We recognize that reducing GHG emissions from our operations is crucial to addressing the dual challenge of meeting the world’s energy demand while responding to the impacts of climate change. In addition, reducing our GHG emissions is essential to maintaining our market position, investment appeal and stakeholder confidence. We decreased our global GHG intensity by approximately 26% in 2020 compared to 2019. This was driven by improvements in gas capture and efforts to coordinate and streamline supply chain infrastructure, which resulted in significant reductions in flaring.
Emissions Reporting Methodology
To determine the overall greenhouse gas (GHG) emissions across our drilling, completions and production operations, we inventory a range of emissions sources, including flares, storage tanks, equipment leaks, engine fuel combustion, liquids unloading, pneumatic devices and electricity usage.
We report our direct emissions (Scope 1) and indirect emissions (Scope 2) as defined by the IPIECA/API/IOGP Petroleum Industry Guidelines for Reporting Greenhouse Gas Emissions on an operated basis. We calculate Scope 1 direct emissions from U.S. facilities using EPA’s Greenhouse Gas Mandatory Reporting Rule. We calculate emissions from our facilities in Equatorial Guinea using the API Compendium of Greenhouse Gas Emissions Methodologies for the Oil and Gas Industry. Our Scope 2 indirect emissions are calculated based on purchased electricity consumption using EPA’s eGrid (Emissions & Generation Resource Integrated Database) emission factors.
GHG Emissions Management
Marathon Oil is focused on continuously improving our emissions management. The company actively works to reduce our environmental footprint and has a history of taking elective and collaborative measures to further our goal, such as actively participating in The Environmental Partnership and its applicable programs. This growing coalition of U.S. oil and natural gas companies represents over 70% of total onshore U.S. oil and natural gas production. Its mission is to continuously improve the industry’s environmental performance by taking action, learning about best practices and technologies and fostering collaboration among stakeholders.
Marathon Oil was an active participant in establishing The Environmental Partnership’s latest flare management program announced in December 2020. Participants have committed to report data to calculate flare intensity, a measurement of flare volumes relative to production. The program will analyze and aggregate this data for its annual report and utilize the insights from the participant’s combined actions and reporting to better understand and identify additional opportunities for the industry to further reduce flaring. In 2020, our flare intensity was 3%, which includes purge gas volumes from the Eagle Ford necessary for emergency flare system operation.
Reducing the GHG emissions intensity of our operations is a central pillar of our climate risk mitigation strategy. We track operational performance through our overall GHG emissions intensity and methane emissions intensity. Intensity metrics are measured as CO2e emissions in metric tonnes per thousand barrels of oil equivalent of all hydrocarbon produced. We believe the intensity rate is a more comparable measurement over time because it takes into account our overall activity level, including portfolio changes from acquisitions and dispositions. We initially prioritized methane intensity given its outsized impact on the environment, but believe that utilizing overall GHG gas intensity as a central key performance indicator provides more opportunities for continued improvement.
In 2020, we focused on mitigating the impacts of gas capture infrastructure limitations related to our North Dakota Bakken asset. In previous years, associated natural gas production outpaced midstream gathering and processing service providers’ ability to align infrastructure development with construction.
Throughout 2019 and 2020, we took concrete actions to expedite delivery of critical infrastructure to aid gas-capture efforts that reduced flaring in the Bakken. This involved working closely with our third-party midstream providers to encourage timely buildout of the infrastructure. We assigned dedicated resources to support our third parties with right-of-way efforts and appointed a company midstream manager in the Bakken whose primary focus is securing access to midstream infrastructure.
In our field operations, we use NGL units to reduce the volumes of gas flared by condensing NGLs from the gas stream that would otherwise be flared due to lack of a gas connection or gas takeaway capacity constraints, and generate electricity to power co-located computing and data centers used for Bitcoin mining. We also developed a gas-capture model to ensure integration of gas-capture requirements into our future development plans.
Our asset team is evaluating potential capital projects in parallel with the Emissions Management Committee’s efforts to identify practices, strategies and projects to lower GHG intensity further.
Our methane intensity increased approximately 22%, from 2.18 tonnes CO2e/MBOE in 2019 to 2.66 in 2020. This rise was driven by production decline and inventory methodology adjustments to improve the accuracy of reporting. To manage methane emissions intensity, we implement the use of emission-free controllers and pumps, vapor recovery towers (VRTs) and units (VRUs) and flares that exceed destruction efficiency minimums where practical.
- ᵃ Greenhouse gas (GHG) carbon dioxide equivalent (CO₂e) emissions are based on carbon dioxide, methane and nitrous oxide from Marathon Oil-operated facilities only.
- ᵇ Permian asset acquired in 2017.
- ᶜ UK assets divested in 2019.
- ᵃ Permian asset acquired in 2017.
- ᵇ UK assets divested in 2019.
- ᶜ Increase in 2020 was due to a counting discrepancy discovered during in-housing of the GHG inventory, and production decline.
- When compared to historic performance, the profile of emissions the profile of emissions sources shifted substantially due to focused efforts to reduce associated gas flaring in the Bakken. Increased percentages in other areas don’t reflect an increase in emissions from that source, rather a composition change over a smaller total emissions base.
Emissions Reduction Strategies
In January 2020, we received a Notice of Violation from the EPA alleging Clean Air Act violations associated with our North Dakota operations. Enforcement action is expected to result in monetary sanctions and injunctive requirements.
While the ultimate outcome to us cannot be predicted with certainty, we believe these enforcement actions will not have a material adverse effect on our consolidated financial position, results of operations or cash flows.
We’re cooperating fully with associated federal agencies, and are aggressively working in a transparent manner to ensure on going compliance with applicable requirements. Specifically, we’re reviewing and enhancing how we design closed vent systems and calculate air emissions. The extent of the injunctive terms and penalty amount are not yet known. We take such allegations and issues very seriously and are focused on enhancing our systems and programs.
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