CDP. Module: Introduction. Page: Introduction. CDP 2016 Climate Change 2016 Information Request CC0.1

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1 CDP CDP 2016 Climate Change 2016 Information Request Occidental Petroleum Corporation Module: Introduction Page: Introduction CC0.1 Introduction Please give a general description and introduction to your organization. Occidental's (Oxy's) principal businesses consist of three segments: oil and gas exploration and production, midstream and marketing and chemicals (OxyChem). The oil and gas segment explores for, develops and produces oil and condensate, natural gas liquids (NGL) and natural gas. The midstream and marketing segment gathers, processes, transports, stores, purchases and markets oil, condensate, NGLs, natural gas and carbon dioxide, and generates power. OxyChem is a leading manufacturer of PVC resins, vinyls, chlorine and caustic soda key building blocks of products such as pharmaceuticals, water treatment chemicals and plastics. Oil and natural gas operations are the core of Oxy s business. Our exploration and production activities are concentrated in three geographic regions: the United States, the Middle East and Latin America. In each of these regions, we focus on long-lived oil and gas assets where we can increase production by applying appropriate technology and advanced reservoir management practices. We believe that using existing infrastructure (and avoiding, in many cases, the need to develop greenfield land, build new roads, pipelines and storage and processing facilities) to recover additional oil and gas from existing fields provides significant life-cycle environmental benefits. Oxy applies a robust environmental risk management approach and operational practices to increase energy efficiency and reduce air emissions, even while expanding our production. CC0.2 Reporting Year Please state the start and end date of the year for which you are reporting data. The current reporting year is the latest/most recent 12-month period for which data is reported. Enter the dates of this year first. We request data for more than one reporting period for some emission accounting questions. Please provide data for the three years prior to the current reporting year if you have not provided this information before, or if this is the first time you have answered a CDP information request. (This does not apply if you have been offered and selected the option of answering the shorter questionnaire). If you are going to provide additional years of data, please give the dates of those reporting periods here. Work backwards from the most recent reporting year. Please enter dates in following format: day(dd)/month(mm)/year(yyyy) (i.e. 31/01/2001). 1

2 Enter Periods that will be disclosed Thu 01 Jan Thu 31 Dec 2015 CC0.3 Country list configuration Please select the countries for which you will be supplying data. If you are responding to the Electric Utilities module, this selection will be carried forward to assist you in completing your response. Select country United States of America Canada Bolivia Chile Colombia Oman Qatar CC0.4 Currency selection Please select the currency in which you would like to submit your response. All financial information contained in the response should be in this currency. USD($) 2

3 CC0.6 Modules As part of the request for information on behalf of investors, electric utilities, companies with electric utility activities or assets, companies in the automobile or auto component manufacture sub-industries, companies in the oil and gas sub-industries, companies in the information technology and telecommunications sectors and companies in the food, beverage and tobacco industry group should complete supplementary questions in addition to the main questionnaire. If you are in these sector groupings (according to the Global Industry Classification Standard (GICS)), the corresponding sector modules will not appear below but will automatically appear in the navigation bar when you save this page. If you want to query your classification, please If you have not been presented with a sector module that you consider would be appropriate for your company to answer, please select the module below. If you wish to view the questions first, please see Further Information Module: Management Page: CC1. Governance CC1.1 Where is the highest level of direct responsibility for climate change within your organization? Board or individual/sub-set of the Board or other committee appointed by the Board CC1.1a Please identify the position of the individual or name of the committee with this responsibility The Environmental, Health and Safety Committee of the Board of Directors is responsible for overseeing Occidental's management of issues regarding greenhouse gas emissions. This Committee is comprised of four independent directors, meets five times each year. It provides Board-level oversight on health, environmental and safety issues of importance to the Company. Issues related to climate change and environmental stewardship are among the key topics that the Committee addresses. At the operational level, Oxy integrates climate change issues into business decision making through a multi-disciplinary committee of managers, several of whom meet directly with Occidental's Board Committee. The Board supports Oxy s efforts to enhance energy efficiency of operations, control emissions of GHG and air pollutants, and to engage and educate stockholders and other public parties through voluntary reporting on GHG emissions. 3

4 CC1.2 Do you provide incentives for the management of climate change issues, including the attainment of targets? Yes CC1.2a Please provide further details on the incentives provided for the management of climate change issues Who is entitled to benefit from these incentives? The type of incentives Incentivized performance indicator Comment All employees Monetary reward Emissions reduction project Emissions reduction target Energy reduction project Energy reduction target Efficiency project Efficiency target Behaviour change related indicator All employees Recognition (non-monetary) Emissions reduction project Emissions reduction target Energy reduction project Energy reduction target Efficiency project Efficiency target Behaviour change related indicator Further Information 4

5 Page: CC2. Strategy CC2.1 Please select the option that best describes your risk management procedures with regard to climate change risks and opportunities Integrated into multi-disciplinary company wide risk management processes CC2.1a Please provide further details on your risk management procedures with regard to climate change risks and opportunities Frequency of monitoring To whom are results reported? Geographical areas considered How far into the future are risks considered? Comment Annually Board or individual/sub-set of the Board or committee appointed by the Board All 1 to 3 years Internal corporate engagement and discussion of longer-term risks and opportunities, particularly with regard to carbon and fossil fuels regulations, are reported to the Board and the Environmental, Health and Safety Committee. CC2.1b Please describe how your risk and opportunity identification processes are applied at both company and asset level Oxy assesses potential climate risks and opportunities as part of its ongoing process to assess overall business risks and opportunities. The scope of this assessment includes the consideration of international accords, treaties, legislation, regulation and government policy initiatives that may affect the raw materials, other inputs and costs to produce our products, and the demand for and the restrictions on the use of our products. Risk evaluation also includes potential physical impacts relating to climate. Opportunity evaluation includes the commoditization, marketing or beneficial use of GHGs or GHG reductions. Examples of opportunities Oxy pursues at both the company and asset level are the production and wholesale delivery of natural gas and NGLs, and advancing the use of CO2 EOR and Carbon Capture Utilization and Storage (CCUS) technologies. Oxy also considers processes that minimize the release of air pollutants to the environment, on-site renewable power generation, implementing energy efficiency measures throughout our operations and the implementation of workplace practices and training to enhance HES performance, awareness and compliance. Oxy's Health, Environment and Safety Management System (HESMS) and risk management program provides a consistent and rigorous methodology to help the company identify and assess specific environmental, social and operational 5

6 impacts across all areas of our business with regard to climate risk and changes to regulatory frameworks. CC2.1c How do you prioritize the risks and opportunities identified? Responsible environmental stewardship is fundamental to our success as a respected producer of energy and commodity chemicals and essential to our reputation as a partner of choice. As part of our environmental stewardship commitment, Oxy pursues measures to manage and control greenhouse gas (GHG) emissions while continuing to expand our operations as efficiently and productively as possible. Opportunities are considered at the facility, business unit or corporate level, as appropriate, and are weighed and prioritized with all other value creating opportunities using strategic and commercial business indicators consistent with our overall goal of maximizing total returns to stockholders. HES risk management policies, standards and procedures are in-place at all operating locations and levels of the organization to identify, prioritize and apply feasible risk mitigation options. The company's Risk Management Community of Practice leverages the collective expertise of the company's engineers to share opportunities for improvement. Higher-level risks are reported, validated by business segment management and reviewed annually with senior management and the Environmental, Health and Safety Committee of the Board of Directors, assuring that HES risk management is among Oxy's highest priorities. CC2.1d Please explain why you do not have a process in place for assessing and managing risks and opportunities from climate change, and whether you plan to introduce such a process in future Main reason for not having a process Do you plan to introduce a process? Comment CC2.2 Is climate change integrated into your business strategy? Yes CC2.2a 6

7 Please describe the process of how climate change is integrated into your business strategy and any outcomes of this process Our business decision-making process integrates climate change issues with other business priorities to help us effectively manage greenhouse gas (GHG) emissions, the social and economic impacts of Oxy s energy use and further the company's commitment to be an efficient, low-cost producer of oil and gas and commodity chemicals. Efforts to mitigate or adapt to climate change while maintaining reliable, cost-effective energy supplies present both challenges and opportunities for society and for Occidental. Our longstanding policy is to seek continuous improvement in resource recovery, conservation, pollution prevention and energy efficiency. Oxy integrates climate change issues into our business decisions through a team of managers and employees, with oversight from the Board of Directors' Environmental, Health and Safety Committee. The process to integrate climate issues into the business strategy is multi-tiered, occurring at the corporate, business unit and facility levels. It involves a cross-section of staff and management at all three tiers. Oxy also engages with investors, industry working groups, NGOs and other parties to assess their input. Financial implications are assessed considering current and estimated future costs and prices for energy, raw materials and electricity, demand for fuels and emission fees and permits. Oxy integrates these considerations into business decision-making through management meetings. The topic of GHG emissions and climate change issues is reviewed by the Environmental, Health and Safety Committee of Oxy's Board of Directors. Oxy provides disclosure of the risks posed by climate change and climate change regulations on its business and operations in its Annual Report, Form 10-K. The key aspects of climate change that have influenced the risk factors on our business include physical risks, regulatory changes, and commercial risks. Oxy publishes information on our approach to reserves estimation and capital planning and allocation. The process used to estimate oil and gas reserves includes economic feasibility at the prevailing commodity prices; changes in proved reserves, including downward revisions of previous estimates due to changes in economic conditions. Oxy also provides an Industry Outlook that identifies factors influencing the price of Oxy s products. The process includes consideration of the actions of governments, such as actual or proposed international, national, regional and state GHG control measures, including the Paris Agreement targets. An outcome of this process is our active engagement with institutional stockholders, environmental groups and other public stakeholders addressing climate risks. The engagement with these stakeholders has initiated a constructive dialogue. Also, Oxy participates in domestic and international industry initiatives that focus on GHG mitigation and climate change-related risks and opportunities. An example of Oxy s mitigation of GHG emissions is utilizing CO2 injection for enhanced oil recovery (EOR) in concert with carbon capture, utilization and storage (CCUS) as a means of permanently sequestering CO2 and the potential to mitigate greater amounts of CO2 through the expansion of CCUS. Oxy recently gained first-ever approval from the U.S. EPA to use a Measuring, Reporting and Verification (MRV) Plan to measure and account for the amount of greenhouse gases that are injected and sequestered safely underground through our CO2 EOR operations in West Texas. Oxy will begin reporting annual data to the EPA s Greenhouse Gas Reporting Program, starting with data for The U.S. Government and the Intergovernmental Panel on Climate Change (IPCC) both support technologies and the opportunity that CCUS offers to capture CO2 and inject it underground for sequestration as part of a suite of pathways to reduce anthropogenic carbon emissions. Crucially, the IPCC (Fifth Assessment Report) and International Energy Agency (IEA) project that most climate change models cannot meet the degrees Celsius global warming scenarios without using CCUS technologies. CC2.2b 7

8 Please explain why climate change is not integrated into your business strategy CC2.2c Does your company use an internal price of carbon? Yes CC2.2d Please provide details and examples of how your company uses an internal price of carbon Oxy is a leader in the application of enhanced oil recovery (EOR) using carbon dioxide (CO2) to generate growth of production and reserves. Operating more than 30 active CO2 EOR projects, Oxy injects over 1.9 billion cubic feet of CO2 each day. To maintain and grow its CO2 EOR production, Oxy prices the cost of CO2 recycled from its own resources and the purchase price of additional supply of CO2 from industrial producers and commercial suppliers. CC2.3 Do you engage in activities that could either directly or indirectly influence public policy on climate change through any of the following? (tick all that apply) Direct engagement with policy makers Trade associations CC2.3a On what issues have you been engaging directly with policy makers? 8

9 Focus of legislation Corporate Position Details of engagement Proposed legislative solution Adaptation resiliency Mandatory carbon reporting Regulation of methane emissions Carbon tax Support Support with minor exceptions Support with minor exceptions Neutral Oxy engages the U.S. EPA and Department of Energy, among other agencies, to explain our use of anthropogenic carbon dioxide (CO2) for enhanced oil recovery (EOR) operations. Oxy received approval from the U.S. Government for a first-of-its-kind Monitoring, Reporting and Verification (MRV) Plan that quantifies the amount of CO2 sequestered during CO2 EOR. The MRV Plan compliments our statutory GHG emissions reporting to the EPA. Oxy works with the National Enhanced Oil Recovery Initiative (NEORI) to support Carbon Capture Utilization and Storage (CCUS) incentive legislation and fiscal policies to spur commercial deployment of technologies to enable the capture of anthropogenic COS and the permanent and safe geologic storing of CO2 underground. Oxy engages the U.S. EPA and associated state-level agencies on the EPA Greenhouse Gas Reporting Program (GHGRP), both directly and through its trade associations. Oxy monitors changes in applicable regulations, comments on technology, management systems for collecting and reporting data and provides information on testing and data collection to improve the GHGRP requirements and accuracy of the data collected. Oxy is an active and longstanding voluntary participant in the U.S. EPA Natural Gas STAR program and the Global Methane Initiative. Working collaboratively with the EPA, Oxy has helped to develop the Gas STAR Program guidelines, tested practices and technology and has implemented solutions aimed to reduce fugitive methane emissions. Oxy also engaged with EPA during the development of its recently promulgated methane emission rulemaking by offering technical data and ideas for improving the effectiveness of the rules. Oxy watches and monitors closely the proposed legislative and/or fiscal measures with regards to an explicit price on carbon. Any approach to regulating GHG emissions should be holistic. Oxy does not support legislative proposals that regulate some sectors while omitting others. Advocacy to support legislation to make the existing federal CCUS incentive permanent so greater amounts of anthropogenic CO2 will be captured and sequestered during CO2 EOR operations, thereby reducing CO2 emissions to the atmosphere. Oxy works through its trade associations and independently with the U.S. EPA. The U.S. EPA, the federal Bureau of Land Management and their counterparts have adopted, or are in the process of adopting, regulations to further regulate methane emissions. Any legislative decision to impose mandatory GHG emission controls, must be holistic and applied to all direct and indirect emitters of GHGs. CC2.3b Are you on the Board of any trade associations or provide funding beyond membership? Yes 9

10 CC2.3c Please enter the details of those trade associations that are likely to take a position on climate change legislation Trade association Is your position on climate change consistent with theirs? Please explain the trade association's position How have you, or are you attempting to, influence the position? American Petroleum Institute American Chemistry Council Texas Oil & Gas Association American Exploration & Production Council Consistent Consistent Consistent Consistent The API addresses climate change issues affecting the US oil and natural gas industry. API has a working group that oversees API s Climate Challenge Program, including participation in government initiated voluntary GHG reduction programs, as well as the development of the API Compendium methodology for estimating oil and gas industry greenhouse gas emissions. As an ACC member company, Oxy is committed to following the Responsible Care Guiding Principles: Promotion of pollution prevention, minimization of waste and conservation of energy and other critical resources at every stage of the life cycle of products; Cooperation with governments at all levels and organizations in the development of effective and efficient safety, health, environmental and security laws, regulations and standards. State level legislative advocacy; opposition to local/municipal oil and gas drilling ordinances that conflict with state law or policy AXPC engages with EPA to improve the Greenhouse Gas Reporting Framework standards and its leak detection and repair program methodologies for reducing GHG emissions. Oxy is an active member and contributor to API, engaging on certain GHG issues and other health, environment and safety standards and industry practices. Oxy is an active member and contributor to the ACC and is a Responsible Care Company. Oxy supports advocacy efforts on relevant issues, including product stewardship and other health, environment and safety standards and industry practices. Oxy is an active member of the TXOGA Oxy is an active member of the AXPC CC2.3d Do you publicly disclose a list of all the research organizations that you fund? CC2.3e 10

11 Please provide details of the other engagement activities that you undertake CC2.3f What processes do you have in place to ensure that all of your direct and indirect activities that influence policy are consistent with your overall climate change strategy? Oxy s participation in trade associations and other advocacy organizations is regularly evaluated based primarily on the value each association provides to help advance our corporate near and long-term interests. Trade association policy and advocacy positions typically reflect a consensus among members of the association with wide ranging interests and areas of focus. Oxy does not necessarily share or endorse every position taken by every trade association to which it belongs. Occidental's Board of Directors and the Government Affairs Committee approves Oxy s membership in any advocacy group or trade organizations that require or would require annual dues payments in excess of $50,000. CC2.3g Please explain why you do not engage with policy makers Further Information Page: CC3. Targets and Initiatives CC3.1 Did you have an emissions reduction or renewable energy consumption or production target that was active (ongoing or reached completion) in the reporting year? No CC3.1a 11

12 Please provide details of your absolute target ID Scope % of emissions in scope % reduction from base year Base year Base year emissions covered by target (metric tonnes CO2e) Target year Is this a sciencebased target? Comment CC3.1b Please provide details of your intensity target ID Scope % of emissions in scope % reduction from base year Metric Base year Normalized base year emissions covered by target Target year Is this a sciencebased target? Comment CC3.1c Please also indicate what change in absolute emissions this intensity target reflects ID Direction of change anticipated in absolute Scope 1+2 emissions at target completion? % change anticipated in absolute Scope 1+2 emissions Direction of change anticipated in absolute Scope 3 emissions at target completion? % change anticipated in absolute Scope 3 emissions Comment CC3.1d 12

13 Please provide details of your renewable energy consumption and/or production target ID Energy types covered by target Base year Base year energy for energy type covered (MWh) % renewable energy in base year Target year % renewable energy in target year Comment CC3.1e For all of your targets, please provide details on the progress made in the reporting year ID % complete (time) % complete (emissions or renewable energy) Comment CC3.1f Please explain (i) why you do not have a target; and (ii) forecast how your emissions will change over the next five years Fossil fuels and fossil-fuel derived chemicals are essential to the dramatic increases in life expectancy, industrial productivity, life-saving technology innovation and economic wealth generation. Oxy does not believe that setting absolute GHG emission reduction goals is an effective way for an oil, gas and chemical company to supply life-essential products while responsibly managing climate risks. Oxy will continue to report publicly and transparently on its overall GHG emissions management and environmental stewardship programs. As the company engages with its stockholders and representatives of relevant government and regulatory agencies on effective ways to mitigate and adapt to climate change, Oxy s position on the relevance and effectiveness of emissions target(s) may evolve. CC3.2 13

14 Do you classify any of your existing goods and/or services as low carbon products or do they enable a third party to avoid GHG emissions? Yes CC3.2a Please provide details of your products and/or services that you classify as low carbon products or that enable a third party to avoid GHG emissions Level of aggregation Description of product/group of products Are you reporting low carbon product/s or avoided emissions? Taxonomy, project or methodology used to classify product/s as low carbon or to calculate avoided emissions % revenue from low carbon product/s in the reporting year % R&D in low carbon product/s in the reporting year Comment Group of products Product Companywide By using CO2 injection with other EOR technologies, Oxy has been able to recover significantly more of the oil in place in existing reservoirs, thereby increasing the productivity and lengthening the life of existing fields. Essentially all injected CO2 becomes sequestered in the oil and gas reservoir. Leveraging the lessons learned from CO2 injection for CO2 EOR, there is the potential to significantly reduce GHG emissions through underground injection of CO2, if it can be done at sufficient scale. OxyChem is developing a new raw material for use in the production of an advanced climate-friendly refrigerant. This new product produces a refrigerant with low global warming potential and ozone depletion potential. The refrigerant is approved by the U.S. EPA and meets European Union regulatory requirements for automobile air conditioning systems. The development and production of natural gas and natural gas liquids as a cleaner fuel for power generation, heating and transportation. Avoided emissions Low carbon product Low carbon product Other: US EPA Monitoring, Reporting and Verification (MRV) Plan, as part of the GHGRP Other: API Compendium of GHG Emissions Estimation 0% 0% 8.6% Less than or equal to 10% Less than or equal to 10% Less than or equal to 10% 14

15 Level of aggregation Description of product/group of products Are you reporting low carbon product/s or avoided emissions? Taxonomy, project or methodology used to classify product/s as low carbon or to calculate avoided emissions % revenue from low carbon product/s in the reporting year % R&D in low carbon product/s in the reporting year Comment Methodologies for the Oil and Natural Gas Industry CC3.3 Did you have emissions reduction initiatives that were active within the reporting year (this can include those in the planning and/or implementation phases) Yes CC3.3a Please identify the total number of projects at each stage of development, and for those in the implementation stages, the estimated CO2e savings Stage of development Number of projects Total estimated annual CO2e savings in metric tonnes CO2e (only for rows marked *) Under investigation To be implemented* Implementation commenced* Implemented* Not to be implemented 15

16 CC3.3b For those initiatives implemented in the reporting year, please provide details in the table below Activity type Description of activity Estimated annual CO2e savings (metric tonnes CO2e) Scope Voluntary/ Mandatory Annual monetary savings (unit currency - as specified in CC0.4) Investment required (unit currency - as specified in CC0.4) Payback period Estimated lifetime of the initiative Comment Low carbon energy installation Energy efficiency: Processes Energy efficiency: Processes Energy efficiency: Processes On-site combined wind and solar PV power generation Construction of combined heat and power (cogen) facility Electrification of well pad and drilling sites, commensurate fuel switching from diesel generators IInstalled methane Leak Detection and Repair (LDAR) systems and Vapor Recovery Units (VRU) for pumps, valves and controllers; infrared camera surveys on a routine basis to complement LDAR program, along with an active Management of Change Program using Maximo tracking and work Scope 1 Scope 1 Scope 1 Scope 1 Voluntary Voluntary Voluntary Voluntary Mandatory Certain projects undertaken as part of compliance programs (e.g. U.S. EPA GHGRP and Subpart W), or are voluntary projects to realize cost savings, and pilot new technologies and standards in collaboration with 16

17 Activity type Description of activity Estimated annual CO2e savings (metric tonnes CO2e) Scope Voluntary/ Mandatory Annual monetary savings (unit currency - as specified in CC0.4) Investment required (unit currency - as specified in CC0.4) Payback period Estimated lifetime of the initiative Comment Energy efficiency: Processes Behavioral change Transportation: use order maintenance; pipeline compressor optimization Improve and/or maintain power generation fleet reliability Installation of motion sensors on office lighting; automated power setting controls and reducing plug load demands Employee incentives for using higher occupancy vehicles and multi-modal commuting Scope 1 Scope 2 (locationbased) Scope 3 Voluntary Voluntary Voluntary industry and regulatory partners. CC3.3c What methods do you use to drive investment in emissions reduction activities? Method Comment Compliance with regulatory requirements/standards Oxy meets or exceeds the regulations in countries in which it operates. 17

18 Method Comment Financial optimization calculations Energy efficiency and GHG reduction projects can provide enhanced returns on capital relative to other investment opportunities CC3.3d If you do not have any emissions reduction initiatives, please explain why not Further Information Page: CC4. Communication CC4.1 Have you published information about your organization s response to climate change and GHG emissions performance for this reporting year in places other than in your CDP response? If so, please attach the publication(s) Publication Status Page/Section reference Attach the document Comment In voluntary communications Complete Stewardship/Pages/Regulation-of-GHGs.aspx Oxy discloses online its environmental stewardship practices and annual GHG emissions performance data 18

19 Publication Status Page/Section reference Attach the document Comment In other regulatory filings Complete Page 7, Risk Factors Change 2016/Shared Documents/Attachments/CC4.1/OXY2015_AR.pdf 2015 Annual Report and Form 10-K Further Information Module: Risks and Opportunities Page: CC5. Climate Change Risks CC5.1 Have you identified any inherent climate change risks that have the potential to generate a substantive change in your business operations, revenue or expenditure? Tick all that apply Risks driven by changes in regulation Risks driven by changes in physical climate parameters Risks driven by changes in other climate-related developments CC5.1a Please describe your inherent risks that are driven by changes in regulation 19

20 Risk driver Description Potential impact Timeframe Direct/ Indirect Likelihood Magnitude of impact Estimated financial implications Management method Cost of management Air pollution limits Emission reporting obligations Emission reporting obligations Fuel/energy taxes and regulations In the U.S., there is uncertainty over new air pollution regulation, primarily as it relates to EPA GHG permitting regulations and policies. In the U.S., at the federal and state level, Oxy is required to identify certain GHG emissions in greater detail than previously required. The U.S. EPA regulates methane as a GHG under the new source performance standards ( Subpart OOOO ). Also, the EPA is considering the extension of methane emissions reporting to existing sources in the oil and gas industry. In the U.S., Oxy could be subject to federal legislation that could impact fuel/energy prices or the demand for Increased operational cost Increased operational cost Increased operational cost Increased operational cost 3 to 6 years Up to 1 year 1 to 3 years >6 years Direct Likely Unknown Direct Direct Indirect (Supply chain) Virtually certain More likely than not Unknown Unknown Unknown Unknown Unknown until regulation has been defined and applied to applicable Oxy owned assets. Oxy s HESMS integrates compliance into our risk and operations management structure. Oxy s HESMS integrates compliance into our risk and operations management structure. Oxy s HESMS integrates compliance into our risk and operations management structure. Compliance and management costs are integrated into our operating cost structure. Compliance and management costs are integrated into our operating cost structure. Compliance and management costs are integrated into our operating cost structure. 20

21 Risk driver Description Potential impact Timeframe Direct/ Indirect Likelihood Magnitude of impact Estimated financial implications Management method Cost of management Uncertainty surrounding new regulation these products or impose additional energy taxes. Also, there is potential indirect exposure over the next 5 years to higher electricity prices through suppliers. Generally, efforts by various U.S. and foreign jurisdictions to propose or adopt legislation, regulations or policies, some of which have been adopted, seek to control or reduce emissions of greenhouse gases or consumption of fossil fuels. Although the effect of these efforts on Oxy is uncertain, Oxy faces risks of delays in new or expanded development projects, increases in taxes, increases in costs to produce and reductions in the demand for, and Increased operational cost >6 years Direct Unknown Unknown Oxy s longstanding policy is to seek continuous improvement in resource recovery, pollution prevention and energy efficiency. Oxy has ongoing efforts focused on identifying costeffective and environmentally sound solutions that yield continuous improvement in the management of GHG and other air emissions associated with our oil and gas and chemical production businesses. Compliance and management costs are integrated into our operating cost structure. 21

22 Risk driver Description Potential impact Timeframe Direct/ Indirect Likelihood Magnitude of impact Estimated financial implications Management method Cost of management restrictions on the use of, its products. CC5.1b Please describe your inherent risks that are driven by changes in physical climate parameters Risk driver Description Potential impact Timeframe Direct/ Indirect Likelihood Magnitude of impact Estimated financial implications Management method Cost of management Tropical cyclones (hurricanes and typhoons) Oxy has several facilities located near the Gulf Coast (Texas and Louisiana) that have been in the path of hurricanes, which have at times resulted in the interruption of some operations. Significant changes in weather or climate could, unless the impacts of such changes were mitigated, affect access to or operation of these Reduction/disruption in production capacity Unknown Direct Very unlikely Low Low Third party and self insurance with respect to losses. Low 22

23 Risk driver Description Potential impact Timeframe Direct/ Indirect Likelihood Magnitude of impact Estimated financial implications Management method Cost of management or other Oxy facilities. However, Oxy is not aware of credible projections that natural disasters, whether or not driven by changes in climate could result in immitigable impacts are probable within the anticipated operating life of its facilities. Change in precipitation extremes and droughts The occurrence of events, such as floods or droughts, could cause operations to cease or be curtailed, and may negatively affect Oxyl s businesses and the communities in which it operates. Reduction/disruption in production capacity Unknown Direct Unknown Low Low Oxy s HESMS integrates water issues into our risk and operations management structure.also, third party and self insurance with respect to losses. Low CC5.1c Please describe your inherent risks that are driven by changes in other climate-related developments 23

24 Risk driver Description Potential impact Timeframe Direct/ Indirect Likelihood Magnitude of impact Estimated financial implications Management method Cost of management Uncertainty in market signals Considering the uncertain outcome and timing of both actual and proposed proposed international, national and state climate related measures, it is difficult to predict their specific business or market-based effects. The likelihood that international, national and state level governments take different, or even contradictory, legal, regulatory and market-based approaches risks creating a patchwork of incompatible and incoherent market signals. Increased operational cost >6 years Direct More likely than not Low Difficult to predict Oxy s HESMS integrates market uncertainty into our risk and operations management structure. Compliance and management costs are integrated into our operating cost structure. CC5.1d Please explain why you do not consider your company to be exposed to inherent risks driven by changes in regulation that have the potential to generate a substantive change in your business operations, revenue or expenditure CC5.1e Please explain why you do not consider your company to be exposed to inherent risks driven by physical climate parameters that have the potential to generate a substantive change in your business operations, revenue or expenditure 24

25 CC5.1f Please explain why you do not consider your company to be exposed to inherent risks driven by changes in other climate-related developments that have the potential to generate a substantive change in your business operations, revenue or expenditure Further Information Page: CC6. Climate Change Opportunities CC6.1 Have you identified any inherent climate change opportunities that have the potential to generate a substantive change in your business operations, revenue or expenditure? Tick all that apply Opportunities driven by changes in regulation Opportunities driven by changes in other climate-related developments CC6.1a Please describe your inherent opportunities that are driven by changes in regulation 25

26 Opportunity driver Description Potential impact Timeframe Direct/Indirect Likelihood Magnitude of impact Estimated financial implications Management method Cost of management Air pollution limits Carbon taxes Air pollution limits Oxy's natural gas reserves could become more valuable if future changes in energy demand include a shift to natural gas. Because of Oxy s expertise in enhanced oil recovery (EOR) techniques, particularly CO2 EOR, Oxy's oil reserves could become more productive from regulatory changes that drive the capture and sequestration of anthropogenic CO2 or burden greenfield oil developments. The expansion of enforcement of methane emissions from new sources to existing sources could accelerate Increased demand for existing products/services Increased demand for existing products/services Increased production capacity >6 years Direct Very likely Lowmedium Unknown Direct Unknown Unknown 1 to 3 years Direct More likely than not Low Difficult to predict Difficult to predict Difficult to predict Match investment to increase production with growth in demand Match investment to increase production with growth in demand Oxy has ongoing efforts to capture methane emissions and control leaks. Oxy has management systems and existing natural gas infrastructure, thus costs are low to manage this potential opportunity. The incremental cost is low to manage this potential opportunity Difficult to predict based on range of technical solutions available. 26

27 Opportunity driver Description Potential impact Timeframe Direct/Indirect Likelihood Magnitude of impact Estimated financial implications Management method Cost of management the use of cutting-edge technologies and processes to control and capture methane emissions, therefore modestly increasing the marketable volume of produced methane. CC6.1b Please describe the inherent opportunities that are driven by changes in physical climate parameters Opportunity driver Description Potential impact Timeframe Direct/ Indirect Likelihood Magnitude of impact Estimated financial implications Management method Cost of management CC6.1c Please describe the inherent opportunities that are driven by changes in other climate-related developments 27

28 Opportunity driver Description Potential impact Timeframe Direct/ Indirect Likelihood Magnitude of impact Estimated financial implications Management method Cost of management Fluctuating socioeconomic conditions Reputation Analyses of global energy demand by the International Energy Agency, OECD, and World Economic Forum, and energy industry groups consistently forecast growth in demand for all forms of energy over the next years, particularly in fastergrowing Asian economies. Growth in GDP, population and per capita living standards are expected to create the commensurate increase in demand for fossil fuels, as well as renewable and alternative energy sources. As a leader in EOR and CO2 EOR, Oxy extends oil and gas production from long-lived assets. We believe that using CO2 EOR technologies and existing infrastructure to recover additional Increased demand for existing products/services Wider social benefits 3 to 6 years Up to 1 year Direct Very likely Medium Direct Unknown Low Difficult to predict Oxy plans to invest an estimated $550 million over the next several years for additional and expanded CO2 in the Permian Basin. Oxy s management approach at both company and asset levels will factor these trends and pricing signals as part of operations and capital allocation decisions. Oxy has a unique competitive advantage in CO2 EOR its ability to share knowledge between our operations to optimize production, and Management costs are integrated into our operating cost structure. Management costs are integrated into our operating cost structure. 28

29 Opportunity driver Description Potential impact Timeframe Direct/ Indirect Likelihood Magnitude of impact Estimated financial implications Management method Cost of management oil and gas from mature oil fields while demonstrating that large-scale geologic sequestration of CO2 that otherwise would be emitted provides significant life-cycle environmental benefits. to leverage our significant midstream infrastructure and marketing operations. CC6.1d Please explain why you do not consider your company to be exposed to inherent opportunities driven by changes in regulation that have the potential to generate a substantive change in your business operations, revenue or expenditure CC6.1e Please explain why you do not consider your company to be exposed to inherent opportunities driven by physical climate parameters that have the potential to generate a substantive change in your business operations, revenue or expenditure 29

30 CC6.1f Please explain why you do not consider your company to be exposed to inherent opportunities driven by changes in other climate-related developments that have the potential to generate a substantive change in your business operations, revenue or expenditure Further Information Module: GHG Emissions Accounting, Energy and Fuel Use, and Trading Page: CC7. Emissions Methodology CC7.1 Please provide your base year and base year emissions (Scopes 1 and 2) Scope Base year Base year emissions (metric tonnes CO2e) Scope 1 Scope 2 (location-based) Sat 01 Jan Sat 31 Dec Sat 01 Jan Sat 31 Dec Scope 2 (market-based) 0 CC7.2 30

31 Please give the name of the standard, protocol or methodology you have used to collect activity data and calculate Scope 1 and Scope 2 emissions Please select the published methodologies that you use American Petroleum Institute Compendium of Greenhouse Gas Emissions Methodologies for the Oil and Natural Gas Industry, 2009 US EPA Mandatory Greenhouse Gas Reporting Rule CC7.2a If you have selected "Other" in CC7.2 please provide details of the standard, protocol or methodology you have used to collect activity data and calculate Scope 1 and Scope 2 emissions CC7.3 Please give the source for the global warming potentials you have used Gas Reference CO2 CH4 N2O IPCC Fourth Assessment Report (AR4-100 year) IPCC Fourth Assessment Report (AR4-100 year) IPCC Fourth Assessment Report (AR4-100 year) CC7.4 31

32 Please give the emissions factors you have applied and their origin; alternatively, please attach an Excel spreadsheet with this data at the bottom of this page Fuel/Material/Energy Emission Factor Unit Reference API GHG Compendium Further Information Page: CC8. Emissions Data - (1 Jan Dec 2015) CC8.1 Please select the boundary you are using for your Scope 1 and 2 greenhouse gas inventory Operational control CC8.2 Please provide your gross global Scope 1 emissions figures in metric tonnes CO2e CC8.3 Does your company have any operations in markets providing product or supplier specific data in the form of contractual instruments? 32

33 Yes CC8.3a Please provide your gross global Scope 2 emissions figures in metric tonnes CO2e Scope 2, location-based Scope 2, market-based (if applicable) Comment CC8.4 Are there are any sources (e.g. facilities, specific GHGs, activities, geographies, etc.) of Scope 1 and Scope 2 emissions that are within your selected reporting boundary which are not included in your disclosure? Yes CC8.4a Please provide details of the sources of Scope 1 and Scope 2 emissions that are within your selected reporting boundary which are not included in your disclosure 33

34 Source Relevance of Scope 1 emissions from this source Relevance of location-based Scope 2 emissions from this source Relevance of market-based Scope 2 emissions from this source (if applicable) Explain why the source is excluded The flaring of natural gas in foreign countries where the state-owned oil company owns the gas. Emissions are relevant and calculated, but not disclosed No emissions from this source CC8.5 Please estimate the level of uncertainty of the total gross global Scope 1 and 2 emissions figures that you have supplied and specify the sources of uncertainty in your data gathering, handling and calculations Scope Uncertainty range Main sources of uncertainty Please expand on the uncertainty in your data Scope 1 More than 10% but less than or equal to 20% Data Gaps Assumptions Extrapolation Metering/ Measurement Constraints Sampling The value shown for uncertainty is an estimate. Most of our GHG emissions estimates are based on metered fuel flows and gas compositions but some are based on engineering estimates, which are inherently less precise. The degree of uncertainty varies by the type of estimate, which is influenced by the age, and sophistication of the control and measurement systems at a facility. Scope 2 (locationbased) More than 10% but less than or equal to 20% Assumptions Metering/ Measurement Constraints Oxy does not measure certain office building emissions. Scope 2 (marketbased) 34

35 CC8.6 Please indicate the verification/assurance status that applies to your reported Scope 1 emissions No third party verification or assurance CC8.6a Please provide further details of the verification/assurance undertaken for your Scope 1 emissions, and attach the relevant statements Verification or assurance cycle in place Status in the current reporting year Type of verification or assurance Attach the statement Page/section reference Relevant standard Proportion of reported Scope 1 emissions verified (%) CC8.6b Please provide further details of the regulatory regime to which you are complying that specifies the use of Continuous Emissions Monitoring Systems (CEMS) Regulation % of emissions covered by the system Compliance period Evidence of submission CC8.7 Please indicate the verification/assurance status that applies to at least one of your reported Scope 2 emissions figures 35

36 No third party verification or assurance CC8.7a Please provide further details of the verification/assurance undertaken for your location-based and/or market-based Scope 2 emissions, and attach the relevant statements Locationbased or market-based figure? Verification or assurance cycle in place Status in the current reporting year Type of verification or assurance Attach the statement Page/Section reference Relevant standard Proportion of reported Scope 2 emissions verified (%) CC8.8 Please identify if any data points have been verified as part of the third party verification work undertaken, other than the verification of emissions figures reported in CC8.6, CC8.7 and CC14.2 Additional data points verified Comment No additional data verified CC8.9 Are carbon dioxide emissions from biologically sequestered carbon relevant to your organization? No 36

37 CC8.9a Please provide the emissions from biologically sequestered carbon relevant to your organization in metric tonnes CO2 Further Information Page: CC9. Scope 1 Emissions Breakdown - (1 Jan Dec 2015) CC9.1 Do you have Scope 1 emissions sources in more than one country? Yes CC9.1a Please break down your total gross global Scope 1 emissions by country/region Country/Region Scope 1 metric tonnes CO2e North America South America Africa and Middle East

38 CC9.2 Please indicate which other Scope 1 emissions breakdowns you are able to provide (tick all that apply) CC9.2a Please break down your total gross global Scope 1 emissions by business division Business division Scope 1 emissions (metric tonnes CO2e) CC9.2b Please break down your total gross global Scope 1 emissions by facility Facility Scope 1 emissions (metric tonnes CO2e) Latitude Longitude CC9.2c Please break down your total gross global Scope 1 emissions by GHG type 38

39 GHG type Scope 1 emissions (metric tonnes CO2e) CC9.2d Please break down your total gross global Scope 1 emissions by activity Activity Scope 1 emissions (metric tonnes CO2e) Further Information Page: CC10. Scope 2 Emissions Breakdown - (1 Jan Dec 2015) CC10.1 Do you have Scope 2 emissions sources in more than one country? Yes CC10.1a Please break down your total gross global Scope 2 emissions and energy consumption by country/region 39