Cabot Oil & Gas Hydraulic Fracturing
|Company||Cabot Oil & Gas Corporation|
|Filer||New York State Comptroller|
|Sector||Oil and Gas|
|Subject(s)||Community Impacts; Hydraulic Fracturing; Water Pollution|
|Resolved Clause Summary||Curtail Toxicity of Fracking Fluids|
|Status||Withdrawn; Company will address|
Report on Reducing Toxic Chemicals in Hydraulic Fracturing
Extracting oil and gas from shale formations, enabled by horizontal drilling and hydraulic fracturing technologies, is a highly controversial public policy issue. Leaks, spills, explosions and adverse community impacts have led to bans and moratoria in the United States and around the globe, including in New York State, the Delaware River Basin, the Province of Quebec (Canada), France, and Bulgaria.
In 2009, a Cabot Oil and Gas ("Cabot") operation in Dimock, PA, discharged an estimated 8,000 gallons of fracturing fluids into a local stream, releasing carcinogenic materials and killing fish. A Material Safety Data Sheet provided by Halliburton, the producer of the spilled materials, indicates fi·actu1ing fluids contained possible human carcinogens, chemicals that led to skin cancer in animals, and "may cause headache, dizziness and other central nervous system effects" to anyone who breathes or swallows the fluids.
Cabot has stated it seeks to use less toxic materials for fi·acturing, but when compared with other companies, Cabot's publicly disclosed efforts are less aggressive and systematic. In contrast to Cabot, Encana has established a Responsible Products Program with a tool that taps government toxicity databases. Encana uses the tool to assess chemicals and decide whether to eliminate them.
Chesapeake Energy established its Green Frac program in 2009 to systematically review chemical use and states that it eliminated 25 percent of the additives used in fracturing fluids in most of its shale plays.
Also in Dimock, because of an incident involving methane contamination of drinking water wells, as of September 2012 Cabot had paid $1.3 million in settlement of State issued penalties, and affected households had accepted a $4.2 million escrow from Cabot. This incident, although it did not involve toxic fracturing fluids, has damaged Cabot's reputation and caused a temporary suspension of some of its operations.
Shareholders and the public lack information to know what systems Cabot has in place to systematically reduce environmental, operational and reputational risks associated with chemicals used in fracturing.
Shareholders request that the Board of Directors report to shareholders, by December 1, 2013, on policy options for a systematic approach, above and beyond regulatory requirements, to curtail the use of toxic chemicals in hydraulic fracturing fluids in the company's shale energy operations. Such a report would be prepared at reasonable cost and omit confidential information.
Supporting Statement. Proponents believe the systematic approach described in the report should at a minimum:
Identify chemicals Cabot would prohibit in fracturing fluids;
Describe a screening mechanism for prohibited chemicals and other chemicals of concern; and
Describe incentives for contractors and hydraulic fracturing fluid suppliers to reduce the use of toxic chemicals in fracturing fluids.
The report should also include an assessment of the operational and financial risks to Cabot associated with failure to take such a systematic approach.