ALBANY, N.Y. —
Nationwide Mutual Insurance Co. has become the first major insurance company to say it won’t cover damage related to a gas drilling process that blasts chemical-laden water deep into the ground.
The Columbus, Ohio-based company’s personal and commercial policies “were not designed to cover” risk from the drilling process, called hydraulic fracturing, or fracking, Nationwide spokeswoman Nancy Smeltzer said Thursday.
The process injects chemically treated water into wells to fracture shale thousands of feet underground and release trapped gas or oil. There are rich shale deposits in parts of Pennsylvania, New York, Ohio, West Virginia and elsewhere.
Health and environmental groups claim fracking can contaminate drinking water. The gas industry says it’s safe if done properly. Nationwide said risks involved in fracking operations “are too great to ignore” and apply to policies of commercial contractors and landowners who lease property to gas companies.
The Nationwide policy first came to light when an internal memo detailing underwriting guidelines was posted on websites of upstate New York anti-fracking groups and landowner coalitions seeking gas leases. Smeltzer confirmed that the memo was genuine but said it wasn’t intended for public dissemination.
The memo reads: “After months of research and discussion, we have determined that the exposures presented by hydraulic fracturing are too great to ignore. Risks involved with hydraulic fracturing are now prohibited for General Liability, Commercial Auto, Motor Truck Cargo, Auto Physical Damage and Public Auto (insurance) coverage.”
It said “prohibited risks” apply to landowners who lease land for shale gas drilling and contractors involved in fracking operations, including those who haul water to and from drill sites; pipe and lumber haulers; and operators of bulldozers, dump trucks and other vehicles used in drill site preparation.
A spokesman for a research and outreach program of the Independent Petroleum Association of America, whose members drill most of the nation’s oil and gas wells, said nothing in what Nationwide said represented a change in policy for the company. Simon Lomax, the research director for Energy In Depth, said insurers don’t sell products specific to individual steps of the oil and gas development process.
“But practical implications aside, the fact that the company would send out a statement this reckless, and this uninformed, should tell us a lot,” Lomax said in an emailed statement. “For starters, it tells me that I won’t be buying home and car insurance from this company.”
Opponents of fracking point to some highly publicized accidents that resulted in contamination.
In late 2010, Houston-based driller Cabot Oil & Gas Corp. settled for $4.1 million with residents of Dimock, Pa., over gas found in their water. State environmental regulators determined Cabot contaminated the aquifer underneath homes with explosive levels of methane. A Cabot spokesman said levels of contaminants found didn’t pose a threat to human health or the environment.
Jeffrey Hanneman, the Texas-based director of environmental practice at the insurance broker Aon Risk Solutions, said the Nationwide move was “really unique” and he doesn’t expect it will be the beginning of a trend.
“To date, all we’ve seen are some that were hesitant to write environmental coverage,” Hanneman said. “But the Nationwide is sort of a broader ban on all the ancillary services related to it (fracking).”
Hanneman noted that there haven’t been any substantial claims that targeted companies other than those that own and operate the wells or the contractors who do the drilling. And even those claims have been few and far between.
He said one factor that may be driving Nationwide’s decision is that increasing publicity — much of it negative — surrounding fracking makes it possible that any damage claims would go beyond the big oil and gas companies to include the hundreds of supporting businesses such as haulers.
Marcellus Shale
Insurer won’t cover fracking damage
- Marcellus Shale
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Meeting set on Marcellus drilling
The League of Women Voters of Lawrence County will sponsor a panel discussion on Marcellus drilling on Tuesday. The discussion on drilling and property values will begin at 6:30 p.m. at New Wilmington Methodist Church, 125 S. Mercer St.
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SRU to host shale summit
Slippery Rock University will host a summit Tuesday to educate local businesses about the Marcellus and Utica shale industry. The session, called Shale Summit II, will be a joint venture of the university, the Grove City Area and Butler County chambers of commerce and WISR/WBUT radio.
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Education Options, Part 2: Current shale boom casts new light on county’s economic future
Second of two parts: Welcome to the Industrial Revolution of 2013. The Marcellus Shale phenomenon has arrived with the promise of jobs and prosperity for an area in dire need of just such a miracle.
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Seismic testing to be discussed
Seismic testing for Marcellus Shale will be discussed Tuesday in New Wilmington. The meeting will begin at 6 p.m. at United Methodist Church, located at the corner of South Mercer Street and Neshannock Avenue.
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Shale Update: Gas from 2012 wells entering pipeline
Wells drilled a year ago in Lawrence County are producing natural gas that is entering a pipeline for consumers. Natural gas from the Marcellus Shale formation under Lawrence County is now being pumped from two wells on the Harry Patterson property in the New Beaver Borough area into a major pipeline and is being sold, said Joe Minnitte, case manager for Shell Exploration and Production Co.
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Township requests shale money for bridges
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Commission approves shale pact for Pulaski game lands
The Pennsylvania Game Commission will allow Hilcorp Energy Co. to extract oil and gas from Pulaski Township state game lands. The eight-member board today unanimously approved a restricted surface use oil and gas cooperative agreement for two separate tracts, including 586 acres of state game land 150.
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Estate planning workshop to address shale issues
A free workshop on estate planning for shale gas leases is planned this month in Lawrence County. Estate Planning for Marcellus Shale Lease Holders, will run from 6:30 to 8 p.m. Jan. 22 at the Shenango Township Volunteer Fire Hall, 2424 E. Washington St. It is being hosted by state Rep. Jaret Gibbons.
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Extension to review seismic tests, pipelines
A program on seismic testing, pipeline agreements and leasing will be offered three times next week. Penn State Extension and the Beaver-Lawrence Farm Bureau will present the program Tuesday in New Castle. It will be presented two more times on Thursday in Beaver County.
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Shell donation boosts Jameson project
Shell Appalachia’s search for natural gas will help fuel completion of Jameson Heath System’s emergency/surgical wing. Jameson is scheduled to take possession of its $20.3 million expansion Feb. 14.
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Meeting set on Marcellus drilling
