Chevron CEO: Industry must address ‘legitimate concerns’ about fracking

By Jim Snyder
Bloomberg News

Oil and gas producers must deal with the “legitimate concerns” that hydraulic fracturing is unsafe by adopting tougher self-imposed standards, Chevron Chief Executive Officer John Watson said in Washington.

BP Plc’s 2010 oil spill at its deepwater well in the Gulf of Mexico — the worst in U.S. waters — fueled public skepticism of the industry, Watson said. Fracking, a drilling technique that has increased production by extracting oil and gas trapped in shale rock, has drawn oil and gas companies to rural communities that aren’t familiar with the development.

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Recent developments add to public awareness of the risks of drilling, and the industry needs to do a better job in resolving the concerns, Watson said at a Center for Strategic and International Studies event in Washington.

“Public expectations are very high, and there’s no reason they shouldn’t be high,” Watson said. “There are some risks out there. Some risks are overstated. But we have to engage them either way.”

In hydraulic fracturing, or fracking, producers shoot a mixture of water, sand and chemicals underground to break apart shale rock formations to free trapped oil and gas. The technique has led to record production of natural gas and sent domestic oil output to its highest level in two decades.

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Opponents say fracking creates air and water pollution.

Chevron has joined environmental groups including the Environmental Defense Fund to establish the Center for Sustainable Shale Development that has crafted 15 performance standards to be followed by oil and gas producers.

“I don’t believe any company would be certified today, but we’re moving towards those standards,” Watson said.

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The U.S. Energy Information Administration said yesterday that oil and gas from shale formations are greater than previously estimated. Tight oil resources could be 345 billion barrels worldwide, and shale gas estimates were increased by 10 percent from 2011, to 7,299 trillion cubic feet, according to the EIA, which tracks and analyzes energy data.

Watson said it may take “a lot of time” to develop some of the resources because infrastructure is in short supply.

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