ConocoPhillips is an official sponsor of the 24th World Petroleum Congress (WPC), which will take place from 17–21 September in Calgary, Canada. Here, Bij Agarwal, president of ConocoPhillips Canada, talks to Carbon Economist about the energy landscape as he sees it.
The theme of this year’s WPC is ‘transition’. Can you talk about what ConocoPhillips is doing on this front, in terms of scope one and scope two emissions?
Agarwal: ConocoPhillips’ ‘triple mandate’ is focused on meeting the energy transition pathway demand, delivering competitive returns, and achieving our net-zero operational emissions ambition by 2050. In 2021, we established a Low Carbon Technologies team to support our net-zero ambition, and in 2022, we published our Plan for Net-Zero Energy Transition. In April 2023, we announced an acceleration of our operational greenhouse gas (GHG) emissions-intensity reduction target for 2030 from 40–50pc to 50–60pc, using a 2016 baseline.
We have reduced our methane emissions intensity by approximately 70pc since 2015 and have exceeded our 2025 methane intensity reduction goal of 10pc, achieving a 13pc reduction in 2021 from a 2019 baseline. We set a new medium-term target to achieve a near-zero methane emissions intensity by 2030, and in 2022, based on flaring reductions to date, we committed to achieving zero routine flaring by 2025—five years in advance of the World Bank Initiative’s goal of 2030.
How important are individual and collective reduction targets for oil and gas producers as they approach the transition?
Agarwal: We believe that individual and collective emissions reduction targets—near, medium and long term—will help to keep companies and countries on track as we pursue our net-zero operational emissions by 2050 ambitions. We continue to position ConocoPhillips for the energy transition and are committed to reducing operational (scope one and two) emissions, over which we have ownership and control.
How is the renewed global focus on energy security changing the strategic thinking of firms involved in energy supply?
Agarwal: We believe North America is strongly positioned to continue serving as a stabilising force that strengthens global energy security. However, we need a regulatory atmosphere that promotes investment and the unrestricted trade of natural gas, crude oil and refined products between the US, Canada and Mexico, as well as exports to the world market. This complementary market integration will support North America’s continued economic prosperity, security and global energy leadership as we work to achieve the energy transition.
We focus on remaining resilient and competitive in any scenario by safely and responsibly providing low-cost, low-GHG-intensity oil barrels and natural gas molecules by asset type with continuously improving ESG performance. Our strategy uses a fully burdened cost of supply, including cost of carbon, as the primary basis for capital allocation. Providing low cost of supply also addresses a key component of a just and orderly transition—a secure and affordable energy supply that strengthens global energy security.
In relation to producers in other parts of the world, how well placed are Canadian firms to address the global transition to a low-carbon economy?
Agarwal: Canada has an abundance of low-carbon energy sources and strong natural geology to support carbon sequestration, and the Canadian government has put a price on carbon that enables transparency on decarbonisation investment. All of these factors can help make us a global leader in net-zero investment and the transition to a low-carbon economy.
At ConocoPhillips, we are developing and growing our Canadian assets in a manner consistent with the global transition. The Montney gas field was designed to eliminate the majority of methane emissions by using self-generated electricity and electric equipment rather than traditional natural gas-driven equipment. And at the Surmont oil sands field, we see a credible opportunity for material operational emissions reductions using the CCS pipeline and hub proposed by the Pathways Alliance.
Is the policy regime in Canada providing adequate incentives for producers to reduce their emissions and invest in new technologies, or can more be done?
Agarwal: For Canada to be a world leader in the energy transition, our industry needs to remain competitive with other global producers. We encourage governments to design policy, programmes and incentives that de-risk investment, encourage innovation and enable various pathways to net-zero operational emissions. The emissions reduction projects that have showed early success are using a collaborative model where governments co-invest alongside industry. In the Netherlands and Norway, for example, CCS projects are receiving public support for up to three-quarters of the cost of the carbon-capture investment.
The Investment Tax Credit (ITC) for CCS as well as the clean technology ITC provide a great basis for Canada’s competitiveness, and we believe there are opportunities to strengthen Canada’s competitiveness in attracting investment in emission reduction technologies. In the US, the Inflation Reduction Act (IRA) will provide nearly $370bn of subsidies for clean energy. Canada will need to keep pace if it wishes to remain competitive. It will also need to ensure that the broader fiscal and climate policy environment does not undermine the efforts the government is making to compete with the IRA.
How important are technologies such as CCS and hydrogen in the oil and gas industry of the future?
Agarwal: Hydrogen has an important role to play in decarbonising the global economy. We have identified two types of hydrogen manufacturing that fit into our company’s core competencies and have the potential to grow into a scalable business: hydrogen from natural gas with associated CCS (‘blue hydrogen’) and hydrogen from the electrolysis of water using electricity from renewables (‘green hydrogen’). Technologies for manufacturing both types are rapidly evolving, and, like CCS, we are pursuing various ways to access these technologies and qualify them for use in projects. In Canada, ConocoPhillips is proud to be a member of the Pathways Alliance—its six member companies are working together and with governments to capture CO₂ from oil sands production facilities and store it safely and securely deep underground. Our Pathways colleagues share our ambition to achieve net-zero GHG emissions from oil sands operations by 2050. Together, we are developing an actionable approach to address emissions, while also preserving the more than $3tn the oil sands are expected to contribute to Canada’s GDP over the next 30 years.
Are there any technologies not yet commercialised (other than CCS and hydrogen) that could be a game changer for producers?
Agarwal: Reducing the GHG emissions intensity of our in-situ oil sands operations continues to be a priority for our Canada operations. At our Surmont asset, we are piloting two technologies to optimise the steam-assisted-gravity-drainage (SAGD) process to reduce our steam-to-oil (SOR) ratio. The first technology—warm applied solvent process—replaces most of the steam in the SAGD operation with a light hydrocarbon solvent.
A second technology to optimise the SAGD process is steam additives, which have the potential to reduce SOR and GHG emissions intensity by 15–35pc. These additives, specifically surfactants, can promote oil drainage rates increases while reducing energy losses. This results in improved thermal efficiency, reduced GHG emissions intensity and incremental oil production.