Oil, gas companies angle for role in carbon neutrality
Macpherson Oil Co.’s tweet Tuesday was enough to pause even the most cursory scroll.
Beneath a photo of solar panels powering the company’s offices off Round Mountain Road read a curious sentence: Santa Monica-based Macpherson is on a quest to become carbon-neutral.
Come again? An oil company aiming to fully offset its own greenhouse gas emissions?
Evidently so. And it’s not just Macpherson.
Members of the local oil and gas industry say they’re ready to ramp up investment in fighting climate change, if only the state will work with them.
Some of the effort has already begun, in renewable fuels production and lower- and zero-carbon energy. The industry points to promising opportunities ahead in hydrogen energy and carbon management that align with the state’s climate goals.
GETTING THERE
What’s more, the industry is viewed as having unique resources — infrastructure, technological expertise and the right workforce — to play a big role in the Golden State’s pursuit of net carbon neutrality by 2045.
Associate Director Yulia Raichman with the United Kingdom-based global consulting firm Turner & Townsend Partners LLP sees oil companies gradually shifting to production of sustainable jet fuel and renewable diesel and gasoline, often by repurposing existing petroleum refineries.
Even as electric vehicles put a dent in demand for gasoline, Raichman predicted there will always be some need for petroleum refining, if only to make material for consumer goods ranging from pharmaceuticals to electronics. She expects to see more movement toward greater refining efficiency and lower emissions as the industry transitions irreversibly to a sustainable future.
A primary challenge she sees is making green hydrogen and other renewable fuels cost-competitive.
“This will require both technological advances and government incentive policies to be successful,” she wrote. “But, with a substantial amount of the infrastructure and the specialized workforce already in place, major (oil and gas) companies can leverage California’s economic incentives to make the transition.”
Local oil producers, when asked about the role they expect to play in California’s transition to carbon neutrality, said they look forward to making big investments that will go a long way to offsetting, reducing or burying greenhouse-gas emissions.
Chevron Corp. said it believes the future of energy is lower carbon. The company stated its support for the Paris Agreement, adding that most published outlooks conclude fossil fuels will remain an important part of the energy system for years to come, even as energy sources shift to ever-lower carbon intensity.
Recently Chevron announced plans to invest more money in growing lower-carbon energy businesses, including renewable natural gas, diesel and aviation fuel.
It expects to produce more hydrogen to supply power, industrial and heavy-duty transport customers, and it outlined plans to partner on regional hubs for removing carbon from the atmosphere or industrial streams and burying it deep underground.
Between now and 2028, it said, Chevron will invest $10 billion in such efforts, a fifth of that just to lower the carbon intensity of its existing operations. Some of that will be invested in California — if the state cooperates, it said.
“We hope California policymakers will partner with us in making these investments in our state,” the company said by email. “This would help our state make progress toward achieving its climate goals while putting more people to work, including in high-paying union jobs.”
URGENT MISSION
It remains to be seen how closely the administration of Gov. Gavin Newsom will be willing to work with an industry on which it has clamped down ever tighter in recent years.
A spokesperson for the governor’s press office said by email the state is proud to be an international leader in the fight against climate change but that more work lies ahead.
The administration said it wants to “continue working with all parties who recognize the urgency of this moment and are committed to doing more.”
In apparent reference to Kern’s B3K Prosperity economic development collaboration, which has identified carbon management and low-carbon energy as potential generators of high-quality local jobs, the email said the administration will give communities tools to plan and leverage regional assets to “capitalize on” the state’s transition.
The email pointed to California’s $600 million Community Economic Resilience Fund, which B3K leaders see as potentially offering money that could help reduce the county’s dependence on oil-related property tax revenues and employment.
Among the local oil producers most outspoken about tackling climate change is California Resources Corp.
It has proposed multibillion-dollar projects that would either suck carbon directly out of the atmosphere and bury it or remove it from the emission stream of a power plant it owns and operates in Elk Hills.
Santa Clarita-based CRC also has a list of sustainability goals it hopes to achieve by 2030, such as recycling more of its wastewater, integrating more renewable energy into its oil and gas operations and cutting its methane emissions.
BOTH WAYS
A spokeswoman for Bakersfield-based oil producer Aera Energy LLC said the company can help the state achieve its climate goal but it emphasized the problem’s complexity requires cooperation on the part of legislators, regulators, consumers and industry.
Spokeswoman Cindy Pollard said balancing public health and environmental protection with the needs of California’s economy will require permitting stability under already stringent regulations.
“Permits equal jobs, jobs equal production, production provides an economic boost through taxes and the funding companies need to invest in multi-year low-carbon technology,” she said.
Emphasizing Aera’ interest in carbon capture and storage, Pollard said all indications are that oil and gas will have to be part of California transition to carbon neutrality. Efforts must be made to preserve valuable infrastructure and avoid premature production slowdowns she said will only lead to greater imports of foreign oil.
“At Aera we understand the urgency around climate change,” she said, “and we want to work with the state and others to find viable solutions so we can meet the greenhouse-gas reduction goals in California.”
On Tuesday Southern California Gas Co. released a study exploring the complexity of meeting California’s 2045 carbon neutrality goal.
It concluded electricity and natural gas do not compete but complement each other’s strengths.
Gas remains an affordable, resilient, proven technology, it said, adding that existing gas infrastructure can be leveraged to deliver hydrogen and support carbon storage.
The company said in a news release it aims to reach net-zero greenhouse-gas emissions in everything it does by 2045.
“As the nation’s largest gas utility, we are setting ambitious goals so we can lead the energy transition,” it said.