InvestorGuidetoHydraulicFracturing

DiscoveringShaleGas:AnInvestorGuidetoHydraulicFracturingBySusanWilliamsFebruary2012Theanalyses,opinionsandperspectiveshereinarethesoleresponsibilityofSustainableInvestmentsInstitute(Si2).Thematerialinthisreportmaybereproducedanddistributedwithoutadvancepermission,butonlyifat-tributed.Ifreproducedsubstantiallyorentirely,itshouldincludeallcopyrightandtrademarknotices.DiscoveringShaleGas:AnInvestorGuidetoHydraulicFracturingSi2AcknowledgementsThisreportwasmadepossiblewithagenerousgrantfromtheIRRCInstitute.Toenhancetheobjectivityofthereport,Si2engagedasmalleditorialadvisoryboardrepresentingenvironmentalorganizations,industryandinvestmentmanagers.Theboardmembersprovidedvaluablefeedbackonthecontentofthereportpriortoitspublicationandservedasresourcesonspecificissues.Theboardmembersgavegenerouslyoftheirtimeandknowledge,andtheresultingreportmorefullyandaccuratelyinformsinves-torsoftherisksandopportunitiesofshalegasdevelopment.Thereport'sconclusionsareSi2'salone,however.TheeditorialadvisoryboardmembersincludeGeorgeKing,GlobalTechnologyConsultant,andSarahTeslik,SeniorVicePresident–PolicyandGovernance,ApacheCorp.;MichaelParker,TechnicalAdvisor,ExxonMobilProductionCo.;MarkBoling,ExecutiveVicePresidentandGeneralCounsel,South-westernEnergyCo.;RichardLiroff,ExecutiveDirector,InvestorEnvironmentalHealthNetwork;EvanBra-nosky,Associate,andAmandaStevens,ShaleGasProgram,WorldResourcesInstitute;andStevenHeim,ManagingDirectorandDirectorofESGResearchandShareholderEngagement,BostonCommonAssetManagement.CompanyofficialsatCarrizoOil&Gas,ChesapeakeEnergy,ExxonMobil,RangeResources,SouthwesternEnergyandWPXEnergy(formerlyWilliamsCos.)reviewedandcommentedontheircompanyprofiles.RichardLiroffandFredSweetprovidedaconstantflowofrelatednewsitems.HeidiWelshandPeterDeSimoneofSi2providededitorialassistance.TheSustainableInvestmentsInstitute(Si2)isanon-profitmembershiporganizationfoundedin2010toconductimpartialresearchandpublishreportsonorganizedeffortstoinfluencecorpo-ratebehavior.Si2providesonlinetoolsandin-depthreportsthatenableinvestorstomakein-formed,independentdecisionsonshareholderproposals.Italsoconductsrelatedresearchonspecialtopics.Si2’sfundingcomesfromaconsor-tiumofthelargestendowedcollegesanduniver-sities,otherlargeinstitutionalinvestorsandgrantssuchastheonethatmadethisreportpos-sible.Formoreinformation,pleasecontact:HeidiWelshExecutiveDirector21122ParkHallRoadBoonsboro,MD21713P:[e-mail]:JonLukomnikExecutiveDirectorIRRCInstituteOneExchangePlaza55Broadway,11thFl.NewYork,NY10006P:212-344-2424F:[e-mail]©2012,IRRCInstituteSi2holdsanirrevocable,non-exclusive,royalty-free,worldwidelicenseinperpetuitytothecontentsofthisreport.DiscoveringShaleGas:AnInvestorGuidetoHydraulicFracturingSi23TableofContentsKeyFindings........................................................................................................5ExecutiveSummary............................................................................................8EnvironmentalandSocialImpacts......................................................................................................9ReportOrganization..........................................................................................................................10KeyQuestionsforInvestors..............................................................................................................11I.Environmental&SocialImpacts.....................................................................14LandUseChanges.............................................................................................................................14CommunityImpacts..........................................................................................................................17FreshwaterConsumption..................................................................................................................18WaterQuality....................................................................................................................................20AirQuality.........................................................................................................................................28II.RegulatoryOversight....................................................................................31StateRegulations..............................................................................................................................31ProposedFederalRegulation..........................................................................................................