Chevron Hears Concerns About Gas Fracking, Ecuador at Meeting

Chevron Hears Concerns About Gas Fracking, Ecuador at Meeting

SAN RAMON, Calif. - Chevron Corp. tried to focus attention Wednesday on its plans to expand oil and gas production, but the company's use of hydraulic fracturing, or fracking, and its ongoing environmental battle in Ecuador arose as key issues.

Activist shareholders from Ecuador and other countries spoke at the company's annual meeting and asked Chevron to live up to its responsibilities in Ecuador, where Texaco, an oil company that Chevron bought several years ago, used to have oil operations.

Later in the day, lawyers representing residents of an Amazon rain forest disclosed that they filed a lawsuit in Canada against Chevron. The plaintiffs said they aim to seize assets there belonging to Chevron as part of their effort to collect an $18.2 billion judgment they won in Ecuador in a pollution case.

Earlier in the day, Chevron shareholders voted on eight shareholder resolutions, including one that would require the company to report on the risks it faces in drilling for natural gas using fracking, a horizontal drilling technique in which water, sand and chemicals are injected at high pressure into underground wells to extract natural gas. A second proposal would have called for the company to appoint an independent chairman of the board who is not a company executive. None of the shareholder proposals obtained a majority of favorable votes.

During the meeting, Chevron Chairman and Chief Executive John Watson accused the Ecuadorean plaintiffs' attorneys of fraud and said that although the company lost in an Ecuadorean court, an international court in the Netherlands has ruled in Chevron's favor.

Chevron later issued a statement in response to the new lawsuit in Canada, saying "the Ecuador judgment is a product of bribery, fraud, and it is illegitimate. The company does not believe that the Ecuador judgment is enforceable in any court that observes the rule of law."

The plaintiffs have denied the fraud allegation and have in turn accused Chevron of the same.

Ecuadorean indigenous groups sued Chevron for environmental damage they say was caused by Texaco Inc. Chevron inherited the lawsuit when it bought Texaco in 2001. The oil company denies the allegations.

In 2011, an Ecuadorean court ordered Chevron to pay $9.5 billion in remediation costs and plaintiff damages, and an additional $8.6 billion if it refused to apologize for the alleged environmental damage.

Last week, a shareholder group led by New York State Comptroller Thomas P. DiNapoli urged Chevron to settle the legal battle in Ecuador, saying it has hurt indigenous people in Ecuador and damaged Chevron's reputation.

Several dozen protesters stood on a sidewalk outside Chevron's corporate headquarters in San Ramon, holding signs that asked for justice in Ecuador and safety improvements in Nigeria, Angola, Brazil and other countries where Chevron has operations.

Others raised concerns about the impact on the environment and public health of hydraulic fracturing drilling techniques Chevron and other companies use to produce natural gas from shale rock. The techniques have unleashed an unprecedented oil and gas production boom in the U.S.

In response to the concerns, Watson said Chevron "supports expanded disclosure" of chemicals used in drilling for gas. He said the company discloses chemicals it uses on a website called Watson said the key challenges are ensuring all industry players use best practices to prevent environmental damage and inform the public about what to expect if they live near a gas field where fracking techniques are used.

"Fracking is not a new technology, but it has come to new areas," Watson told reporters after the meeting. "I think there are legitimate concerns, and we're willing to address them."

But Larry Fahn, president of shareholder advocacy group As You Sow, which sponsored the proposal requesting a report from Chevron on the risks of gas production, said concerns about pollution, road congestion and other problems are growing among communities near gas fields. He added that some of Chevron's rivals have voluntarily provided more information about their fracking activities.

"We still don't know what chemicals are being injected into these wells and what the risks and liabilities might be of water contamination and water and air pollution," Fahn said in a brief interview following the meeting. "Many previously bucolic, rural areas are becoming industrialized, and there's new traffic, crime and rising prices. Because of that, communities are pushing back."

Fahn cited Bulgaria is an example of an area where public concerns about safety prompted the government to issue a moratorium on gas drilling.

Chevron said it planned to spend about $28.5 billion this year in oil and gas production facilities around the world, and about $9 billion in the U.S., including projects in the deep waters of the Gulf of Mexico, gas fields in Pennsylvania and at a refinery in Mississippi. The company plans to spend an additional $3.6 billion on downstream operations, such as refining and marketing.

While natural gas production is a key area of expansion for Chevron, the company doesn't plan to get involved in exporting the commodity from North America, Watson said.


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