||Penn Virginia Corporation
||Natural Gas Hydraulic Fracturing
||Withdrawn in response to corporate disclosures
Report on Natural Gas Development
The use of hydraulic fracturing in natural gas drilling has become highly controversial. Proponents are concerned about regulatory, legal, reputational and financial risks associated with the environmental, health, and social impacts of fracturing operations.
Concern about water sources, toxic chemicals and wastewater has led to new regulations in several states and proposed federal legislation. Explosions, contamination incidents, and millions of dollars in fines demonstrate that things can and do go wrong. For example, media reports that in Pennsylvania, "officials...have cited energy companies for more than 2,500 violations associated with fracturing practices and collected $25.7 million in fines since 2008."
More than 250 health care professionals and medical societies warned New York Governor Cuomo that the state failed to analyze public health impacts of hydraulic fracturing in its rush to approve permits for drilling. The medical professionals cite evidence in Texas, Wyoming, Louisiana, North Dakota and Pennsylvania which finds worsening health metrics among neighbors of gas wells and related infrastructure. The onset of symptoms and drilling frequently coincided.
Negative local impacts are straining community resources and generating opposition to fracturing operations. According to a MSCI report, "the expansion of oil gas activities into areas previously untouched by the industry will continue to face fierce opposition from the community, unless companies adequately manage environmental impacts and community health concerns through communication and adoption of best environmental practice."
In this climate, companies risk increased regulatory and legal risks or bans on fracturing operations outright. Pittsburgh banned natural gas drilling within city limits. New York State imposed a moratorium. Maryland banned drilling until the conclusion of a two-year study.
Resolved: Shareholders request that the Board of Directors of Penn Virginia Corporation prepare a report to investors by September 2012, at reasonable cost and excluding confidential or legally prejudicial data, on the short-term and long-term risks to the company's operations, finances and gas exploration associated with community concerns, known regulatory impacts, moratoriums, and public opposition to hydraulic fracturing and related natural gas development.
Supporting statement: Such report should, at a minimum, summarize for the prior two fiscal years, with regard to hydraulic fracturing and related infrastructure:
- any substantial community opposition to the company's maintenance or expansion of particular operations, such as permitting and drilling;
- government enforcement actions, including allegations of violations;
- total aggregate government fines on an annual basis;
- facility shutdown orders, license suspensions or moratoriums on licensing, exploration or operations;
On a forward-looking basis, the report should identify:
- communities where substantial opposition to permitting or drilling, or maintenance or expansion of operations, is anticipated;
- financial or operational risks to particular operations, facilities and plans from proposed federal or state laws or regulations, including moratoriums on fracking;
- any limitations which regional water supply or waste disposal issues may place on operations or expansion;
In the event of uncertainty about probabilities or outcomes, the report should at a minimum describe the worst-case scenario and the extent of uncertainties.