Will Exxon, Chevron Yield to Fracking Pressure?
Chevron Corp. (NYSE:CVX) and Exxon Mobile Corp. (NYSE:XOM), the two biggest oil companies in the U.S., are under pressure from environmentalists and shareholders to reveal more information about hydraulic fracking practices.
Thirty percent of shareholders from both companies voted to disclose more information about hydraulic fracking, a risky drilling practice that involves shooting chemical-laced water and sand into shale rock in order to break open the rock, releasing oil and gas. The oil industry claims that the practice is safe when done properly, but fracking has raised concerns about water contamination from environmentalist groups.
The motion to disclose more about fracking received about the same number of votes last year, which shows a growing concern about the practice from investors and the general public. Chevron said 31 percent of its shareholders backed the proposal in comparison with 27 percent last year. Thirty percent of Exxon’s shareholders supported the motion both this year and last.
Also of concern for the oil companies is the possibility of Arctic drilling. Chevron claims it’s still evaluating drilling opportunities in the Arctic, and that their biggest hurdle to the project is cost. Rival company Royal Dutch Shell PLC (NYSE:RDSA) made moves to start drilling off the coast of Alaska, but ran into trouble when a drilling barge called the Kulluk ran aground off a remote Alaskan island in the Arctic Sea. The Kulluk was being towed to a shipyard in Seattle when it hit rough water and broke free from its towing vessel. The barge came to rest on the shore on New Year’s Eve after several days of frantic attempts to secure it. No oil was spilled in the incident, but damage to the barge did cause Shell to put its Arctic drilling plans on hold.
Chevron Chief Executive Officer John Watson said at the company’s annual shareholder’s meeting that Chevron provides adequate disclosure about fracking. Danielle Fugere, president of As You Sow, an investor advocacy group that filed the Exxon resolution, said that oil companies in general and Exxon in particular need to be more forthcoming with information on fracking in order to protect the public’s safety. “Shareholders expect Exxon to lead the industry, but almost across the board, Exxon is failing to provide the site specific information that shareholders, regulators, and impacted communities need,” she said.