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EOG Hydraulic Fracturing

Whereas:  Extracting oil and gas from shale formations, enabled by the use of horizontal drilling and hydraulic fracturing technology, is a highly controversial public policy issue. 

Leaks, spills, explosions and adverse community impacts have led to bans and moratoria in the United States and around the globe. These include New York State, the Delaware River Basin, the Province of Quebec (Canada), France, and Bulgaria. 

Reflecting communities’ concerns that state regulations do not provide adequate protection from the adverse effects of shale gas operations, the Natural Resources Defense Council has launched the “Community Fracking Defense Project”, to assist “local governments seeking added control or protections from hydraulic fracturing in their communities.” 

The International Energy Agency’s 2012 report, “Golden Rules for a Golden Age of Gas” addressed the need of the energy industry to sustain its social license to operate, stating that “full transparency, measuring and monitoring of environmental impacts and engagement with local communities are critical to addressing public concerns.” 

Investors believe companies must be transparent about managing their environmental footprint and social impacts, and engage with key stakeholders. Transparency requires full disclosure of steps taken to minimize risks, acknowledgement of challenges and failures, and clearly defined procedures to continually improve operations. 

EOG publicly “recognizes the importance of proactively engaging with others in the community,” but proponents believe the company does not provide sufficient information regarding how community concerns are tracked and responded to. Without such information, shareholders are unable to evaluate risks to the company’s social license to operate. 

The Company also states that it seeks to use less toxic materials for fracturing, but proponents believe it fails to detail sufficiently the systems in place to do so. 

The Department of Energy Secretary’s Shale Advisory Panel recommended in 2011 that companies “adopt a more visible commitment to using quantitative measures as a means of achieving best practice and demonstrating to the public that there is continuous improvement in reducing the environmental impact of shale gas production.” 

Resolved:  Shareholders request that the Board of Directors publish a set of systematic policies for tracking and responding to community concerns, reducing the use of toxic chemicals, disclosing violations, and reporting to shareholders, on an annual basis via quantitative indicators, the results of these policies. Such a report should be prepared at reasonable cost and omitting confidential information by Dec 31, 2013. 

Supporting Statement:  Proponents believe the systematic approach of the policies should at a minimum: 

- Track, via quantitative indicators, the number of complaints from the community, and the portion of these issues resolved; 

- Articulate a systematic approach, above and beyond regulatory requirements, to reduce use of toxic chemicals in hydraulic fracturing fluids; 

- Lead to company disclosure of all government enforcement actions relating to hydraulic fracturing and related operations, including all allegations or notices of violation, total aggregate government fines on an annual basis, and any shutdown orders, suspensions or moratoriums affecting exploration or operations.