2011 Shareholder Resolution
Company: Energen Corporation
Topic: Fracking

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, “[a] government-industry study found that 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. These activities have been linked to environmental impacts that could have significant financial implications for the companies involved, and are contributing to increased regulatory scrutiny. High profile contamination incidents, especially in Pennsylvania, have fueled public controversy. Pennsylvania’s Times-Shamrock Newspapers report “many of the largest operators in the Marcellus Shale have been issued violations for spills that reached waterways, leaking pits that harmed drinking water, or failed pipes that drained into farmers’ fields, killing shrubs and trees.”

The regulatory climate is shifting rapidly which could pose 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 all tightened or are considering tightening regulations and permitting requirements, though state regulations remain uneven. At the federal level, the Environmental Protection Agency is studying links between fracturing and drinking water resources; the Agency’s Science Advisory Board is urging use of a “life cycle analysis” framework.

Proponents believe these potential environmental impacts and increasing regulatory scrutiny could pose threats to Energen Corporation’s license to operate and enhance vulnerability to litigation. Proponents believe our company is not providing sufficient information on the key business risks associated with hydraulic fracturing operations. Proponents believe Energen Corporation should protect its long-term financial interests by taking measures beyond the existing, inconsistent regulatory requirements to reduce environmental hazards and the associated business risks and should report on the policies and practices it is implementing toward this end.

RESOLVED:

Shareholders request that the Board of Directors prepare a report by September 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 Energen Corporation;
  2. and 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. For purposes of this proposal, “potential” includes both occurrences that are reasonably foreseeable as well as worst case scenarios.


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