Federal lawmakers recently called on several agencies, including the Securities and Exchange Commission (SEC), the Energy Information Administration (EIA) and the Government Accountability Office (GAO), to investigate whether the natural gas industry has provided an accurate picture to investors of the long-term profitability of their wells and the amount of gas these wells can produce.
"Given the rapid growth of the shale gas industry and its growing importance for our country’s energy portfolio, I urge the S.E.C. to quickly investigate whether investors have been intentionally misled,” wrote Representative Maurice D. Hinchey, Democrat of New York, in one of three letters sent to the commission by four federal lawmakers. For a complete copy of Rep. Hinchey’s letters to the SEC and EIA, click here and here.
The calls for investigations came amid growing questions about the environmental and financial risks surrounding natural gas drilling, especially a technique known as hydraulic fracturing, or hydrofracking, used to release gas trapped deep underground in shale formations.
According to an article in The New York Times, members of the House Committee on Natural Resources said they hoped to hold a hearing in the next several weeks to discuss natural gas drilling.
Senator Benjamin L. Cardin, Democrat of Maryland, recently sent a letter to the GAO, the investigative arm of Congress, in which he asked it to investigate the environmental impacts of hydrofracking, the accuracy of reserves estimates and industry regulation.
New York Assemblywoman Barbara S. Lifton, a Democrat and longtime critic of drilling, recently sent a letter to the New York State comptroller, Thomas P. DiNapoli, calling for a similar investigation and citing roughly $1 billion in state pension funds invested in shale gas companies.
Further, according to The New York Times, the New York Attorney General Eric T. Schneiderman sent subpoenas to five oil and gas companies ordering them to provide documents relating to the disclosure the companies made to investors about the risks of hydrofracking. The five companies subpoenaed were Talisman, Chesapeake Energy, E. O. G. Resources, Baker Hughes and Anadarko.
The calls for investigations follow several recent articles in The New York Times describing doubts reflected in internal e-mails from federal regulators and natural gas industry officials about the costs associated with shale gas and the reliability of company reserves estimates provided to public and investors.
Oil and gas companies and energy market analysts, however, have strongly rejected the views expressed in the industry and federal e-mails published by The New York Times. In an open letter to his employees, the chief executive of Chesapeake Energy, Aubrey McClendon, said the company’s prospects were bright.
“There is no reason to believe that shale gas wells will have shorter lives than our conventional wells — some 8,000 of which are 30 years old or older,” Mr. McClendon wrote.
Stay tuned to InsureReinsure.com for future updates regarding these allegations and investigations.