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Unocal Corporation
1201 West 5th Street, P.O. Box 7600
Los Angeles, California 90051
Telephone (213)977-7019
[Unocal Corporation Logo]
Roger C. Beach
Chief Executive Officer April 19, 1995
Dear Unocal Employee:
By now, you should have received Unocal's 1994 annual report and proxy
statement, together with a proxy card (or voting instruction card) for
directing the voting of your shares at the upcoming annual meeting.
This year's proxy statement contains two stockholder proposals. One calls on
the company's Board of Directors to issue a report to stockholders about
our natural gas processing operations in northern Alberta, Canada. The
second asks the Board to review and update Unocal's "Statement of
Principles," our code of conduct for doing business internationally.
The enclosed Proxy Fact Sheet presents the viewpoints and recommendations
of your company's Board of Directors. I would also encourage you to review
the entire proxy statement, which provides more detailed information about
each of these proposals.
As a Unocal employee and stockholder, you are a part-owner of our company.
Your views and your votes are very important. I urge you to complete and
sign your proxy card or voting instruction card, and return it in the
postage-paid envelope provided with the proxy statement.
Very truly yours,
/S/ Roger C. Beach
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[Unocal Corporation Logo]
PROXY FACT SHEET
ITEM 3 / STOCKHOLDER PROPOSAL
Item 3
Proposal Summary
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Requests the Board of Directors to prepare a report on the company's gas
processing operations in northern Alberta, Canada, in territory claimed from
the Canadian and Alberta governments by the Lubicon Lake Indians; and discuss
the consequences of our newly constructed gas processing plant.
VOTE NO [A box with a checkmark appears here]
The Board of Directors recommends a vote AGAINST the adoption of Proxy Item
3.
[A map appears here. An outline is labeled "Proposed Lubicon Lake Indian
Reserve." A shaded outline within the proposed reserve is labeled "Lubicon
Lake." Another shaded outline, southwest of the proposed reserve and
slightly overlapping the proposed reserve's southwest boundry, is labled
"Unocal Lease Area." The locations of the "Slave Gas Plant," within the
Unocal lease area, and "Little Buffalo (Lubicon Lake Indian Settlement),"
north of both the proposed reserve and the lease area, are labeled and
represented by points. A straight line with arrows at both ends indicates
that it is "12 Miles" between the two points. The map has an insert showing
the where the "Mapped area" is located in Alberta. "Alberta" is outlined and
labeled. The "Slave Area" is labeled and represented by a star. "Edmonton"
and "Calgary," both South of the Slave Area, are labeled and represented by
points. "British Columbia" is shown to the West.]
Unocal's View
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The proposal pertains to the recent addition of a sour gas processing unit at
Unocal Canada Limited's existing oil and gas handling facility at the Slave
field. The plant is located in a remote area of northern Alberta, 12 miles
from a small settlement of Lubicon Lake Indians. The site is adjacent to a
reserve that has been proposed for the Lubicons by the Canadian government.
Unocal does not believe a report describing the issues surrounding the
expansion of the gas processing plant is necessary. All aspects of the Slave
field development, including the processing plant expansion, were fully
permitted after extensive technical and environmental reviews. Moreover, at
the express request of the Lubicons, a thorough public re-examination of the
plant expansion permitting was undertaken by the responsible Alberta
authority in November and December of 1994. The plant's technological
soundness and environmental safety were reaffirmed.
Why Plant Expansion Makes Sense
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Unocal Canada has operated the Slave field since 1983, producing oil and
sweet (low sulfur) natural gas. All of the produced gas is flared (burned
off), because the volume is too low for economic processing and sale.
The plant expansion will enable us to boost gas production. The additional
gas is not being produced now because it is slightly "sour," containing small
amounts of sulfur compounds. Addition of the sour gas processing facility,
adjacent to the existing plant, makes economic production of this gas
possible. It will also enable us to recover and sell the sweet gas now
being flared.
It's important to emphasize that the new gas entering the plant will be only
slightly sour. Sulfur emissions from our expanded plant are projected to be
less than half the licensed limit of .635 metric tons per day. Current plant
emissions of about 1.3 metric tons per day of nitrogen oxides and .1 metric
tons per day of carbon monoxide will be virtually eliminated by the new
equipment.
Regulatory Approval to Operate
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In February 1994, Unocal received approval to construct and operate the sour
gas processing unit from the Alberta Energy Resources Conservation Board
(ERCB), the regulatory agency overseeing energy issues for the province.
Prior to construction, Unocal Canada representatives met with Lubicon
leaders to discuss the proposed plant expansion. By January 1994, the
company had received two letters from the Lubicon Chief stating that the
Lubicons would not oppose the expansion and related new flow (feeder) lines.
Construction began immediately and was completed in September, 1994.
Plant Safety Reaffirmed
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Two months after plant construction was completed, the ERCB convened public
hearings to reexamine the issuing of Unocal's sour gas processing permit.
The hearings, held at the request of the Lubicons, included extensive
testimony from independent environmental consultants, technical experts and
Unocal Canada engineers.
In February of 1995, the ERCB reaffirmed its approval of the plant
expansion. The Board concluded that the sour gas plant "can be operated in
a safe manner and will not represent any substantive risk to people living in
the area or their future life style on the proposed reserve."
[A bar graph appears here. It is labled "Slave Gas Plant Emissions
Comparison." The X axis is labeled "Tons per day," and four intervals are
labeled: 0, .5, 1.0 and 1.5. There are six vertical bars. The three bars on
the left of the graph are blue, with the legend "Before Plant Expansion."
The first bar is labeled "NOx" and rises to 1.3 on the graph. The second bar
is labeled "CO" and rises to .1 on the graph. The third bar is labeled
"Sulphur" and rises to less than .1 on the graph. The first two of the
three bars on the right of the graph are yellow, with the legend "After Plant
Expansion." The first bar is labled "NOx" and the second bar is labeled
"CO." Both of these bars rise to less than .1 on the graph. The third bar,
labeled "Sulphur," is a stacked bar, yellow at the bottom and white at the
top. The yellow portion is labeled "Expected" and rises to .19 on the graph.
The white portion is labeled "License" and rises to .635 on the graph.]
The Lubicons' Land Dispute
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While Unocal Canada holds all proper mineral leases and regulatory permits
for the Slave field, a complicating factor remains an unresolved land rights
claim between the Lubicons and Canada's federal and provincial governments.
Dating back to the 1930s, this bitterly contested dispute has frequently been
played out in the public arena. The land rights issue does not involve
Unocal Canada, and must necessarily be resolved by the governments and the
Lubicons.
Unocal: A Good Neighbor
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From the onset of our activities in the Slave field, Unocal has made every
effort to be a friend and good neighbor to the Lubicons. We've offered jobs,
training, and technical assistance to help the Lubicons maintain a
sustainable lifestyle. We have also freely and willingly shared information
about our activities in the region, including the gas plant expansion.
Summary
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Unocal Canada's plant expansion was approved and permitted by the Alberta
Energy Resources Conservation Board. The Lubicons themselves were informed
about the project, and extensive hearings on the plant were held last fall by
the ERCB at their request. The Board found that the facility will have no
substantive adverse impact on people or the environment.
For these reasons, we do not see a need for any further documentation on this
matter. We believe the requested report is unnecessary, and would serve no
useful purpose for our stockholders.
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[Unocal Corporation Logo]
PROXY FACT SHEET
ITEM 4 / STOCKHOLDER PROPOSAL
Item 4
Proposal Summary
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Requests the Board of Directors to review and update Unocal's Statement of
Principles, which outlines the company's code of conduct for doing business
internationally;
Requests that the Board develop specific guidelines advising the company on
investing in or withdrawing from countries where there is a pattern of
ongoing and systemic violations of human rights, where a government is
illegitimate, or where there is a call for economic sanctions by human rights
advocates, pro-democracy groups or legitimately elected representatives.
VOTE NO [A box with a checkmark appears here]
The Board of Directors recommends a vote AGAINST the adoption of Proxy Item
4.
Unocal's Statement of Principles
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Meet the highest ethical standards in all of our business activities.
Conduct business in a way that engenders pride in our employees and respect
from the world community.
Treat everyone fairly and with respect.
Offer equal employment opportunity for all host country nationals, regardless
of race, ethnic group, or sex.
Make sure that a very high percentage of the work force is made up of
nationals.
Train and develop national employees so they have full access to
opportunities for professional advancement and positions at higher levels in
the organization.
Maintain a safe and healthful workplace.
As employees, value and protect each other's health and safety as highly as
we do our own.
Use local goods and services as much as practical, whenever they're
competitive and fit our needs.
Improve the quality of life in the communities where we do business.
Contribute -- and not just economically -- to local communities, so that our
presence enhances peoples' lives in long-lasting, meaningful ways.
Protect the environment.
Take our environmental responsibilities seriously and abide by all
environmental laws of our host country, as we do in the United States.
Communicate openly and honestly.
Maintain our policy of encouraging meaningful dialogue with concerned
shareholders, employees, the media, and members of the public.
Be a good corporate citizen and a good friend of the people of our host
country.
Unocal's View
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Unocal has earned an international reputation for integrity and high ethical
standards. Our Statement of Principles was created to codify and maintain
those standards. The Principles fully and clearly describe Unocal's
commitment to ethical business practices -- including respect for human
rights. They also spell out our responsibilities to citizens, local
communities, and host countries where we have operations and activities.
Our Statement of Principles was reviewed and published just nine months ago,
in July of 1994. It is consistent with President Clinton's newly established
"Model Business Principles," a voluntary code of conduct for U.S.
corporations doing business abroad. We believe there is no need to revise or
update our Statement. We also feel that linking the company's investment
decisions to political agendas is not an effective way to do business, or to
bring about constructive social change.
Energy Development Improves Quality of Life
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Historically, energy development has had a positive impact on peoples' lives,
regardless of a country's internal politics. It builds economies, improves
living standards and stimulates social reform.
At Unocal, we have learned this through direct experience. Over the past 25
years, we've seen our activities improve the quality of life for thousands
of families and communities in Indonesia, the Philippines, Thailand and other
developing nations. Our projects have created good-paying jobs, provided
educational and skills training, and helped establish new industries in these
countries. They have also improved health, safety and environmental
practices.
Unocal in Myanmar: Pursuing Constructive Engagement
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Unocal is a co-venturer in a major natural gas project in the Yadana field,
offshore Myanmar. Total, a French energy company, is the project operator.
Production is expected to begin in 1998 and reach 525 million cubic feet of
natural gas per day. The gas will be transported by pipeline to Thailand,
where it will be used for electricity generation.
Because of Myanmar's current political situation, the natural gas project is
the object of some controversy. Some would prefer we withdraw from Myanmar,
and isolate the nation to compel democratic reforms. We believe such a move
would be counter-productive, and would hurt the very people it was designed
to help.
Summary
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Unocal's code of business conduct is spelled out in a clear and comprehensive
Statement of Principles. We believe there is no need to revise or
reformulate this code. As it stands, the Statement outlines our commitment
to maintaining the highest ethical standards. It also includes our firm
pledge to improve and enrich the lives of people wherever we do business.
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