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While many international oil and gas companies have made
emissions reductions pledges, few have gone as far as Occidental
Petroleum, either in commitments or actions taken to date. And the
same can be said about ADNOC, the national oil company of the
United Arab Emirates, when state-owned companies are
considered.
The top executives of Occidental and ADNOC shared their
perspectives on the challenges of getting to net zero in a
discussion led by IHS Markit Vice Chairman Daniel Yergin on 2 March
at CERAWeek by IHS Markit.
"Our goal is to provide the world with net-zero carbon oil,"
said Vicki Hollub, Occidental CEO. In November 2020, Occidental
became the first large US-based oil company to say it will
eliminate Scope 3 carbon emissions (those created by the customers
for the oil and gas it produces) across its value chain by
2050.
The company's path leverages technology it has developed over 40
years of enhanced oil recovery with carbon dioxide (CO2) injection
into a wide range of carbon capture and sequestration (CCS)
services for oil producers and other industries. And it's
transforming how the company thinks about itself, she said. "We do
not expect to be an oil company only in the next 10 to 20 years. We
expect to become a carbon management company," she said.
Occidental announced last year a partnership with private equity
firm Rusheen Capital Management to create a joint venture called
1PointFive to commercialize technology to remove carbon directly
out of the air. "United Airlines is a partner … because they have a
goal of net zero by 2050," she said.
In February, the partners announced that Worley had been
selected to perform front-end engineering and design of the planned
facility in West Texas. The first train of the facility could
capture 500,000 metric tons/year of CO2.
Occidental also is working on CCS for industrial companies, such
as two ethanol plants in Texas owned by White Energy, a gas-fired
power plant in North Dakota, and it will soon be working with a
steel plant in Colorado, she said.
United Arab Emirates
For ADNOC, pushing forward on the zero-carbon transition is part
of an ongoing commitment, said H.E. Minister Sultan Ahmed Al Jaber,
director general and CEO of ADNOC.
"The truth is … the whole of the UAE has been preparing for the
energy transition for more than 15 years," he said. "We have always
seen the energy transition as a unique opportunity to diversity and
grow our economy."
Also, ADNOC will be propelled in the next few years by the
nation's recovery from the COVID-19 pandemic and the global rebound
in demand for oil, gas, and power. He said the UAE has vaccinated
nearly 50% of its population to date, and its industry is poised to
meet new demand as oil and gas demand globally return to pre-COVID
levels.
"The best way to manage any period of uncertainty is to stay
focused on what we can control: It is, simply, our costs," he said.
Technology and operational innovations in the last five years have
improved UAE's drilling efficiency by 35%, he said.
"We understand the world will need oil and gas for many decades
to come," Al Jaber said. "Our mission at ADNOC is to provide that
oil and gas as responsibly as possible … [to be the] lowest-cost
producer and lowest emitter."
UAE has two advantages as the oil and gas industry decarbonizes,
according to Al Jaber. First, he cited the company's leadership on
environmental issues, such as being the first Middle East nation to
sign the Paris climate treaty. Second, the country's geology gives
it access to some of the lowest carbon intensity (CI) oil and gas
production in the world. Despite being a low-carbon producer now,
ADNOC's goal is to reduce its CI by 25% in the next 10 years, he
said.
Beyond that, the UAE has spread its investments across an array
of energy transition projects. It has three of the largest and
lowest-cost solar projects in the world, he said, and it has
significant investments in more than 30 solar projects around the
world.
ADNOC teamed up with Emirates Steel more than four years ago on
a CCS project. "We can capture 800,000 [metric tons (mt)] of CO2
and have plans to expand significantly in very near future," Al
Jaber said.
Different attitude
Looking ahead, both executives said that they see demand rising
from governments and the public for net-zero carbon operations
— and they support it.
From Hollub's perspective, the key is to take a whole new
attitude when tackling a global problem like carbon emissions.
"When you think about your stakeholder being the world, you do
things differently than you did before," she said.
In the case of Occidental, she said the company's environmental,
social, and governance commitment "becomes an opportunity, an
advantage." By making pledges with real milestones, she said
Occidental welcomes investors to "judge how we are doing."
The demands of decarbonization require scaling-up operations,
and this realization was a factor in Occidental's purchase of
Anadarko Petroleum in August 2019 in a transaction valued at about
$55 billion. The acquisition was designed to give it access to
massive oil and gas reserves in key basins so it could scale up for
more efficiency and to support investments in technologies such as
CCS.
Yet, with all that new acreage, Occidental is careful, Hollub
said. "It's not all about drill, drill, drill," she said. Oil and
gas production must be done "with thought," and with an eye to
complementary opportunities for enhanced oil recovery and CCS, she
said.
For ADNOC, technology is at the heart of the transition as well.
Renewable power and CCS projects are "a natural extension" of its
commitment, Al Jaber said. "We intend to leverage our experience in
the energy spectrum to promote every enabler [technology] of a
lower-carbon future."
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