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January 28, 2011
Resolutions Challenge Hydraulic Fracturing by Nine Oil and Gas Companies
    by Robert Kropp

After receiving strong support in the 2010 proxy season, an investor coalition led by Green Century Capital Management and the Investor Environmental Health Network requests improved risk management and better disclosure.

Shareowner resolutions that challenged the controversial practice of hydraulic fracturing by oil and gas companies won substantial levels of support in the 2010 proxy seasons, as three of the six resolutions filed by an investor coalition gained more that 30% of shareowner votes. Last year's coalition was led by As You Sow, Green Century Capital Management, and the Investor Environmental Health Network (IEHN).

With the 2011 proxy season now underway, shareowner resolutions have already been filed with nine oil and gas companies, "Pressing them," a press release from the Investor Network on Climate Risk (INCR) states, "To disclose their plans for managing water pollution, litigation and regulatory risks that are increasingly associated with ever-expanding natural gas hydraulic fracturing operations (also known as fracking) in the United States."

This year's resolutions have been coordinated by Green Century and IEHN. The texts of the resolutions are available on IEHN's website. Investors filing resolutions also include As You Sow, Domini Social Investments, Trillium Asset Management, The Sisters of St. Francis of Philadelphia, Miller/Howard Investments, and the New York State Comptroller.

Resolutions have been filed this year with ExxonMobil, Chevron, Ultra Petroleum, El Paso, Cabot Oil & Gas, Southwestern Energy, Energen, Anadarko, and Carrizo Oil & Gas.

"As conventional natural gas supplies have dwindled," the press release continued, "The American Petroleum Institute estimates that 60 to 80 percent of natural gas wells drilled in the next decade will require hydraulic fracturing."

The process of hydraulic fracturing requires the injection of as much as 7.5 million gallons of water per well, as well as often toxic chemicals, to crack open rock and allow natural gas to flow to the surface. According to a November 2009 report by the Environment America Research and Policy Center, "The available information from state-required or voluntary disclosures paints a very troubling picture of the toxicity" of the chemical make-up of the fluids used in hydraulic fracturing.

The resolutions filed this year request that companies adopt best management practices in the recycling of waste water, reduction of volume and toxicity of chemicals, disclosure of chemicals used, and assurance of the integrity of well cementing.

"High profile water contamination incidents, new litigation, and public protests that include calls for moratoria on natural gas permitting all suggest sizeable and rising business risks to companies and attendant threats to shareholder value," said Richard Liroff, executive director of IEHN. "Shareholders need assurance that companies are candidly disclosing these risks and are adopting best management practices to minimize them."


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