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Company: National Fuel Gas
Subject: Natural Gas Hydraulic Fracturing
Year: 2015
Sector: Energy Production
Lead Filer: Miller/Howard Investments
Outcome: Withdrawn in response to corporate commitments

Quantitative Risk Management Reporting for

Hydraulic Fracturing Operations

 

WHEREAS: The Department of Energy secretary's shale advisory panel 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."

A 2012 University of Texas study, reviewing hydraulic fracturing regulations in 16 states, concluded that "regulatory gaps remain in many states, including the areas of well casing and cementing, water withdrawal and usage, and waste storage and disposal." Local governments in New York State and Pennsylvania, concerned about adequacy of state regulation, are defending in litigation their right to impose controls beyond state regulations.

Seneca Resources Corporation, the exploration and production segment of National Fuel & Gas Corp., states that it applies best practices in technology, safety and environmental stewardship, yet proponents believe the company fails to disclose metrics and systematic policies necessary to evaluate how the company is minimizing risks associated with water, waste, and toxic chemical management. Absent quantitative reporting and objective metrics, shareholders cannot reliably assess the effectiveness of company policies intended to mitigate the risks of company hydraulic fracturing operations.

Investors require specific, detailed, and comparable information about how companies are managing the challenges and opportunities created by operations that employ well stimulation using hydraulic fracturing. The 2011 report, "Extracting the Facts: An Investor Guide to Disclosing Risks from Hydraulic Fracturing Operations," outlines 12 management goals, best management practices, and key performance indicators that would provide such information. Publicly supported by a broad group of investors and various companies and environmental organizations, the guide stresses the importance of companies reporting quantitatively on key performance indicators.

RESOLVED: Shareholders request the Board ofDirectors to report to shareholders via quantitative indicators by December 31, 2015, and annually thereafter, the results of company

policies and practices, above and beyond regulatory requirements, to minimize the potential adverse impacts on ground and surface water 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 that 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:

• Systematic post-drilling groundwater quality assessments;

• Quantity of fresh water and recycled water used for shale operations by region, including

source;

• Percentage of wastewater stored in tanks, lined pits and unlined pits;

• Goals and quantitative reporting on progress to reduce toxicity of drilling fluids; and

• Measures to reduce emissions, such as the percentage of wells completed with reduced

emission ("green completion") methods.


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