Control Risks: The Global Anti-Fracking Movement, What it Wants, How it Operates and What’s Next

The Global Anti-Fracking Movement, What it Wants, How it Operates and What’s Next by Jonathan Wood, Senior Global Issues Analyst, December 2012, published by Control Risks, Cottons Centre, Cottons Lane, London

As shown by local bans in the Us and Canada, national moratoriums in France and Bulgaria, and tighter regulation in Australia and the UK, the global anti-fracking movement has mounted an effective campaign against the extraction of unconventional gas through hydraulic fracturing (‘fracking’). Meanwhile, the oil and gas industry has largely failed to appreciate social and political risks…. Almost single-handedly, Gasland made unconventional gas production internationally controversial. The film’s climactic scenes of rural homeowners using matches to set tap water alight have been replicated repeatedly, in multiple languages, in both mainstream and social media. Anti-fracking movements worldwide centre on water contamination concerns and related threats to public health, agriculture and ecology, citing Gasland as evidence. Tighter regulation has revolved around Gasland’s major concern of disclosing fracturing chemicals, as well as managing surface wastewater and reducing greenhouse gas emissions. … The industry argues that environmental concerns are misplaced and based on misperceptions fuelled by Gasland. yet simply attempting to discredit Gasland has been ineffective for a few key reasons. First, anti-fracking grievances are broader and deeper than water contamination. They also encompass health and safety concerns, and issues of economic development, cultural integrity and political legitimacy, which pertain directly to the question of who wins and who loses from gas development. secondly – and crucially – companies have lost public trust by discounting the legitimacy of grievances, prioritising trade secrets over transparency and engaging governments rather than communities. Finally, the industry has underestimated the sophistication, reach and influence of the anti-fracking movement. It is not simply ‘NIMBy-ism’ masquerading as environmentalism, but a diverse coalition of ideological and vested interests unlikely to be swayed by industry-funded studies or glossy public relations campaigns. …

However, the movement as a whole falls into four broad camps: those desiring a better deal from the gas industry; those advocating further study into the environmental and economic impacts of unconventional gas development; those demanding a complete ban on hydraulic fracturing; and – in the majority – those demanding tighter regulation of gas development. … The anti-fracking movement tends to sharply discount rosy industry projections of economic growth and employment. From pennsylvania to poland, activists are concerned that labour will be imported and profits exported, leaving local communities to bear the long-term environmental and public health costs of the industry. … Transferred into politics, the anti-fracking movement’s discourse on a better deal revolves around the tax structure of the unconventional gas industry. At one level, this reflects animosity towards the incentives and exemptions often provided to attract investment. … Finally, the anti-fracking movement frequently overlaps with direct compensation claims by individuals or communities against companies, seeing itself as a counterweight to the energy industry’s political clout and legal armour. Prominent Us anti-fracking groups, for example, took a special interest in water contamination lawsuits in Dimock (Pennsylvania) – settled in late 2012 – which achieved global symbolic status because they featured in Gasland. … Yet, as in the Dimock case, settlement – rather than conceding the debate and fuelling anti-fracking sentiment – may be the least costly course of action.

The anti-fracking movement points to lingering knowledge gaps about the impact of unconventional gas development – particularly on public health – as justification for a precautionary policy and regulatory stance. It naturally seizes on credible analyses of water contamination, seismic activity or other issues as critical evidence supporting the need for further research. Two 2011 reports in particular function as key texts in this regard: a US Environmental  protection Agency (EPA) finding of water contamination from a well in Pavillion (Wyoming); and the UK Department of Environment and Climate Change (DECC)’s determination that hydraulic fracturing induced minor earthquakes near Blackpool (Lancashire). … Another problem for the industry is that the anti-fracking movement is sceptical of studies sponsored by or linked – however tenuously – to the gas industry, which is a key source of funding and research into hydraulic fracturing. several recent university studies in the US, for example, were compromised by undisclosed conflicts of interest between researchers and gas companies. This only underscores the challenge of meeting demands for further research. Research is expensive and time-consuming; without a significant injection of public funding – the US Congress in June 2012 rejected a $4m administration proposal to study water quality impacts – significant knowledge gaps seem likely to remain. … In Canada, meanwhile, Quebec’s new separatist government in September 2012 moved quickly to extend a partial moratorium to study impacts into a comprehensive ban. …

The push for a complete ban on hydraulic fracturing stems largely from three environmental arguments. First, the risk of water contamination from hydraulic fracturing fluids, gas migration and surface wastewater is simply too great.  Secondly, methane emissions from wells and pipelines specifically, and increased fossil fuel consumption generally, threaten to accelerate climate change, as the IEA acknowledged in its 2012 report on the ‘golden rules for unconventional gas development. Thirdly, with Gasland’s images of extensive networks of well pads in the western US firmly in mind, intensive development will fragment sensitive ecologies. … As public health concerns gain wider traction in the movement, they seem very likely to also surface as primary justifications for moratoriums and bans. …

….the US anti-fracking movement continues to push for an end to trade secrets exemptions embedded in many state laws, as well as a comprehensive federal disclosure requirement, such as that contained in the FRAC Act, a disclosure bill introduced in each of the last two Congresses. However, with analogous action in the UK, parts of Australia, and by companies in Poland and  South Africa – let alone the IEA’s endorsement of mandatory disclosure – its war on disclosure is largely won. … Anti-fracking websites are highly effective information and messaging platforms. … The early days – 2006 to 2008…are replete with stories of companies playing on general ignorance about the science, practice and economics of hydraulic fracturing to secure favourable lease terms.  At the more sophisticated end of the spectrum, for example, the anti-shale Quebecois (Canada) campaign Moratoire d’une generation maintains a dedicated initiative – schiste 911 – to alert activists by email to drilling activity in the province. … Secondly, the industry needs a broad-spectrum political engagement strategy that is not overly dependent on cosy relationships with regulators, power-brokers and other narrow points of influence, which are easily tarred by general mistrust of central governments and are a source of political risk. … Thirdly, the industry needs to continue to make good faith efforts to reduce adverse impacts across the board. [Emphasis added]

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Control Risks is a global risk and strategic consulting firm specialising in political, security and integrity risk. Control Risks’ aim is to help its clients to understand and manage the risks of operating in complex or hostile environments. Control Risks brings together the expertise of regional political risk analysts, business intelligence and corporate investigations experts and experienced security consultants to offer fully integrated, information led risk management services. Operating from 34 offices,[1] the company’s primary services include anti-corruption audits, consultancy and training, eDiscovery, political risk analysis and a broad range of security and crisis management support. Control Risks was formed in 1975, as a professional adviser to the insurance industry. … As multinational organizations demanded a more holistic suite of risk management services, Control Risks grew organically delivering a wider range of services from more international locations. In the 1990s, as multinationals started doing business in more unfamiliar territories, business intelligence and investigations became a growth area. Since then Control Risks has conducted due diligence on behalf of many of the world’s largest companies, researching into their potential business partners, agents and employees. Control Risks formed a Joint Venture with International SOS in 2008, and through this partnership provides a comprehensive suite of travel security services and advice to clients’ business travelers and expatriate employees. In 2010, Control Risks launched an eDiscovery offering to support organizations with complex, multi-national litigation issues. The company has continued its expansion and today is a business of over 2,000 employees, operating from a network of 34 offices and with an on-the-ground presence in more than 100 countries and cities including; Abu Dhabi, Amsterdam, Baghdad, Beijing, Berlin, Bogotá, Copenhagen, Delhi, Dubai, Hong Kong, Houston, Islamabad, Jakarta, Johannesburg, Kabul, Lagos, London, Los Angeles, Mexico City, Moscow, Mumbai, New York, Paris, São Paulo, Shanghai, Singapore, Sydney, Tokyo, and Washington DC.[2] In December 2010, the company reported a 10% rise to £136 million in its annual revenues due to oil companies wanting protection in Iraq.[3]  [Emphasis added]

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