Friday, July 13, 2012

A Shale Gas Leak with a Twist

A new kind of 'leak' has hit Shale Gas Fracking Industry in the States - the news has 'leaked' out that an insurance company in the States is refusing to insure the Shale Gas a.k.a. 'Fracking' Industry as well as its sub-contractors who transport materials for the industry. 
Nancy Smeltzer - company spokesperson for Nationwide Insurance said the news that the company will not provide insurance coverage to Fracking industry was not meant for public dissemination.  
But the word is out and the Washington Post is covering the story. The story is not all good for anti-shale activists since landowners who lease to Frack industry will also be caught 'uninsured' as it were, however the fact that a large insurance company has 'washed its hands' of the industry speaks volumes.   
How can an Industry survive without insurance? Will this debacle spawn a Court Case? Will this news spark a 'trend' of non-insurance by other Insurance Companies? Will these two Goliaths of Industry (Insurance and Oil & Gas) collide in a 'no holds barred' battle? Too early to say for sure on any of this, but the slight lull in industry activities and the major depression of natural gas prices on the market followed by a more recent upsurge all speaks to the extreme volatility of the industry. With this latest news from Nationwide - will Shale Gas Industry now be considered too hot to handle?  - will the news precipitate a "Walk from Wall Street" for natural gas investors?   

NOTE: Fracking industry spokespersons are downplaying the effects of this announcement however, the news is significant given that Nationwide is a well-established 80-year veteran of the Insurance Industry which has grown to one of the largest insurance and financial services companies in the world, with more than $135 billion in statutory assets. 

Washington Post headline:
"US insurance company nixes coverage for damage related to hydraulic fracturing for oil and gas"

Truth is For Sharing - DO Feel Free to Pass This One On!

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