Benchmarking Emissions Targets Must Address Many Questions

Companies have announced plans to achieve net zero emissions by a certain year — usually 2040 or 2050. That prompted Wood Mackenzie to analyze emissions performance for a handful of large independents, Diamondback Energy, Occidental Petroleum and Pioneer Natural Resources amongst them.

“It’s too early to say which companies are performing best and which are likely to achieve their emissions goals,” Ryan Duman, research director, US Lower 48 upstream research, said during the monthly Oilfield Strong webinar presented by OTA Environmental Services.

“Some companies talk net zero emissions and have aggressive targets, but it’s hard to make out how they’ll reach those targets. It’s not to say it won’t happen, but you’re looking at lots of questions: What will it cost? What ways do you see a path forward? How does it get implemented?” he continued.

“There is also a focus on different types of emissions,” said Duman, noting there are lots of efforts to address venting but also efforts into mitigation. “There is a wide spectrum of targets as companies seek to show stakeholders and investors that are serious about targeting emissions,” he said.

“Talking about targets and that spectrum, it’s encouraging to see but the risk when we talk to clients is they don’t know which target — net zero or scale back — or what timeframe is going to achievable, and what the penalties are if they miss.

The part that spooks some people, especially in planning, is there’s real dollars in the plan — hundreds of millions to billions, with the goalposts changing. They hate to tell investors they’ve been chasing the wrong metric and spent all that money on actions that won’t get them to net zero. You have to be careful about what the right target is and the way to do better,” Duman said.

Rather than setting goals 20 or 30 years out, he suggested setting closer goals — meeting gas capture targets in the next few years. “See what you’re doing in the next five to 10 years, always check that timeframe,” he advised.

Capital markets are helping drive companies to set those targets, but companies are also looking to avoid policy risks by being prepared for new regulations, according to Duman. Smaller companies need to have similar ambitions, he said.

While they may not own carbon capture and storage projects like the larger companies, smaller companies can make their operations more efficient and improve in areas like water handling as ways to improve their environmental performance.

“Regardless of size, there will be a big push for electrification of operations and removing emissions, especially through logistics — removing truck traffic and less diesel consumption for generators,” Duman said.

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