Why this leading energy company sees opportunity in a low-carbon future
Equinor, formerly known as Statoil, is not your average energy company. The Norwegian-based corporation reports producing oil and gas with half of the CO2 emissions, compared to the global industry average.
The company also stated commitment to building its business in support of the Paris Agreement, and plans to invest over $200 million in Equinor Energy Ventures, one of the world’s largest corporate venture funds dedicated to investing in growth companies in renewable energy. That may be why CDP ranked Equinor as the oil and gas company best prepared for a low-carbon future.
Equinor is also doing its part to detect and reduce methane emissions by embracing innovation and technology. In fact, Equinor was the first energy producer to purchase and install a new solar-powered technology device to continuously detect methane leaks. And, Equinor collaborates with EDF and Stanford in supporting mobile monitoring advances, such as drone-based sensors.
In advance of the World Gas Conference in D.C. later this month, I spoke with Bjorn Otto Sverdrup, senior vice president of sustainability at Equinor, to learn more about the company’s climate goals and how the company is addressing methane emissions from its oil and gas operations. Here's an edited transcript of our conversation.
Equinor's goal is to be the world's most carbon-efficient producer of oil and gas, further reducing the carbon intensity by 20 percent by 2030, reducing annual carbon emissions by 3 million tonnes by 2030, and scaling up your investments in renewable energy. What led you to set these goals?
We actually started setting climate targets more than 10 years ago, as we set a target in 2007 for what to achieve by 2020. In that time, we’ve discovered that a low-cost portfolio is also a low-carbon portfolio, and that carbon efficient businesses are more sustainable businesses.
The business case for climate action is strong and quite evident both in the short and long term – this led us to change the strategy and vision of the company, and to establish aggressive sustainability goals.
We’ve also developed a very comprehensive climate roadmap, which lays out how we’ll achieve our goals: reducing emissions from oil and gas production, growing the business through new energy solutions and embedding climate in all our decision-making. We’ve also changed key performance indicators, so our CEO’s pay and bonus is now also related to climate performance.
There’s a growing trend of using emerging technology – things like sensors, data analytics and digital collaboration tools – to make environmental problems more visible and more actionable. How are you thinking about innovation at Equinor?
We really believe that technology and digitalization will turn the industry upside down, for the better. Technology has the potential to rapidly bring down costs, make operations safer and lower our carbon footprint. And digitalization is a key priority.
For example, sensors that can detect methane leaks at the well site and provide real-time data to understand what's really happening can help us fix problems quickly when they appear. It’s not just about running a smarter business, it’s also about running a more sustainable business.
Sometimes, though, the solutions are simpler – we have no routine flaring at our offshore installations in Norway, which is also a source of methane leakages. And our subsea pipelines have additional coating around them – we make sure there are no cracks.
What drove you to work with Environmental Defense Fund on a critical problem like methane, and to get involved in the Methane Detectors Challenge?
A few years ago I was quite worried about methane, because I think it's fair to say we didn't understand the challenge. That’s why I wanted to engage with EDF to better understand what is happening with methane in the U.S., and how we could fix problems using science-based insights.
We are now much more confident in our understanding of methane emissions in the U.S., and we’ve already made progress in bringing down emissions.
That’s why we’re working with the industry to try to understand emissions across the value chain, and working with the Norwegian government to assess emissions from the oil and gas industry. We also have drones flying over installations and infrared cameras to detect methane leaks.
Cooperation with groups like EDF and industry partners can help shape and take methane science and innovation to a very new level. So, I'd like to say thank you to EDF for their cooperation.
We’ve learned that Equinor is particularly interested in and excited about a mobile monitoring solution that actually stemmed from the Mobile Monitoring Challenge. What are your plans for expansion in the mobile and continuous monitoring spaces?
Equinor has tested different methane monitoring technologies on some our onshore and offshore facilities, and is evaluating results from the pilots to see how we best can utilize such technology in our operations.
Technology development within environmental management, including methane management, is an area where external cooperation is seen as strategically important. To be beneficial to the industry, progress has to be shared and adopted across companies.
Through the OGCI Climate Investment, Equinor and nine other oil and gas companies have launched a billion–dollar investment vehicle to invest in technologies that have the potential to significantly reduce greenhouse gas emissions, including methane emissions. We are in particular excited about what the OGCI CI Methane Venture Day on June 25 in Washington, D.C.,will bring.
People look to Equinor as one of the leaders in the industry. What kind of results are you seeing in methane emissions?
For Norwegian gas to Europe through the entire value chain, the analysis shows that the emissions of methane are 0.3 percent. But if you look at the emissions on the upstream side, on the oil platform and processing facilities, it's 0.02 percent, which is more than 10 times less than the average for gas consumed in Europe.
So, the numbers are very low and it’s not only because we have been good at monitoring, but I would also say that it's been because of very deliberate design, initiative and attention.
Compared to the U.S. or other geographies, the numbers are not as good yet for the industry as a whole. I think a carbon price will be quite instrumental in providing the right incentives to act.
We are also trying to share what we're doing on methane, to get others to follow our lead – we’ve spent time with both the Norwegian government, the European commission and at the highest level of the U.S. government, where we talked about methane.
We’d love to see a price on carbon in the U.S. What can we learn from the carbon tax in Norway, and how does it affect your business?
Carbon pricing is an efficient part of the solution. The carbon tax provides investors with a line of sight, and drives improvements and energy efficiencies. And we know it works. We have been subject to a CO2 tax, currently above $60 per ton, and it has made us look for and find new business opportunities, like carbon capture and storage.
We are strong advocates for carbon pricing, and even sent a letter to the UN asking for a stronger carbon price. It might sound counterintuitive to ask for more taxes, but we believe that it’s the most efficient way to reach a low-carbon future.
Are investors increasingly asking Equinor for information about how you're tackling and managing climate risks in your business?
Absolutely. They are looking to understand risks related to the business. We publicly disclose our emissions. That's part of my mandate. But we treat climate as an integrated part of the risk management of the company, focusing on both challenges as well as opportunities.
We’re also working to balance our portfolio, which is why by 2030 we aim to devote 15 to 20 percent of capital towards new energy solutions. And 15 to 20 percent might sound like a small number, but since we’re this year making capital investments of about 11 billion dollars, that's quite a sizable business.
We also aim to allocate a quarter of all our R&D activities towards new energy solutions by 2020. We are building up quite a bit of momentum and we will have sharp growth in the renewable space.
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