Methane Emissions Report – EOG Resources, Inc. (2014)
Public confidence in the environmental benefits of natural gas is threatened by evidence of high levels of methane leakage from the oil and gas industry in many regions. For example, a November 2013 study published in the Proceedings of the National Academy of Sciences shows the oil and gas sector in Oklahoma and Texas, where EOG has operations, may be emitting up to five times more methane than estimated. This study raises questions regarding the adequacy of current Environmental Protection Agency methods for measuring methane emissions.
The International Energy Agency’s (IEA) 2012 report “Golden Rules for a Golden Age of Gas” recommends producers undertake actions “necessary to realise the economic and energy security benefits while meeting public concerns”, such as eliminating venting. It also recommends producers “consider setting targets on emissions as part of their overall strategic policies to win public confidence.”
Methane is a potent greenhouse gas (GHG), with 86 times the climate impact of carbon dioxide over a 20-year period. Studies from Harvard, the University of Texas, Cornell, and the University of Colorado, among others, estimate highly varied methane leakage rates as a percentage of production, creating uncertainty and garnering media attention that EOG should do more to proactively address.
Reducing methane air emissions in upstream oil and gas production is one of four policies proposed by IEA that “could stop the growth in global energy-related emissions by the end of this decade at no net economic cost” and help keep the increase in global mean temperature below 2 degrees Celsius. All four policies “rely only on existing technologies”, “have already been adopted and proven in several countries,” and “would not harm economic growth in any country or region”.
The IEA also states “public authorities need to consider imposing restrictions on venting… .” This regulatory risk, including target setting, was seen, for example, when in November 2013, Colorado proposed new regulations, with industry support, focusing on methane air emissions and requiring companies capture 95 percent of their hydrocarbon emissions.
Proponents believe EOG’s social license to operate may be at risk. Implementing a comprehensive program of measurement, mitigation, disclosure, and target setting for actual, as opposed to estimated or calculated, methane air emissions can help address this risk. We also believe better management of leakage and venting represents economic opportunity for EOG by capturing valuable product that can be monetized. Additional benefits include worker safety improvements, maximizing available energy resources and protecting human health.
Unfortunately, EOG’s disclosures associated with leakage and venting are minimal.
Resolved: Shareholders request EOG publish a report that reviews its policies, actions, and plans on a play by play basis in order to enhance and further develop measurement, disclosure, mitigation, and reduction targets for methane emissions resulting from all operations under its financial or operational control. The report should consider steps beyond legal compliance and be prepared in light of studies on this issue, at reasonable cost, omit proprietary information, and be available by October 2014.