By Jennifer Hiller
HOUSTON, Feb 20 (Reuters) - The chief executive of Pioneer
Natural Resources, Scott Sheffield, on Thursday called
on energy investors to sell shares or pull funding from
companies that have rates of natural gas flaring.
The practice of burning off natural gas produced alongside
more profitable oil has become a top issue for investors, who
are focused on sustainability measures and already are
frustrated by a decade of poor financial returns in oil and gas.
Flaring has surged with U.S. oil output, but can worsen climate
change by releasing carbon dioxide.
If producers in the Permian Basin, the top U.S. shale field,
cannot drop flaring rates below 2% of gas produced by the first
half of next year, when new pipelines would have come online,
Sheffield asked investors in public shares, bonds or private
equity firms to "end up either not doing business or sell
whatever you have in regard to that company."
The idea, Sheffield said during an earnings call, came out
of a late January workshop in Austin, Texas, coordinated between
Columbia University and the University of Texas at Austin, which
brought together producers, pipeline companies, policymakers,
non-governmental organizations, academics and analysts to talk
about Permian Basin flaring. The workshop was invitation-only,
but Columbia plans to release a report on it.
Companies attending agreed to share best practices, better
report data to state agencies in Texas and New Mexico and set
flaring targets, Sheffield said.
"I think it's important to remove that black eye on the
Permian Basin going forward," said Sheffield, who in November
first called for companies to limit flaring.
Other executives that have spoken out against high flaring
rates include Matt Gallagher, CEO of Parsley Energy and
the head of Royal Dutch Shell's Permian Basin
operations, Amir Gerges, who said this month that the region
needs "regulatory requirements that incentivize reduction in
flaring."
On Tuesday, one of Texas' oil and gas regulators defended
flaring rates, which average around 5% in the Permian but also
released a report naming companies with the worst records and
said he would hold public meetings on the topic.
Several Permian Basin producers reported financial results
this week, including Concho Resources, which said it
dropped its flaring rate to 1.6% last year from 3.6% in 2017.
“There's a lot of push, obviously, on the industry and from
within the industry to continue to move that number down,”
Concho CEO Tim Leach said on Wednesday.
(Reporting by Jennifer Hiller in Houston
Editing by Marguerita Choy)
BP (BP.)
