Devon: no `clear path’ to tackling Scope 3 emissions

Devon Energy sees little chance it can drive down Scope 3 emissions from customers — caused by the burning of its oil and gas production — anytime soon, despite its recent net zero emissions goals.

Devon plans to reduce greenhouse-gas emissions intensity for Scopes 1 and 2 by 50pc by 2030. It also seeks to cut methane emissions intensity and phase out routine flaring by the end of the decade.

Such interim targets lend "internal credibility as well as external credibility" to the longer-term goals, ensuring the company will stay the course in the coming decades, chief operating officer Clay Gaspar told Argus.

But tackling the bigger challenge of emissions from global use of oil and gas is still a bridge too far.

"My most direct means of reducing Scope 3 emissions is reducing our primary products — oil, gas and natural gas liquids — which there's still a fundamental demand around the globe for," Gaspar said.

US explorers have come under growing pressure from investors and climate activists alike to lessen their carbon footprint. US operators are generally seen as lagging behind European peers that have set more sweeping goals and are shifting into renewables, even if those efforts have not always met with favor from the market.

"I don't see a success model yet that I want to emulate — I don't know that they have been rewarded by the shareholders," Gaspar said.

For the time being, Devon, which completed an all-stock merger with WPX Energy earlier this year, will focus on curbing Scope 1 and Scope 2 emissions — those from its operations and energy purchases — which offer the best "bang for the buck," according to Gaspar.

The company has no plans to sell off any assets to support its emissions targets, unlike other producers that have come under fire for passing the problem onto others as they seek to burnish their green credentials. "That's not our game, it's not something that's contemplated in our plans," said Gaspar.

He acknowledges a "heightened awareness'' around environmental issues at the board level after a Dutch court ordered Shell to more aggressively slash emissions and dissident shareholders unseated a quarter of ExxonMobil's board of directors in a fight over the oil major's climate strategy.

"It was a natural conversation that would have been had regardless of all the extenuating circumstances," said Gaspar. "It then became a much larger and more robust conversation."

In the near term, the industry is heeding investor calls to show restraint on the drilling side even as oil prices continue their inexorable rise.

"The call that we hear from investors — specifically in the US publicly traded companies — is more around a capital mindset, making sure that we don't over indulge in the higher commodity price range only to suffer the consequences of an oversupply," he said.

By Stephen Cunningham