Despite struggling with low commodity prices in 2016, many oil and gas companies made significant improvements in risk reporting and transparency, according to a report released last week.
The annual Disclosing the Facts report, backed by As You Sow, Boston Common Asset Management, and the Investor Environmental Health Network, rated companies engaged in U.S. unconventional oil and gas development on how they report and manage risks from the potential effects of their operations.
Based on a scorecard that tracked 43 different indicators of companies’ disclosure practices, the report said that “many companies have substantially increased their disclosures on issues of core concern to both investors and local communities.”
Twenty of the 28 companies identified in the 2016 report improved their scores from 2015. BHP Billiton Ltd. topped the list at 40 out of a possible 43 points, maintaining its top spot from a year ago. Noble Energy Inc. jumped to number two on the list with 35 points, with Apache Corp. coming in third at 29 points.
“Our report shows that several good practices are becoming more widespread,” Boston Common Asset Management Managing Director Steven Heim said. “Companies are disclosing numerous operational and technological innovations that reduce their environmental footprint, yield bottom-line benefits and reduce social conflicts.
“Companies are sourcing water for hydraulic fracturing operations from treated municipal wastewater, drawing water from deep saline aquifers for which there is no current competition from other users, and treating their own wastewater. These are very positive signs.”
But the report said that some companies “are still seriously lagging in taking and disclosing actions to address” concerns related to the potential risks of their operations. Along with community and environmental impacts, methane emissions and induced seismicity are among the key areas the industry should focus on moving forward, the report said.
“Absent greater disclosure on things like methane leakage, other air emissions and growing concerns around induced seismicity, there remains an accountability problem for oil and gas companies using [hydraulic fracturing] to unlock energy reserves,” Heim said.