Shareholder Exchange

Resolution Text

Whereas, over the last 15 years, the US shale oil and gas boom and lax regulation have made the country the world's third highest flaring nation (in 2019), with flaring volumes increasing each year since 2016.[1]

Flaring and venting waste 8% of global natural gas production annually, contribute 6% of global greenhouse gas emissions, and disperse a range of pollutants that harm human health and local environments.[2]

Flaring is a major source of methane pollution, with one in ten flares in the Permian basin malfunctioning or unlit.[3]

Routine flaring is utilized when gas is produced during oil (or gas condensates) production operations and companies do not reinject, utilize or move it to the gas market.[4],[5]

Companies which do not manage venting and flaring activity risk their reputation and license to operate, as investors, regulators and civil society are setting expectations to address this issue.

In 2020, investors managing more than $2 trillion called on the Texas Railroad Commission to support policies to achieve zero routine flaring by 2025.[6] Corporate, city, state and national entities who have committed to net-zero emissions goals will increasingly be scrutinizing sources of emissions throughout the value chain, similarly to Europe.[7] For example, in October 2020 the French government blocked an LNG supply deal between the utility Engie and project developer NextDecade because of concerns about flaring and methane emissions among US gas producers.[8]

PDC Energy is the 30th largest U.S. natural gas producer.[9] According to 2019 pre-pandemic data, PDC’s operations in the Permian Basin had a flaring rate of 5.4%[10], significantly higher than their peers, who have demonstrated that routine flaring and venting can be dramatically reduced using existing technology and improved planning. Producers such as Chevron, Pioneer, EOG and Occidental report achieving flaring intensities of 1% or lower in the Permian.[11] Pioneer Natural Resources recently announced a target of “Zero routine flaring by 2030, with an aspiration to reach this goal by 2025”.[12] ExxonMobil also stated in 2020 that “zero routine flaring is within everyone’s reach”.[13]

Resolved, shareholders request that the Board reports on if, and how, PDC Energy will curtail its impact on climate change from routine flaring and venting, beyond existing efforts. The report should be made available to shareholders, omit proprietary information and be prepared at reasonable cost by November 1, 2021.

Supporting Statement:

At management’s discretion, we recommend consideration of the feasibility of the following in the report:

Setting time-bound goals to significantly reduce routine flaring and venting from operated and non-operated wells, and well completions;
Committing to the World Bank’s “Zero Routine Flaring by 2030” initiative, as 40 oil companies have done;[14]
Validating flaring and venting data through a qualified and third-party audit.

[1] http://pubdocs.worldbank.org/en/503141595343850009/WB-GGFR-Report-July2020.pdf

[2] https://www.pnas.org/content/pnas/early/2020/05/12/2006774117.full.pdf?versioned=true

[3] https://data.permianmap.org/pages/flaring

[4] https://www.worldbank.org/en/programs/zero-routine-flaring-by-2030

[5] http://blogs.edf.org/energyexchange/2020/10/07/simplifying-the-debate-about-routine-flaring/

[6] https://www.bloomberg.com/news/articles/2020-09-04/investment-giants-urge-texas-to-end-most-flaring-of-natural-gas

[7] https://ec.europa.eu/energy/sites/ener/files/eu_methane_strategy.pdf

[8] https://www.bloomberg.com/professional/blog/gas-flaring-catches-up-with-u-s-lng/

[9] https://www.ngsa.org/wp-content/uploads/sites/3/2020/08/First-Q-2020-production.pdf

[10] https://mft.rrc.texas.gov/link/fe3298a2-8788-4234-b2a0-90ee41558d75

[11] https://www.gaffneycline.com/sites/g/files/cozyhq681/files/2020-06/Tackling%20Flaring_Final.pdf

[12] https://investors.pxd.com/news-releases/news-release-details/pioneer-natural-resources-releases-2020-sustainability-report