By Jon Hurdle
May 18, 2018
Shareholders at the natural gas driller Range Resources narrowly approved a resolution this week calling on the company to review its policy on cutting methane emissions in a vote that advocates say is the first to succeed on the methane issue at an energy company that operates in Pennsylvania.
Like other shareholder resolutions, the vote was nonbinding, but may signal growing public pressure on the state’s natural gas industry to curb leaks of the greenhouse gas that is many times more potent than carbon dioxide in contributing to climate change.
The resolution, which was opposed by the company, was led by the Unitarian Universalist Association, a church pension fund, and was passed by owners of 50.3 percent of the company’s shares.
It called on Range to report on its actions related to methane emissions management, including efforts to “measure, monitor, mitigate, disclose, utilize leak detection and repair” its methods for cutting emissions.
Tim Brennan, chief financial officer of the fund that brought the resolution, said it was an important signal that more shareholders, including major institutional investors, are getting concerned about how methane emissions may undermine their investments.
“It was enormously successful,” Brennan told StateImpact Pennsylvania. “Resolutions like this don’t normally even get close to a majority. The fact that it got a majority is very significant.
“This means that mainstream investors, some of the big asset managers, are concerned about the company’s management of their methane emissions, and that’s a big risk because of its relationship to climate change.”
According to the Interfaith Center on Climate Responsibility, which promotes shareholder advocacy on environmental and other issues, the resolution is the first of its kind to succeed at a Pennsylvania energy company, and only the second to be passed nationwide. The first was brought by a pension fund for California teachers at WPX Energy of Oklahoma in 2016, according to the center.
The report, due by September, should include the leakage rate as a percentage of production; reduction targets and means to track them, and the environmental impact of methane leaks, the resolution said.
According to the U.S. Environmental Protection Agency, natural gas production contributes more than half of methane produced by the oil and gas sector as a whole.
Because of the potency of methane as a greenhouse gas, it has the potential to offset the climate benefits of natural gas, which burns with much lower carbon dioxide emissions than coal or oil, and so could damage natural gas’s reputation as a relatively clean burning fuel, the resolution said.
It argued that shareholder value would be enhanced by a strong emissions-reduction program which would maximize the amount of gas for sale, support market share, and preserve the environmental reputation of natural gas, as claimed by the industry.
And it accused Range of failing to provide adequate disclosure of its methane-reduction policies.
Range said it plans to meet with the activist shareholders to discuss the resolution.
“Range appreciates the perspective brought forward by the proposal creators, and looks forward to working together with them to further articulate the company’s approach to emissions management,” the company said in a statement.
Spokesman Mike Mackin did not respond to questions on whether Range will take specific actions to comply with the resolution; whether it had adequately disclosed its methane-reduction policies, or what it means by further articulating its approach to emissions management.
But he noted that Range improved its rank among energy companies last year in an annual scorecard on methane emissions produced by As You Sow, a nonprofit that uses shareholder advocacy to promote environmental and social responsibility.
Texas-based Range, one of the earliest operators in the southwestern portion of Pennsylvania’s Marcellus Shale, ranked seventh out of 28 energy companies for making “substantial” reductions in methane emissions, according to the report from As You Sow.
Pennsylvania’s policy to reduce methane emissions from the natural gas industry, announced in January 2016, requires operators of unconventional wells to install the best available technology to stop leaks. The policy also created a revised permit for operators of compressor stations and processing plants.
DEP is finalizing the permits, which are the first in the state to set individual methane limits for new natural gas well sites and compressor stations. But there are no overall targets for emission cuts because that will depend on the number of new facilities, the amount of gas they produce, and the type of equipment they use, said DEP spokesman Neil Shader. He said the permits will be ready “shortly.”
Unconventional natural gas wells in Pennsylvania produced 112,000 tons of methane in 2015, the most recent year for which data is available, up from 108,000 tons the year before, according to the Department of Environmental Protection.
But the nonprofit Environmental Defense Fund, which monitors corporate disclosure of methane emissions, said in a report in February this year that Pennsylvania’s emissions from the natural gas industry are about five times higher than the state’s estimate. The approximately 70,000 conventional wells, which are drilled into shallow formations, leak about 23 percent of their gas compared with just 0.3 percent for deeper unconventional wells, the report said.
Sean Wright, a senior manager at EDF, said the Range Resources resolution shows that shareholders are increasingly concerned about methane emissions. Four years ago, a similar resolution was supported by less than 10 percent of shareholders, compared with around half this time.
Wright said this may be the first time that shareholders of a Pennsylvania energy company have approved a resolution calling for methane reduction, and said it signals that more investors are becoming aware that their shares are at risk from methane emissions.
“Investors see that there’s a very large competitive risk in the natural gas industry,” he said. “Methane undermines the reputation of natural gas as being a cleaner fossil fuel, and in a world of growing cheap renewables, methane makes it harder for natural gas to succeed.”
Rob Altenburg, director of the energy center at the environmental group PennFuture, said demands for information on methane emissions make sense for shareholders because added carbon pollution brings added risk.
“As potential investors seek to divest away from carbon-intensive stocks, and as jurisdictions either move to price carbon or transition away from polluting industry, the value of these stocks could fall,” he said.