Investors target Marcellus Shale drillers

HOUSTON (Reuters) - A group of shareholders who focus on the environment said on Tuesday they are targeting companies operating in the Marcellus Shale to ensure development of natural gas does not pollute or endanger human health.

The shareholder proposal campaign, aimed at 12 companies including Chesapeake Energy Corp, EOG Resources Inc and Exxon Mobil Corp, was sparked by mounting worry about chemicals used in a process to extract gas from rock called hydraulic fracturing, the groups said.

“There is real business risk here,” said Larisa Ruoff, an official with the $100 million Green Century Funds. “Companies and regulators must ensure this development is done in a way that protects the environment and drinking water.”

Hydraulic fracturing -- where water, sand and chemicals are pumped into formations at pressures high enough to crack the rock and allow gas to escape -- has helped fuel a drilling boom in the United States.

That technology and others have allowed companies to tap vast supplies of natural gas locked in big formations like the Marcellus Shale, which spans parts of New York, Pennsylvania and West Virginia.

But environmentalists and critics say the drilling chemicals have polluted aquifers in Pennsylvania and Colorado and can cause cancer and other serious illnesses.

The shareholder proposals sponsored by Green Century Funds and the Investor Environment Health Network ask companies to increase transparency about the effect of their drilling on the environment and encourage companies to switch to less-toxic hydraulic fracturing fluids.

The oil and gas industry says the process is safe, and there has never been a documented case of ground water contamination because of hydraulic fracturing.

“Ultimately the facts are going to bear out,” said Tom Price, a spokesman for Chesapeake Energy. “I think that is all we can do, is to continue to point to the facts.”

Chesapeake holds the largest number of drilling leases in the Marcellus along with its partner Statoil ASA.

Still, opponents are becoming more vocal. On Monday, New York City Mayor Michael Bloomberg said he opposed natural gas drilling in the city’s upstate watershed, saying it posed too many risks.

Ruoff said she has heard back from several of the companies about the proposals, but she declined to name them.

Reporting by Anna Driver in Houston, editing by Matthew Lewis