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Company: El Paso Corporation
Subject: Natural Gas Hydraulic Fracturing
Year: 2011
Sector: Energy Production
Lead Filer: Miller/Howard Investments
Cofiler(s): Catholic Health East
Outcome: Withdrawn in response to corporate commitments

Natural Gas Exploration and Development

Whereas:

Onshore "unconventional" natural gas production often requires hydraulic fracturing, which typically injects a mix of millions of gallons of water, thousands of gallons of chemicals, and particles deep underground to create fractures through which gas can flow for collection. According to the American Petroleum Institute, "up to 80 percent of natural gas wells drilled in the next decade will require hydraulic fracturing."

The impacts of fracturing operations include activities above and below the surface that are a necessary part of the life cycle of those operations, including assuring the integrity of well construction and moving, storing, and disposing of significant quantities of water and toxic chemicals.

High profile contamination incidents, especially in Pennsylvania, are fueling public controversy and altering the regulatory environment. Pennsylvania's Times-Shamrock Newspapers report "many of the largest operators in the Marcellus Shale have been issued violations for spills that reached waterways, leaking pits that harmed drinking water, or failed pipes that drained into farmers' fields, killing shrubs and trees."

Public officials in Pittsburgh, Philadelphia and New York City have called for delays or bans on fracturing. Pennsylvania, West Virginia, Colorado, Wyoming and New York State all tightened or are considering tightening regulatory requirements, though state regulations remain uneven. At the federal level, the Environmental Protection Agency is studying links between fracturing and drinking water resources.

A multi-sectoral assessment for investors, "Water Disclosure 2010 Global Report," flags brand and reputation risks from water management in the oil and gas sector as a particular concern.

Proponents believe potential environmental impacts and increasing regulatory scrutiny could pose threats to El Paso's license to operate, and enhance vulnerability to litigation, and that our company is not providing sufficient information on key business risks associated with natural gas extraction and hydraulic fracturing. Proponents believe our company should protect its long-term financial interests through policies and measures beyond existing, inconsistent regulatory requirements to further reduce environmental hazards and associated business risks.

Therefore be it resolved:


Shareholders request that the Board of Directors prepare a report by September 1, 2011, at reasonable cost and omitting confidential information such as proprietary or legally prejudicial data, summarizing 1. known and potential environmental impacts of fracturing operations of El Paso Corporation; 2. policy options for our company to adopt, above and beyond regulatory requirements and our company's existing efforts, to reduce or eliminate hazards to air, water, and soil quality from fracturing operations ; and 3. the management's evaluation of the potential magnitude of material risks, short and long term, that this issue may pose to the company's finances or operations.

Supporting statement:

Proponents believe policies explored should include, for example, additional efforts to reduce toxicity of fracturing chemicals, recycle waste water, monitor water quality prior to drilling, cement bond logging, and other structural or procedural strategies to reduce environmental hazards and financial risks. For purposes of this proposal, "potential" includes both occurrences that are reasonably foreseeable as well as worst case scenarios.

 

 

 

 

 

 

 


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