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ExxonMobil Urges Shareholders to Defeat Shale Proposals

Shareholders once again are urging ExxonMobil Corp. to report how its natural gas operations in shale formations impact the environment. The oil major once again is recommending the proposal be defeated.

The shale drilling proposal, among others by shareholders, is detailed in a U.S. Securities and Exchange Commission Schedule 14A, the company's proxy statement, which was mailed to shareholders of record. ExxonMobil is scheduled to hold its annual meeting on May 29.

The latest drilling proposal was submitted by a group of shareholders led by the New York City Pension Funds and the Park Foundation. urging that ExxonMobil report on the results of "procedures and practices, above and beyond regulatory requirements, to minimize any adverse environmental and community impacts from the company's natural gas extraction operations associated with shale formations." The report "should be prepared at reasonable cost and omit confidential information."

While some producers have begun to provide quantitative reporting, including BG Group and Talisman Energy Corp., ExxonMobil does not. The company's operations integrity management system "is a generalized framework for companywide operations but lacks criteria specific to shale energy operations," the shareholder group said.

"ExxonMobil's subsidiary, XTO Energy, signed onto the 'Appalachian Principles,' which specify what companies 'should do' rather than what they currently do or commit to doing."

The proponents suggest the reports include the percentage of wells using "green" completions; total amount of air emissions reduced annually on a categorical and regional or site basis; percentage of drilling residuals managed in closed-loop systems; and percentage of recycled water used in each regional operation; quantity of fresh water used for shale operations by region, including sources.

Shareholders also want ExxonMobil to provide the numbers and types of community complaints or grievances, and portion open or closed; goals and systems for reducing the use of potentially harmful chemicals in fracturing fluids; and enforcement statistics, including numbers of violation notices or administrative actions alleging violations with potential to harm health or environment, and aggregate value of all penalties during the year.

Similar shareholder proposals, also filed previously at Chevron Corp., failed to pass in 2012 and 2011 (see Shale Daily, May 31, 2012).

ExxonMobil said in the latest proxy that it already discusses the "risks and rewards of shale extraction. We are also reporting on the results of shale gas development operations...Most important, the company is effectively assessing and managing the risks associated with such development."

It said that among other things, it participates in the FracFocus online registry sponsored by the Interstate Oil and Gas Compact Commission and the Groundwater Protection Council, which includes data on fracture fluid chemical additives and water usage on a site-by-site basis.

"Additionally, the commitments of the Appalachian Shale Responsible Practice Group, which XTO Energy helped draft, include a section on measurements and metrics that are being followed. ExxonMobil's aboutnaturalgas.com website also presents information on unconventional gas development and the manner in which the associated risks are managed..."

A proposal on greenhouse gas (GHG) emissions goals, submitted by the Sisters of St. Dominic of Caldwell New Jersey, requests that the board adopt quantitative goals based on current technologies to reduce total GHG from company products and operations. ExxonMobil recommended voting against it.

Up for a vote is another shareholder proposal that would require the chairman of the board to be an independent board member, phased in for the next CEO transition. Another recommendation is that the directors be limited in the number of boards on which they serve. ExxonMobil recommended voting against all of the shareholder proposals.

ISSN © 2577-9877 | ISSN © 2158-8023
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