Investors Ask Oil, Insurance Groups to Disclose Safety Plans
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Aug 5, 2010, 5:17:49 PM8/5/10
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Investors Ask Oil, Insurance Groups to Disclose Safety Plans
By NATHANIAL GRONEWOLD of Greenwire
Published: August 5, 2010
NEW YORK -- A coalition of mostly institutional investors is demanding
oil and gas companies disclose their existing safeguards and plans of
action in the event of another offshore rig disaster and possible oil
spill like the one experienced by BP PLC and other companies in the
Gulf of Mexico.
Led by Ceres, a Boston-based nonprofit committed to promoting investor
activism in environmental and social issues, more than 50 U.S. and
global investors sent letters to major offshore oil and gas producers.
The letters request, among other things, that companies disclose their
investments in spill prevention technologies, their contingency plans
in the event of a deepwater well blowout and their risk exposure to
possible new regulations on deepwater drilling activities.
Insurance companies that back policies for the oil and gas industry
also received letters from the group. Those letters ask insurers to
disclose whether they are considering adjusting their relative
exposure to the industry or are changing underwriting rules in the
wake of the disaster.
"The shareholder harm that has flowed from the BP spill has focused
investor attention on governance, compliance and management systems
needed to minimize risks associated with deepwater offshore oil and
gas development worldwide," the investor coalition writes in a letter
to Steven Farris, CEO of Apache Corp., one sample of the dozens of
letters sent. "We write to request additional information on the
measures and programs Apache has in place for managing risks
associated with its offshore oil and gas operations, as well as any
changes the company plans to make in its risk management framework as
a result of the BP Gulf of Mexico spill."
Letters were sent to a total of 27 oil and gas companies and 26
insurance companies. Energy companies receiving the requests for
information include the giants Exxon Mobil Corp., ConocoPhillips,
Chevron Corp., Royal Dutch Shell PLC, Total SA and Statoil, as well as
smaller producers like Apache, Marathon Oil Corp. and Tullow Oil PLC.
AIG Inc., Swiss Re and Lloyd's were among the insurers receiving
letters that requested disclosure.
Investors seeking details on company plans and policies say the
Deepwater Horizon rig explosion and spill has cost them hundreds of
millions of dollars as BP shares plummeted. They characterize their
request as an act of shareholders exercising their rights and
protecting their interests in the companies they have invested in.
"In my state alone, the nation's two largest public employee pension
funds have seen the value of their BP holdings plummet by $349
million," said California Treasurer Bill Lockyer, trustee of the
CalPERS and CalSTRS pension funds. "Investors have a right to full
disclosure of the risks associated with oil companies' offshore
operations and the prevention, response and governance measures they
have in place to minimize those risks."
Other signatories to the letter include New York City Comptroller John
Liu; New York State Comptroller Thomas DiNapoli; AFL-CIO investment
director Daniel Pedrotty; and Pax World Management's vice president
for sustainable investing, Julie Fox Gorte. Public fund managers in
Connecticut, Florida, Maryland, North Carolina, Oregon, Pennsylvania
and Rhode Island also signed.
Details that the investors are seeking from the oil and gas firms
include:
* How much companies have invested in offshore drilling safety
technology in the past three fiscal years.
* Detailed contingency plans in the event of an offshore blowout,
including details on how the plan was formulated and approved by the
boards of directors.
* Lessons learned from the BP Macondo spill, including evidence of
how companies' drilling practices differ from BP's or how they involve
superior spill prevention technologies and safeguards.
* Information on how contractors are selected and monitored.
* Disclosure on governance, including how board members or
individual company managers are involved in spill response prevention
and planning.
Companies receiving the letters say that it will take time for them to
formulate an adequate response given the volume of details requested
by the investor groups.
"We've received the letter. We will review it and we will develop a
thoughtful response," said Apache spokesman Bill Mintz. "We try to do
better every day and when there's a major event like the Macondo
blowout everyone in the industry is going to try to look at what
happened and see what the lessons learned are."
Copyright 2010 E&E Publishing. All Rights Reserved.
For more news on energy and the environment, visit www.greenwire.com.
By NATHANIAL GRONEWOLD of Greenwire
Published: August 5, 2010
NEW YORK -- A coalition of mostly institutional investors is demanding
oil and gas companies disclose their existing safeguards and plans of
action in the event of another offshore rig disaster and possible oil
spill like the one experienced by BP PLC and other companies in the
Gulf of Mexico.
Led by Ceres, a Boston-based nonprofit committed to promoting investor
activism in environmental and social issues, more than 50 U.S. and
global investors sent letters to major offshore oil and gas producers.
The letters request, among other things, that companies disclose their
investments in spill prevention technologies, their contingency plans
in the event of a deepwater well blowout and their risk exposure to
possible new regulations on deepwater drilling activities.
Insurance companies that back policies for the oil and gas industry
also received letters from the group. Those letters ask insurers to
disclose whether they are considering adjusting their relative
exposure to the industry or are changing underwriting rules in the
wake of the disaster.
"The shareholder harm that has flowed from the BP spill has focused
investor attention on governance, compliance and management systems
needed to minimize risks associated with deepwater offshore oil and
gas development worldwide," the investor coalition writes in a letter
to Steven Farris, CEO of Apache Corp., one sample of the dozens of
letters sent. "We write to request additional information on the
measures and programs Apache has in place for managing risks
associated with its offshore oil and gas operations, as well as any
changes the company plans to make in its risk management framework as
a result of the BP Gulf of Mexico spill."
Letters were sent to a total of 27 oil and gas companies and 26
insurance companies. Energy companies receiving the requests for
information include the giants Exxon Mobil Corp., ConocoPhillips,
Chevron Corp., Royal Dutch Shell PLC, Total SA and Statoil, as well as
smaller producers like Apache, Marathon Oil Corp. and Tullow Oil PLC.
AIG Inc., Swiss Re and Lloyd's were among the insurers receiving
letters that requested disclosure.
Investors seeking details on company plans and policies say the
Deepwater Horizon rig explosion and spill has cost them hundreds of
millions of dollars as BP shares plummeted. They characterize their
request as an act of shareholders exercising their rights and
protecting their interests in the companies they have invested in.
"In my state alone, the nation's two largest public employee pension
funds have seen the value of their BP holdings plummet by $349
million," said California Treasurer Bill Lockyer, trustee of the
CalPERS and CalSTRS pension funds. "Investors have a right to full
disclosure of the risks associated with oil companies' offshore
operations and the prevention, response and governance measures they
have in place to minimize those risks."
Other signatories to the letter include New York City Comptroller John
Liu; New York State Comptroller Thomas DiNapoli; AFL-CIO investment
director Daniel Pedrotty; and Pax World Management's vice president
for sustainable investing, Julie Fox Gorte. Public fund managers in
Connecticut, Florida, Maryland, North Carolina, Oregon, Pennsylvania
and Rhode Island also signed.
Details that the investors are seeking from the oil and gas firms
include:
* How much companies have invested in offshore drilling safety
technology in the past three fiscal years.
* Detailed contingency plans in the event of an offshore blowout,
including details on how the plan was formulated and approved by the
boards of directors.
* Lessons learned from the BP Macondo spill, including evidence of
how companies' drilling practices differ from BP's or how they involve
superior spill prevention technologies and safeguards.
* Information on how contractors are selected and monitored.
* Disclosure on governance, including how board members or
individual company managers are involved in spill response prevention
and planning.
Companies receiving the letters say that it will take time for them to
formulate an adequate response given the volume of details requested
by the investor groups.
"We've received the letter. We will review it and we will develop a
thoughtful response," said Apache spokesman Bill Mintz. "We try to do
better every day and when there's a major event like the Macondo
blowout everyone in the industry is going to try to look at what
happened and see what the lessons learned are."
Copyright 2010 E&E Publishing. All Rights Reserved.
For more news on energy and the environment, visit www.greenwire.com.
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