Identifying, funding and implementing projects that reduce operational GHG emissions is part of how we intend to deliver our 2050 net-zero ambition. To drive accountability for the emissions that are within our control, we are developing a Net-Zero Roadmap to plan, allocate resources and report each business unit’s progress toward achieving our ambition through a pipeline of cost-effective projects with short, medium and long-term emissions reduction targets.

Net-Zero Governance 

Working with a leading environmental, social and governance (ESG) consultancy firm we are designing a Net-Zero Governance Framework, with the goal of identifying how to leverage and optimize our process, system, organizational and governance structure to align and drive the company along a net-zero pathway. Internally, a net-zero governance team is developing a management system to direct how we will work collaboratively to implement the company’s net-zero ambition.

Objectives include:

• Defining and delivering a credible pathway to net-zero operational emissions
• Undertaking appropriate monitoring and assurance to track reduction efforts
• Fostering business unit alignment, accountability and collaboration
• Achieving business unit and corporate milestones
• Driving cultural transformation with enterprise-wide ownership of the net-zero ambition
• Establishing a governance structure adaptable to changing demands

Net-Zero Roadmap

The Net-Zero Roadmap is the primary mechanism for how our planning translates to action and prioritizes near-term Scope 1 and 2 emissions reduction efforts by identifying and executing viable abatement options. It also details how we intend to fulfill our longer-term commitments through planning, fostering technological advancements and partnering with peers and external stakeholders to explore pilot projects that could abate challenging operational emissions.

Each of our operating business units is developing a roadmap to describe its strategies and plans to help drive the company toward realizing our net-zero ambition. When rolled up, the roadmaps will inform our technology development, operations and engineering teams, along with our development staff, where to direct efforts today, while allowing us to forecast and prioritize for the needs of the future.

The company-wide Net-Zero Roadmap will also:

• Empower each business unit to progress initiatives specific to its needs
• Leverage the marginal abatement cost curve (MACC) process to prioritize projects
• Promote collaboration between business units on projects which are scalable or transferable
• Design new facilities to reduce emissions
• Prioritize pilot projects and tests of emerging technologies to address our most significant needs
• Enhance the tools and processes we use to prioritize, execute and track our emissions reduction efforts

Marginal Abatement Cost Curve (MACC)

During our annual budget planning process, we review and rank potential greenhouse gas (GHG) emissions reduction projects using a MACC. The MACC plots the break-even cost of carbon dioxide equivalent (CO₂e) reduction, considering capital and operating cost, and the potential increased revenue for each project against the cumulative GHG emissions that can be reduced.

Project funding is based on a number of criteria including:

• Cost: Cost per metric ton of CO₂e abated
• Sustainable Reduction: Reduces emissions permanently
• Scalability: Can be scaled up to provide additional emissions reductions
• Technology Readiness: Systems and processes proven to reduce emissions by the forecasted amount 
• Repeatability: Can be repeated in other business units

Using discretionary corporate funding, we support projects that are expected to provide the greatest overall contribution in reducing our GHG emissions or that anticipate forthcoming regulatory changes. Corporate funding allows projects to be prioritized company-wide. Once a project is approved, the business unit receives a supplemental capital allocation for each project and has accountability to deliver the project. The projects approved for 2022, some of which are multi-year projects, could represent a recurring annualized reduction of approximately one million metric tons of CO₂e, if successful. These include production efficiency measures, methane and flaring intensity-reduction initiatives and asset electrification projects, specifically:

• Flaring: Incorporate vapor recovery units at facilities; recovering gas to be sold
• Methane: Switch instrumentation from gas-driven to air-driven pneumatics; modifying facilities to reduce gas venting
• Electrification and combustion: Reduce combustion needs on drilling and completion activities; electrify operations and pursue low carbon sources of electricity
• Operational efficiencies: Streamlining facilities, tanks and equipment; improving waste heat utilization, insulation and power distribution