Producers Fight For The Climate

Global scientists and the U.N. have spoken. Governments must follow, but their policies are lagging. Finally, the public, producers and energy-consuming industries must get onboard. Actions will speak louder than alarmist words. Fortunately, some oil companies are already stepping up to the plate.

We’re speaking about reducing methane emissions to mitigate global warming. The U.N.’s Intergovernmental Panel on Climate Change (including 91 scientists) has declared the climate is heating up much faster than scientists warned just a few years ago. The terrible repercussions for human life and economies have already become too evident. The next U.N. climate talks take place in December in Katowice, Poland.

What is the role of the oil and gas industry? How can it sustain a worthwhile business and power the world, while addressing this challenge? After all, demand is not diminished. The Energy Information Administration says world energy consumption will have risen 28% between 2015 and 2040. Most of this growth will come from Asian countries that are not in the Organization for Economic Co-operation and Development (OECD). China and India will account for more than 60% of the world’s total increase from 2015 through 2040.

A day after the IPCC report was released, ExxonMobil Corp. donated $1 million to a group lobbying for a carbon tax, a solution more companies and economists espouse.

In September, before the IPCC’s dire report, the Oil and Gas Climate Initiative (ExxonMobil is a member) pledged “to reduce by 2025 the collective average methane intensity of its aggregated upstream gas and oil operations by one-fifth, to below 0.25%, with the ambition to achieve 0.20%, corresponding to a reduction by one-third.” The group further pledged to reach zero flaring by 2030.

It has also created a $1-billion fund to invest in new, cleaner energy technologies, with a goal to speed up and scale up the way industry reduces methane emissions. And, it inked a partnership with China National Petroleum Corp. to start a similarly sized fund in China.

The Initiative’s members are a roll call of diverse heavy-hitters: BP Plc, Chevron Corp., CNPC, Eni, Equinor, Occidental Petroleum Corp., Pemex, Petrobras, Repsol, Saudi Aramco, Shell, Reliance Industries and Total SA. BP CEO Bob Dudley is chair.

Already, since 1990, U.S. emissions have come down significantly thanks to shale, according to data from the EIA, all while natural gas production has doubled. Another industry group of 48 E&Ps has formed The Environmental Partnership, also meant to collaborate on ways to reduce emissions.

Meanwhile, each company must devise its own time table. ExxonMobil, for one, said it will take measures to reduce methane emissions across its worldwide operations by 15% by 2020. Already, its wholly owned subsidiary, XTO Energy Inc., said it has reduced methane emissions from its operations by 9% since 2016.

In April, XTO began a pilot program at its James Ranch facility in the Delaware Basin in New Mexico, to evaluate new low-emission technologies, which will serve as a model for future development. In 2017, XTO implemented a methane management program to mitigate emissions in its operations. This includes a commitment to phase out high-bleed pneumatic devices over three years, extensive personnel training, research and facility design improvements for new operations.

XTO president Sara Ortwein spoke about these programs recently while addressing the Houston Producers’ Forum more generally. She told attendees XTO has already replaced two-thirds of its high-bleed pneumatic devices.

Prior to joining XTO in late 2016, Ortwein was president of ExxonMobil’s upstream research company. There, she had a front-row seat to witness the role that research and technology development play in unlocking value while drilling for and producing oil and gas.

“It’s not just about blockbuster breakthroughs,” she told attendees.

“It comes in a lot of incremental improvements, day in, day out. Some of those are discovered through research, but many of them come through day-to-day field operations and just incrementally, continually improving our efficiency and our effectiveness from a cost and performance standpoint. So now, I get to see every day how technology is continuing to reshape the shale business, and the tight oil and gas business, allowing us to continually expand the boundaries of what is possible in our industry.”

XTO owns interests in about 50,000 producing wells, collecting reams of data that lead to incremental improvements. It operates in every major unconventional play in the U.S., Canada and Argentina. As it continues to optimize the natural gas operations, it’s growing the oil portfolio as well. A little over a year ago, ExxonMobil acquired about 250,000 contiguous acres in the Delaware Basin from companies that were owned by the Bass family entities.

“The effects of the shale boom on America’s economy are clear; less obvious, but just as important, are the benefits to our environment,” Ortwein said. “When used for power generation, natural gas from shale has been instrumental in reducing CO₂ emissions. CO₂ emissions from U.S. power generation are at their lowest recorded levels since 1988. That’s something I think we can all be proud of.”