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What Bakken O&G companies can learn from the BP debacle
Posted by bakkenexpertIt’s been months since a drop of oil has leaked into the Gulf but the remnants still reside from this PR disaster. BP is still running radio and TV ads in all major markets to slowly reclaim it’s brand equity and based on the Exxon Valdez disaster it will take upwards of 15-20 years for the subject to fade into wikipedia.
In the last few weeks in a number of papers a similar theme is circulating that should catch the attention of all the Bakken O&G companies that exist. Elements of the media have started reported that “Fracking” is a dirty word. On Yahoo today the term hit #1 in the “Trending Now” section. In the Christian Science Monitor, a prominent article ran with the subject
Fracking debate prompts EPA hearing in New York on gas drilling
If the title didn’t get your attention then surely the tagline would – “Fracking opponents carried signs saying “Kids can’t drink gas” and “Protect our water. “. In the Bakken region hydraulic fracking is a core component, perhaps the core component in drilling and recovering oil from the layers of rock within the Williston Basin. The long term effects of hydraulic fracturing are not entirely clear as the data around this technique is limited.
Opponents make claims that fracking destroys the environment, sickens children and sets water ablaze. There are a couple of congressional inquiries on the matter related to the practice in Pennsylvania and New York within the lucrative Marcellus Shale beds. For Bakken related companies, the inquisition has not started, but these protests against fracking may be the beginning. Any North Dakota state commission or board has not raised a vocal ruckus over this issue as yet, after all, this is the very practice that catapulted ND into the national spotlight as one of the only bright economic growth stories in recent years. The state took in more than $400 million in oil revenue last year and handcuffing drillers would hamper growth.
If Bakken O&G companies are smart, they will get out in front of this issue, form an independent commission, and do some real unbiased research on the potential impact of this type of drilling and develop a detailed industry standard incident response plan as well as disaster prevention strategies in case this issue surfaces on any real scale in North Dakota. Sure there has been a few small incidents including a recent spill near Killdeer, but these were passing glances in terms of media coverage. One of the only things that can derail the growth in the Bakken is some sort of human casualty (or near casualty) as a direct (or even indirect result) of the environmental impact of fracking.
Just as O&G companies de-risk their acreage, bigger players such and Continental Resources (CLR: 71.31 +0.62%), Brigham Exploration (BEXP: 0.00 N/A) and Whiting Petroleum (WLL: 44.20 -0.20%) need to step up and de-risk the environmental impact of drilling before lawmakers step in and try to do it for them. Even a temporary moratorium on hydraulic drilling could lead to a 30-40% haircut across all Bakken related stocks and that is the last thing a loyal Bakken investor needs.
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Tags: BEXP CLR drilling economy fracing fracking growth hydraulic drilling north dakota O&G
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