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.
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.
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.
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.
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, Pathway to Net-Zero 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 Pathway to Net-Zero include:
Modeling carbon prices and related financial impacts in capital spending plans for major projects
Testing business plans under various scenarios
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.
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.
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.
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.
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.
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.
