Annual Meetings-Hydrofracking: Overview of Hydrofacking

Pdf Summary

Hydrofracking, short for hydraulic fracturing, is a process used to extract natural gas from rock formations where the gas is trapped. It involves injecting pressurized water, sand, and chemicals into gas wells to create fractures in the rock, allowing the gas to flow out. However, this process comes with various risks, including environmental pollution, groundwater contamination, air and noise pollution, and even potential for triggering earthquakes. The benefits of hydrofracking include making gas extraction cost-effective, reducing dependence on foreign oil, job creation, and a smaller carbon footprint.<br /><br />From a regulatory perspective, both federal and state governments have oversight on hydrofracking activities, with laws like CERCLA, Clean Air Act, Clean Water Act, Safe Drinking Water Act, and Energy Policy Act of 2005 impacting the industry. State and local initiatives vary, with some states imposing bans, requiring disclosure of chemicals used, and implementing operational regulations to manage the risks associated with hydrofracking.<br /><br />The insurance industry is also adapting to the risks posed by hydrofracking, with specialty coverage emerging due to the unique challenges it presents. The market consensus is that standard policies are not designed to cover hydrofracking adequately, and insurers are cautious in providing coverage due to uncertainties and potential high loss scenarios. Moving forward, understanding the risks, selecting appropriate coverage, and proactive risk management are critical in navigating the complex landscape of hydrofracking.

Asset Caption

Presented by:
Daniel Mason, Senior Vice President/Senior Claims Adjuster, MatthewsDaniel and Gerard Finley, CPCU, Senior Vice President, Casualty Treaty Underwriting, Munich Reinsurance America, Inc. They discussed the perceived benefits, community response, exposures, operational risks, and lessons from losses.

Keywords

Hydrofracking

Hydraulic fracturing

Natural gas extraction

Environmental pollution

Groundwater contamination

Regulatory oversight

Federal laws

State laws

Insurance industry

Risk management