Oasis Flaring 2014
|Company||Oasis Petroleum Inc.|
|Filer||Unitarian Universalist Association of Congregations|
|Sector||Oil and Gas|
|Subject(s)||Air Pollution; Greenhouse Gas Emissions|
|Resolved Clause Summary||Quantitative goals for reducing flaring|
|Status||Withdrawn; Ongoing dialogue|
Rapid growth in tight oil production has led to increased domestic flaring and propelled the U.S. into the top 10 gas flaring countries globally along with Russia, Nigeria, and Iraq. Between May 2011 to May 2013, the quantity of gas flared in North Dakota more than doubled to approximately 266,000 Mcf per day.
States such as Texas have adopted regulations that significantly restrict flaring; although the state accounts for roughly a third of U.S. oil production, less than 1% of gas produced in Texas is flared.
About 29% of gas produced in the Bakken is flared. During 2012, producers in North Dakota flared over $1 billion worth of this high-value product.
Because of its high liquids content, flaring in the Bakken represents substantial forgone revenue. According to the North Dakota Department of Mineral Resources, gathering and processing of Bakken gas is economic because of its higher market value.
In March 2012, 36 investors representing $500 billion in assets wrote a letter to 21 oil and gas companies requesting information regarding the companies’ domestic flaring activities. The letter noted that investors “are concerned that excessive flaring, because of its impact on air quality and climate change, poses significant risks for the companies involved, and for the industry at large.”
We believe flaring poses financial, operational, and reputational risks to Oasis Petroleum and is a potential threat to its reputation and social license to operate. In addition, a lack of sufficient industry-wide action to reduce flaring may prompt new regulations.
Reducing flaring can help companies meet objectives such as reducing greenhouse gas emissions, while also mitigating regulatory risks associated with low-carbon fuel standards intended to reduce the life cycle greenhouse gas emissions of fuels.
Oasis Petroleum’s gas flaring reduction efforts are inadequate relative to its peers. Leading companies have set quantitative goals to reduce flaring; Hess has set a target to reduce flaring in the Bakken below the state’s goal of 10% by 2014, and achieved its 50% flare reduction goal in Algeria and Equatorial Guinea earlier than planned. Continental Resources, a leading oil and gas producer in the Bakken, has set a goal to reduce natural gas flaring from its operated well sites to as close to zero percent as possible. In 2012, Continental’s goal was to reduce flaring in the North Dakota Bakken by 50% by the end of the year.
Resolved: Shareholders request that Oasis Petroleum adopt time-bound, quantitative company-wide goals, based on current technologies, for reducing flaring from all operations and facilities under the company’s operational or financial control, and report to shareholders as part of its annual sustainability report, omitting proprietary information, by September 30, 2014 on its progress toward achieving these goals.