Shareholder Resolutions

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Company: Ultra Petroleum
Subject: Natural Gas Hydraulic Fracturing
Year: 2013
Sector: Energy Production
Lead Filer: Green Century Capital Management
Outcome: Withdrawn in response to corporate commitments

Quantitative Risk Management Reporting for

Hydraulic Fracturing Operations


Extracting oil and gas from shale formations, using horizontal drilling and hydraulic fracturing technology, has become a highly controversial public policy issue.

Leaks, spills, explosions and adverse community impacts have led to bans and moratoria in the United States and around the globe. These include New York State, the Delaware River Basin, the Province of Quebec, and France.

The Department of Energy's Shale Gas Production Subcommittee recommended in 2011 that companies "adopt a more visible commitment to using quantitative measures as a means of achieving best practice and demonstrating to the public that there is continuous improvement in reducing the environmental impact of shale gas production." (emphasis in original)

Investors require detailed and comparable information about how companies are managing risks and rewards from natural gas extraction operations.  The 2011 report, "Extracting the Facts: An Investor Guide to Disclosing Risks from Hydraulic Fracturing Operations," outlines best management practices and key performance indicators and articulates clear investor expectations in these areas. It has been publicly supported by investors on three continents representing $1.3 trillion in assets under management and by various companies.

Some companies are providing more clarity on their policies and procedures to mitigate risk and quantify the reduction in impact. For example, Talisman Energy has published "Shale Operating Principles," stating, "We will measure our progress by setting quantitative performance metrics [and] ... disclose ... progress ...via publicly available reporting." In addition, BG Group states it "will provide regular updates on ... progress against the targets" set out in its "Operating Principles for Unconventional Gas."

Ultra Petroleum does not provide such quantitative reporting, or even comprehensive policies addressing key performance indicators and risks.  As a result, investors have little understanding as to how the company is managing its risks and rewards from natural gas extraction operations. 

Resolved:   Shareholders request the Board of Director to report to shareholders via quantitative indicators by October 30, 2013, and annually thereafter, the results of company procedures and practices, above and beyond regulatory requirements, to minimize the adverse environmental and community impacts from the company's hydraulic fracturing operations associated with shale formations. Such reports should be prepared at reasonable cost omitting confidential information. 

Supporting Statement

Proponents suggest the reports include:

  • percentage of wells using "green completions;"
  • total amount of air emissions reduced annually on a categorical and regional/site basis;
  • percentage of drilling residuals managed in closed-loop systems;
  • percentage of wastewater stored in vented tanks, lined pits and unlined pits;
  • percentage of recycled water used by region;
  • quantity of fresh water used for shale operations by region, including source;
  • numbers and categories of community complaints of alleged impacts, and portion resolved;
  • goals and systems to reduce potentially harmful chemicals in fracturing fluids; and enforcement statistics, including numbers of violation notices or administrative actions that allege violations with potential to harm health or the environment, and aggregate value of all penalties during the year