Oil and gas companies engaged in hydraulic fracturing face an array of risk management worries, ranging from potentially widespread environmental liability litigation to regulatory uncertainties and a limited pollution insurance market.

The few dozen fracking-related lawsuits filed so far against well owners and drillers — most alleging groundwater contamination — could turn into hundreds if pollution incidents recur as fracking operations expand, legal sources say.

The suits likely would trigger insurance coverage disputes — similar to those in previous pollution cases — over the applicability of pollution exclusions, the number occurrences at sites with multiple wells and allocation of losses among the various owners, contractors and others involved, lawyers add.

Regulation of fracking operations, now largely a state concern, also is likely to become increasingly “federalized,” with a U.S. Environmental Protection Agency study of fracking's effect on drinking water supplies expected next year, added Carl J. Pernicone, a partner with Wilson Elser Moskowitz Edelman & Dicker L.L.P. in New York. Added regulation will open energy companies to new causes of legal action for alleged failures to comply with requirements, he said.

While energy companies have used hydraulic fracturing in oil and gas wells since the 1940s, advances in horizontal drilling have created a boom in shale development in the past decade. In a shale gas well, a rig may drill down a mile or more, then turn horizontally and drill out through a shale layer. A mixture of water, sand and chemicals is pumped into the well at high pressure, fracturing the shale and freeing trapped gas and oil.

Slumping natural gas prices have slowed drilling in the Marcellus shale, which runs from southern New York through Pennsylvania, Ohio and West Virginia. But other shale plays, including the Bakken in North Dakota, are seeing more activity, and Marcellus drilling is expected to pick up again in the next few years as gas prices rise.

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Energy companies have hydraulically fractured 2,448 wells in Pennsylvania since the beginning of 2011, compared with 16,793 in Texas, 4,926 in Colorado and 2,145 in North Dakota, according to FracFocus, a registry of well sites and fracking chemicals that compiles information submitted by 453 member energy companies.

Fracking has been controversial for its potential environmental risks, which can include contamination of groundwater with fracking fluid or methane leaked from faulty well casings; air pollution from methane emissions at well sites and fumes from drilling equipment and trucks hauling fracking fluid and wastewater; and accidental wastewater spills.

Energy companies are moving toward recycling the millions of gallons of “flowback” water produced by each well, but in addition to fracking chemicals, this wastewater can contain such naturally occurring substances as benzene — a carcinogen — and radioactive radium. If it is not recycled, fracking waste is disposed of in evaporation pits, which may leak or overflow, or by injecting it into disposal wells, a practice that has been linked to earthquakes in Texas, Oklahoma and Ohio.

At least three dozen liability lawsuits, many alleging drinking water contamination, had been filed against energy companies in a handful of states through mid-2012, the largest numbers being in Pennsylvania and Texas, according to a tally by law firm Edwards Wildman Palmer L.L.P.

Many more could follow if perceptions of water supply threats expand, Mr. Pernicone said.

“The water is the key thing,” he said. “If there's a litigation breakout, alleged water contamination will likely be at the center of it.”

For that reason, insurers see Marcellus shale drilling, often carried out closer to towns and cities, as riskier than more remote operations in North Dakota and Texas, said Jeff Hanneman, managing director of Aon Risk Solutions' environmental services group in Houston.

The potentially high cost of investigating and defending cases is as much of a worry for insurers as possible judgments and settlements, sources add.

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“Their concern is more getting caught up in class action lawsuits that drag on for several years,” Mr. Hanneman said.

“A suit alleging damages from fracking could be a long, protracted, complicated kind of process,” agreed Mike Schneider, president of Houston-based agency Cravens Warren & Co.

Meanwhile, energy companies also face potentially tighter federal regulation, sources say. States have largely managed drilling regulation so far, with some, such as Pennsylvania, adopting pro-development policies. New York, by contrast, has banned fracking temporarily pending the release of environmental and health studies, expected shortly.

The U.S. Interior Department last year proposed new rules for fracking on federal land, including requirements that companies disclose fracking chemicals and have management plans for flowback water. The department last month delayed implementing the rules and is drafting a new proposal, expected this year.

The EPA also is in the midst of a comprehensive study of fracking's effects on drinking water supplies. The study, due in 2014, is examining the effect of the huge amounts of water withdrawn from rivers and aquifers for fracking operations, the potential for surface spills of fracking fluid and flowback water, and the impact of improper disposal of wastewater.

“You're going to see a lot more federal regulatory effort” aimed at fracking, Mr. Pernicone said.

Any new rules issued by Interior, the EPA or other agencies will increase litigation risk for oil and gas companies, he said.

Such rules “could very well provide the basis for claims,” he said.