Oxy recognizes the importance of the many potential challenges and opportunities presented by the issue of climate change. Our longstanding policy is to seek continuous improvement in resource recovery, conservation, pollution prevention and energy efficiency. Oxy’s efforts to reduce GHG emissions are consistent with the company’s commitment to be an efficient, low-cost producer of oil and gas and chemicals. Oxy integrates climate change issues into business decision making through a committee of managers and employees.
Oxy is engaged in developing GHG emission estimates, evaluating proposed regulations and assessing carbon credit trading markets and voluntary initiatives, and we discuss these matters with stakeholders and the public. Oxy encourages efforts to increase the understanding of human influences on climate, and we support the development of practical technology and policy to mitigate and adapt to climate change and its consequences.
Regulation of GHGs
There is an ongoing effort by the scientific community to assess and quantify the effects of climate change and the potential human influences on climate. Notwithstanding the status of these important efforts, numerous government authorities are considering legislation or regulations seeking to control or reduce emissions of GHGs or the consumption of fossil fuels.
We believe any approach to regulating GHG emissions should be holistic, and we do not support efforts that regulate some sectors while omitting others. Patchwork programs that focus on a particular state or region have inherent geographic restrictions in their ability to affect any human-induced climate change, may conflict with one another, and are necessarily cost-inefficient. Oxy believes that the question of whether there is a need for mandatory GHG emission controls in the U.S. is most appropriately informed by sound science and answered at a national level, after due consideration of the social and economic costs and consequences.
Underground storage of carbon dioxide
Despite the uncertainty about the effectiveness and ramifications of certain legislative proposals, Oxy continues to pursue measures to manage and control our GHG emissions — while continuing to expand economically — and to promote the viability of longterm carbon storage in oil and gas reservoirs.
New and existing technology has the potential to significantly reduce GHG emissions if it can be commercialized at a large enough scale to have an impact. Underground storage of CO2, which is also known as geologic storage or sequestration, is a ready method for the large-scale storage of CO2 that would otherwise be emitted to the atmosphere. The use of CO2 for EOR is a means of permanent geologic storage.
Oxy is an industry leader in CO2 injection for EOR. Oxy operates more than 25 active CO2 flood projects, injecting approximately 500 billion cubic feet of CO2 per year, or over 25 million metric tons in 2008. Of this amount, 60 percent is recycled from producing wells, and the other 40 percent is newly supplied to the floods to make up for the quantity that is stored deep underground in the oil and gas reservoir through the CO2 flooding process.
Oxy believes that production at many other mature oil fields could be increased with CO2 EOR if additional economic sources of CO2 become available to supplement natural sources. In fact, Oxy is actively pursuing projects with other parties, such as a West Texas hydrocarbon gas processing plant where CO2 that otherwise would have been emitted will instead be captured for direct injection in Oxy’s EOR operations.
Oxy believes CO2 EOR can validate the commercial and technical viability of geologic storage. In order to sustain this essential proving ground, the longstanding and effective programs regulating CO2 EOR should be preserved, and natural sources of CO2 should continue to be available to protect and increase the investment of capital in CO2 EOR.
Methane capture
In our oil and gas business, Oxy is pursuing initiatives to bring natural gas (methane) — a clean-burning fossil fuel with very low GHG emissions relative to other fossil fuels — to market rather than flaring or emitting it to the atmosphere. OxyChem’s operations make extensive use of natural gas as an energy source.
Oxy’s ongoing efforts to capture methane emissions under the EPA’s Natural Gas STAR Program have helped keep our rate of growth in estimated GHG emissions well below that of our oil and gas production. The Natural Gas STAR Program is a voluntary partnership between the EPA and industry to evaluate, implement and report cost-effective technologies and practices to reduce methane emissions from oil and gas operations. Oxy has implemented a broad spectrum of projects that reduced cumulative estimated methane emissions by more than 16 billion cubic feet from 1990 through 2007.
Cogeneration
More than 25 years ago, Oxy began building several highly efficient cogeneration plants for electrical power and steam to supply our oil and gas and chemical operations. Cogeneration, or combined heat and power (CHP), significantly increases electrical power generation efficiency over traditional methods while reducing CO2 emissions by as much as 66 percent. The GHG emission reduction benefits from Oxy’s cogeneration facilities are substantial. Using typical assumptions for the average CO2 emission factor for the U.S. national electrical grid, installed capacity of the cogeneration units, steam boiler thermal efficiencies and steam quality and usage, Oxy’s CHP facilities at full utilization are estimated to reduce GHG emissions by 4 million metric tons more per year than if equivalent power were supplied from the grid.
GHG emissions inventory
Some recently adopted state laws call for GHG emissions inventories and reductions to be phased in over time. Where appropriate, Oxy is engaged in the process as detailed rules are developed. For example, following adoption of the California Global Warming Solutions Act of 2006, Oxy was the first upstream oil and gas producer in the state to join the voluntary California Climate Action Registry, committing to track and publicly report our estimated GHG emissions from our California operations, and these estimates were certified by an outside expert. Oxy also has responded to inquiries by the Carbon Disclosure Project (www.cdproject.net), a consortium of institutional investors that surveys the world’s largest companies on this topic.