Performance

Performance

Occidental's reporting focuses on the policies, objectives, performance and activities of the company. To improve transparency and provide relevant information to our stakeholders, we have elected to use our corporate website as the primary medium for Social Responsibility-related reporting. This website provides updates to our 2017 year-end performance and information on activities implemented and achievements in 2017 and 2018. An Annual Performance Summary Table, linked in the left margin, highlights our Environmental, Health, Safety and Social performance metrics to the year-end 2017 (unless otherwise noted). Occidental also reports annually to CDP on its climate change and water programs. Our most recent submissions to the CDP are linked in the left margin.

More information and examples of our performance can be found throughout the Social Responsibility sections in this corporate website.

Occidental's reporting process is informed by IPIECA's Oil and Gas Industry Guidance on Voluntary Sustainability Reporting (third edition, 2015 release) and is routinely updated and refined based on active stakeholder and investor engagement. In addition to the Performance Summary Table highlights, we achieved progress on the following key topics discussed with stakeholders during the 2017-18 timeframe:

  • Greenhouse gas (GHG) and methane emissions metrics, a commitment to eliminate routine flaring, and inclusion of climate-related compensation metrics for Executive Management

  • Analysis of climate-related risks and opportunities

  • Better communications and disclosure on what matters most to Occidental’s stakeholders

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Content Index

The Content Index refers to the IPIECA-API-IOGP sector-specific performance issues and indicators most relevant to Occidental and our community-level stakeholders. The Content Index also cross-references the indicators from the Global Reporting Initiative (GRI) Sustainability Reporting Guidelines (G4) and the United Nations Sustainable Development Goals (SDGs) most aligned with our business operations and our ability to help achieve the SDGs.


IPIECA Issue IPIECA Indicator GRI G4 Indicator SDG
Climate Change and Energy E1: Greenhouse gas emissions EN15, EN16, EN18, EN19 SDG7
E2: Energy use EN3, EN5
E3: Alternative Energy Sources EC2, OG2 SDG13
E4: Flared gas EN15, OG6
Biodiversity and Ecosystem Services E5: Biodiversity and ecosystem services EN11, EN12, EN13, OG4 SDG15
Water E6: Fresh water EN8, EN10, EN22 SDG6
E7: Discharges to water EN1, EN8, EN10, EN22, EN27, OG5, OG7
Local Environmental Impact E8: Other air emissions EN20, EN21 SDG13
E9: Spills to the environment EN24
IPIECA Issue IPIECA Indicator GRI Indicator SDG
Workforce Protection HS1: Workforce protection LA5 SDG3
HS2: Workforce health LA5
HS3: Occupational injury and illness incidents LA6
Product Health, Safety and Environmental Risks HS4: Product stewardship EN27, PR3 SDG12
Process Safety and Asset Integrity HS5: Process Safety OG13
IPIECA Issue IPIECA Indicator GRI Indicator SDG
Community and Society SE1: Local community impacts and engagement EC8, SO1, SO2, SO9, SO11 SDG16
SE2: Indigenous peoples HR8, OG9
SE4: Social investment EC7, EC8
Local Content SE5: Local content practices EC9 SDG8
SE6: Local hiring practices and performance EC8
SE7: Local procurement and supplier development EC8, EC9, EN32, EN33, LA14, LA15, HR1, SO9, SO10
Human Rights SE8: Human rights due diligence LA15, LA16, HR1, HR2, HR3, HR5, HR8, HR9, HR12, OG9, OG10 SDG16
SE9: Human rights and suppliers LA14, LA15, HR1, HR5, HR6, HR10, HR11
SE10: Security and human rights LA14, HR2, HR5, HR7, OG10
Business and Transparency SE11: Preventing corruption SO3, SO4, SO5, SO7 SDG16
SE12: Preventing corruption involving business partners SO3, SO4, SO5
SE13: Transparency of payments to host governments EC1
SE14: Public advocacy and lobbying SO6
Labor Practices SE15: Workforce diversity and inclusion LA1, LA12 SDG5
SE16: Workforce engagement HR4 SDG8
SE17: Workforce training and development LA9, LA10
SE18: Non-retaliation and grievance system LA16, SO10, SO11 SDG16




Occidental is governed by a Board of Directors (Board), which, among other duties, sets the company's policies, objectives and overall direction of the business and monitors and evaluates the senior management team. The Board of Directors is committed to strong corporate governance policies and practices and continually reviews evolving best practices in governance and seeks input from Occidental's stockholders. The performance of individual directors, committees and the full Board is evaluated annually. The annual assessment focuses on such factors as whether committees are functioning effectively and whether the Board has the necessary diversity of skills, backgrounds and experience to meet the company's current and future needs.

Occidental's corporate governance highlights include:

  • an independent Chairman of the Board;

  • annual elections of the entire Board;

  • majority voting for directors and, in uncontested elections, mandatory resignation if a majority vote is not received;

  • stockholders right to proxy access, the ability to act by written consent and to call special meetings;

  • no poison pill or similar plan; and,

  • a confidential voting policy.

Occidental's stockholders elected eleven directors to the Board, ten of whom are independent directors.

Board of Directors

BOD
Female Directors

7 Years Experience

Occidental demonstrates its commitment to respecting and upholding human rights through continued integration of the Company's Human Rights Policy into its global business practices. Occidental's actions to fulfill this commitment included:

  • educating and promoting Occidental's Business Code of Conduct and its Human Rights Policy to employees, contractors and other business partners;

  • participating in meetings and working groups to advance respect for human rights; and

  • engaging host governments, non-governmental organizations (NGOs), communities, and civil society groups.


At Occidental, we actively promote diversity, inclusion and equal employment opportunity throughout the company. Our diverse workforce contributes to our ability to work effectively across multicultural environments. Internationally, we team with nationwide, regional and local governments to transfer skills and technology to workers in the regions where we operate, and to recruit and train local citizens for jobs at all levels of the company.

At the close of 2017, women represented 17.6 percent of Occidental's U.S. management and senior leadership positions. Minorities represented 20.6 percent of our U.S. management and senior leadership positions.

Workforce Diversity







In 2017, we achieved our highest-rated employee safety performance, based on the U.S. Department of Labor's Injury and Illness Incidence Rate (IIR). Occidental's 2017 worldwide employee IIR of 0.20, which included no occupational fatalities, is less than one-tenth of the current U.S. private industry average IIR of 2.9 published by the U.S. Bureau of Labor Statistics. Our employee IIR has been less than 1.0 for 21 consecutive years.

  • Occidental Oman achieved a combined employee and contractor Injury and Illness Rate (IIR) of 0.04 while working over 38.5 million man-hours, the best performance since Occidental started operations in Oman over 30 years ago.

  • In Qatar, our employees and contractors achieved a second full year without a recordable injury.

  • Occidental Colombia’s combined employee and contractor Injury and Illness Incident Rate (IIR) of 0.04 is based on more than 5.2 million man-hours worked in 2017.

  • OxyChem's worldwide employee Injury and Illness Incidence Rate (IIR) of 0.45 was 47 percent better than the average 2017 employee IIR of 0.85 for its midsize company peers in the American Chemistry Council.

The overall safety performance across Occidental's operations in 2017 was excellent, and the company is committed to continuously improving workplace and contractor safety and preventing any incidents. Occidental's business units actively encourage contractors to improve their Health, Environment and Safety (HES) programs, both in periodic safety meetings where Occidental management discusses HES practices with contractors, and in individual service quality meetings. Potential areas of improvement Occidental pursues include increasing supervision, job safety analysis, equipment inspections and emergency preparedness, particularly in drilling and workover activities. We expect both employees and contractors to uphold Occidental's commitment to health and safety, and the company's Safety Management System practices.

Occidental strives to achieve exemplary environmental performance. This section describes environmental stewardship topics and performance indicators most relevant to Occidental stakeholders such as biodiversity and habitat conservation, climate change, energy use and greenhouse gas emissions and water management.

Environmental Remediation

Occidental maintains a wholly owned subsidiary, Glenn Springs Holdings, Inc., to uphold Occidental's commitment to protect health, safety and the environment at former operating locations and historical environmental sites of Occidental entities. The scientists, engineers and project managers at Glenn Springs employ advanced, environmentally sound methods and innovative site restoration and management solutions in cooperation with interested stakeholders. Through proactive engagement with relevant agencies and with the development and application of common process initiatives and tools, Glenn Springs is able to effectively provide consistent results at Occidental sites currently or previously used for industrial, mining, or commercial activities. Discussion of Occidental's remediation spending can be found in our Annual Report on Form 10-K.

Notable remediation efforts include the Lower North Potato Creek at the Copper Basin Project in Tennessee. Glenn Springs earned the Tennessee Department of Environment and Conservation's 2015 award for exceptional environmental stewardship of a natural heritage site, for successfully restoring the Lower North Potato Creek watershed in eastern Tennessee to its natural habitat.

"I am extremely proud of the efforts of our employees, contractors and vendors, working together with our State and Federal partners to restore the Lower North Potato Creek," said Glenn Springs President Mike Anderson. "The Governor's Environmental Stewardship Award is recognition of the team's innovative approach to reviving this important ecosystem in eastern Tennessee."

Eureka Roast Yard 1
Eureka Roast Yard 2
Burra Creek 1
Burra Creek 2

Before and After Photos of Burra Creek: A tributary of North Potato Creek was reconstructed by removing contaminated materials, replacing with healthy soils and constructing natural flow control and habitat enhancements.

Biodiversity and Habitat Conservation

Occidental actively promotes habitat preservation and biodiversity. Minimizing the disturbance of wildlife habitat is a key tenet of our conservation efforts. We believe that using existing oil and natural gas production infrastructure -- and avoiding, in many cases, the need to develop greenfield land, build new roads, pipelines and storage and processing facilities -- to recover additional oil and natural gas from existing fields provides significant life-cycle environmental benefits. Field development using directional drilling and locating more than one well from a single drill pad reduces the surface area needed for oil and gas production. In mature fields, we often apply enhanced oil recovery (EOR) technologies and drilling techniques. These approaches minimize our operational footprint and minimize habitats exposed to disturbance.

Occidental works with national, regional and local government agencies, university researchers and nonprofit organizations to support native species in certain operating locations, implement adaptive management practices to minimize habitat disruption and to preserve and restore habitat for those species.

  • The Pecos Watershed Initiative, a proactive approach to the Endangered Species Act, involves landscape-based management of multiple species and their habitat within the Pecos River Watershed, in Texas. The Initiative is a collaborative endeavor between industry and local, state and federal agencies to improve habitat and species health while allowing for responsible economic development.

  • In Colombia, Occidental Colombia and Ecopetrol have implemented a reforestation and habitat conservation program with the Barrancabermeja San Silvestre Wetland Integrated Management Regional District, a regional protected area. This program aims to recover degraded areas and restore contiguous areas previously fragmented by cattle farming, and has established a productive tree plantation served by the local community. The plantation has around 108,000 trees, including some endangered species. Also, around 700 fruit trees have been planted with the objective of attracting protected fauna, impacted by hunting and the loss of habitat.

Occidental amplifies its commitment to biodiversity through an active membership in and support of nonprofit conservation organizations, including the Wildlife Habitat Council (WHC) and The Nature Conservancy. Occidental's longstanding participation in the WHC has helped us to enhance habitats across the United States. WHC's Corporate Wildlife Habitat Certification/International Accreditation Program recognizes commendable wildlife habitat management and environmental education programs at company-owned properties. We currently manage four sites certified by the WHC under the Corporate Lands for Learning and Wildlife at Work programs. Since 2012, Glenn Springs has earned four national habitat awards from the WHC, National Wild Turkey Federation, Pheasants Forever and Ducks Unlimited.

At the site of a former chemical facility in Montague, Michigan, Glenn Springs implemented a comprehensive wildlife enhancement plan benefiting several species of mammals, birds and insects. In 2015, the site received the Wings over Wetlands Award from Ducks Unlimited in recognition of its accomplishments. The Montague conservation plan includes:

  • Creation of a long-term forest management plan

  • Creation of 35 acres of wetlands and aquatic habitat

  • Creation of two timber ponds

  • Planting and maintaining over 80 acres of native prairie grasses

  • Establishment of nearly 30 acres of wildlife food plots

Energy Utilization and Energy Efficiency

Occidental uses energy to produce oil and gas and manufacture chemicals to generate steam and electricity, and to conduct other business activities. Our longstanding policy is to seek continuous improvement in resource recovery and energy efficiency. Occidental reports overall energy use net of the amount of energy consumed to generate electricity exported to the grid and adjusted by Occidental's equity share in the facilities we operate. Occidental has been successful in controlling energy consumption, achieving a 20 percent reduction in energy intensity per pound of production over the 2010-2017 period.

In its oil and gas operations, Occidental applies several strategies to improve energy efficiency and reduce air emissions, even while expanding our production from mature fields. Generally, however, the energy demand per barrel increases over time, as more intensive production methods, such as water and steam flooding and carbon dioxide enhanced oil recovery (CO2-EOR), are used to recover oil and natural gas from mature fields.

In 2017, guided by the principles of the American Chemistry Council (ACC) Responsible Care® Energy Efficiency program, our OxyChem plants successfully implemented innovative energy efficiency initiatives through technical innovations, creative projects or novel processes. Combined, energy savings resulting from these projects generated more than a five percent reduction in energy intensity per pound of production versus the prior year.

In February 2017, OxyChem announced the start-up of a 1.2 billion pound-per-year capacity ethylene cracker at its plant in Ingleside, Texas, one of the largest new ethylene crackers along the Gulf Coast. In addition to the energy efficiency features such as the use of hydrogen-rich vent gas as fuel, recovery of waste heat on the process and flue gas outlet of the cracking furnaces, a unique aspect of this project is the use of two thermal oxidizers equipped with waste heat boilers to combust low pressure discharges of vent gases from process equipment and storage vessels. These thermal oxidizers are designed to provide high emissions control and generate steam from the waste heat. OxyChem estimates that the approximately 970,000 tons per year of total CO2 is avoided due to its highly efficient design.

In 2017, OxyChem commissioned a plant at its Geismar, Louisiana facility to produce a new raw material (known as 4CPe) to be used in making next-generation, climate-friendly refrigerants. Based on patented research and development by OxyChem, the new product will enable the efficient production of next-generation refrigerants, which have low global-warming potential and ozone depletion potential. The refrigerant is approved by the U.S. EPA and meets the European Union regulatory requirements for automobile air conditioning systems.

Cogeneration

Occidental's cogeneration facilities are highly efficient natural gas fired cogeneration power plants that co-produce electricity and steam for adjacent plants, while also providing excess electricity into local markets. Cogeneration, or combined heat and power (CHP), significantly increases electrical power generation efficiency over traditional methods while reducing carbon dioxide (CO2) emissions by more than 50 percent. Cogeneration is more than just an energy-efficient method of generating electricity and thermal energy. It has the potential to deliver lower overall system costs, stronger critical infrastructure, and improved grid reliability.

The greenhouse gas (GHG) emission-reduction benefits from Occidental's natural gas-fired CHP facilities are substantial. Based on commonly-used assumptions, Occidental's CHP facilities at full utilization are estimated to reduce GHG emissions by 5 million metric tons per year compared to the case where equivalent power is supplied from the electrical grid. The steam produced by the combined cycle facilities reduces the nearby manufacturing facilities' CO2 emission of about 500,000 tons annually, compared to steam supplied by typically configured boilers.

OxyChem has made improvements to its CHP systems, saving more than 306,000 MMBtu/year and approximately 18,500 tons of CO2 equivalents reductions per year since implementation. In Ontario, OxyChem has partnered with Canada’s Independent Electricity System Operator (IESO) to build an energy saving project at our Niagara Falls-based PVC Plant. A new gas turbine and heat recovery steam generator generates efficient power and steam for the plant’s processes. This updated technology increased the overall efficiency of the plant by about 25 percent.

Demand Response

In the Texas market, Occidental is one of the leading providers of Responsive Reserve Service, which helps improve reliability of the electric grid. By offering to reduce power consumption at specific Occidental locations, when called upon by the grid operator, Occidental provides the Texas electrical grid with a demand response tool which helps maintain grid reliability for industrial, commercial and residential consumers. Occidental continuously evaluates opportunities to reduce the company's electric costs by instituting practices to consume less electricity in high-demand hours, by minimizing electric transmission costs, and by increasing participation in the Responsive Reserve Service market.

Renewable Energy Generation

Occidental routinely looks for alternatives to help secure low cost, reliable energy for its power needs. Occidental devotes capital to install energy-efficient electrical equipment and distribution systems to provide electric power for operations that formerly required natural gas or diesel engines. We are exploring the possibility of installing renewable energy systems, such as wind and solar generation, to provide electricity for our chemical and oil and natural gas operations.

Climate Change

Occidental is committed to be part of the climate solution and continues to develop and implement practical innovations to preserve the environment and reduce our emissions. Our business decision-making process integrates climate change-related issues with other business priorities to help us effectively manage greenhouse gas (GHG) emissions, the social and economic impacts of Occidental's energy use and further the company's commitment to be an efficient, low-cost producer of oil and gas and commodity chemicals. As part of this commitment, Occidental published a report, Climate-Related Risks and Opportunities: Positioning for a Lower-Carbon Economy highlighting our efforts to address climate-related risks and opportunities and to reduce our emissions. The report is organized in the four-element framework recommended by the Task Force on Climate-related Financial Disclosures (TCFD), which covers governance, risk, strategy and metrics and targets.

Occidental recently launched Low Carbon Ventures, a new business unit that, among other things, seeks to identify and develop commercial opportunities to extend our competitive advantages in carbon dioxide enhanced oil recovery (CO2 EOR) and carbon capture, utilization, and storage (CCUS) and investing in and developing technologies to drive cost efficiency. Occidental is an industry leader in applying these technologies and it provides a key long-term competitive advantage for the company.

Key elements of Occidental's Climate Report include:

  • Modeling carbon prices and related financial impacts in capital spending plans for major projects

  • Testing business plans under various scenarios, including the IEA's 450 Scenario and Sustainable Development Scenario

  • Initiatives for mitigating CO2 and methane emissions and our commitment to support industry emissions-reductions efforts as part of the American Petroleum Institute-sponsored Environmental Partnership

  • Developing options for delivering sustainable shareholder value under scenarios with stringent regulation of CO2 emissions and lower demand for oil and gas than would be anticipated under business-as-usual scenarios

  • Oversight of sustainability matters including climate risks and opportunities that will be overseen by the Board and Management

Outcomes of this process to integrate climate change considerations into our business strategy help inform our active engagement with institutional stockholders, state and national-level regulators, environmental groups and other public stakeholders addressing climate risks. We work with governments, companies, peer companies in our industry sector and civil society organizations to facilitate the development of viable global policies and regulatory frameworks. The engagement with these stakeholders has initiated a constructive dialogue. Occidental participates in domestic and international industry initiatives, such as IPIECA, Carbon Capture Coalition and the Global Carbon Capture and Storage Institute that focus on GHG mitigation solutions and global climate change-related risks and opportunities.

Greenhouse Gas (GHG) Emissions Management

Occidental voluntarily reports estimated greenhouse gas (GHG) emissions using several protocols. For our worldwide operations, Occidental uses the Greenhouse Gas Protocol of the World Business Council for Sustainable Development and the World Resources Institute, supplemented by business-specific protocols (API-IPIECA). We have reported on GHG emissions to the CDP (formerly known as Carbon Disclosure Project), since its inception in 2003. Carbon dioxide (CO2) is the predominant component of Occidental's GHG emissions, while the remainder is primarily methane (CH4).

In 2017, Occidental's estimated global direct and indirect GHG emissions on an equity-share basis decreased by approximately three percent. For Occidental’s oil and gas operations, the global direct plus indirect emissions intensity remained unchanged in 2017 at 0.04 metric tons CO2-equivalents per barrel of oil equivalent.

Estimated GHG Emissions, Direct and Indirect
(in million metric tons equivalent)

GHG

Methane and Flaring

Methane, the major component of natural gas, is a clean-burning fossil fuel and, for power generation, has 40 percent lower greenhouse gas emissions relative to coal. Occidental's ongoing efforts to capture methane emissions under the U.S. Environmental Protection Agency's (EPA) voluntary Natural Gas STAR Program have helped to reduce GHG emissions from our oil and gas operations. Occidental has implemented a broad spectrum of projects that reduced cumulative estimated methane emissions by more than 17.2 billion cubic feet from 1990 through year end 2017. This corresponds to more than eight million metric tons of CO2 equivalents, which, according to EPA emission factors, is the same as the emissions from 2.5 coal-fired power plants operating for one year.

In December 2017, Occidental joined other oil and gas operators in launching the API-sponsored Environmental Partnership program aimed at reducing methane emissions from production operations. Occidental's participation in the Environmental Partnership encompasses:

  • Leak Detection and Repair: Implement monitoring and timely repair of fugitive emissions at selected sites. Occidental is on track to perform more than 375 leak surveys in 2018.

  • Equipment Upgrades: Replace, remove or retrofit high-bleed pneumatic controllers.

Pursuant to federal and/or state regulations, Occidental conducts monitoring surveys at its field facilities at least semi-annually or quarterly after the initial survey. Surveys at facilities are typically conducted at least four months apart.

Our goal is to bring natural gas to markets, which generates returns for shareholders, rather than flaring or emitting it into the atmosphere. Occidental strives to minimize flaring of natural gas and is committed to the elimination of routine flaring by 2030. In upstream oil and gas operations, gas streams are flared for safety reasons when gas processing plants have planned shutdowns or during turnarounds, enabling inspections, repairs and maintenance activities that cannot occur during operation to be performed safely.

Occidental has implemented business-specific plans to minimize gas flaring. Historically, Occidental's oil production operations in the Arabian Gulf offshore in Qatar were the largest source of gas flaring in the company's operations.

  • With the active support of our partner, Qatar Petroleum, Occidental Qatar has successfully reduced flaring emissions by more than 98 percent since 2005 and continues to reduce flaring in Qatar. These efforts include capturing a substantial portion of the produced gas for treatment and use by Qatar Petroleum as a feedstock or fuel, reinjecting it for enhanced oil recovery and using it to generate electricity for Occidental's Qatar's operations.

  • In Oman, gas capture and methane utilization projects have contributed to a significant reduction in gas flared at the Far West and Khamilah fields. From 2013 to 2016, the amount of gas flared was reduced from more than 9 billion cubic feet per year (BCF/yr) to 1 BCF/yr, a decrease of more than 90 percent - cumulatively equivalent to almost 800,000 mertirc tons of CO2.

  • In its U.S. oil and gas operations, Occidental achieved a 60 percent reduction in CO2 emissions from natural gas flaring (primarily the result of non-routine operations, maintenance and weather related upsets) over the period of 2012-2016.

Other Air Emissions Management

Occidental has an ongoing effort to maintain and improve the reliability of the equipment and facilities used in its oil and gas activities. Occidental's oil and natural gas, chemical and midstream operations generate air emissions including sulfur oxides (SOX), nitrogen oxides (NOX), volatile organic compounds (VOCs) and carbon monoxide (CO), among other substances. These air emissions are generated from boilers, heaters, engines, flares, compressors and other process sources.

Occidental devotes significant resources to capture emissions of methane and other organic compounds, both in design and construction of new facilities and in retrofitting existing facilities. Occidental employs advanced technologies and leak detection and repair (LDAR) processes to contribute to the decline in methane and to monitor and control fugitive emissions of VOCs and other air pollutants. This reduction is the result of investments in gas process plant capacity, enhanced control systems and upgraded gas handing infrastructure. Among such efforts are:

  • Adopting lower emission thresholds to eliminate leaks and to repair connections (e.g., valves, flanges, pump seals). Assuming it is technically feasible and safe, Occidental repairs or replaces every leaking component within 30 days of detection.

  • Adopting "green completion" practices to capture gas at the wellhead during well completion and prevent its release to the atmosphere.

  • Replacing diesel generators and engines with electric drives, where feasible.

  • Transitioning to compressed air systems for pneumatic control and instrumentation, rather than using natural gas.

  • Installing Vapor Recovery Units (VRUs) to capture and recover gas from certain equipment, rather than venting to atmosphere.

  • Adopting better control devices (e.g., low-bleed or no-bleed pneumatic valves) to reduce methane emissions.

  • Adopting advanced monitoring systems to help identify and eliminate sources of fugitive emissions.

  • Using Infrared (IR) cameras, including optical gas imaging (OGI) and forward-looking infrared (FLIR) cameras to visually identify possible emissions leaks.

The IR camera approach is being used to monitor fugitive emissions on equipment and components such as pneumatic valves, plunger lift systems, storage tanks, compressors, glycol dehydrators and similar components, especially where the equipment or components are geographically dispersed or difficult to access. Infrared cameras, including optical gas imaging (OGI) and forward-looking infrared (FLIR) cameras, use the infrared spectrum to visually identify possible emissions leaks. Equipment exhibiting possible leaks identified by IR cameras are further inspected and components are repaired or replaced, as appropriate.

Enhanced Oil Recovery and Carbon Dioxide Sequestration

Occidental is an industry leader in applying carbon dioxide enhanced oil recovery (CO2-EOR) techniques for increased oil production. CO2-EOR is a key competitive advantage for our company. Operating more than 30 active CO2-EOR projects, Occidental injects 2.6 billion cubic feet per day or 1 trillion cubic feet of CO2 each year, making Occidental the largest injector of CO2 for EOR in the Permian Basin, and among the largest globally. From this CO2, about 40 to 50 percent is newly sourced from Occidental and other commercial suppliers, and the remainder is recycled from producing wells. Over time, virtually all injected CO2 becomes sequestered in the oil and gas reservoir.

Cumulative Stored CO2 - Denver Unit Plant
(in billions cubic feet)

CO<sub>2</sub>

Occidental continues to pursue measures to manage and control greenhouse gas (GHG) emissions - while continuing to expand our operations - and to promote the viability of CO2-EOR and Carbon Capture Utilization and Storage (CCUS) applications in oil and gas reservoirs. Underground injection of CO2, especially as practiced during EOR, is a ready and proven method for the large-scale geologic sequestration of CO2 that otherwise would be emitted to the atmosphere. In fact, the U.S. Government and the Intergovernmental Panel on Climate Change (IPCC) both support CCUS as part of a suite of pathways to reduce anthropogenic carbon emissions. Crucially, the IPCC and International Energy Agency project that most climate change models cannot meet the 1.5-2 degrees Celsius global warming scenarios without using CCUS technologies.

In 2015, the U.S. Environmental Protection Agency (EPA) approved a Monitoring, Reporting and Verification (MRV) Plan for simultaneous CO2 injection and sequestration for Occidental's Denver City unit operations in Texas. This is the first-of-its-kind MRV Plan approved by the EPA and represents an important milestone in the development and commercialization of CCUS technology as an approach for long-term management of greenhouse gas emissions. Since then, Occidental has received approval for a second MRV Plan at an additional CO2 facility. The continuing use of natural sources of CO2 in EOR is essential to support investment in and expansion of infrastructure that can be used in the future to transport and inject CO2 from anthropogenic sources.

Water Management

The production of oil and natural gas, electricity and chemicals requires water, and Occidental understands the importance of managing water resources responsibly. Occidental's water management is designed to conserve and protect water resources in communities where we operate by optimizing the use of low-quality produced water, the recycling of water and limiting the use of freshwater used for drinking water supplies. We routinely assess our water management practices including those with respect to water supply, treatment and discharge, to identify water-related risks and opportunities for improvement. In addition, OxyChem, as an American Chemistry Council Responsible Care® company, is committed to reporting on its water management practices and water stewardship.

Occidental's water management focuses on the unique characteristics of each community and locality of our operations. Through water management practices that include the treatment and use of low-quality produced water, the recycling of water and the limited use of freshwater and drinking water supplies, Occidental works to ensure its water use does not affect the ability of cities, towns, farms and ranches near our operations to secure ample access to water resources. We report water metrics on our major global operations, including total water withdrawals, water recycling and wastewater discharges in the Annual Performance Summary Table.

Before beginning operations in a new location, Occidental's Health, Environment and Safety Management System (HESMS) requires an assessment of potential environmental effects, including those related to water resources. The HESMS encompasses programs, standards and operational strategies designed to conserve natural resources, such as improving efficient use, recycling and reuse of water and the quality of water being treated and discharged to surface water bodies. Occidental considers the longer-term patterns of integrated water resources management, regenerative capacity of ground water and aquifers, population growth/demand shifts and the potential for weather related impacts to evaluate and mitigate the effects of water risks on key operations and the safety and well-being of employees and contractors. When evaluating a new site or asset, this involves evaluating legal and regulatory issues and hydrological yield in terms of the reliability and proximity of other water users during exploration and production activities. Our analysis of water-related risks includes an information-gathering process, environmental due diligence, participation in industry association work groups (for example, IPIECA Water Working Group and the American Chemistry Council Responsible Care® ) and external stakeholder engagement to inform and refine our risk management and strategic planning processes.

Part of Occidental's assessment involves the identification of water-related risks and impacts as well as opportunities. Occidental uses various approaches, including the Global Environmental Management Initiative ®, Local Water Tool (GEMI® LWT) to assess risks and to evaluate water use and discharge at key operations, taking into account factors such as:

  • Physical and climatic characteristics

  • Future physical supply reliability

  • Population growth and industrial growth trends

  • Affected ecosystems

  • Regulatory issues

  • Social context

This process with the use of other industry risk tools, helps us validate the efficacy of existing water-related safeguards and identify new opportunities to ensure the protection of water sources and receiving water bodies.

Upstream Oil and Gas Water Management

The vast majority of water managed by Occidental is co-produced from hydrocarbon reservoirs with oil and natural gas. Occidental separates produced water, which is typically saline, from the produced oil and natural gas, and recycles it in a closed loop by reinjection into mature reservoirs as part of its improved oil recovery (IOR) or enhanced oil recovery (EOR) operations. Generally, since the ratio of water to oil and natural gas extracted increases over time, the extraction, processing, treatment and reinjection of produced water is integral to the design and efficient operation of Occidental's mature oil and natural gas fields. More recently developed oil and natural gas fields are in the primary recovery phase and do not require water injection to produce oil and gas. Occidental strives to use non-freshwater and recycled or reused sources in place of freshwater for both types of operations. Occidental also obtains water from other non-potable sources, seeking to use the lowest-quality water acceptable for operational activities, and it recycles produced water and wastewater wherever feasible.

Throughout its operations, Occidental is increasing the rate of recycling and reuse of water, which decreases our freshwater withdrawals, but also the need for transportation and disposal of water. Occidental has implemented major water treatment, reuse and recycling projects in many locations, including the United States and Oman. Occidental also is developing or enhancing water-related technologies. This includes new approaches for the treatment of produced water and wastewater streams. Occidental continues to evaluate new opportunities for beneficial reuse of water, such as for agricultural and ecological use or ranching operations. The volumes and sources of water required by Occidental vary considerably by local basin, even from well to well. In all operations, Occidental strives to minimize the use of potable water sources and maximize the re-use of produced (flowback) water. In the Permian Delaware Basin, our industry-leading water recycling program achieves more than 90 percent recycling rate at new locations; less than 10 percent of water used for drillings completions are fresh water sources. Since the inception of this program in 2016, 2.7 million barrels of produced water have been recycled. Occidental's operations expect to recycle approximately six million barrels by the end of 2017.

Discharge to surface water bodies requires a permit or authorization that sets water quality parameters consistent with the receiving water body and may specify treatment requirements. Additionally, discharges or runoff from Occidental's facilities are evaluated for water quality under other applicable regulations and company policies. In certain locations, such as in the United States and in Colombia, discharges of treated water from Occidental's facilities support riparian (or riverbank) eco-systems by providing a more consistent flow of freshwater than would otherwise exist.

Water Management for Hydraulic Fracturing

Occidental is committed to public disclosure about its hydraulic fracturing operations. In 2011, Occidental was an early participant in FracFocus®, a website created by the Ground Water Protection Council and the Interstate Oil and Gas Compact Commission to provide for well-specific voluntary disclosure of hydraulic fracturing operations, including the chemical ingredients used in fracturing fluids. In addition to providing a national registry, the website provides factual information about hydraulic fracturing and groundwater protection.

Occidental also maintains on-site Safety Data Sheets (SDS) for all of the chemicals and fracturing fluid additives it uses. Several states also use FracFocus® for regulatory disclosures. As a leading producer of oil and gas in the United States, Occidental remains at the forefront in disclosing hydraulic fracturing, including in jurisdictions where such disclosure is voluntary. Please refer to FracFocus.org if you would like to access the chemical registry or for more information about how hydraulic fracturing works, groundwater protection, chemical use and related regulations.

Occidental is committed to conducting hydraulic fracturing in a manner that does not impact the environment or the communities in which we operate. It is Occidental's practice to avoid diesel fuels, including any of the following chemicals: benzene, toluene, xylene and ethylbenzene (collectively BTEX), in hydraulic fracturing treatments. In certain hydraulic fracturing fluid ingredients, BTEX components may be present in trace amounts. In such cases, the BTEX components will be disclosed in accordance with FracFocus procedures. FracFocus may exclude chemicals protected by claims of protected / confidential information.

Occidental's commitment to using produced water from oil and gas reservoirs and other non-potable sources wherever feasible reduces our demand for freshwater. Produced water, along with varying volumes of drilling muds and fracturing fluids can be collected and reused in a closed loop system. Depending on the volume and chemical properties of the produced water, Occidental and its service companies employ a range of mitigation techniques to manage the potential environmental impacts of drilling materials and flowback fluids. Occidental works collaboratively with its service companies to improve drilling and production techniques to enhance the efficiency of water usage and to minimize the amount of chemicals required for hydraulic fracturing. Several techniques include:

  • Re-use of drilling fluids to the maximum extent; Occidental avoids sending any wastewater to disposal

  • Drilling using closed loop systems in areas with high freshwater tables

  • Within our U.S. drilling operations, Occidental stores drilling muds, other (oily) residuals and flowback water in closed containment systems or tanks for on-site storage and eventual disposal

Regulatory Compliance

Occidental's operations are governed by hundreds of thousands of health, environment and safety related legal, regulatory and permit requirements. We monitor our performance worldwide through an index that tracks reportable events and citations to the appropriate government agency. Reportable events include spills or releases in excess of a level stipulated by regulatory agencies, or a deviation from a regulatory standard or an established permit condition. Citations include notices of violation received from a government agency, as well as initiation of government agency proceedings such as administrative orders, consent orders or agreements, civil actions or court orders to enforce HES laws or regulations. Occidental's high level of performance in our increasingly regulated industry sector reflects the company's attention to ensuring compliance.

Citations and penalty data are influenced by the level of enforcement activity, which varies from year to year. Occidental takes proactive measures to identify, report and resolve compliance issues in cooperation with government agencies, which can also serve to mitigate potential penalties. Discussion of Occidental's spending on environmental compliance can be found in our Annual Report on Form 10-K.


Occidental takes pride in stimulating economic opportunity and growth in the countries where it operates. Sourcing from local suppliers and contractors, offering competitive employee compensation and benefits, producing oil and gas on behalf of host governments, paying substantial taxes and royalties, and investing in valuable social programs all contribute to the development of sustainable economies. For example, in 2016, Occidental contributed approximately $12.1 billion to the U.S. economy through salaries, payments to businesses for goods and services, taxes, and financial returns to investors. Occidental paid more than $1.1 billion in worldwide taxes, including income, production, property and payroll taxes at key operating locations in the U.S., Oman, Qatar and Colombia. Occidental did not receive any significant financial assistance from government.

Occidental actively engages with its key stakeholders in order to understand their interests and concerns and develop mutually beneficial outcomes. This process helps us identify social investment opportunities in key areas such as education, health care, arts and culture, and enterprise development to address local community needs and to support development goals.



Performance Reports