Occidental Petroleum methane emissions reduction targets
|Company||Occidental Petroleum Corporation|
|Sector||Oil and Gas|
|Subject(s)||Greenhouse Gas Emissions; Methane Emissions|
|Resolved Clause Summary||Report on reductions targets for methane and flaring|
WHEREAS: Methane’s impact on global temperature is 86x that of CO2 over a 20-year period, emissions contribute significantly to climate change. Methane represents over 25% of 20-year CO2 equivalent emissions in the EPA Greenhouse Gas Inventory.
Further, domestic flaring has propelled the U.S. into the top 10 gas flaring countries globally. Approximately 29% of gas produced in the Bakken is flared and gas flared in North Dakota more than doubled between May 2011 and May 2013, with $1 billion worth of gas lost in 2012.
Studies from Cornell, the University of Colorado and the University of Texas estimate highly varied methane leakage rates as a percentage of production, creating uncertainty and garnering attention from Forbes and The New York Times, where methane leakage was referred to as “the Achilles’ heel of hydraulic fracturing.”
The IEA highlights the risk of failing to implement best practice methane management in “Golden Rules for a Golden Age of Gas,” recommending actions “necessary to realise the economic and energy security benefits [of gas development] while meeting public concerns.” Recommended actions are to “eliminate venting, minimise flaring,” and “consider setting targets on emissions as part of their overall strategic policies to win public confidence.”
Reducing methane emissions in upstream oil and gas production is one of four policies proposed by the International Energy Agency (IEA) that “could stop the growth in global energy-related emissions by the end of this decade at no net economic cost.” The policies “rely only on existing technologies” and “would not harm economic growth.”
The IEA states, “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.
We believe Occidental Petroleum’s social license to operate is at risk and the company has a responsibility to implement a comprehensive management program. We recognize some operations may incorporate best practice management; however, the risk of leaks at high growth or select geographies can negate best practices elsewhere.
Methane leakage and flaring has a direct economic impact on Occidental as lost and flared gas is not available for sale. The National Resource Defense Council estimates control processes could generate $2 billion in annual revenues for the industry and reduce methane pollution eighty percent.
RESOLVED: Shareholders request that Occidental issue a report (by October 2014, at reasonable cost, and omitting proprietary information) for investors that reviews the Company’s policies, actions, and plans to measure, disclose, mitigate, and set quantitative reduction targets for methane emissions and flaring resulting from all operations under the company’s financial or operational control.
SUPPORTING STATEMENT: The Global Reporting Initiative (GRI) and the Carbon Disclosure Project provide guidelines to disclose the quantity of flared and vented hydrocarbons. We believe a report adequate for investors to assess the Company’s strategy would include methane leakage rate as a percentage of production, how the Company is measuring and mitigating emissions, best practices, worst performing assets, risk mitigation, and environmental impact.