With eyes on oil and gas sector, investors seek methane rules

With eyes on oil and gas sector, investors seek methane rules


During the 2013 proxy season, first-time resolutions filed with three oil and gas companies by Trillium Asset Management gained considerable support from shareowners who agreed that fugitive methane represented a significant environmental and financial risk for companies engaged in hydraulic fracturing.

One company targeted by Trillium's resolutions, Range Resources, "decided to lash out at its own shareholders and their legitimate questions," Trillium wrote at the time. "In an inflammatory SEC filing, Range directly attacks shareholder rights, falsely claiming misalignment between Trillium and the company's 'real stockholders,' despite Trillium's sizable holdings in the company."

In its "inflammatory SEC filing," the company largely neglected to acknowledge the growing urgency of regulating fugitive methane emissions, which, as a recent letter to the EPA stated, "is a highly potent greenhouse gas — at least 84 times more powerful than carbon dioxide over a 20-year time period."

The letter, submitted by a group of investors organized by Trillium and New York City Comptroller Scott Stringer, references the Obama Administration's Strategy to Reduce Methane Emissions, which includes updated EPA standards to reduce methane emissions from oil and gas operations. "As market forces and the Clean Power Plan position natural gas as a low-greenhouse gas alternative to coal, it is all the more critical for regulation to address methane emissions so natural gas can live up to its climate potential," the letter stated.

Furthermore, the letter continued, "proven control strategies that can slash oil and gas methane emissions by 40 percent at an average annual cost of less than 1 cent per thousand cubic feet of produced natural gas" have been identified. And, "the value of captured gas more than offsets the cost of control."

"We believe establishment of a comprehensive methane policy that reduces emissions and ensures a real climate benefit from natural gas as we transition to a renewable energy economy can have positive economic and environmental benefits," the letter stated. "Getting methane emissions under control will help manage the rate of climate change, thereby limiting the damaging economic costs associated with droughts, storms, floods and other disruptions."

"Strong regulations will be good for the climate, the energy sector and the broader economy," said Jonas D. Kron, senior vice president at Trillium.

"With natural gas production increasing dramatically throughout the U.S., we must take action now to ensure that this bridge to a truly renewable future is harnessed in a manner that limits the effect on our atmosphere and maximizes value for shareholders," Stringer said.

In addition to Trillium and the New York City Pension Funds, the investor signatories, which together manage more than $300 billion in assets, include F&C Investments, Pax World Management, LLC, Portfolio 21, Arjuna Capital, Christopher Reynolds Foundation, Domini Social Investments LLC, First Affirmative Financial Network, Calvert Investment Management, Inc., Friends Fiduciary Corporation, Miller/Howard Investments, Inc., Nathan Cummings Foundation, Tri-State Coalition for Responsible Investment, Domini Social Investments LLC, Mercy Investment Services, Inc., Daughters of Charity, Province of St. Louise, and Mercy Health (formerly Catholic Health Partners) and Walden Asset Management.

This article originally appeared at Social Funds. gasflaring_leonidikan_sstock