Conoco battles global warming

Kay Cashman

Petroleum News

Shareholders are attracted to companies that offer consistent financial returns as well as a progressive position on climate change; specifically, global warming caused by human activities. ConocoPhillips’ business strategy, initiated in late 2016, advanced its vision to be the E&P company of choice for investors and other stakeholders, leading to its being named to the Dow Jones Sustainability Index North America for the 13th consecutive year. That DJSI stock index captures the top 20% of the largest 600 stocks in the S&P Global Broad Market Index based on their environmental, sustainability and governance, or ESG, practices.

In an interview in early June with IHS Markit’s Daniel Yergin, ConocoPhillips Chairman and CEO Ryan Lance addressed ConocoPhillips’ position on both returns to shareholders and global warming. Lance said ConocoPhillips alone has taken 7 million tons of equivalent CO2 out of its business over the last five to six years.

“We’re about trying to reduce … emissions. We don’t need regulations to do it because companies are voluntarily doing it today. We’re trying to reduce the fugitive emissions. We’re trying to reduce flaring and get that down and the CO2 footprint has come down in the United States, despite the fact that we’ve seen this dramatic growth in oil and gas production over time,” Lance said.

“Companies are trying to do the right thing and trying to manage through this transition and improve the sustainability of the product we have. We are going after our Scope 1 and Scope 2 emissions,” Lance said.

“The ESG, the transition discussion, is not going away,” he said. “The world needs to transition to lower carbon fuels over time. But even then, there’s space for oil and gas because it’s so important for cheap reliable energy in all four corners of the world.”

Scope 1 greenhouse gas emissions are direct emissions from owned or controlled sources, such as oilfield production facilities. Scope 2 GHG emissions are indirect, resulting from the generation of electricity, heat or steam owned or purchased by the company. Scope 3 includes all other indirect emissions occurring in a company’s value chain.

Optimistic about future of oil and gas

In a recent virtual talk with Politico Playbook, Sommers expressed amazement that the world still consumes so much oil, despite being 30% off normal in May.

“The world was still demanding 70 million barrels of oil even during the worst economic crisis the world has ever seen,” he said. “The world is going to continue to demand these products … post-pandemic.”

And while Alaskans view ConocoPhillips’ North Slope 750 million barrel Willow discovery as large, the world was using about that much oil in just over a week pre-pandemic.

For the world to stop using oil would require a massive and costly economic shift, which is one reason why solving global warming is so challenging, especially for third world economies in the early and middle stages of growth.

ConocoPhillips’ Chief Economist Helen Currie is one of the people looking to help her company tackle global warming.

In a 2018 interview Currie said ConocoPhillips’ position is that the world’s need to drive down emissions doesn’t mean oil demand will decline.

“We see oil demand continuing to grow for decades into the future - and in our view, it can continue to grow inclusive of climate change policies.”

Political polarization latest challenge

ConocoPhillips is a founding member of the Climate Leadership Council and supports a tax on carbon to address Scope 3 emissions, Lance said. CLC is an international policy institute founded in collaboration with business and environmental interests to develop a carbon dividend plan.