Concho Fugitive Methane Report 2014
|Company||Concho Resources, Inc.|
|Filer||Domini Impact Investments LLC|
|Sector||Mining & Resources|
|Subject(s)||Air Pollution; Climate Change; Hydraulic Fracturing; Methane Emissions|
|Resolved Clause Summary||Report on methane emissions|
Natural gas can be beneficial in tackling climate change by reducing our dependency on coal in electric power generation. However, increased global warming from high methane emissions generated along the natural gas and oil value chain may negate some of this benefit. This carries climate risks and threatens to increase public opposition to natural gas development.
Over a 20 year period, methane’s impact on temperature is 86 times that of carbon dioxide and therefore contributes significantly to climate change. The oil and gas industry accounts for 70% of energy-related methane emissions. Academic studies from Cornell, the University of Colorado and the University of Texas estimate highly varied methane leakage rates as a percentage of production.
The International Energy Agency (IEA) believes that reducing methane emissions in upstream oil/ gas production is an important way to “stop the growth in global energy- related [greenhouse gas] emissions by the end of this decade at no net economic cost.” The IEA states that methane emission reductions can be achieved with “existing technologies” that “have already been adopted and proven in several countries.”
The IEA highlights the risk of failing to implement best practice measurement and disclosure of methane emissions and recommends oil and gas producers undertake a set of actions “necessary to realize the economic and energy security benefits while meeting public concerns” of unconventional gas development. The IEA recommends oil and gas companies eliminate venting, minimize flaring and “consider setting targets on emissions as part of … overall strategic policies to win public confidence.”
The IEA states that “public authorities need to consider imposing restrictions on venting and flaring.” A failure by companies to proactively reduce methane emissions may invite more rigorous regulations. The Environmental Protection Agency requires reduced emission completions by 2015 for hydraulically fractured natural gas wells.
We believe Concho Resources (“Concho”) has a responsibility to implement a comprehensive program of measurement, mitigation, disclosure, and target setting for its methane emissions across its operations. Benefits include: worker safety improvements, maximizing available energy resources, protecting human health, reducing environmental impacts, and reducing economic waste. Upgrading production assets may improve performance and make equipment more robust and less susceptible to upsets and downtime. Significant reductions in methane emissions are possible using existing technologies with positive return on investment.
Nearly 200 institutional investors managing $20 trillion issued a statement calling for better management and disclosure of methane- related risks from oil and gas companies. Investors managing $87 trillion support the Carbon Disclosure Project’s reporting framework, which solicits information on methane emissions and reduction efforts. Concho has not responded to the CDP’s request for information.
Shareholders request that Concho issue a report reviewing the company’s policies, actions, and plans to measure, disclose, mitigate, and set reduction targets for methane emissions resulting from all operations under its financial or operational control. The report should be prepared at reasonable cost, omit proprietary information, and be made available to shareholders by December 2014.