Fracking, a hydraulic process used to extract gas from shale formations, is one of several, lesser-known energy risks facing the environmental insurance industry in 2012, according to bloggers writing for WillisWire.
"There is much debate and concern surrounding fracking due to the chemicals utilized-for example acids to dissolve minerals and create cracks and surfactants to make fluids more slippery-and the massive amounts of wastewater generated," Anthony Wagar writes for WillisWire. "Not to mention the fear of radioactive materials and other contaminants potentially finding their way into water supplies."
For the insurance industry, the toxic tort issue is complicated by the gradual, long-term nature of the potential harm created by the fracking process. Wager notes that general liability carriers provide a degree of "sudden and accidental" pollution coverage.
But "environmental insurance carriers have been a lot more selective in their appetite when underwriting these risk in terms of providing any meaningful ‘gradual' pollution coverage (particularly in the Marcellus shale formation which has received most of the negative media attention lately)," Wagar writes.
Spanning across the Appalachian Basin, the Marcellus Shale formation can be found beneath about 60% of Pennsylvania's total landmass, where it is buried to depths of up to 9,000 feet.