Joint Ventures Mask Global Oil & Gas Emissions Risk


The world’s major oil and gas companies face significant emissions risks within the industry’s vast web of joint ventures. EDF’s new analysis, The Next Frontier: Managing Methane Risks from Non-Operated Assets, maps the global risks and opportunities to advance methane reduction efforts industrywide.

Methane — the primary component of natural gas and a climate pollutant 84 times more powerful than carbon dioxide over a 20-year period — is responsible for a quarter of global warming happening today.

Methane leaks occur throughout the entire supply chain, with evidence of higher emissions in upstream production. Companies that are acting on methane emissions generally only do so at assets they operate. However, this new analysis reveals that assets operated by other companies account for nearly 50% of oil and gas production for many companies. These non-operated assets (NOAs) can undermine a company’s commitments to reduce emissions. But mitigating this risk, which has gone largely unrecognized until now, represents a major opportunity to advance methane reduction efforts industrywide.

This report examines the NOAs of eight publicly traded companies participating in the Oil & Gas Climate Initiative (OGCI) – BP, Chevron, Eni, ExxonMobil, Occidental, Repsol, Shell and Total. These companies have established themselves as leaders on methane, but the risk of non-operated assets applies across the sector.

 

According to EDF research, an average of 50 percent of the eight companies’ production flows from non-operated assets, with the individual proportions ranging from 26 percent to 65 percent. Oil and gas produced by these NOAs account for fully one-fifth of total world output.

Despite their huge role in company portfolios, NOAs are not currently covered by existing corporate pledges to reduce methane emissions. If companies were to expand their methane reduction strategies to include an approach for non-operated assets, they increase the impact of their methane commitments by three- to five-fold.

The findings are particularly important as both industry, investors and regulators all step up their focus on methane, a potent greenhouse gas responsible for a quarter of the warming we experience today. As stakeholders scrutinize carbon footprints, advances in aerial and satellite monitoring will provide unprecedented visibility into higher emitting projects and geographies. At a time when it is becoming easier to ‘see’ emissions, a comprehensive approach to methane reduction is not only the right thing to do for the environment, but is also essential to earn and keep public trust, which is critical to industry’s license to operate.