Shareholder Resolutions

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Company: EQT Corporation
Subject: Natural Gas Hydraulic Fracturing
Year: 2014
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Outcome: Withdrawn in response to corporate commitments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 controversial public issue.  Leaks, spills, explosions and community impacts have put the industry's social license to operate at risk, leading to bans and moratoria in the US and around the globe.  

Measurement and disclosure of best management practices and impacts is the primary means by which investors can gauge how companies are managing risks and rewards of their operations. 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).

The 2011 report, "Extracting the Facts: An Investor Guide to Disclosing Risks from Hydraulic Fracturing Operations," outlines best management practices, 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.

Although EQT publishes an annual sustainability report with some information on its practices and policies, the company's disclosures fall short in disclosing some areas critical to investors seeking to assess operational and financial risks.  For instance:

  • Potential impact on local water quality. The company lacks adequate disclosure on residuals management, the use of open pits for storage of wastes, the toxicity of drilling fluids and the management of radioactive materials.
  • Methane releases. The release of methane in drilling completions and production has become a significant concern for the natural gas industry, because of the potential impacts on climate change.
  • Host community relationships. Metrics necessary to determine trends in relationships to host communities are lacking.

Resolved:   Shareholders request the Board of Directors to report to shareholders via quantitative indicators by December 31, 2014, and annually thereafter, the results of company policies 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 a breakdown by geographic region, such as each shale play in which the company engages in substantial extraction operations, addressing at a minimum:

  • Percentage of wells using "green completions;"
  • Methane leakage as a percentage of total production;
  • Percentage of drilling residuals managed in closed-loop systems;
  • Goals to eliminate the use of open pits for storage of drilling fluid and flowback water, with updates on progress;
  • Goals and quantitative reporting on progress to reduce toxicity of drilling fluids;
  • A system for managing naturally occurring radioactive materials;
  • Numbers and categories of community complaints of alleged impacts, and portion resolved;
  • A systematic approach for reporting community concern statistics upward within the company.