First U.S. oil major sets target for all GHG emissions

Source: By Mike Lee, E&E News reporter • Posted: Thursday, November 12, 2020

Occidental Petroleum Corp. pledged to cut its climate-warming emissions within three decades, setting the most aggressive target yet for a U.S. oil company.

Occidental will eliminate or offset emissions from its own operations by 2040, and it plans to do the same for the products it sells by 2050, Chief Executive Officer Vicki Hollub said on the company’s earnings call this week.

Most of the large European oil producers, including Royal Dutch Shell PLC, BP PLC, Total SE and Equinor ASA, have set some version of a net-zero emissions target.

In the U.S., though, Oxy becomes only the second company to make such a promise, after ConocoPhillips. And Conoco said it only plans to address so-called scope 1 and scope 2 emissions, which come from producing oil and gas and transporting them to market. Occidental’s plan goes further by targeting scope 3 emissions, which include those caused by drivers and other end users of oil and gas.

The two biggest U.S. oil companies, Exxon Mobil Corp. and Chevron Corp., have pledged to lower the emissions intensity of their operations but haven’t set goals to eliminate emissions.

Oxy’s pledge to tackle scope 3 emissions depends on its plans to capture carbon dioxide directly from the air, offsetting the pollution caused by drivers and other customers. The company has been working on the idea for years and intends to start building a large-scale capture plant in the Permian Basin in 2022 (Energywire, Aug. 20).

The company plans to use the captured carbon dioxide to coax oil out of older formations, a process known as enhanced oil recovery.

“We’re very committed to this and excited about it because this, for us, is a win, win, win,” Hollub said on the company’s conference call with analysts. “This not only helps us to help the world by reducing CO2 out of the atmosphere, it will help our shareholders too by lowering our cost of enhanced oil recovery in the Permian and in other places as we dance this out.”

Hollub called it a “contrarian” move, because the European companies are planning to invest in wind and solar power to meet their climate change goals. The company plans to release more details about its emissions plan later this month in a sustainability report.

The discussion came as Occidental reported a $3.8 billion loss for the quarter amid the pandemic and economic downturn.

Occidental already has the biggest CO2-enhanced oil operation in the Permian Basin, and its direct-capture operation will rely on chemicals produced by its OxyChem division.

There’s likely to be demand for the project since the Internal Revenue Service is close to finalizing carbon capture and sequestration tax credits under Section 45Q of the tax code. And the International Energy Agency said carbon dioxide sequestration will be essential to slowing the rise in global temperatures.

The company still hasn’t said how much the direct air capture plant will cost, but Hollub said the cost will go down as more plants are built.

“I think the curve and the pace of improvement for the direct air capture facility would be faster than what we’ve seen in solar and wind,” she said.