Treasurer Wheeler urges better disclosure for deepwater mining operations in the wake of Gulf Coast oil spill
— Oregon Treasurer among major investors to send letter urging action by oil companies
By Oregon State Treasurer
SALEM – Across the globe, thousands of deepwater drilling rigs are siphoning millions of gallons of oil from far beneath the ocean floor — but along with petroleum and profits, those wells are raising new concerns for investors, in the wake of losses connected to the BP drilling disaster off the Gulf Coast.
Oregon State Treasurer Ted Wheeler on Thursday joined with a coalition of 58 major investors to urge oil companies and their insurers to disclose spill prevention and response plans, in hopes of reducing the likelihood of a similar future calamity.
“Everybody has learned from the BP disaster that a company’s preparations for worst-case scenarios can have a profound impact on investment returns,” Treasurer Wheeler said. “We want to be sure that companies that engage in high risk activities have the appropriate risk-mitigation plans in place.”
The investors signing the letters Thursday manage portfolios worth a combined $2.5 trillion. The Oregon investment portfolio is roughly $70 billion, with the largest portion in the Oregon Public Employees Retirement Fund, which was worth almost $51 billion on June 30.
Other signatories include the New York State Comptroller, California State Treasurer, the Pennsylvania State Treasurer, Florida State Board of Administration and the UK-based Local Authority Pension Fund Authority Forum.
Among the addressees are the world’s three largest deepwater miners — Petrobras, ExxonMobil and Royal Dutch Shell. The letters were sent to 27 oil companies and 26 insurers.
The Oregon Public Employees Retirement Fund is diversified and invested around the world, and its holdings include energy companies. As part of its indexing strategy, OPERF is invested in all public companies in the largest global stock indexes, which include BP p.l.c.
Investors have seen BP’s stock value plunge by more than a third since the spill.
“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,” the letter says.
“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 letter continues. “The BP Gulf of Mexico disaster has also raised concerns about response plans by companies and the industry for dealing with offshore accidents.”
The letter includes questions on four key topics: company investments in spill prevention and response activity; contingency plans for managing deepwater blowouts; 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.
Deepwater offshore drilling has become increasingly critical to the global oil industry, accounting for roughly half of new oil discoveries over the last five years. Deepwater oil production capacity, at 2,000 feet or deeper, has tripled since 2000 to five million barrels a day and is projected to double again by 2015, according to Cambridge Energy Research Associates. There are now 14,000 deepwater wells worldwide.
The Oregon Investment Council oversees the asset mix and principles for Oregon’s investment portfolio.
In addition to communicating directly with companies, Oregon also demands more accountability from Wall Street and corporations through the use of proxy votes and in some cases lawsuits, when companies have failed to act in shareholders’ best financial interests.
The Oregon State Treasury protects public assets and saves Oregonians money through its investment, banking, and debt management functions. The office also promotes public outreach and education to help Oregonians learn strategies to save money, invest for college and make smart financial choices.
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