Environmental Protection

Investors Ask Companies with Deep Water Wells for SPCC Plans

More than 50 U.S. and other global investors have sent letters to major energy companies asking them to disclose information regarding their risk oversight measures, including spill prevention and response plans, for their own offshore oil operations around the world, according to an Aug. 5 press release from Ceres.

A coalition of investors, environmental groups and other public interest organizations, Ceres works with companies to address sustainability challenges.

The letters, sent to chief executive officers at 27 oil and gas companies, were signed by 58 global investors with collective assets totaling more than $2.5 trillion, including the New York State Comptroller, California State Treasurer, Florida State Board of Administration and the UK-based Local Authority Pension Fund Authority Forum.

"It is important for all companies involved in subsea deepwater drilling to be open and transparent with investors and stakeholders at this crucial historic moment," wrote the investors. "The Gulf tragedy provided dramatic evidence that investors and pensioners have high stakes in deepwater oil exploration. 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 State Treasurer Bill Lockyer, who serves as a trustee on the board of CalPERS and CalSTRS, which have a combined $337 billion in assets. "Our message is simple: 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."

"Investors are rightly raising questions about whether and how the rest of the oil industry is prepared to manage the risks associated with the industry's move toward increasingly extreme water depths and operating conditions to find oil," said Andrew Logan, oil program director at Ceres, a leading network of investors and environmental groups which helped organize the investor letters.

The letter includes questions on:

  • company investments in spill prevention and response activity, including offshore drilling and spill response capability;
  • spill contingency plans for managing deepwater blowouts; lessons learned from the BP spill, including their position on possible new regulations and more robust enforcement on offshore drilling in the Gulf and elsewhere;
  • possible actions to improve their safety contractor selection and oversight practices; and governance systems for overseeing management of offshore oil and gas operations. Companies are asked to respond by Nov. 1.

There are now 14,000 deepwater wells worldwide.

A second letter was sent by most of the same investors to 26 insurance companies that provide insurance for offshore drilling activity. The letter asks if insurers are, among other questions: considering adjustments to their overall exposure to offshore oil and gas operations, including possible changes in policy volume; considering changes in their underwriting criteria; supportive of new regulations that would reduce offshore drilling risks.

Swiss Re has estimated that total insured losses for all affected parties from the BP rig explosion and spill could top $3.5 billion ─ a figure that would surpass the $2.2-$2.5 billion in annual insurance premiums worldwide for oil and gas exploration.

comments powered by Disqus

Free e-News Subscription

I agree to this site's Privacy Policy