Insuring Fracking Risk: Can Conventional Insurance Tools Manage Unconventional Risk?

Hydraulic fracturing of subterranean shale formations to extract natural gas, or “fracking,” is a process that sometimes lends itself to hyperbole in these polarized times. Proponents hail it as a lifeline for economically depressed rural regions, touting well-paying jobs and cleaner burning fuel for electricity generation. President Obama has called America the “Saudi Arabia of natural gas” and encouraged expanding its use in cars and trucks. Obama: US Saudi Arabia of Natural Gas, U.S. News & World Rep., Jan. 26, 2012. Skeptics decry fracking as an environmental disaster in waiting. They link existing operations to a variety of serious health impacts and cite threats to drinking water supplies from undisclosed chemical constituents of the fluid used in the fracking process.