In August, I questioned whether investors should fear the FRAC Act, a legislative effort to increase oversight of the oil and gas industry practice of hydraulic fracturing. For an education on the subject, make sure to check out the comments section of that article. The firsthand experiences of our fellow Fools working within the industry are invaluable to gaining an understanding of this nuanced debate.
One commenter, Wildcat79, argued that basic cementing requirements would allay most hydrofracking concerns. That's a view shared by Michael Nickolaus, special projects director for the nonprofit Ground Water Protection Council and former director of Indiana's state Oil and Gas Division. I think these guys are dead on, and cementing requirements should be a bigger part of the conversation going forward.
Responding to my concerns about the potential for regulatory capture, another commenter (who managed to snag the user name Fool) noted that "anyone who thinks the state regulators and the industry are in bed with each other haven't worked in Pennsylvania or New York!"
That's a fine point, Fool! Late last week, the Pennsylvania Department of Environmental Protection ordered a halt to all of Cabot Oil & Gas'
As with neighboring operators like Chesapeake Energy
No wonder, then, that Cabot is taking this matter so seriously. Most E&P companies don't bother to issue a press release about a surface spill like this. Then again, the suspension of hydrofracking is an extreme response by regulators, and shows just how high tensions are running in battleground shale states like Pennsylvania.
Cabot is rated a surprisingly low two stars (out of a possible five) in Motley Fool CAPS. Think the company will fare better than other Fools seem to expect? Then rate the stock to outperform right here.
Fool contributor Toby Shute doesn't have a position in any company mentioned in this article. Check out his CAPS profile or follow his articles using Twitter or RSS. Chesapeake is a Motley Fool Inside Value selection. The Fool owns shares of Chesapeake and has a dynamite disclosure policy.