You don't just drill a hole, as you might when drilling for crude oil. You pump water loaded with sand and chemicals at high pressure into the shale formation below. The liquid fractures the rock formation and it releases the gas.
The polluted water comes up and if not disposed of on-site has to be treated by sending it to municipal sewage systems, which weren't built to treat water laced with the types of chemicals used in the fracking process. In addition, the process is likely to taint the water with radioactive materials such as radium.
Treatment plants in New York, Pennsylvania, Texas and Wyoming, where oil companies are fracking for gas, discharge the water back into streams and rivers.
The oil and gas companies are in all likelihood operating with insurance ranging from environmental, general liability, and all-risks coverage.
But the hazards associated with fracking are far less understood than those with other fuels. The EPA said it will begin to test more stringently, but testing for radioactivity in drinking water has traditionally been required by federal and state authorities only every few years. Underwriters, therefore, have yet to come up with the real estimate of the environmental cost of extracting gas through this process.
Industry claims they are following all applicable laws, which they probably are. But that doesn't mean a whole lot when drinking water is only required to be tested once every six, eight or 10 years.
There's no way gas companies are being charged the proper liability premiums to cover the environmental risk.
April 1, 2011
Copyright 2011© LRP Publications