It’s happening! U.S.-based oil and gas companies are wisely sharing the ambitions of the public and articulating their role in building the energy future. This trend—which I review in my new book The Gamechanger’s Playbook: How Oil and Gas Leaders Thrive in an Era of Continuous Disruption—both creates cover and foreshadows urgency for your own company’s leadership strategy. For my counsel on your company’s specific options regarding net-zero, reach out to get to work on your strategy or book a strategy talk.
Both of these things are true:
- The world will need oil and gas for a long time.
- We must share the ambitions of the public for a decarbonized energy future
Williams Companies, Range Resources, and ConocoPhillips each have recently articulated a decarbonization strategy. If these three commitments do not convince you a game-changing trend is underway in US oil and gas, I’m not sure what will!
Although sharing aspirations is a key strategy of game-changing leadership, companies do not have to jump in with a huge target out of the gate. In their own way, each of the three companies has taken an approach that is incremental and aligned with its specific values and culture.
Let’s look at the elements common to the three announcements that your company should consider in its strategy.
- Say “climate.” Oil and gas companies cannot dance around the word “climate” any longer
- Williams Companies has a page on their website called Climate Commitment. The language on this page is unequivocal in its proactive engagement on the topic.
- Range Resources entitles Chapter 8 of its 2020 Corporate Sustainability Report “Climate Change.”
- Just last week, ConocoPhillips rolled out their Climate Risk Framework for the Energy Transition, with more detail available here.
- Express a climate-driven, decarbonization, or clean-energy ambition. It is important that companies get started now sharing the public’s ambitions for the energy future. Each of these companies, in their own way, embarked upon an agenda to do just that.
- On Williams’s Climate Commitment page, the first header asserts that Williams is “Committed to our clean energy future” and includes a video from Williams CEO Alan Armstrong. The video is aligned with the company’s personality and culture—emphasizing their history, culture of “doing the right thing,” and focus on creating durable sustainability solutions. Their announcement represents a solid, pragmatic step toward sharing ambition with the public for a decarbonizing energy future. They articulate their goals as “Elements of a net-zero approach.”
- Range Resources announces its aim for 2025 is net-zero operational greenhouse gas emissions.
- ConocoPhillips states that its “Climate risk framework includes targets and actions consistent with the aims of the Paris Agreement.”
- Set goals. Under the umbrella of the ambition, companies can then set goals to show that they are serious. There’s a lot of room for incrementalism here for companies not ready to take the plunge.
- Williams Companies set emission reduction goals of 56% absolute reduction from 2005 levels in company-wide greenhouse gas (GHG) emissions by 2030, putting the company on a trajectory to be net-zero carbon emissions by 2050.
- Range Resources articulated the goal of achieving net-zero direct, operational GHG emissions and reducing GHG emissions intensity by 15% relative to 2019 levels by 2025.
- ConocoPhillips set the goals to reduce operational emissions by 35 to 45% by 2030 and reach net-zero Scope 1 and Scope 2 emissions by 2050.
- Show your work. Each company describes their emissions reduction work now underway—which has more impact when paired with the ambition-sharing goals they have laid out above.
- Williams articulates short-term emission reduction strategies such as reducing methane through their Leak Detection and Repair (LDAR) program, blowdown minimization operational practices, and increasing renewable power generation to their operations.
- Range Resources identifies new emission reduction strategies deployed in 2020, including reforestation offsets, LDAR surveys, enhanced environmental data efficiency and tracking, and improved emission measurement methodologies.
- ConocoPhillips states that they have reduced emissions intensity within operations by nearly 65% since 2015.
- Invest in R&D. As with showing your current emissions reduction efforts, showing your investments in R&D will carry more weight with stakeholders under the umbrella of decarbonization commitments. This is true for both current innovation efforts and new investments that will be required to meet new targets.
- In addition to exploring expanding their renewable natural gas (RNG) and solar energy projects, Williams is also looking into carbon capture, synthetic gas, and using hydrogen as a fuel source.
- Range Resources has publicly announced its technology investments to reduce operational emissions. These steps include electrifying operations as well as establishing carbon offsets through reforestation and forest management.
- ConocoPhillips is conducting a feasibility assessment across three areas that can reduce the emissions intensity of operations: carbon capture and use, hydrogen, and alternative energy technologies.
It matters because:
Connecting with a skeptical public requires changing the nature of the conversation. Investors, regulators, and community stakeholders want to engage with companies that are part of the future, which means part of the climate solution.
Don’t make these mistakes:
It has been easy for North American companies to scoff at the “new energies” strategies of the international majors—but leaders do this at their own peril. Williams, Range Resources and ConocoPhillips each demonstrate a unique pathway that shares the public’s ambitions for the energy future.
Seize the day: Oil and gas leaders of companies of every size must be ready to articulate their role in the energy future.
- Speak climate fluently. Your investors and key stakeholders are talking about climate every day. Your strategy needs to reflect a fluency in this conversation.
- Express an ambition for the decarbonized energy future. Your company doesn’t need to articulate a radical new strategy. You do need to clearly state your role in a decarbonizing energy future. Do it in a way that is authentic to your company’s values and culture.
- Set some new goals. These can be emissions reductions targets, investments in innovation, or undertaking internal studies. They need to be aligned with your energy ambition—and must push the envelope to take your company into a changing energy future.
WIlliams, Range Resources, and ConocoPhillips have charted game-changing steps forward—pragmatic and incremental net-zero strategies that align with their companies’ values and culture. Your company can chart its own course, too. Need help figuring out how? Reach out.
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