Exxon plan would boost earnings, cut emissions
Exxon Mobil, the nation’s largest oil company, on Wednesday outlined a five-year plan to increase its earnings and grow its dividend while working to lower emissions in support of the Paris climate accord goals.
The Irving oil major said it plans to reduce its greenhouse gas emissions from oil and gas production by 15 to 20 percent from 2016 levels by reducing flaring and methane emissions by 40 to 50 percent by 2025. By 2030, the company plans to eliminate routine flaring, in which natural gas is burned off because there aren’t enough gathering lines or processing facilities.
“We are fully committed to growing shareholder value by meeting the world’s energy demands today and pursuing a technology-driven strategy to succeed through the energy transition,” Exxon CEO Darren Woods said in a statement. “Looking ahead, we’re working to reduce our emissions and develop solutions, such as carbon capture and low-carbon hydrogen, needed to decarbonize the highest emitting sectors of the economy — a critical requirement for society to achieve its net zero ambition.”
The 2015 Paris agreement on climate change calls for limiting global warming to 1.5 degrees Celsius by 2100.
Exxon’s strategy comes as the oil giant faces mounting pressure from governments, investors and environmental groups to abandon its centuryold oil and gas business model to avoid the worst consequences of climate change. The company this week added two transition-minded directors to its board as it contends with a proxy battle from an climateminded activist investor. Also this week, a federal judge levied a $14 million penalty against Exxon for thousands of Clean Air Act violations at its Baytown refinery.
Still, Exxon said it plans to
spend $16 billion to $19 billion this year and as much as $25 billion per year through 2025 on lowcost, high-return oil and gas projects to meet global demand for fossil fuels. These investments are expected to deliver shareholder returns of more than 30 percent, and the vast majority of its oil and gas projects can generate a 10 percent return even with oil at $35 a barrel, Woods said.
Unlike European oil majors that have committed to lowering oil and gas production to combat climate change, Exxon said it will focus on lowering emissions from its fossil fuels production and help other industries lower their emissions.
Exxon last month said it will spend $3 billion on its newly created Low Carbon Solutions business, which looks to commercialize carbon capture technology aimed at capturing greenhouse gases from industrial activities and storing it deep underground. The company has more than 30 years of experience in carbon capture and represented 40 percent of all the carbon captured
last year. The International Energy Agency projects that carbon capture and storage could reduce up to 15 percent of global emissions by 2040.
Exxon said it reduced its methane emissions by 15 percent and flaring by 25 percent in 2020, compared with 2016 levels. The emissions reduction came as Exxon slashed operating expenses by 15 percent and made $6 billion in permanent cuts in response to the historic oil bust caused by the global pandemic.
“Our development of nextgeneration technologies and existing businesses positions us well to capitalize on the growing demand for decarbonization and market opportunities that are increasingly coming together to support lower-carbon energy solutions,” Woods said.