Planet

ENVIRONMENTAL STEWARDSHIP AT OXY

At Oxy, we have a long-standing Health, Safety, Environmental and Sustainability (HSE&S) Policy to seek improvement in resource conservation and recovery, pollution prevention and energy efficiency and to responsibly remediate impacts from acquired and legacy operations or waste management practices in accordance with our HSE&S Principles. We integrate these activities through our Operating Management System and its rigorous policies and procedures that promote compliance with environmental laws, regulations, and internal standards and guidelines. We strive to apply technologies to conserve or reuse resources, design facilities to minimize our impact on communities and ecosystems and work with stakeholders to preserve habitat and biodiversity. Oxy understands its dependencies on the environment need to be managed effectively for business continuity to meet customer needs and community expectations.

Climate Strategy and Net-Zero Transition

Oxy recognizes the significant challenge climate change poses to our society and is committed to be part of the solution. We are leveraging our expertise in carbon management and storage in our plans to achieve net zero and accelerate progress on the global climate goals of the Paris Agreement. We are dedicated to bringing together people, resources, innovative technology and our 50+ year legacy of carbon management to accelerate the multiple avenues in our pathway to net zero, as well as helping others do the same. As the first U.S. oil and natural gas producer to establish net-zero emissions goals for our operations and products (Scopes 1, 2 and 3) aligned with the goals of the Paris Agreement, we’ve taken a leadership role in developing solutions to accelerate a lower-carbon economy. We are focused on advancing Direct Air Capture (DAC) solutions and carbon dioxide (CO₂) sequestration hubs—which we believe are essential to meet the goals of the Paris Agreement while supporting the diverse energy supply that society needs. Our strategy employs four key elements to achieve net-zero emissions in our operations and energy use before 2040 and aiming for 2035 and in our total carbon inventory, including the use of our products, before 2050.

Achieving our climate goals involves a multi-pronged approach to lower both greenhouse gas (GHG) emissions and atmospheric concentrations of CO₂, and we have established multiple interim targets to promote sustained progress toward net zero. Our 2023 Climate Report, Leading the Way in Carbon Management, describes our efforts to develop and deploy revolutionary technologies to help society achieve net zero while meeting urgent needs for energy and essential products. Direct Air Capture (DAC) and sequestration hubs are key exampIes of carbon removal technologies we are advancing that the U.S. government and leading international organizations have called for to meet the goals of the Paris Agreement.

Oxy's Original Net-Zero Strategy diagram from our 2021 Climate Report.

Leveraging 50+ Years of CO₂ Management Expertise

Oxy has among the largest CO₂ management operations in the world. Our subsurface engineering teams have decades of experience characterizing reservoirs for CO₂ storage in our enhanced oil recovery (EOR) operations. This expertise enables us to broaden our portfolio of storage options beyond oil and gas fields to include sequestration hubs using saline formations. Another key differentiator is our comprehensive, enterprise-wide strategy, which is predicated on our 50+ years of experience with integrated carbon management and large-scale carbon separation, transportation, recycling and storage applied in our enhanced oil recovery (EOR) business to offer future opportunities to supply net-zero oil. Oxy is building an integrated portfolio of low-carbon projects, products, technologies and companies that complement our existing businesses, leverage our competitive advantages in CO₂-EOR, reservoir management, drilling, essential chemistry and major infrastructure projects, and are designed to sustain long-term shareholder value as we implement the net-zero transition.

We launched Oxy Low Carbon Ventures (OLCV) in 2018 to leverage our industry-leading experience in managing CO₂ and provide impactful global solutions to advance net-zero emissions. The core of OLCV’s strategy is to design and implement innovative, scalable solutions that help society achieve carbon neutrality and accelerate the transition to a net-zero economy. 1PointFive focuses on commercializing and deploying Carbon Capture, Utilization and Storage (CCUS) and DAC technologies at scale to remove CO₂ from industrial processes and the atmosphere, using the captured CO₂ to help create less carbon-intensive products, like fuels, chemicals and concrete, and injecting residual CO₂ in secure underground oil and gas or saline formations for long-term sequestration to meet our ambitious net-zero goals.

Net-Zero Oil: A Path to Lower-Carbon Products

The United Nations Intergovernmental Panel on Climate Change (IPCC) and the International Energy Agency (IEA) 1.5°C scenarios show 2050 oil demand at up to 50% of today’s levels, specifically for hard-to-abate sectors that will continue to require liquid fuels and for hydrocarbon feedstocks. A key part of our strategy is to establish a supply of lower-carbon oil and gas to meet this need with a decarbonized product. By pairing DAC with our existing infrastructure, we aim to remove an amount of CO₂ equivalent to that emitted during the production and consumption of our products. Alongside our plans to reduce our operational emissions, we believe this can result in net-zero oil and gas, which can then be used to produce lower-carbon fuels and other essential materials— all with a lower-carbon footprint.

Reducing Greenhouse Gas Emissions, Methane and Flaring

Oxy is committed to improving operational performance by implementing practices and technologies designed to reduce our emissions and maximize the use of our natural gas production. We are implementing a diverse range of projects to capture natural gas that has traditionally been flared, and use it to boost energy production, maintain field pressure or sell to third parties.

Oxy’s leading position as the first U.S. producer to endorse international pledges, including the World Bank’s Zero Routine Flaring by 2030 initiative and the Energy Transition Principles, and the first U.S.-based Permian producer to join the UN-sponsored Oil & Gas Methane Partnership (OGMP) 2.0 further illustrates our dedication to reduce GHG emissions and successfully accelerate a lower-carbon economy while meeting the needs and aspirations of a growing, energy-dependent global population.

Oxy is a member of the Oil and Gas Climate Initiative (OGCI), a 12-member CEO-led initiative that focuses on leading the industry’s response to climate change and accelerating action towards a net zero future. OGCI focuses on partnering, capacity building and innovations to target key technologies and areas that can have the greatest impact on emissions reductions. We are also an active participant in emissions reduction programs promoted through multiple associations, including the Methane Guiding Principles (MGP), the Oil and Gas Methane Partnership 2.0 (OGMP 2.0), The Environmental Partnership (TEP), and the World Bank's Zero Routine Flaring by 2030 Initiative. In addition, Climate Investment (CI) is a $1 billion-plus fund to which Oxy and other OGCI members contribute to invest in innovations that deliver capital-efficient decarbonization solutions and drive their adoption through CI’s partner networks to accelerate scaled impact. We are an original signatory to OGCI’s Aiming for Zero Methane Emissions Initiative and also to the Oil and Gas Decarbonization Charter (OGDC), which was announced at COP28.

In 2021, Oxy endorsed the OGMP 2.0 sponsored by the UN Environment Programme (UNEP) to share best practices on methane emissions reductions across our value chain and to pursue OGMP 2.0’s Gold Standard for continued improvement in direct measurement technologies and reporting of methane at our assets in line with OGMP 2.0’s expectations. We submitted our Implementation Plan and Report to UNEP. The December 2023 report by the UNEP’s International Methane Emissions Observatory noted that the “Gold Standard has been achieved on the basis of a credible implementation plan.”

Greenhouse Gas Emissions Estimation and Reporting

Oxy values transparency and discloses key environmental metrics important to our stakeholders, including climate reporting in accordance with the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD). We have adopted operational control as our organizational boundary and 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. While we primarily report our estimated GHG emissions on an operated basis, we include estimates of certain emissions on an equity basis in our Annual ESG Data Summary. 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 (IPCC) and the Greenhouse Gas Protocol. Our 2023 Climate Report, Leading the Way in Carbon Management, contains a letter from our President and CEO, Vicki Hollub, provides details on our corporate governance, strategy, risk management, and metrics and targets under the TCFD framework, and appendices including our key GHG emissions data from 2019 through 2022, associated independent assurance statements, our 14 current GHG goals, an index of TCFD alignment, a timeline of 50+ year legacy of carbon management and a glossary.

GHG Emissions Reduction Goals

Short-term GHG Goals

• Target Date – 2022
  • Scope 1 + 2 (annual) – Milestones in Emissions Reduction Efforts established annually by the Board of Directors
  • Scope 3 (annual) – Milestones in Low Carbon Ventures Projects established annually by the Board of Directors
• Target Date – 2024
  • Scope 1 + 2 (absolute – credit facility KPI) – Reduce Oxy’s combined Scope 1 and 2 CO₂e emissions from worldwide operated assets by at least 3.68 million metric tons per year by 2024, compared to our 2021 emissions
• Target Date – 2025
  • Scope 1 + 2 (carbon intensity) – Oil and gas Scope 1+2 GHG emissions intensity of 0.02 MTCO₂e/BOE
  • Scope 1 + 2 (absolute) – OxyChem Scope 1+2 GHG emissions reduced by 187,990 MTCO₂e (2.33%)
  • Scope 1 + 2 (carbon intensity) – OxyChem Scope 1+2 GHG emissions intensity reduced by 2.7%
  • Scope 1 (methane intensity) – Methane Emissions Intensity <0.25% of operated wet gas produced for market

Medium-term GHG Goals

• Target Date – 2030
  • Scope 1 (absolute) – Eliminate all routine flaring by 2030
• Target Date – 2032
  • Scope 1 + 2 + 3 (absolute CCUS) – Facilitate 25 million metric tons per year of geologic storage or utilization of captured CO₂ in our value chain by 2032 (or other recognized, technologically feasible climate mitigation)
• Target Date – 2035
  • Scope 1 + 2 (net-zero ambition) – Achieve net zero for Scope 1+2 emissions with an ambition to do so before 2035

Long-term GHG Goals

• Target Date – 2040
  • Scope 1 + 2 (net-zero goal) – Achieve net zero for Scope 1+2 emissions before 2040
• Target Date – 2050
  • Scope 1 + 2 + 3 (net-zero ambition) – Achieve net zero for total carbon inventory (including Scope 3 emissions chiefly from the use of our products) with an ambition to do so before 2050
• Target Date – Beyond 2050
  • Scope 1 + 2 + 3 (net-zero ambition) – Total carbon impact through global deployment of CCUS, Direct Air Capture and other solutions to advance a net-zero world beyond 2050

For more details on Oxy’s GHG Goals, see our 2023 Climate Report under “About Our GHG Emissions Estimates” on page 4, “Net-Zero Goals” on page 42, and Appendix III on pages 57 and 58.

Annual Sustainability Goals

We are taking action to advance our environmental goals throughout our operations.

Oxy’s Executive Compensation Committee of the Board of Directors (the Committee) has approved 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 2022, the two annual sustainability metrics included:

1. Net emission reduction efforts that align with our 2040 net-zero goal for our operations and energy use (Scopes 1 and 2), with targets to develop and implement an enhanced Find It/Fix It operational emissions program in international locations, deploy at least 4 emissions reduction projects in the Permian Basin and achieve a 15% reduction in routine flaring from our 2020 baseline and
2. 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 to approve commencement of and commence construction on our first DAC plant (STRATOS), enter into at least 1 carbon capture, transport or sequestration joint venture, enter into at least 3 low-carbon product development transactions, and identify and coordinate external validation of the company’s carbon accounting process, including validation of GHG emissions at one or more operating sites.

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 2022 maintained the weight of sustainability metrics at 30% of the annual cash incentive award.

Highlights of Our Progress

Building a Net-Zero Economy

• Construction 30% complete at STRATOS, the first commercial-scale DAC plant in the Permian Basin, with agreement for BlackRock to invest $550 million in STRATOS on behalf of clients through a fund managed by its Diversified Infrastructure business
• Engineering and design activities ongoing for our second DAC plant at the King Ranch in South Texas
• Multiple agreements signed to sell carbon dioxide removal (CDR) credits from DAC
• Advancing sequestration hub design and sequestration well permitting with interests in more than 400 square miles of pore space access with a capacity to sequester up to 6 billion metric tons of CO₂
• NET Power plant design ongoing for construction of its first utility-scale plant in the Permian to power Oxy’s operations

Key Achievements in Operations

• Reduced carbon dioxide equivalent (CO₂e) emissions in our company-wide operated assets in 2022 by approximately 18% from 2019 and by nearly 4% from 2021
• Reduced methane emissions in our operated assets by approximately 58% from 2019 and 40% from 2021
• Reduced routine flaring by 44% in our global oil and gas operated assets since joining the World Bank’s Zero Routine Flaring initiative from 2020 through 2022, including achieving Zero Routine Flaring across U.S. operations in 2022
• Expanded deployment of key emissions reduction projects, including tankless facilities, compression for tie-back to central processing and gas lift facilities, temporary gas storage during plant or pipeline outages, and methane detection technologies
• Eliminated or retrofitted all high-bleed gas-driven pneumatic controllers found in U.S. onshore operations

Read more on how Oxy is Leading the Way in Carbon Management in our 2023 Climate Report. 

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 more than 50 years of carbon management experience, the diversity of our workforce makes Oxy 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) projects, 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, developing and retaining 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, secure 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 U.S. government, the IPCC 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 reduction. Rapid and widespread deployment of DAC projects, particularly when paired with emissions reduction 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 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 production and 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.

Water Stewardship

Oxy's water stewardship program is designed to conserve and protect water resources in communities where we operate by:

• Optimizing the use of lower-quality produced water
• Recycling produced water and process water from our operations
• Limiting the use of freshwater and potable water in our operations where feasible

Oxy’s water management focuses on the unique characteristics of the regions where we operate. We strive to prevent our water use from affecting the ability of municipalities, ranchers and farmers—and other water users near our operations—to obtain access to water resources.

Oxy has conducted in-depth internal reviews of our water tracking and reporting processes in several key assets, optimized water data gathering and accounting processes and updated our evaluation of water-related risks in our Enterprise Risk Management process. We aim to provide transparent reporting on water management, including providing our company-wide water data. Refer to our responses to CDP on our company-wide water data on estimated withdrawal, consumption, recycling, beneficial use and disposal.

Waste Management

Oxy continuously strives for responsible waste management practices with the goals of safeguarding people and the environment, promoting sustainability and ensuring compliance with applicable laws and regulations.

Our operations implement waste minimization and pollution prevention plans, programs that include tracking of generation, treatment, recycling and disposal of residual materials and wastes. These efforts are designed to maximize the beneficial use, reuse and recycling of natural resources and byproducts and to reduce the amount of waste that we generate and dispose. We have implemented a robust monitoring system to track waste generation, treatment and disposal processes. We promote a culture of improvement in waste management practices by conducting regular audits and assessments, and through active engagement and peer-to-peer exchange of best practices promoted by international industry associations such as Ipieca, the International Association of Oil & Gas Producers (IOGP), American Petroleum Institute (API), the American Chemistry Council (ACC) and the Vinyl Sustainability Council (VSC), as well as non-governmental organizations like EcoVadis.

Spill Prevention

Oxy's investments in Health, Safety and Environmental (HSE) risk management, maintenance and our Asset Integrity program emphasize safeguarding people and the environment. We also invest in inspection activities, projects to upgrade or replace facilities and pipelines in environmentally sensitive areas, especially watersheds and freshwater bodies, and automated control systems to detect, report and mitigate leaks and spills to the environment. We have addressed spill prevention in four primary ways:

• Adopting tankless designs at new facilities and upgrades of existing facilities to ship more fluid directly by pipelines and reduce the potential for fluid releases or emissions at tanks (which has a benefit of reducing air emissions as well as the potential for spills)
• Leveraging automation to expand the monitoring of facilities from central locations, including devices that can detect fluid releases at remote sites
• Periodically reevaluating and updating our Spill Prevention, Control, and Countermeasures Plans and apply best management practices
• Rapidly deploying our spill response teams of employees and contractors to contain and capture liquids and commence soil cleanup.

Biodiversity, Land Use and Remediation

Oxy actively promotes habitat conservation and biodiversity. Conserving natural resources, including biodiversity, wildlife and habitat, is one of Oxy’s updated HSE&S Principles that our Board approved in 2022. We believe that using existing production infrastructure to recover additional oil and natural gas from mature fields provides significant life-cycle environmental benefits—avoiding, in many cases, the need for new surface disturbance, such as new roads, pipelines or storage and processing facilities. Environmental resources, including habitat quality such as vegetation structure, are assessed at potential well locations. We strive to avoid affecting species and their habitats where possible, and where not feasible, minimizing such effects by collocating infrastructure.

Glenn Springs Holdings, an affiliate of OxyChem, manages former operating locations and acquired properties in accordance with our commitment to safeguard people and the environment. Since 2012, Glenn Springs has earned four national habitat awards from the Wildlife Habitat Council, National Wild Turkey Federation, Pheasants Forever and Ducks Unlimited.

Oxy participates in or monitors remedial activities or proceedings in approximately 160 environmental sites on behalf of OxyChem as well as certain oil and gas subsidiaries of Oxy.

Read more on our approach to environmental stewardship and our progress highlights in our 2023 Sustainability Report.

To learn more on the industry-leading safety, environmental and sustainability initiatives at our chemical business, OxyChem, visit OxyChem Sustainability.