|NYS Comptroller Quizzes Oil Fracking Giant on Water Safety
State Comptroller Tom DiNapoli is asking one of the nation's largest petroleum companies — and a major shipper of crude oil by rail across the country — to explain what steps may be taken to conserve and protect water during the water-intensive process of hydrofracking.
Houston-based EOG Resources also is a major player in the North Dakota Bakken fields, where a rising tide of hydrofracked crude oil is being shipped out on rail cars to coastal refineries. Some of the crude is passing through New York state and the Port of Albany.
DiNapoli filed a shareholder resolution with the company, along with the New York City comptroller and progressive investors, that together targeted five major oil companies to highlight potential risks that fracking poses to water availability, particularly in places like Texas were water is already scarce.
Fracking relies on a blend of water, sand, and chemicals, pumped under high pressure a mile or more underground, to break apart rock formations that contain natural gas or oil, which then is recovered at the well. A well can require two million gallons or more of water.
"Energy companies need to demonstrate that they've taken real steps to protect the water supply, the public and their investors from accidents and mishaps," said DiNapoli. "By providing specific metrics and adhering to best management practices, investors can gauge how companies are managing the risks and rewards of their operations. Increased transparency will help safeguard the public and the company itself."
His resolution asks EOG, which pioneered fracking for crude in North Dakota in 2006, to show "results of company policies and practices ... to minimize the potential adverse impacts on ground and surface water from the company's hydraulic fracturing operations associated with shale formations."
The state pension fund, controlled by DiNapoli, holds $137 million in EOG stock. His resolution will be presented at an EOG shareholder meeting this spring.
Similar resolutions were also filed with ExxonMobil, Chevron, Occidental Petroleum, and Pioneer Resources by shareholders representing Green Century Capital Management, As You Sow, Sisters of St. Francis of Philadelphia, and Calvert Investments.
The petroleum companies were named in a recent report on water risks from fracking by Ceres, a group of progressive investment groups with $12 trillion in assets. The five scored the lowest among 24 companies for toxic chemicals, water and waste, air emissions, community impacts, and governance.
Attempts to reach EOG officials for comment were not successful. Last fall, the company CEO said it will expand crude shipments at its rail facilities in Cushing, Oklahoma, and St. James, Louisiana.
EOG launched the Bakken drilling boom in 2006 and was the first company to get around limited pipeline capacity in that region by shipping crude oil by rail. The company was expecting its crude oil production to grow by 28 percent last year from its fields in the Bakken and in Texas.
The Ceres report found that between January 2011 and May 2013, about 97 billion gallons of water was used for fracking nationwide, with much of it used in Texas, Pennsylvania, Oklahoma, Arkansas, Colorado and North Dakota. That was enough to provide drinking water to 2.7 million people annually.
Nearly half of the 39,300 wells hydraulically fractured during that period were in regions with so-called "high or extremely high water stress," meaning most water supplies were already used by municipalities, industries and farms. About half the wells were located in areas of drought, such as that in Texas.
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