EOG Resources – Methane Emissions – 2016

Outcome: Successfully withdrawn subject to the company's commitment to disclose its methane emissions rate, its LDAR program, and to include methane issues in its 2016 proxy materials.

Methane, the primary component of natural gas, is a greenhouse gas with over 80 times the climate impact of carbon dioxide over a 20-year period. Emissions from the oil and gas industry constitute the largest industrial source of methane emissions in the U.S. Estimates suggest approximately $2 billion of natural gas is lost each year in the U.S.
There is, however, a great deal of concern that methane is leaking from the industry at a higher rate than thought. This uncertainty could shake public confidence in the environmental benefits of natural gas as studies indicate that, to maximize the climate benefits of a transition from both diesel and coal to natural gas on all time scales, methane emissions from the industry must be limited to 0.8% of production.
In 2015, a number of industry companies, including Southwestern, Hess and Apache, formed One Future, a coalition with the goal of achieving a 1% leakage rate across the entire value chain. http://www.onefuture.us/
A report prepared by ICF International, drawing on industry input, identified proven control strategies that can cut oil and gas methane emissions by 40% at an average annual cost of less than one cent per thousand cubic feet of produced natural gas. These strategies, such as vigilant leak detection and repair programs, are commonsense ways to cut emissions. Some such strategies can have a positive economic payback, as the value of captured gas more than offsets the cost. http://www.energyglobal.com/downstream/the-environment/05102015/ICF-Methane-emissions-1538/
Regulatory risk is also very real. In August 2015 the Obama Administration issued a proposed methane rule on new and modified sources of methane in the oil and gas industry. The rule is a component of the Administration’s goal to reduce methane emissions from the industry by at least 45 percent below 2012 levels by 2025.
The question remains how the EPA will regulate methane from existing infrastructure. Speaking to that question, the EPA Administrator said, “If existing sources aggressively reduce their emissions, then it’s not clear that there will be cost-effective reductions that will necessitate regulation of existing facilities.” http://thehill.com/policy/energy-environment/229781-epa-head-defends-methane-rule-from-greens-criticism
Proponents believe implementing a comprehensive program of measurement, mitigation, disclosure, and target setting for actual methane air emissions can help address these risks. We believe better management represents economic opportunity by capturing product that can be monetized.
Unfortunately, EOG’s efforts appear to be minimal – lacking a quantifiable reduction goal, lacking a leakage rate disclosure as a percentage of either production or throughput, and lacking a meaningful description of a leak detection and repair program.
Resolved: Shareholders request EOG publish a report that reviews its policies, actions, and plans to enhance and further develops measurement, disclosure, mitigation, and reduction targets for methane emissions resulting from all operations under its control. The report should consider steps beyond legal compliance and be prepared in light of studies on methane emissions, at reasonable cost, omit proprietary information, and be available by October 2016.

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