Outcome: Successfully withdrawn as the company will be improving its methane emissions disclosures.
Resolved: Shareholders request EOG Resources (EOG) adopt time-bound, quantitative, company-wide goals for reducing methane emissions and issue a report, at reasonable cost and omitting proprietary information, on its plans to achieve these goals.
Methane, the primary component of natural gas, is a greenhouse gas (GHG) with over 80 times the climate impact of carbon dioxide over a 20-year period. Methane emissions from the oil and gas industry constitute the largest industrial source of methane emissions in the U.S.
In 2015, EOG’s methane emissions intensity rate was 0.55%. ONE Future (members include peer companies Apache, Hess, and Southwestern), an EPA recognized industry organization striving to improve efficiency across the natural gas value chain, has set methane intensity goals for the gas production and gathering segment at 0.46% and 0.36% by 2020 and 2025 respectively – reductions of 16.4% and 35.5% compared to the 2012 baseline.
However, there is significant concern that even these reductions may not be enough to instill continued public confidence in the environmental benefits of natural gas as studies show methane emissions from fossil fuel production may be much higher than previously thought – one recent study says 20 – 60% higher. A 2015 study measured oil and gas methane emissions from one region in Texas where EOG operates to be 90% greater than estimates.
While EOG qualitatively describes the use of certain technologies to reduce methane emissions, it has not set a reduction goal or demonstrated continuous improvement in methane emissions intensity rate. Proponents believe a methane reduction goal would be consistent with the company’s stated philosophy: “Our safety and environmental management processes are based on a goal-setting philosophy. The company sets safety and environmental expectations and provides a framework within which management can achieve safety and environmental goals in a systematic way.”
Setting GHG reduction goals is also a good business practice. A report published by WWF, CDP, and McKinsey & Company, found that companies with GHG goals achieved 9% better return on investment, on average, than companies without targets. A report prepared by ICF International, drawing on industry input, identified proven control strategies that can cut oil and gas industry methane emissions by 40% at an average annual cost of less than one cent per thousand cubic feet of produced natural gas.
In May 2016, the EPA released a final rule requiring oil and gas companies to limit methane emissions from new and modified facilities and began the process of developing a rule for existing facilities. This regulation is part of the nation’s goal to reduce methane emissions from the industry 40 – 45 percent below 2012 levels by 2025.
Proponents believe a reduction goal will drive necessary methane emissions reductions, minimize product loss, and allow EOG to exceed stakeholder expectations.