Oxy's environmental stewardship practices and performance focus on climate change, energy use and greenhouse gas emissions management, biodiversity and habitat conservation, and water and waste management.
Greenhouse Gas Emissions Estimation and Reporting
Oxy values transparency and discloses key environmental metrics important to our stakeholders. We have adopted 2019 as our baseline since it was the year that Oxy acquired Anadarko Petroleum Corporation and the year before Oxy established our net-zero goals. We report our estimated GHG emissions from operations for 2019 and 2020 on an operated and operated-equity basis in our Annual Performance Summary Table. Our estimates include CO2, methane (CH4) and nitrous oxide (N2O), with CO2 constituting the majority of our GHG emissions. Oxy uses industry standards and practices for estimating emissions, including applicable guidance from the U.S. Environmental Protection Agency, American Petroleum Institute (API), IPIECA, the Intergovernmental Panel on Climate Change and the Value Reporting Foundation.
Progress Toward Targets
We are taking action to advance our environmental goals throughout our operations, including:
- Annual Sustainability Goals: Oxy’s Executive Compensation Committee of the Board of Directors (the Committee) has established annual climate-related goals since 2018 that directly impact the incentive compensation of Oxy’s executive officers, focused on advancing carbon capture, utilization and storage projects to meet our net-zero goals. For 2021, the two annual sustainability metrics included:
- Net emission reduction efforts that align with our 2040 net-zero goal for our operations and energy use (Scopes 1 and 2), with targets such as deploying at least three technologies to advance methane emission surveys and emission controls, retrofitting at least 900 high-bleed pneumatic controllers, and expanding hydrogen recovery for on-site fuel use at a key OxyChem facility; and
- Carbon ventures and reduction projects that promote near-term progress toward our 2050 net-zero ambition for our total carbon inventory, including the use of our sold products (Scope 3), with targets such as maintaining the first commercial-scale Direct Air Capture project on track for 2022 Final Investment Decision, entering into at least one joint venture for carbon capture, transport and/or sequestration, and entering into at least three low carbon product development transactions.
The Committee identifies annual targets to advance our sustainability metrics and evaluates each year’s performance in accordance with the Executive Incentive Compensation Plan, and the results are reported in Oxy’s annual proxy statement. In response to shareholder input, the Committee in 2021 increased the weight of sustainability metrics to 30% of the company performance portion of the annual cash incentive award.
- Air Emissions Mitigation: Oxy’s Find It, Fix It, Measure It and Predict It ("Find It/Fix It") program provides our operations and maintenance personnel and air quality professionals with additional resources to expedite detection, reporting and repair of emissions sources, improve measurement and estimation of methane releases, and perform root cause analysis to prevent recurrence. On a parallel track, we have established an Emissions Technology Team to evaluate and pilot remote sensing technologies that can identify methane emissions rapidly and over a broader geographic area to assist in directing our Find It/Fix It crews to areas with potential emissions.
- Flaring: An extended gas gathering system in our New Mexico operations facilitates the transfer of sales gas to multiple third-party midstream companies to reduce flaring during maintenance events or unplanned outages at third-party processing plants and pipelines. We are taking action to reduce flaring in accordance with the World Bank’s initiative for Zero Routine Flaring by 2030, and we have already achieved our zero routine flaring goal in our DJ Basin operations.
- Methane Capture: We retrofit existing facilities and design new facilities to reduce methane emissions, such as replacing certain flares with vapor recovery units at well sites and tank batteries. As a member of the API-sponsored Environmental Partnership and OGCI, we set a short-term target in 2020 to reduce methane emissions below 0.25% of our total produced and marketed natural gas volume by 2025. We have also endorsed the Oil & Gas Methane Partnership 2.0 to collaborate further on methane reductions across our value chain.
- Energy Use and Efficiency: In 2019, Oxy commissioned Texas’ first-of-its-kind solar facility to directly power an enhanced oil recovery field operation in the Permian Basin. We are also an investor in NET Power, whose revolutionary natural gas power technology can generate zero-emission electricity while utilizing and capturing CO2.
- Co-Generation: OxyChem has continued to optimize our highly efficient combined heat and power (or cogeneration) facilities, which supply electricity and steam to several of our chemical plants and supply surplus power to the grid, further reducing our emissions by 18,500 tons of CO2 equivalent per year.
- Water Stewardship: Water is central to Oxy’s value chain. OxyChem is a leading manufacturer of water disinfection products used by public agencies across the globe to deliver clean drinking water to protect public health, and its award-winning partnership with Water Mission has supplied clean drinking water to over 1 million people in vulnerable communities. Oxy also co-produces saline water with oil and gas from underground formations, and we view that water as a resource. We have invested in central water treatment and recycling facilities in New Mexico and Texas that enable us to significantly reduce both our need for fresh water by millions of barrels per year and our disposal of surplus produced water. Oxy’s focus on water treatment, recycling and conservation helps to sustain fresh water resources for cities, towns, farms or other water users.
Supporting a just transition to a net-zero economy
Oxy has a robust pathway to net zero to meet the goals of the Paris Agreement. Importantly, we believe our pathway supports the four key stakeholder groups of the Just Transition – energy workers, energy-producing communities, communities susceptible to climate impacts, and low-income consumers. We strive to do so in the following manner:
- Energy Workers: With nearly 50 years of carbon management experience, the diversity of our workforce makes Oxy uniquely well-suited to achieve net zero before 2050 for our total emissions inventory. Oxy’s workforce is essential to our net-zero pathway and includes employees who specialize in geoscience, drilling, well servicing, reservoir engineering, major construction, chemical processes, operations and maintenance, environmental, IT, regulatory, land, supply chain and accounting. Oxy’s pathway will require the skills, training and initiative of our workers to build, deploy and operate Direct Air Capture (DAC) and Carbon Capture, Utilization and Storage (CCUS), and to produce low- or zero-emissions power, fuels, plastics, building materials and feedstocks. As reflected in our Diversity, Inclusion and Belonging initiative and our active recruiting and internship programs, Oxy invests in hiring and developing a diverse workforce for the future across our upstream oil and gas, midstream, chemicals and low carbon businesses.
- Energy-Producing Communities: Oxy continually strives to maintain our reputation as a Partner of Choice® in the communities where we operate. Oxy’s pathway to net zero will leverage our substantial oil and gas technologies, property holdings and infrastructure – from wells and pipelines to CO2 recovery plants, electricity distribution systems and water recycling facilities – to advance safe, permanent handling and storage of captured anthropogenic or atmospheric CO2. Consequently, our focus on a net-zero transition provides for and assumes continued local investments in energy-producing areas that sustain community benefits such as prosperity, public health and safety and enhanced environmental quality.
- Communities Susceptible to Climate Impacts: The Intergovernmental Panel on Climate Change and other leading organizations have identified the need for large-scale carbon removal from the atmosphere to avoid global temperatures rising more than 1.5 to 2° Celsius. To achieve the necessary scale of carbon removal, deployment must begin in the near term. Susceptible nations and communities have called for rapid action. Oxy’s pathway includes essential near-term actions, such as DAC, that can begin removing CO2 from the atmosphere concurrent with accelerating emissions mitigation. The Transition Pathway Initiative (TPI) has recognized Oxy as one of three oil and gas companies with net-zero plans aligned with TPI’s 1.5°C pathway. Rapid and widespread deployment of DAC, particularly when paired with emissions mitigation technologies in which Oxy has invested like NET Power, can slow the increase of, and ultimately help to reduce, CO2 concentrations in the atmosphere to mitigate climate change.
- Consumers: A successful net-zero transition must meet daily human needs, particularly those of disadvantaged communities, for reliable energy and essential products. In addition to Oxy’s energy production, OxyChem produces the basic building block chemicals that provide all of us with clean drinking water, and the essential feedstocks for pharmaceuticals and nearly every home-based product that consumers use every day to enjoy a better quality of life. Oxy’s pathway to net zero through DAC, CCUS and low carbon energy and products focuses on capturing more CO2 than is emitted from the use of our products. By producing low-carbon or net-zero power, fuels, plastics and other products, the technologies we are deploying can help multiple industry sectors to reduce their carbon footprints while they continue to manufacture and deliver affordable essential goods and services to consumers across the globe.