The American multinational energy corporation Chevron has outlined a plan to expand its oil and gas production through 2025 without spending significantly more and also pledged to limit the pace of growth of its carbon emissions.
Falling energy demand due to pandemic-driven lockdowns sent the industry into a crisis in 2020 and led Chevron to a $5.54 billion annual loss, its first since 2016.
Investors have been pressuring Chevron and other oil companies to control spending and reduce emissions that contribute to climate change. Competitors Royal Dutch Shell, BP and Exxon Mobil have vowed to keep output stable or allow it to decline to meet climate or financial goals.
Chevron CEO Michael Wirth told analysts that Chevron can achieve its output and carbon goals regardless of oil price fluctuations.
But, some analysts were unimpressed with the climate and emissions goals, viewing them as too modest. A forecast of $25 billion in free cash flow through 2025 after dividends and project outlays is “underwhelming,” analysts said. “The goal of investing about 2 percent of overall project spending on lower carbon emissions, indicates Chevron is not pivoting its underlying operations,” they added.
The intensity target is less ambitious than rivals that look to reduce absolute emissions of carbon gases. Releases overall can increase if production rises, and Chevron failed to set a net zero emissions target like European and some US peers. Meanwhile other oil majors have outlined plans to invest in renewable energy and carbon capture and storage.
Still, Chevron said it would fix annual capital outlays at around $14 billion and increase oil and gas output by about 3.5 percent on a compound annual basis by 2025. Its climate focus includes a 35 percent reduction in its carbon emissions rate per unit of production by 2028. Routine flaring of natural gas, a contributor to climate warming, will halt by 2030, officials said.
Chevron is on a “pathway toward net zero” emissions, Mr. Wirth said, but added that technology breakthroughs, carbon markets and policy changes are needed.
“We’ll make more specific commitments as time unfolds,” he said.
Chevron, which acquired Noble Energy during last year’s market lows, raised to $600 million its expected cost savings from the deal, helping lower operating expenses 10 percent this year compared with 2019.