As we work to safely find and deliver energy to the world, reducing emissions is a high priority. A recent redesign and refresh of our Marginal Abatement Cost Curve (MACC) allows us to evaluate and prioritize emissions reductions projects across the company, which is important as we have already reduced our annual emissions by almost 7 million tons since 2009. The curve plots a break-even cost of carbon that considers capital cost, operating costs, and potential increased revenue for each project, against the cumulative greenhouse gas (GHG) emissions that can be reduced. For example, a project that installs a compressor to move previously flared gas into a sales pipeline will have an upfront cost, increased expenses to operate and maintain, and increased revenue from natural gas sales. Depending on the volume and natural gas price, this could lead to either a positive or negative break-even cost of carbon associated with executing the project.
The redesigned process included initial data gathering for insights into project viability such as planning time, technology availability, partners and permitting. We performed more detailed economic analysis on the more promising projects to see which might achieve the most emission reductions at the lowest cost, if implemented.
The screening process indicated that our most cost-effective emission reduction projects have already been carried out. Even if it were practical to do the additional 40-plus projects that were identified in one year, the associated emissions reductions would be lower than our historical average. The number of emissions reduction projects in our inventory has been declining over the past four years as regulations have increased and discretionary opportunities have been more limited. We will need to tap into creative operational solutions, new monitoring and measurement technology, and new operating technologies to further reduce emissions. Our next step is to look at more details for the lower cost projects and plan our future capital investments. In addition to our producing assets, we also consider projects that are not yet in operation. By evaluating emission reduction projects at early stages in the life cycle, we may be able to decrease both the cost of emission reductions and possible future compliance costs by avoiding expensive retrofits.