environmental

Over the past few years, the simultaneous drives for action on climate change, diversity in the workplace, and corporate accountability have coalesced into the environmental, social, and governance (ESG) movement. The energy industry has been at the center of all this, of course, because significant volumes of greenhouse gases (GHGs) are generated with the production, processing, transportation and –– especially –– consumption of hydrocarbons. But while many energy companies have developed ESG strategies and goals, the ESG movement has also come under increasing scrutiny and criticism –– and from all sides, it seems. So where does the movement stand today, and what are its prospects in a world that is now as focused on energy security and affordability as it is on quickly reining in GHG emissions? In today’s RBN blog, we discuss highlights from our new Drill Down Report on the issues surrounding ESG.

The Federal Energy Regulatory Commission (FERC) issued two new statements of policy February 17 regarding the certification of new pipelines and the assessment of greenhouse gas (GHG) impacts. Together, the two updates reflect a more meticulous regulatory environment and a stricter adherence to policies that midstreamers must comply with in an effort to avoid lengthy and expensive court challenges that have become more commonplace recently. The guidelines will affect most new projects within FERC jurisdiction and, among those, some of the biggest impacts will be felt in the U.S.’s rapidly expanding LNG sector — the terminals themselves and the pipelines that deliver feedgas to them. That could be cause for concern as Russia’s war on Ukraine has exacerbated an already precarious gas situation in Europe and a global LNG supply crunch. In today’s RBN blog, we explain the impact of FERC’s latest guidance on pipeline certification and GHG policy with regard to the LNG sector.

We get that the primary focus for oil and gas producers, midstream companies, and refiners needs to be on the business side of things — the strategies and capital plans they develop and implement to survive and hopefully thrive, and the day-to-day decisions they make to keep things running smoothly — and that’s what we at RBN devote most of our time to as well. Still, it seems increasingly apparent that many of these same companies need to pay more attention to environmental, social, and governance issues, not only because ESG is a front-and-center concern of investors and lenders but because addressing these issues in the right way can help to improve a company’s operations and prospects. The environmental element of ESG typically gets the spotlight, at least for companies that produce, transport, or process oil and gas, but the social and governance parts are important too.

Each sector of the oil and gas industry — upstream, midstream, and downstream — faces its own unique set of challenges in dealing with the ongoing transition to a lower-carbon global economy and in addressing the increasing ESG-related demands of investors and lenders. Refiners are no exception. Their highly complex facilities may be capable of converting crude oil into gasoline, diesel, and jet fuel, but the fact remains these refined products generate greenhouse gases when they are produced and consumed. What can refiners do to prepare for an era of low- or no-carbon fuels and improve their enviro-cred at the same time? Many have been investing heavily in renewable fuels production, such as renewable diesel and ethanol, and in sourcing at least some of their electricity needs from wind and solar. Today, we continue our series on the environmental-social-governance movement in the oil and gas industry with a look at what refiners are doing on the ESG front.

Many leading energy companies have come to accept the reality that environmental, social, and governmental (ESG) matters are now front-and-center concerns to an increasing number of investors and lenders. Their challenge, of course, is that the hydrocarbon-based commodities they produce, process, transport, and refine are by their very nature prospective generators of carbon dioxide and other greenhouse gases that the ESG movement is targeting. What’s an energy company to do? For many midstream companies, the answer — for now at least — is to focus on minimizing the release of methane, carbon dioxide (CO2), and other GHGs from their gas processing plants, pipelines, storage facilities, and fractionators, and on switching to renewables to power their operations. Today, we continues our series with a look at how midstream companies are addressing investors’ and lenders’ concerns about the sector’s GHG releases.

Many of us need a break from natural gas market mayhem, rolling blackouts, and frozen pipes, so we’re turning to a very different topic — at least for a day. ESG, or more specifically the environmental part of the too-important-to-ignore environment/social/governmental movement. The fact is, for many investors, lenders, and others who give heavy weight to ESG in their decisions, the companies that produce, process, transport, refine, and/or export hydrocarbons are automatically suspect. At the same time, though, it is broadly understood that crude oil, natural gas, and NGLs remain essential commodities, and that it could take decades for economies around the globe to significantly reduce their dependence on them. So, where does that leave hydrocarbon-centric companies in 2021’s ESG-conscious world? Today, we continue our series on ESG issues and how they relate to players in the energy industry.

The run-up in crude oil prices the past couple of months has supported a rise in energy stock prices — since early November, the S&P 500 Energy Sector Index has increased by more than 40%. Yet, many investors, lenders and others remain wary of oil and gas companies, not only due to the energy industry’s historic volatility but also the unique social, political and financial pressures that hydrocarbon producers, midstreamers, and refiners face in demonstrating that they are addressing environmental, social, and governance issues. ESG has come to the fore in the U.S., Canada, and elsewhere, and will shape activity in the oil patch this decade and beyond, and energy companies that ignore it or only pay lip service do so at their peril. Today, we begin a series on the growing significance of ESG and how upstream, midstream, and downstream players are incorporating it into their strategies and operations.