Published on October 6th, 2014 | by Tina Casey16
ExxonMobil Comes Clean On Fracking Risks — Not
October 6th, 2014 by Tina Casey
For whatever reason, lately it looks like drilling companies have been stumbling all over each other in a rush to disclose fracking risks and other formerly secretive aspects of the drilling industry. ExxonMobil issued a major new report to its shareholders on September 30, Andarko and EOG hopped on the bandwagon with a financial risk commitment to their shareholders last Friday, and Baker Hughes earlier pledged to disclose the secret sauce in its fracking fluid.
“Looks” is the operative word here, so let’s start with ExxonMobil and work our way down.
ExxonMobil And Fracking Risks
The new ExxonMobil fracking risk report is titled “Unconventional resources development risk management report to shareholders.” As our friends over at DeSmogBlog.com reported last summer, ExxonMobil issued the document in response to repeated demands by groups of activist shareholders including Green Century Capital Management and the office of the New York State Comptroller among others.
Here’s ExxonMobil VP of Investor Relations Jeffrey Woodbury with his money quote in an ExxonMobil press release announcing the new report:
Hydraulic fracturing has been responsibly and safely used by the oil and gas industry for more than 60 years, but the process isn’t without risks. This report to shareholders details how ExxonMobil uses sound risk management processes and engages with stakeholders to ensure safe and environmentally responsible operations.
Perhaps Mr. Woodbury was referring to some other report. We took a look at the ExxonMobil fracking risk opus and found a lot of fancy adjectives and graphics but practically no useful details.
We did, however, find the tell. Here it is, straight from the report:
The oil and gas industry relies upon contract service companies to provide much of the required equipment, materials, and qualified personnel during drilling, completion, and production. When these other companies are performing work on our behalf, we ensure our comprehensive risk management expectations are known to them.
Did we miss something about following up to make sure those contractors are toeing the line? If you found it, drop us a note in the comment thread.
Meanwhile, ExxonMobil is doubling down on its US shale assets, it used the occasion of the historic NYC Climate Week to remind folks that it is in the midst of a major expansion of refineries in Antwerp and Singapore, and it previously announced plans for a major new shale gas-to-plastics facility at its refinery in Baytown, Texas.
Bottom line: risks, schmisks.
Baker Hughes And Fracking Risks
Along similar lines, last April Baker Hughes created a huge buzz around the tubes by announcing that it would voluntarily disclose the chemicals in its fracking fluids.
The promise wasn’t quite all that it was cracked up to be. According to its own press materials, although Baker Hughes “believes” that full disclosure is possible, the company passed that hot potato right along to its supply chain with the following disclaimer (emphasis added):
Where accepted by our customers and relevant governmental authorities, Baker Hughes is implementing a new format that achieves this goal, providing complete lists of the products and chemical ingredients used.
Andarko And EOG To ‘Fess Up
We’re a little more optimistic about Andarko and EOG, since their disclosure pledge comes out of actions by the office of New York State Attorney General Eric Schneiderman. The AG has been in hot pursuit of fracking risks to shareholders, leveraging subpoena powers under a 1921 state law providing broad access to financial records.
Last Friday, the AG announced fracking risk disclosure agreements with the two companies and rather than calling only for internally generated reports, the agreements call for detailed disclosure through federal securities law filings.
The agreements won a cautious nod of approval from Mindy Lubber, president of the green investor group Ceres.
Here’s a taste of what will be required:
…financial risks posed by the environmental impacts associated with fracking — such as effects on drinking water aquifers, as well as those arising from chemical use and handling, water use and wastewater handling and disposal, and air emissions…
…financial risks posed by present and probable future regulation and legislation related to fracking, such as state or federal moratoriums, local bans or restrictive ordinances, or requirements for disclosure of chemicals used in fracking fluids…
…company strategies and actions for reducing, offsetting, limiting, or otherwise managing the financial effects of regulation, litigation, or environmental impacts related to fracking.
That thing about local bans is especially relevant to New York State, where scores of communities have successfully used local zoning regulations to prohibit fracking. The tactic has bled over into fracking hotspot Pennsylvania, where proponents of local control recently won a major victory in the state’s Supreme Court.