Released December 29, 2020 | SUGAR LAND
en
Written by John Egan for Industrial Info Resources (Sugar Land, Texas)--These days, no energy-industry conference is complete without a discussion of environmental, social and governance (ESG) issues. A recent virtual conference did not disappoint.
At Hart Energy's (Houston, Texas), "DUG East: Marcellus-Utica Midstream" event, executives with Range Resources Corporation (NYSE:RRC) (Fort Worth, Texas) and CNX Resources Corporation (NYSE:CNX) (Pittsburgh, Pennsylvania), discussed ESG issues on separate days.
The event included a panel discussion of ESG, triggered in part by Range Resources Corporation's recently adopted goal of net-zero greenhouse gas emissions by 2025. Range Resources is one of the largest oil and gas producers in the Appalachian region, which includes the Marcellus and Utica shales.
ESG issues likely will be elevated during President-elect Joe Biden's term, but that discussion began a few years earlier.
While hydraulic fracturing, and to a lesser degree ESG, drew some headlines during the recent presidential campaign, "the capital markets have been voting their ESG points of view with its dollars for a couple of years," said Sean O'Donnell, managing director at private equity firm Quantum Energy Partners (Houston, Texas). "ESG is not a new topic for capital markets. In you're waiting for the election to figure out ESG, you're a couple of years behind."
Added K. Scott Roy, senior vice president for Range Resources, "If you're starting now, you've got a lot of catching up to do. The results of the election may place a little more focus on ESG, but this is a discussion that was well under way long before the election, and it will continue long after (President-elect Biden's) term in office."
For more on ESG in the oil and gas industry, see August 31, 2020, article - Conference: ESG Coming to the Oil Patch, But Questions Remain on Metrics. ESG concerns are increasingly being felt in the Electric Power Industry too. For more on that, see December 2, 2020, article - Wave of Coal Power Plant Closure Announcements Clouds Outlook for King Coal and October 26, 2020, article - Investment in Renewables Expected to Soar as Duke Energy Unveils Bold Decarbonization Plan.
In discussing Range Resources' recent adoption of a zero net greenhouse gas emissions goal by 2025, Roy said the interests of a diverse group of stakeholders -- including investors, banks, consumers, employees, policymakers and the communities in which Range operates -- have come into alignment in the last few years on the importance of ESG. For oil & gas producers like Range, he said, the most critical ESG issues are emissions management, water management, safety and community involvement.
Quantum Energy Partners' O'Donnell explained why ESG issues are coming of age. "The science (around climate change), while still debated, is by and large understood. The technology (to fight it) is available. The room for debate around things has really narrowed. There are some companies who may want to ignore or deny certain things, but there are no real excuses left or places to hide. Dollars will not flow to companies that don't have a robust (ESG) program. It's as simple as that."
"At Quantum, across the E, the S and the G of ESG, our focus has been on the S (social issues), particularly as it relates to stakeholder engagement," O'Donnell added.
In a lot of ways, ESG metrics can be seen as proxies for running a business well, speakers on the December 3 panel agreed. Reducing waste -- whether in the form of lowering fugitive methane emissions or better managing water resources -- helps increase revenue and lower costs. Employee safety, long a given in the industry, remains vital to hiring and retaining a skilled workforce. And better engaging with local communities just makes good business sense, as those communities have the power to delay or deny projects through permitting and litigation.
"Every company knows it needs to be an environmental steward," said Jean Mosites, a shareholder at law firm Babst Calland (Pittsburgh, Pennsylvania). "There's no question about that. As for how they do it, where they do it, when they do it, that will vary." She suggested smaller operators may have more difficulty adopting and hitting ESG targets compared with larger operators like Range Resources.
"In Appalachia, water and methane are the two priority risks where operators need to be well ahead of regulation," said Quantum's O'Donnell. "Venting and tanks and infrastructure are priorities for natural gas producers in Appalachia. There's quite a bit of aging infrastructure here."
The conference's keynote speaker, CNX Resources President and Chief Executive Officer Nick Deluliis, said CNX is the oldest publicly traded company in the Appalachian region. "We are from this region, by and large. And we want to stay in this region. We want to hire locally. We want to spend locally. We want to set targets for how much of our hiring and spending is going to stay within this region, particularly where communities are more economically distressed," he continued.
"If we are champions of our community, if we put our money where our mouth is, performance will follow and Wall Street will follow," Deluliis continued. But if oil and gas companies don't do a good job on ESG performance, "there are naysayers out there who are working night and day to make sure we never get the chance for demand to grow the way it should."
"We are manufacturing a wonderful widget that impacts society," the CNX executive continued. "Natural gas is a noble industry. Natural gas improves the human condition. We're not a bridge to something better, we are the foundation for the future."
"We need to be a better advocate for what we do," he said. "We almost apologize for what we do on a regular basis. We need to have a much more thorough discussion with those beyond our industry" on how natural gas is not the problem, but part of the solution."
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, six offices in North America and 12 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook - Twitter - LinkedIn. For more information on our coverage, send inquiries to info@industrialinfo.com or visit us online at http://www.industrialinfo.com.
At Hart Energy's (Houston, Texas), "DUG East: Marcellus-Utica Midstream" event, executives with Range Resources Corporation (NYSE:RRC) (Fort Worth, Texas) and CNX Resources Corporation (NYSE:CNX) (Pittsburgh, Pennsylvania), discussed ESG issues on separate days.
The event included a panel discussion of ESG, triggered in part by Range Resources Corporation's recently adopted goal of net-zero greenhouse gas emissions by 2025. Range Resources is one of the largest oil and gas producers in the Appalachian region, which includes the Marcellus and Utica shales.
ESG issues likely will be elevated during President-elect Joe Biden's term, but that discussion began a few years earlier.
While hydraulic fracturing, and to a lesser degree ESG, drew some headlines during the recent presidential campaign, "the capital markets have been voting their ESG points of view with its dollars for a couple of years," said Sean O'Donnell, managing director at private equity firm Quantum Energy Partners (Houston, Texas). "ESG is not a new topic for capital markets. In you're waiting for the election to figure out ESG, you're a couple of years behind."
Added K. Scott Roy, senior vice president for Range Resources, "If you're starting now, you've got a lot of catching up to do. The results of the election may place a little more focus on ESG, but this is a discussion that was well under way long before the election, and it will continue long after (President-elect Biden's) term in office."
For more on ESG in the oil and gas industry, see August 31, 2020, article - Conference: ESG Coming to the Oil Patch, But Questions Remain on Metrics. ESG concerns are increasingly being felt in the Electric Power Industry too. For more on that, see December 2, 2020, article - Wave of Coal Power Plant Closure Announcements Clouds Outlook for King Coal and October 26, 2020, article - Investment in Renewables Expected to Soar as Duke Energy Unveils Bold Decarbonization Plan.
In discussing Range Resources' recent adoption of a zero net greenhouse gas emissions goal by 2025, Roy said the interests of a diverse group of stakeholders -- including investors, banks, consumers, employees, policymakers and the communities in which Range operates -- have come into alignment in the last few years on the importance of ESG. For oil & gas producers like Range, he said, the most critical ESG issues are emissions management, water management, safety and community involvement.
Quantum Energy Partners' O'Donnell explained why ESG issues are coming of age. "The science (around climate change), while still debated, is by and large understood. The technology (to fight it) is available. The room for debate around things has really narrowed. There are some companies who may want to ignore or deny certain things, but there are no real excuses left or places to hide. Dollars will not flow to companies that don't have a robust (ESG) program. It's as simple as that."
"At Quantum, across the E, the S and the G of ESG, our focus has been on the S (social issues), particularly as it relates to stakeholder engagement," O'Donnell added.
In a lot of ways, ESG metrics can be seen as proxies for running a business well, speakers on the December 3 panel agreed. Reducing waste -- whether in the form of lowering fugitive methane emissions or better managing water resources -- helps increase revenue and lower costs. Employee safety, long a given in the industry, remains vital to hiring and retaining a skilled workforce. And better engaging with local communities just makes good business sense, as those communities have the power to delay or deny projects through permitting and litigation.
"Every company knows it needs to be an environmental steward," said Jean Mosites, a shareholder at law firm Babst Calland (Pittsburgh, Pennsylvania). "There's no question about that. As for how they do it, where they do it, when they do it, that will vary." She suggested smaller operators may have more difficulty adopting and hitting ESG targets compared with larger operators like Range Resources.
"In Appalachia, water and methane are the two priority risks where operators need to be well ahead of regulation," said Quantum's O'Donnell. "Venting and tanks and infrastructure are priorities for natural gas producers in Appalachia. There's quite a bit of aging infrastructure here."
The conference's keynote speaker, CNX Resources President and Chief Executive Officer Nick Deluliis, said CNX is the oldest publicly traded company in the Appalachian region. "We are from this region, by and large. And we want to stay in this region. We want to hire locally. We want to spend locally. We want to set targets for how much of our hiring and spending is going to stay within this region, particularly where communities are more economically distressed," he continued.
"If we are champions of our community, if we put our money where our mouth is, performance will follow and Wall Street will follow," Deluliis continued. But if oil and gas companies don't do a good job on ESG performance, "there are naysayers out there who are working night and day to make sure we never get the chance for demand to grow the way it should."
"We are manufacturing a wonderful widget that impacts society," the CNX executive continued. "Natural gas is a noble industry. Natural gas improves the human condition. We're not a bridge to something better, we are the foundation for the future."
"We need to be a better advocate for what we do," he said. "We almost apologize for what we do on a regular basis. We need to have a much more thorough discussion with those beyond our industry" on how natural gas is not the problem, but part of the solution."
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, six offices in North America and 12 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook - Twitter - LinkedIn. For more information on our coverage, send inquiries to info@industrialinfo.com or visit us online at http://www.industrialinfo.com.
