​Encana, Cabot rank last in assessment of methane management disclosures

Image: Joey Podlubny/JWN

Calgary-based Encana Corporation ranked at the bottom of a list of 28 mostly American oil companies, tied with Cabot Oil & Gas Corp. with a score of zero, for methane management disclosures.

At the top of the list, with 12 of a possible 13 points, were Apache Corporation, BHP Billiton, and Southwestern Energy. Royal Dutch Shell, ConocoPhillips and Hess Corporation earned 11 points each.

“More work needs to be done but I think we are on the right track,” said Greg Guidry, executive vice-president for Shell’s unconventionals business.

As You Sow, Boston Common Asset Management and The Investor Environmental Health Network (IEHN) released the 2017 special edition of the Disclosing the Facts scorecard.

While the annual scorecard has historically addressed oil and gas company management of environmental and community risks from hydraulic fracturing operations, this year's edition focuses on the critical risk of methane emissions—a potent contributor to global climate change—and how companies are managing methane reductions. The report found a striking range of differences among the 28 companies' methane management disclosures.

"This year's report reflects rising investor concern that excessive methane emissions from oil and gas operations will undercut the potential net climate benefit of substituting natural gas for coal, especially in decarbonizing energy markets," Steven Heim, managing director at Boston Common Asset Management, LLC, said in a statement. "Investors are increasing focus on carbon risk, shown clearly by majority shareholder votes this year calling for 2 degree scenario reporting."

The International Energy Agency's World Energy Outlook 2017 contends that methane emissions from the oil and gas value chain are among the cheapest to abate of all anthropogenic emissions.

The groups noted Exxon Mobil Corporation, with a score of nine, improved its methane reduction program and disclosures this year following a 2017 shareholder proposal filed by As You Sow. Chevron Corporation and BP plc, however, remained laggards in methane disclosures, earning only two and three points respectively, joined by other laggard companies Cabot and Encana at bottom as well as Continental Resources, EQT, QEP Resources and Whiting Petroleum at one point each.

In a separate action this week, however, As You Sow and impact investment manager Arjuna Capital filed a resolution calling on ExxonMobil to produce a detailed report, explaining how the company will address the global transition toward a "low carbon economy" by altering its energy mix to substantially reduce dependence on fossil fuels and to protect shareholder value.

In fact, 2016 saw clean energy investments by oil companies more than double, Natasha Lamb, managing partner at Arjuna Capital, noted in a statement. “Exxon need only look to their peers for predictive business models that protect investors from the risks of a decarbonizing economy, including stranded carbon assets. Investors need to understand the long game—how these oil giants will actually address climate risks going forward. Business as usual is not an option."

Industry moving on methane

Much of the industry, meanwhile, is moving forward to tackle methane emissions, which could pose a threat to the low emission credibility of natural gas compared to other fossil fuels. The American Petroleum Institute announced last week the formation of an environmental partnership of 26 companies, including many of the top U.S. natural gas producers, to cut methane leaks from wells and other U.S. onshore production sources. The announcement came despite the Trump Administration's backing away from methane regulation.
And in November, large international oil and gas companies including Exxon Mobil, signed up to "guiding principles" for cutting methane emissions. These are in addition to voluntary commitments announced in 2014 and 2016 by Apache, BHP, Hess, and Southwestern Energy as founding members of the ONE Future Coalition.
"As our scorecard demonstrates, there are sharp differences among companies in how well they disclose their concrete actions to reduce methane emissions. Those companies taking effective action will reduce their carbon risk, a key consideration for investors," said Richard Liroff, executive director of the Investor Environmental Health Network.

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