Investors Press Continental Resources to End Wasteful Flaring of Natural Gas
Large Oil Developer Burns Off Natural Gas as Other Firms Set Flaring Reduction Goals
The rapid growth in domestic oil production has set the U.S. on track to
become the world’s top oil producer by 2015, but investors are wary of the
environmentally damaging practices associated with that growth.
Boston, MA Jan 10, 2013
(click image to
The rapid growth in domestic oil production has set the United States on
track to become the
world’s top oil producer by 2015, but investors are wary of the
environmentally damaging practices associated with that growth, specifically
the burning off—or flaring—of natural gas that is produced as a byproduct from oil wells.
In North Dakota’s Bakken shale region, widespread flaring across millions
of acres lights up the night sky, burning off enough energy each day to heat
half a million homes.
Flaring is also prevalent in other key shale regions,
like Texas’s Eagle Ford. Excessive flaring of natural gas affects regional
air quality and creates significant greenhouse gas emissions that investors are seeking to reduce.
Acting on that concern,
Mercy Investment Services, Inc. has filed a shareholder resolution with
Continental Resources, Inc., a major Oklahoma-based oil
developer operating in the Bakken, requesting that the firm “adopt
quantitative, company-wide goals, based on current technologies, for
reducing or eliminating flaring in all operations and facilities under the
company’s financial or operational control.”
“Flaring poses financial, operational, and reputational risks to
Continental, and is a potential threat to its license to operate,” the
resolution reads. Furthermore, the resolution contends that gas can be
captured economically: “Due to the relatively high liquids content in Bakken
gas, flaring in this region represents substantial forgone revenue.” Unless
Continental acts on this resolution, shareholders will vote on its
recommendations at the firm’s annual meeting, usually held in June.
“The flaring of natural gas is a tremendous economic waste, and it
threatens oil developers’ license to operate, as well as the environment,”
said Pat Zerega, director of shareholder advocacy at
Mercy Investment Services, the lead filer of this resolution.
“Numerous Sisters of Mercy, as well as myself, live in areas of Pennsylvania
and New York affected by flaring from shale gas operations, and our concern
over the environmental impacts of flaring continues to grow. Continental
should focus on eliminating this wasteful practice.”
The domestic oil industry’s practice of allowing billions of cubic feet
of natural gas to be flared or vented is only loosely regulated at the state
level, and growing domestic oil development has propelled the U.S. into the
top 10 gas flaring countries globally along with Russia, Nigeria, and Iraq.
Flaring is of particular concern in North Dakota, where the
number of producing oil wells grew 21 percent between January 2012 and
October 2012, according to the North Dakota Industrial Commission.
In its most recent report on oil production, the state’s Commission also
noted that while “the high liquids content makes gathering and processing of
Bakken gas economic” and “additions to gathering and processing capacity are
at least 30 percent of this gas continues to be flared. Given the rapid
growth of oil production in the region, these estimates may lag behind
actual flaring levels.
The shareholder resolution cites two firms that are taking action on
flaring: Hess, which achieved a five-year target of 50
percent flare reduction in two foreign countries, and
Whiting Petroleum, a firm with a stated goal of zero flaring-related emissions.
“Even with lower natural gas prices, there is no reason that oil
developers in the Bakken should be burning off a fuel that their colleagues
in the Marcellus region are working to capture. It’s simply bad practice,
and it is making domestic oil a particularly high-carbon source,” said
Andrew Logan, director of oil and gas program at Ceres.
“Ceres has been working with the oil industry to eliminate its most wasteful
and environmentally harmful practices. Flaring can be reduced to essentially
zero, and the industry should hold itself accountable to achieving this goal.”
This shareholder resolution adds to growing investor concern over
flaring. In March 2012, Mercy Investment Services and other investors
representing $500 billion in assets
letter to 21 of the industry’s largest shale oil producers, including
Continental, urging them to reduce or eliminate flaring. The signatories of
the letter included F&C Asset Management, Boston Common Asset Management,
Local Authority Pension Fund Forum, PaxWorld Management, Portfolio 21
Investments and Presbyterian Church (USA), among others.
Ceres coordinates annual shareholder filings on a range of sustainability
issues. Additional examples of Ceres’s work with shareholders can be found
Power, a publication highlighting action on palm oil, hydraulic
fracturing, the homebuilding sector and the electric power industry.
For more information:
Brian Bowen, 617-247-0700 x148,
Ceres is an advocate for sustainability leadership.
Ceres mobilizes a powerful coalition of investors, companies and public
interest groups to accelerate and expand the adoption of sustainable
business practices and solutions to build a healthy global economy. Ceres
also directs the Investor Network on Climate Risk (INCR), a network of 100
institutional investors with collective assets totaling more than $11
For more information, visit