The process of hydraulic fracturing, or “fracking,” as it is commonly called, is becoming an increasingly controversial issue. The process involves injecting chemically treated water into wells at high pressure to fracture shale and release trapped gas or oil. Between one and nine million gallons of water can be used per well, and many health and environmental groups claim fracking can contaminate drinking water.
In one case in late 2010, the Houston-based Cabot Oil & Gas Corp. settled with Pennsylvania residents for $4.1 million when state environmental regulators determined that the aquifer beneath the residents’ homes was contaminated with explosive levels of methane. Not every case has been as publicized as the one involving Cabot, however. Many settlements involving the gas industry have required the plaintiffs to sign non-disclosure agreements, which can make it more difficult for researchers to study the health and environmental impacts.
Nationwide Mutual Insurance Co. has become the first major insurance company to state that it will not cover damage related to hydraulic fracturing. An internal memo from Nationwide, which was confirmed as genuine but never intended for public dissemination, read: “After months of research and discussion, we have determined that the exposures presented by hydraulic fracturing are too great to ignore. Risks involved with hydraulic fracturing are now prohibited for General Liability, Commercial Auto, Motor Truck Cargo, Auto Physical Damage and Public Auto (insurance) coverage.”
Some feel the memo is of particular significance because it represents the judgment of professional assessors of risk. The insurance company has no ideological interest in asserting the risks of fracking, nor would it benefit, like the gas industry, from denying such risks exist.