ExxonMobil faces a fresh challenge from activist shareholders next year, even after unveiling a suite of climate goals, including a target to zero out operational emissions from its key Permian basin assets by 2030.
Shareholders are likely to ignore chief executive Darren Woods — who has called for "calm heads and a thoughtful approach" to tackle the energy transition — and instead press the biggest US oil company to embrace more sweeping green targets. Dutch activist group Follow This has already proposed a shareholder resolution urging ExxonMobil to lay out medium and long-term goals to slash emissions from operations and, crucially, the use of its products by customers.
Behind the campaign lies concern that ExxonMobil is still not taking the climate crisis seriously enough, despite losing a quarter of its board earlier this year to a successful proxy battle over its perceived failure to plan for a low-carbon future. The Coalition United for a Responsible Exxon, which says it represents more than 135 institutional investors with $2.5 trillion in assets, recently gave the firm a ‘D-' grade on a ‘mid-term' report card. The group called for Woods to be replaced and the role of chairman and chief executive to be split. ExxonMobil says it actively engages with shareholders and will reply to proposals "through our ongoing conversations and when we file a definitive proxy statement".
The clamour for the company to move more quickly on the climate front comes after it recently expanded carbon intensity reduction targets, and declared a net zero ambition for Scope 1 and 2 emissions from its Permian operations by the end of the decade. To meet this target, ExxonMobil plans to electrify operations, invest in methane mitigation and detection technology, eliminate routine flaring and use offsets.
Efforts to cut its carbon footprint in the Permian shale basin of west Texas and southeast New Mexico may include wind, solar, hydrogen and natural gas with carbon capture and storage. ExxonMobil produced 500,000 b/d of oil equivalent from the Permian at the end of the third quarter, over 40pc of its US net output, reflecting the growing importance of the top shale play in its overall portfolio.
The major aims to reduce flaring in the Permian by 75pc by the end of this year compared with 2019, and seeks to eliminate all routine flaring in the Permian by the end of 2022. It has joined forces with climate technology firm Scepter to deploy satellite technology to track and detect Permian methane emissions in real time.
Case for the Defense
The Environmental Defense Fund (EDF) has just announced that, in the Permian overall, significant rates of methane are still escaping from about 40pc of the 900 sites it inspected in a recent aerial survey. "Exxon's commitment to end routine flaring across its Permian operations by the end of 2022 demonstrates the feasibility and cost-effectiveness of rules from the Environmental Protection Agency and Bureau of Land Management that prohibit wasteful flaring to protect taxpayers, the climate and local communities," EDF's senior director of regulatory and legislative affairs, Jon Goldstein, says.
ExxonMobil's Permian targets may set a new bar for other operators. Leading Permian producer Pioneer's chief executive, Scott Sheffield, tells Argus he has "already talked to our people to see how we can get to net zero by 2030". But even with the expanded targets, sustainability non-profit group Ceres argues that ExxonMobil still lags behind many rivals in plans to reduce its carbon footprint. "We will need to wait and see whether this approach, which covers less than 15pc of the company's production, is a one-off effort or a sign of more ambitious targets to come," Ceres' senior director for oil and gas, Andrew Logan, says.
