Cabot Oil & Gas Corporation Natural Gas Hydraulic Fracturing

• Company: Cabot Oil & Gas Corporation
• Subject: Hydraulic Fracturing
• Year: 2011
• Sector: Energy Production
• Lead Filer: New York State Common Retirement Fund
• Outcome: Withdrawn in response to corporate commitments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 ground that are a necessary part of the life cycle of operations related to fracturing, including assuring the integrity of well construction and moving, storing, and disposing of significant quantities of water and toxic chemicals.

Our company's operations in Susquehanna County, Pennsylvania have had environmental releases of drilling mud and other substances, record keeping violations and allegations that the operations have caused natural gas contamination of 13 water wells. These environmental challenges have resulted in regulatory consent orders, temporary halts to new well drilling, and payment of substantial penalties by our company. In the opinion of the proponent, these developments have undermined the reputation of our company and of natural gas extraction processes in general, and pose a threat to our company's license to operate.

As a result of growing public concern regarding environmental impact of natural gas extraction, the changing regulatory climate could pose further risks to company operations. 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 have tightened or are considering tightening regulatory requirements. The federal Environmental Protection Agency is studying the potential adverse impact that hydraulic fracturing may have on water quality and public health.

Proponents believe our company is not providing sufficient information on key business risks associated with natural gas extraction including hydraulic fracturing, and that our company should protect its long-term financial interests by taking measures beyond existing, inconsistent regulatory requirements to reduce environmental hazards and associated business risks.

Resolved:

Shareholders request that a committee of independent members of the Board of Directors prepare a report by December 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 the company and 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.

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. "Potential" includes occurrences that are reasonably foreseeable as well as worst case scenarios. "Impacts of fracturing operations" encompass the life cycle of activities related to fracturing and associated gas extraction.