US majors shareholders nix shale info proposals

OREANDA-NEWS. June 01, 2015. Shareholders of ExxonMobil and Chevron rejected proposals meant to pressure the two majors to disclose more about onshore shale drilling operations that use hydraulic fracturing techniques some consider risky.

Proposals submitted by shareholders ahead of both companies' annual meetings this week noted that many US states and countries around the world have either banned or put a moratorium on the use of those methods because of "leaks, spills, explosions and community impacts."

In the proposal to ExxonMobil, shareholders asked for the annual report to include details such as methane leakage as a percentage of total production, goals to eliminate the use of open pits for storage of drilling fluids and reports on progress to reduce toxicity of drilling fluids. The Chevron proposal wanted details such as quantity of fresh water used, percentage of recycled water used and post-drilling ground water quality assessments.

Chevron discloses its risk management and other practices in the Marcellus shale area, which is certified by the Center for Sustainable Shale Development, the proposal to Chevron's board said. "But by not reporting to the same extent elsewhere, Chevron leaves investors in the dark about reputational, legal and other risks lurking in other plays," it said.

While the proposals were defeated at both companies, they highlight a growing scrutiny from communities and individuals of the booming shale industry, which has helped propel the US to become one of the largest global oil producers. Countries such as Germany and Bulgaria and states like New York ban extracting oil and gas using fracking, but Texas lawmakers earlier this month signed into law a bill that prevents local regulation of oil and gas drilling.

Countering the proposal, ExxonMobil said safety, security and environmental performance is managed through its Operations Integrity and Management System (OIMS). Following a similar proposal filed by the same shareholder group last year, ExxonMobil said it published a report titled Unconventional Resources Development, Managing the Risks, which described how the company identifies and manages risks associated with developing unconventional resources. It also looked at issues such as drinking water protection, water use and disposal, chemical use and transparency and air emissions.

Chevron said it minimizes adverse water and community impacts by designing and managing wells to protect groundwater, reducing fresh water use and using centralized water facilities and pipelines which reduces truck traffic.