Chevron reinforces commitment to lowering carbon intensity in its operations

At its annual investor meeting on 9 March, Chevron announced plans to increase return on capital employed and lower carbon intensity.

As part of these plans, Chevron said will reaffirm its 2021-2025 guidance for organic capital and exploratory expenditures of $14 billion to $16 billion, and double its initial estimate of Noble synergies to $600 million, which contributes to an expected reduction in 2021 operating expenses of 10% from 2019. These steps are expected to result in a doubling of the company’s return on capital employed and 10% CAGR of free cash flow by 2025 at $50 Brent.

“The path to increase return on capital employed is straightforward – invest in only the highest-return projects and operate cost efficiently,” said Pierre Breber, Chevron CFO. “Capital discipline and cost efficiency always matter. We have the portfolio and investments that position us to increase returns and grow free cash flow.”

Over the next five years, as capital is expected to decrease for its major expansion in Kazakhstan, the company will increase its investment in a number of assets, including the Permian.

Lower carbon

Having exceeded its 2023 upstream carbon intensity reduction targets three years ahead of schedule, Chevron announced lower 2028 targets and zero routine flaring by 2030. The new targets align with the second stock-take period under the Paris Climate Agreement and include all of Chevron’s production on an equity-basis:

• 24 kg CO₂e / boe for oil and gas GHG intensity; a combined 35% reduction from 2016;
• 3 kg CO₂e / boe for overall flaring intensity; 65% lower than 2016; and
• 2 kg CO₂e / boe for methane intensity; 50% lower than 2016.

“Our energy transition strategy is focused on actions that are good for both society and shareholders,” said Bruce Niemeyer, Vice President of Strategy and Sustainability at Chevron. “Achieving our 2028 goals is expected to keep Chevron a top quartile oil and gas producer in terms of carbon intensity.”

In addition, the company updated plans to increase renewable energy and carbon offsets and to invest in low-carbon technologies such as hydrogen and carbon capture, utilization and storage. Over the past several weeks, Chevron launched its second Future Energy Fund with an initial commitment of $300 million and announced a new bioenergy partnership in California with Schlumberger and Microsoft, designed to qualify as carbon negative.