Throughout 2021, a year of challenge and transformation, our sustainable development (SD) priorities remained a foundational element of our long-term value proposition. Environmental, social and governance (ESG) performance, including climate risk management, remained a strong focus of our ongoing engagements with a wide range of external stakeholders including the financial sector, policymakers and residents in the areas in which we operate.

ConocoPhillips concluded 2021 with an enhanced portfolio after completing two transformative acquisitions. We successfully integrated Concho Resources and Shell’s Permian assets into the business, while navigating one of the most challenging eras in industry history, one marked by a global pandemic and accompanying economic and energy demand downturns. As the world economy recovered, we continued operating safely, addressed our SD priorities and advanced our climate risk plans and actions.

This performance demonstrated that our business model – focused on peer-leading distributions, balance sheet strength, disciplined investment and ESG leadership  – positions us to adapt and compete across business cycles, geopolitical events and the evolving energy transition.

Meeting the central aim of the Paris Agreement to respond to the climate challenge is a worldwide imperative for which governments and companies alike have adopted net-zero ambitions. We intend to play a meaningful role in this vital effort by fulfilling our Triple Mandate to responsibly meet energy transition pathway demand, deliver competitive returns on and of capital and achieve our net-zero operational emissions ambition. This mandate represents our commitment to create long-term value while enhancing climate protection and accelerating our contribution to the energy transition.

We’ve developed and published a detailed Plan for the Net-Zero Energy Transition that describes how we will manage the transition’s associated risks and emerging opportunities. Under this plan, we intensified our efforts to reduce our Scope 1 and 2 emissions, with an ambition to become net-zero by 2050. Steps taken include:

• Increasing our previously announced operational GHG emissions intensity reduction target from 35-45% to 40-50% by 2030 on a gross operated basis.
• Broadening this goal to include non-operated net equity investments.
• Setting a further 10% reduction target for methane emissions intensity by 2025 from our 2019 baseline, building on the 65% reduction achieved since 2015.
• Aiming for zero routine flaring by 2025, five years earlier than the World Bank’s goal.
• Advocating for a U.S. carbon price that would directly reduce consumer energy demand and thus end-use (Scope 3) emissions.
• Expanding our scenario planning to include multiple alternative energy transition pathways that test our strategy’s resilience to climate-related risk. Incorporating into our capital allocation process a fully burdened cost of supply, including cost of carbon.
• Refocusing our portfolio on assets with the low cost of supply and low emissions intensity that will be essential in meeting energy transition pathway demand.

Our vital role in the energy transition will also include capturing potential business value through a recently formed Low Carbon Technologies organization. This team is tasked with developing a companywide Net-Zero Roadmap for Scope 1 and 2 emissions, understanding the new energies landscape and prioritizing possible future investments in low carbon energy solutions. Initially identified opportunities include carbon capture and storage and hydrogen production and use.

This year’s report also highlights environmental stewardship efforts of our business units. Our water management achievements included using more than 54% recycled produced water as source water in the Permian Basin and reducing freshwater withdrawals by 25% at APLNG in Australia. Our biodiversity management efforts in our Lower 48 business unit included maintaining voluntary conservation agreements on more than 500,000 acres in New Mexico, Oklahoma and Texas, and the creation of a biodiversity mapping tool to inform stakeholders of our development strategies. We strengthened community relationships, and enhanced community sustainability by utilizing local service and supply providers.

Our ESG leadership efforts include constructive, meaningful dialogue that enhances our understanding of stakeholder priorities and concerns and enables us to collaboratively address them. ConocoPhillips remains committed to engaging with our stakeholders as expectations rise and challenges continue. We intend to meet our SD priorities and respond effectively to evolving risks and opportunities that arise throughout the energy transition. 

Ryan Lance, Chairman and Chief Executive Officer
June 2022