A coalition of more than 50 major U.S. and global investors on Thursday sent letters to 27 oil and natural gas producers asking them to disclose information regarding their risk oversight measures for offshore operations, including spill prevention and response plans.

Boston-based Ceres, a leading network of investors and environmental groups, helped to organize the investor letters, which were signed by 58 global investors with collective assets totaling more than $2.5 trillion. The investors include the New York State Comptroller, California State Treasurer, Florida State Board of Administration and the UK-based Local Authority Pension Fund Forum.

"It is important for all companies involved in subsea deepwater drilling to be open and transparent with investors and stakeholders at this crucial historic moment," the investors wrote. "The shareholder harm that has flowed from the BP spill has focused investor attention on governance, compliance and management systems needed to minimize risks associated with deepwater offshore oil and gas development worldwide...The BP Gulf of Mexico disaster has also raised concerns about response plans by companies and the industry for dealing with offshore accidents."

The letters were sent to producers that include the world's three largest deepwater oil producers: ExxonMobil Corp., Royal Dutch Shell plc and Petroleos Brasilerio, otherwise known as Petrobras. Letters were not sent to the Gulf of Mexico (GOM) Macondo well owners BP plc (65%), Anadarko Petroleum Corp. (25) or Mitsui Ltd. (10%).

"The Gulf tragedy provided dramatic evidence that investors and pensioners have high stakes in deepwater oil exploration," said California State Treasurer Bill Lockyer, who serves as a trustee on the board of CalPERS and CalSTRS, which have a combined $337 billion in assets.

"In my state alone, the nation's two largest public employee pension funds have seen the value of their BP holdings plummet by $349 million. Our message is simple: investors have a right to full disclosure of the risks associated with oil companies' offshore operations, and the prevention, response and governance measures they have in place to minimize those risks."

Andrew Logan, who directs the oil program for Ceres, said, "Investors are rightly raising questions about whether and how the rest of the oil industry is prepared to manage the risks associated with the industry's move toward increasingly extreme water depths and operating conditions to find oil.

"The BP disaster demonstrates that the shift to deeper waters comes with a significantly increased risk profile, and that the cost of getting environmental risk management wrong has increased dramatically."

The letter asks for information on five key topics: company investments in spill prevention and response activity, including offshore drilling and spill response capability; spill contingency plans for managing deepwater blowouts; lessons learned from the BP spill, including their position on possible new regulations and more robust enforcement on offshore drilling in the GOM and elsewhere; possible actions to improve their safety contractor selection and oversight practices; and governance systems for overseeing management of offshore oil and gas operations. Companies are asked to respond by Nov. 1.

"Investors are by definition risk takers, but our risks need to be calculated and measured," said New York State Comptroller Thomas P. DiNapoli, sole fiduciary of the New York State Common Retirement Fund. "Investors have a right to know that our companies are taking all necessary steps to maximize opportunities without sacrificing safety. We believe improved practices and policies to mitigate risk will ultimately improve the bottom line, which is good for all investors."

The GOM spill "was a game-changer for shareholders," said Pennsylvania State Treasurer Rob McCord. "It demonstrated the catastrophic consequences that can result when firms fail to provide essential risk assessment. Information is power -- and it helps investors manage risk.

"Would I invest in an offshore drilling company if its disclosure statement revealed that its 'rapid response' to a catastrophic oil spill involved the unproven technique of stuffing golf balls, hair clippings and shredded tires down a well? Probably not," McCord said.

A second letter was sent by most of the same investors to 26 insurance companies that insure offshore drilling activity. Among other things the letter asks if insurers are considering adjustments to their overall exposure to offshore oil and gas operations, including possible changes in policy volume; considering changes in their underwriting criteria; and supportive of new regulations that would reduce offshore drilling risks.

Swiss Re has estimated that total insured losses for all affected parties from the rig explosion and spill could top $3.5 billion, a figure that would surpass the $2.2-$2.5 billion in annual insurance premiums worldwide for oil and gas exploration, Ceres said.

The letters and the investor signatories are available at www.ceres.org.

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