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Chevron Shareholders Vote Down Hydrofracking Resolution

Chevron Corp. CEO John Watson on Wednesday found himself face to face with some rambunctious activists who came to the annual shareholder meeting in San Ramon, CA, to voice their opposition to the oil major's global drilling practices. In the end, however, the company's majority shareholders won the day, turning back resolutions that included calling for more disclosure about hydraulic fracturing (hydrofracking).

ExxonMobil Corp. CEO Rex Tillerson had faced a similar crowd in Dallas earlier Wednesday as he defended onshore natural gas drilling and blasted critics opposed to hydrofracking (see Daily GPI, May 26).

Some Chevron shareholders put forth a resolution asking the company to prepare a report on the potential environmental impacts of hydrofracking and ways it can be minimized. The measure, which Chevron's management opposed, failed but was able to capture almost 41% of the total vote. A similar measure defeated by ExxonMobil shareholders garnered the support of close to 29%.

The nonprofit As You Sow Foundation, which backed the hydrofracking resolutions at both the ExxonMobil and Chevron meetings said the double-digit favorable votes by shareholders indicate that "mainstream investors are concerned about fracking and want more disclosure."

Watson didn't address hydrofracking specifically in his comments, but he explained in some detail how Chevron uses the "safest, most environmentally friendly practices" across the board in its exploration and development. Vice Chairman George Kirkland also reminded the audience that developing gas from shale rock formations cost less than other types of gas production, which offers advantages to the company and therefore its shareholders.

In an emailed statement a spokesman said Chevron also is working with industry groups to educate the public about the chemicals it uses and procedures used to dispose of waste and wastewater. Hydrofracking "can be done in a sustainable and environmentally friendly fashion," but environmental standards need to be raised "across the industry," said the spokesman.

Chevron has more than one million net acres in shale plays across North America; today most of its development is focused in the Marcellus and Antrim shales. Chevron plans to release information about its drilling chemicals and other shale operations by the end of June through an organization called FracFocus, the spokesman said.

During the meeting Watson detailed a solid report about the company's 2010 global operations and often was conciliatory with the critics in the audience. He said he agreed with the critics on some of the contentious issues -- to a point. However, on some of the most publicized controversies concerning drilling operations overseas the CEO stood his ground.

"Our business is a very long-term business," Watson told the audience. Some of the company's projects and facilities last half a century, and over a long period of time, things "ebb and flow." The company, he said, is centered on being "a force for good, even if a government where we operate doesn't live up to everyone's high standards."

"Over that period of time, you're going to see governments ebb and flow..."

All of the shareholder proposals were voted down with the company's recommendations, which included rejecting a proposal to elect a board member with a strong environmental background and another to link executive pay to environmental sustainability.

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