Hydraulic Fracturing: Identifying and Managing the Risks

Massive domestic natural gas reserves previously uneconomical to develop are now, through hydraulic fracturing, feasible to produce. The process, which involves the injection of millions of gallons of water and chemical additives under high pressure into the subsurface, is not without risk. Over three dozen lawsuits have been filed alleging that hydraulic fracturing has caused damages to drinking water supplies, toxic exposures, and earthquakes. Regulation of this process at the federal level has been minimal; states are only now enacting legislation requiring the disclosure of the chemicals used in the fracturing process. Two municipalities in New York state have been successful in stopping exploration and development within their borders through the imposition of bans on hydraulic fracturing under local zoning laws. Studies completed thus far are inconclusive or contradictory as to whether hydraulic fracturing is causing ground and drinking water contamination or earthquakes. The risks associated with hydraulic fracturing are known, and can be managed and mitigated through the implementation of drilling controls, agency oversight, and insurance products tailored to the hydraulic fracturing process.