Oklahoma City-based Devon Energy Corp. on Monday joined many of its Lower 48 oil and gas peers in establishing environmental performance targets to reduce the carbon intensity of its operations and cut overall emissions from its supply chain.
By 2030 the onshore producer plans to reduce methane emissions intensity by 65%. Flaring intensity is set to decline to at least 0.5% by 2025, with routine flaring eliminated by 2030.
“We know that strong environmental performance is essential to protecting the communities in which we live and operate, managing risk, and generating long-term value for stakeholders,” said CEO Rick Muncrief. “Devon is setting aggressive goals to lower its carbon impact, while continuing to return value to shareholders. We know the need for oil and gas will remain for decades, but as good stewards, it is incumbent on us to improve how we produce and deliver it.”
Muncrief during the firm’s 1Q2021 conference call in May said Devon would limit “top-line production growth from 0-5%.” The company is instead “pursuing margin expansion in earnings through scale and a leaner corporate cost structure, where moderating reinvestment rates…are substantially below that of cash flow. We’re maintaining low levels of leverage to establish a greater margin of safety.”
The CEO last month said, “I personally feel it is time for industry to stop contemplating and talking about the possibilities of a cash-return model and more quickly embrace this necessary change. High returns on capital employed, reduced reinvestment rates and free cash flow generation will determine the winners in this cycle, not the historic behavior of delivering outsize production growth.”
Bringing down emissions also is key, and Devon has set its path to sharply rein in carbon output.
To reduce its flared gas, Devon expects to drive results in a variety of ways. It would continue its pre-production planning, as well as optimizing facility design and operating conditions. In addition, management wants to “assess and deploy beneficial reuse technologies,” while collaborating with oilfield service providers to “prevent and mitigate midstream and downstream constraints.”
A range of “potential actions” to reduce the flared gas would include an expanded leak detection and repair program. Advanced leak detection technologies also would be implemented.
In addition, facilities could be electrified “to reduce the use of natural gas and diesel consumed onsite, including transitioning from gas-driven to air-driven pneumatic controllers.” Ways to optimize facility design also are being eyed to minimize leaks and eliminate common equipment failures.
On another front, Devon by 2050 is aiming to have net-zero greenhouse gas (GHG) emissions as classified under Scope 1 and 2 criteria. Scope 1 includes sources that are controlled or owned by an organization, while Scope 2 covers indirect GHG emissions associated with purchasing electricity, steam, heat or cooling.
“The company’s long history of using advanced technologies to improve efficiencies across the business will be key to delivering on its ambition to achieve net zero GHG emissions for Scopes 1 and 2 by 2050,” executives said.
On another front, completions activities in the most active operating area, the Permian Basin’s Delaware sub-basin, would use at least 90% recycled water. To minimize freshwater use, the company has a dozen water recycling facilities throughout the basin.
Devon said it also would continue evaluating how to constructively engage stakeholders upstream and downstream of operations to improve environmental, social and governance (ESG) performance. By 2023, contractors who perform work on Devon locations are to begin undergoing “annual evaluations to assess their ESG performance in key areas,” management said.
“Our new targets reflect our dedication and commitment to achieving meaningful emissions reductions while pursuing our ultimate goal of net zero GHG emissions,” COO Clay Gaspar, said.
Devon’s Climate Change Assessment Report is to be “refreshed” by the end of the year, outlining progress to address climate-related risks and opportunities.
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