2015 Shareholder Resolution
Company: Energen Corporation
Topic: Methane

WHEREAS:

Methane emissions are a significant contributor to climate change, with an impact on global temperature roughly 86x that of CO2 over a 20-year period. Methane represents over 25% of 20-year CO2 equivalent emissions according to the Environmental Protection Agency (EPA) Greenhouse Gas Inventory.

Studies from the National Oceanic and Atmospheric Administration (NOAA), Harvard University and others estimate highly varied methane leakage rates as a percentage of production. The attendant uncertainty surrounding methane leakage has, according to the New York Times, made it “the Achilles’ heel of hydraulic fracturing.”

A 2013 study, “Anthropogenic Emissions of Methane in the United States,” finds EPA prescribed methodologies “underestimate methane emissions nationally by a factor of ~1.5.” The EPA’s auditor refers to current emissions estimates as being of “questionable quality.”

The International Energy Agency (IEA) highlights the risk of failing to implement best practice methane management in “Golden Rules for a Golden Age of Gas,” recommending actions “necessary to realise the economic and energy security benefits [of gas development] while meeting public concerns,” including eliminating venting, minimizing flaring and setting targets on emissions.

Reducing methane emissions in upstream oil and gas production is one of four policies proposed by the IEA that “could stop the growth in global energy-related emissions by the end of this decade at no net economic cost.” The policies “rely only on existing technologies” and “would not harm economic growth.”

A failure by companies to proactively reduce methane emissions may invite more rigorous regulations. The President’s Climate Action Plan’s “Strategy to Reduce Methane Emissions” empowers the EPA to determine how to reduce methane emissions.

States have begun to adopt stricter regulations. In 2014, Colorado approved regulations to fix persistent methane leaks. Industry representatives who helped craft the regulations called them “the right thing to do for our business,” noting that the regulations are needed to ensure their investments pay off.

Methane leakage has a direct economic impact on Energen Corp., as lost gas is not available for sale. The Natural Resources Defense Council estimates control processes could generate $2 billion in annual revenues for the industry and reduce methane pollution 80%, while ICF International estimates currently available controls could cut emissions 40%, with the most-cost effective opportunities creating $164 million in net savings.

A strong program of measurement, mitigation, target setting and disclosure would reduce regulatory and legal risk, maximize gas for sale and potentially bolster shareholder value.

RESOLVED:

Shareholders request that Energen Corp. issue a report (by September 2015, at reasonable cost, omitting proprietary information) reviewing the Company’s policies, actions and plans to measure, mitigate, disclose and set quantitative reduction targets for methane emissions resulting from all operations under the Company’s financial or operational control.

SUPPORTING STATEMENT:

The report can include the leakage rate as a percentage of production, best practices, worst performing assets, environmental impact, quantitative reduction targets and methods to track progress over time. Real-time measurement and monitoring technologies are recommended.


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