Natural Gas Fracking Intrigue Mounts: Is the Industry Misleading Investors, Politicians?

The U.S. Environmental Protection Agency (EPA) last week announced seven sites that will be at the center of a long-awaited study on hydraulic fracturing.

Hydraulic fracturing (or "fracking") involves pumping large volumes of water and chemicals under pressure into underground shale formations to fracture the rock and release natural gas.

The process has revitalized the domestic natural gas industry in the U.S., but it is highly controversial due to the environmental damage, which is just beginning to come to light.

Nine members of Congress sent a letter to Obama imploring him to press for expanded natural gas exploration, specifically fracking. The letter says that fracking "has been safely used in the US for decades." 

The NY Times, however, ran a front page story saying that although natural gas companies say they’ll deliver a vast domestic energy resource in the US, hundreds of industry emails and internal documents reveal the industry may be over-stating the potential productivity of those wells, misleading investors, and setting them up for an investment bubble.

"Money is pouring in" from investors even though shale gas is "inherently unprofitable," an analyst from investment firm PNC Wealth Management wrote in an email, according to the NY Times. "Reminds you of dot-coms," he says. 

Rep. Maurice Hinchey (D-NY) wants the Securities and Exchange Commission (SEC) to investigate shale gas drilling companies, accusing them of using "Enron-like" tactics to cover financial shortcomings and attract unwarranted investment.

"The very fact that Chesapeake Energy chief executive Aubrey McClendon admitted to investors that his company is reselling fracking leases for 5 to 10 times their actual value is indicative of a reckless and dangerous mentality of invincibility reminiscent of Ken Lay’s during his years at Enron," says nonprofit Food & Water Watch, which wants a national ban on fracking.

A National Academy of Science report issued in May clearly states that fracking contaminates water. And NY State sued the federal government earlier this month to force a ban on on the practice in the Delaware River Basin until the EPA study has been completed.

Reuters reports the Delaware River Basin Commission has proposed rules that would allow up to 18,000 gas wells within the basin, which includes parts of New York City’s watershed.

EPA will be assessing the impacts of fracking on drinking water resources in five states, beginning this summer. Initial results should be available by the end of the year.

The studies, which will take place in regions across the country, will be broken into two study groups. Two of the seven sites were selected as prospective case studies where EPA will monitor key aspects of the hydraulic fracturing process throughout the lifecycle of a well.

These areas are located in:

• Haynesville Shale – DeSoto Parish, La.
• Marcellus Shale – Washington County, Pa.

Five retrospective case studies were selected and will examine areas where hydraulic fracturing has occurred for any impact on drinking water resources. These are located in:

• Bakken Shale – Kildeer, and Dunn Counties, N.D.
• Barnett Shale – Wise and Denton Counties, Texas
• Marcellus Shale – Bradford and Susquehanna Counties, Pa.
• Marcellus Shale – Washington County, Pa.
• Raton Basin – Las Animas County, Colo.

EPA says it chose the sites from more than 40 case studies  nominated for inclusion. The studies were prioritized and selected based on factors such as proximity of population and drinking water supplies and concerns about impaired water quality.

"The study will continue to use the best available science, independent sources of information, and will be conducted using a transparent, peer-reviewed process," the EPA says.

The information gathered from these case studies will be part of a study plan which includes literature review, collection of data and information from states, industry and communities, laboratory work and computer modeling.

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