frack when it is not…
But what is fracking? Fracking is a short-hand term for a method of natural gas drilling, short for hydraulic fracturing. “Sounds painful.” It is, and more than likely harmful to the environment as well. The process requires the injection of millions of gallons of water laced with chemicals (such as carbon dioxide and nitrogen) into the ground to crack open gas-bearing shale rock.
Would you like to live next door to a fracking operation or share a well?
Even Rex Tillerson, CEO of Exxon Mobil concedes there is cause for concern. "There are risks" to the environment when the industry drills for natural gas in shale deposits, Mr. Tillerson said at a press conference following the oil company’s annual shareholder meeting. "We’re not trying to characterize this as an activity that does not have risk." Hmmm? Maybe Mr. Tillerson has a 5,000 acre horse farm in Fracking County, Pennsylvania.
But what is even more extraordinary than Mr. Tillerson acknowledging the risk of fracking? The large number of his shareholders (nearly 30%) who demanded
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—by corporate resolution
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—enhanced disclosures of the environmental, legal and financial risks of natural-gas production, particularly in connection with fracking. And that percentage is well below the 41% of rival Chevron shareholders voting for a similar resolution.
Garnering that level of shareholder support is something that deserves to be taken seriously and examined more closely. Management can often keep resolutions it does not embrace off the agenda. It’s called “agenda control” and it’s one of the most sophisticated, subtle and effective ways to use corporate power. For some reason, however, this issue made it to the shareholders, who in defeat, gained the attention of management on this important issue.
This story is hardly over. The promise of huge reserves of natural gas being tapped right here in Pennsylvania, New York and Maryland is tantalizing on many levels. But environmental concerns are real, serious and must be respected.