U.S.-based energy companies are mostly failing to disclose their management of hydraulic fracturing operations that could have negative environmental impacts, according to a survey published last Thursday.
The survey, by a group of investment advisers and shareholder advocacy organizations, found about three-quarters of 30 oil & gas companies surveyed are not fully disclosing their practices on areas like air and water quality, use of toxic chemicals, and waste management, in a way that would help shareholders make investment decisions.
Authors of the survey, titled “Disclosing the Facts 2014: Transparency and Risk in Hydraulic Fracturing Operations,” argued that more transparency about the controversial practice of hydraulic fracturing, or “fracking” for oil and natural gas would help companies and shareholders alike.
“The results show that many energy companies are still largely failing to rigorously disclose the impacts of their hydraulic fracturing operations on communities and the environment,” said Richard Liroff, executive director of Investor Environmental Health Network, one of four groups to compile the listing.
“We are encouraged by a handful of companies that have clearly risen to our challenge with the scorecard, but data on key metrics remain largely absent for most companies, making it difficult for investors and the public to assess and compare companies’ performance,” Liroff said in a statement.
The ranking is also complied by As You Sow, a nonprofit that promotes corporate accountability through shareholder action; Boston Common Asset Management, an investment manager that emphasizes sustainability; and Green Century Capital Management, which promotes investment in clean energy.
Danielle Fugere of As You Sow said the group’s standards are also designed to help energy companies defend themselves against any claims that their fracking operations contaminated underground water supplies.
During a conference call with reporters, Fugere said companies are encouraged to monitor water quality near wells before and after fracking to show that their activities have not damaged water quality.
“This gives a baseline for companies so that if later allegations are made that the water is impacted, companies will have a better means of understanding whether they were responsible or not and so that can be very protective,” she said.
The second annual report found that 24 out of 30 companies disclosed a quarter or less of their handling of matters such as toxic chemicals and air emissions.
Only one, BHP Billiton, disclosed its operations in more than half of 35 categories monitored.
BHP sharply improved its score from only 2 points in 2013, in a move that the report’s authors attributed to the publication of their rankings, which are based on disclosure of the use of toxic chemicals; management of water and waste; air emissions; community impacts, and management accountability.
But most companies continue to receive “failing scores”, the report said, preventing investors from accurately assessing how or whether the companies manage the key risks of fracking, the extraction technique that has enabled the current boom in U.S. oil and gas production.
Most are also not disclosing leakage of methane, a potent greenhouse gas, despite rising concern among investors, according to the report, which assessed methane management for the first time this year.
Range Resources, a leading natural gas producer in Pennsylvania, and one of only three in the survey reporting methane leakage, tripled its score to 9 points from only 3 in 2013 but still failed to meet the group’s standards on most measures.
Matt Pitzarella, a spokesman for Range, accused the report of “bias”, and argued that the company places a high priority on transparency.
“Range is very proud of the extensive information we provide regarding all facets of our operations as part of our commitment to transparency with our stockholders, residents of the communities where we live and work, and all other constituents who are interested in understanding our company and its operations,” Pitzarella wrote in an email.
“We can’t speak to the bias of the authors of the report, but our overall experience with stockholders is that they believe Range and many other companies in our sector do an excellent job in transparency,” Pitzarella said.
