Exxon Mobil, Chevron Face Shareholder Questions about Environmental Impact of Hydraulic Fracturing at Annual Meetings
Two of the worlds largest energy companies have made major investments in shale gas. Exxon Mobil made a $35 billion investment when it bought XTO in 2010. Exxon’s goal is to double U.S. natural gas output in the next ten years. Chevron has concentrated its investment specifically in the Marcellus Shale with the $3 billion purchase of Atlas Energy and a large acreage deal with Chief Oil & Gas. Chevron expects to increase its output of gas seven-fold in the next few years.
But investors in each of these energy giants want “more disclosure” on the so-called environmental risks involved with horizontal hydraulic fracturing, as witnessed at their annual meetings yesterday:
Large blocks of investors in the two biggest US oil companies on Wednesday demanded more disclosure about the environmental risks of extracting oil and gas through hydraulic fracturing.
Exxon Mobil Corp defended the practice at its annual shareholder meeting on Wednesday, even as investors peppered Chief Executive Rex Tillerson with concerns and questions about it.
A proposal requiring more disclosure by Exxon on the impact of "fracking" received about 30% of the votes by shareholders in the world’s largest publicly traded oil company.
At rival Chevron Corp, which became heavily involved in fracking through a recent acquisition, 41% of shareholders backed a similar resolution.
The industry insists it is safe, and Tillerson said there were claims about the 50-year-old technology that had no basis in fact. The company regularly meets with local officials and politicians, and is running an advertising campaign aimed at addressing public concerns.
While acknowledging the risks, Tillerson said Exxon works to bring together regulators in states with shale drilling to examine current rules and determine which are most effective.
"We’re not trying to characterize this as an activity that does not have risks," he told reporters after the meeting in Dallas.
Regulators in states where shale drilling is growing at breakneck speed are "stretched", but rules governing fracking should not be set at the federal level, he said. Chevron echoed a desire for regulation to stay at state level.*
*Business Standard (India)/Reuters (May 26, 2011) – Big US oil firms face concern over fracking