12 Apr 2012

How a company fracks for natural gas determines its corporate social responsibility

Written by Jim Pierobon

As energy producers find more natural gas from shale formations throughout the U.S. and the price of natural gas continues to fall it should be no surprise that a debate looms over how a company fracks for natural gas and whether it is socially responsible.

On its face, with sufficient operational and risk controls in place, fracking should be able to meet most, if not all, definitions of corporate social responsibility (CSR). All it will take, however, for today’s discussions to become heated debates is a serious accident spoiling the groundwater supplies of a large population.

A typical well fracking for natural gas in shale formations. CREDIT: ProPublica.org. Be sure to check out ProPublica's coverage of fracking here.

Some industry analysts expect that a natural gas company fracking for new supplies will, eventually, experience the industry’s own version of a Three Mile Island (1979 nuclear meltdown), Exxon Valdez (1989 oil tanker leak) or BP Macondo (2010 offshore oil well blowout).

How the industry protects against that; how willing all companies that frack will abide by industry best practices remains to be seen.

CSRHub (subscription required) has added fracking to its list of “special issues.”  Those who have registered or subscribed on the site can choose to either approve of fracking, disapprove of it, or block out ratings entirely for companies who participate in the area.

The list of companies involved in this area was longer than CSRHub expected. It found that 51 companies out of the approximately 5,000 it covers participate in some sort of fracking. It has gather partial information on another 40 or so smaller companies.  It hopes to be able to publish partial ratings on these companies soon.

CSRHub created its list with a lot of help from five organizations and one well known expert in the area, blogger Mike Benard.  With help from Bernard, it reviewed data from FracFocus (44 companies matched our list), FracTracker (31 matches), Marcellus Shale Coalition (42 matches), Marcellus Money (26 matches), and the Pennsylvania Department of Environmental Protection (23 matches).  It combined their input with data Mike had gathered on 56 companies to create its final list.

As you can see from the sources it cited, a lot of attention focused on the Marcellus Shale formation that stretches across a large part of the US central and eastern region.  It hopes to add other sources soon that identify companies that are involved in fracking in other parts of the US and in the rest of the world.

“We suspect that there are at least another 100 companies among those we rate who participate in this area—either directly via drilling and exploration or through supplying materials to the industry or by helping to process and transport the gas and oil fluids they extract,” CSRHub says. “We encourage our community to suggest additional sources.”

The overall ratings for the companies covered by this special issue range from a low of 39 (using our average user profile) to a high of 64.  The average for each source’s list is right around the average score for its entire database—between 48 and 50.  This suggests that the companies involved in this area are not entirely positive or inherently anti-social—they may instead be ordinary companies that did not realize involvement in fracking could be controversial.

Controversial may be an understatement.

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