TIDMZPHR
RNS Number : 0931B
Zephyr Energy PLC
08 June 2021
Prior to publication, the information contained within this
announcement was deemed by the Company to constitute inside
information as stipulated under the UK Market Abuse Regulation.
With the publication of this announcement, this information is now
considered to be in the public domain.
8 June 2021
Zephyr Energy plc
(the "Company", "Zephyr" or the "Group")
Zephyr pledges to achieve 100% carbon-neutral operations by 30
September 2021;
launch of carbon measurement and mitigation initiative with the
Prax Group
Zephyr Energy plc (AIM: ZPHR), the Rocky Mountain oil and gas
company focused on responsible resource development, is pleased to
announce that it intends to achieve carbon-neutrality across its
operational footprint by 30 September 2021. This industry-leading
pledge is a major first step towards near-term delivery of
hydrocarbons produced with an operational "net-zero" carbon impact,
and the Company's Board members are unanimously committed to this
initiative.
As an integral part of this undertaking, Zephyr has agreed to
collaborate with the Prax Group, a British multinational
independent oil refining, trading, storage, distribution and retail
conglomerate dealing in crude oil, petroleum products and
bio-fuels, headquartered in London, United Kingdom. The Prax Group,
which has trading offices in London, Singapore and the United
States of America ("US"), will work with Zephyr to measure, reduce
and mitigate greenhouse gas ("GHG") emissions across Zephyr's
businesses, with mitigation efforts primarily focused on the
purchase of sustainability/decarbonisation offsets (called Verified
Emission Reductions or "VER") from reputable pre-vetted developers
of sustainable projects. This exercise will include Zephyr's
current corporate activity, its non-operated production assets in
the Williston Basin, North Dakota, US, and its upcoming appraisal
drilling project in the Paradox Basin, Utah, US.
The cost to purchase the appropriate number of VERs to offset
Zephyr's growing operational footprint is expected to average well
under $1 per barrel of oil equivalent produced, although the net
cost to Zephyr may be considerably less given the potential to sell
oil volumes at a premium as a result of the anticipated "net-zero"
operational carbon status of those volumes. Purchases of VERs will
be staged in increments matching Zephyr's forecast production
profile to facilitate effective cash management. Recent
market-based evidence suggests that purchasers and supply chain
partners of "net-zero" operated volumes are willing to absorb costs
associated with the purchase of VER offsets related to oil and gas
production.
Zephyr's initial efforts will be focused on its Scope 1 GHG
impacts(1) , which cover all direct emissions from Zephyr-owned or
controlled sources - from the drilling and production of operated
and non-operated hydrocarbons through to transport to the refinery,
as well as all other corporate emissions. Over the next few months,
Zephyr and the Prax Group will focus on measuring, reducing and
mitigating operational GHG emissions across the Company, and
Zephyr's pledge to achieve carbon-neutral operations in a rapid
manner is demonstrative of Zephyr's commitment to achieving
sector-leading environmental standards.
Zephyr's Board also understands that mitigating the Company's
operational CO2 impact is only a first step - emissions from the
ultimate end-use of produced volumes have a significant CO2 impact
as well. Going forward, Zephyr pledges to work with potential
end-users of its products to explore routes to more fully offset
its product CO2 (Scope 3 Emissions(1) ) to the greatest extent
possible.
In addition to the environmental benefits that will result from
Zephyr's efforts to reach carbon-neutrality, the Company
anticipates that this approach will also yield economic benefits -
including expanded access to a wider group of potential
institutional investors, as total ESG-focused assets under
management are currently estimated to be over US$30 trillion
globally. Moreover, the average cost of capital for companies with
committed ESG and decarbonisation initiatives has been shown to be
demonstrably less than that of traditional resource companies. The
Board believes that incremental regulatory benefits may also
materialise from Zephyr's actions.
Colin Harrington, Chief Executive of Zephyr, said :
"When we relaunched the Company as Zephyr almost a year ago, the
Board unanimously agreed a policy to always operate with two core
values in mind: to be responsible stewards of our investors'
capital and to be responsible stewards of the environment in which
we work.
"These values are straightforward, fundamental, and at the
forefront of every decision we make. It's why I'm excited that
today's announcement, a pledge to offset 100% of carbon emissions
from our operations starting this September, is both a
groundbreaking initiative for Zephyr and a major step towards a
tangible demonstration of our commitments.
"Zephyr recently entered a new phase of growth - we are now a
cash-generating oil producer with plans for near-term development
on our flagship Paradox Basin appraisal project. This new phase
comes with a corresponding new carbon impact, which is why the
timing is right to launch what we believe is an industry-leading
environmental commitment. As our existing asset portfolio consists
of light, high-quality, low-GHG intensity resource developments, we
have confidence that Zephyr is an ideal platform from which to
launch this initiative.
"The path forward, albeit nascent and experimental, is grounded
in the sentiment that good environmental & operational
performance + good governance = superior investor returns. Today's
announcement is illustrative of this thesis. We believe that
eliminating our operational carbon footprint is important from an
environmental perspective - and we also feel that our shareholders
will benefit from the potential for premium commodity pricing,
access to a wider pool of institutional investors and cheaper cost
of capital, as well as enhanced relations with our regulatory
partners.
"We've set ourselves an ambitious target to reach carbon
neutrality for all operations by the end of September, and I am
thankful for our collaboration with Christopher Dillman and his
team at the Prax Group for assisting us with this endeavour. Their
capabilities in structuring and executing bespoke actionable
decarbonisation strategies makes them an excellent fit for
Zephyr.
"We look forward to working with the Prax Group team to deliver
on this commitment to improve Zephyr's environmental performance
and minimise the impacts of our corporate activity and hydrocarbon
production."
Contacts:
Zephyr Energy plc Tel: +44 (0)20 7225
Colin Harrington (CEO) 4590
Chris Eadie (CFO)
Allenby Capital Limited - AIM Nominated Tel: +44 (0)20 3328
Adviser 5656
Jeremy Porter / Liz Kirchner
Turner Pope Investments - Broker Tel: +44 (0)20 3657
James Pope / Andy Thacker 0050
Flagstaff Strategic and Investor Communications Tel: +44 (0) 20 7129
Tim Thompson / Mark Edwards / Fergus 1474
Mellon
About the Prax Group: Headquartered in the UK, the Prax Group is
a British multinational independent oil refining, trading, storage,
distribution, and retail conglomerate dealing in petroleum products
and biofuels. The Group has established principal offices in
London, Houston and Singapore, and additional satellite offices
across the world.
Footnotes:
(1.) Scope 1 emissions are reported as Direct GHG emissions from
equipment or other sources owned (partly or wholly) and / or
operated by the company. For increased clarity when reporting
Direct GHG emissions, those Scope 1 emissions associated with
energy sold to others can be reported separately as Direct
emissions from exported energy.
Where an operation purchases energy already transformed into
electricity, heat or steam, the GHGs emitted to produce this energy
are Scope 2 and reported as Indirect GHG emissions from imported
energy. The 2015 update of the GHG Protocol distinguishes between
two calculation approaches, 'location' and 'market based' for Scope
2 emissions and it is helpful for companies using this standard to
highlight which method is used in their reporting.
You can report Scope 3 emissions as Other indirect emissions,
which refer to GHG emissions related to your company's value chain
(see Module 1 Reporting process). The GHG Protocol supplemented its
standard with its 2011 publication of the Corporate Value Chain
(Scope 3) Accounting and Reporting Standard [10]. Of the 15
categories of Scope 3 emissions defined in this standard, Category
11 'Use of sold products' is the most relevant to the oil and gas
industry. There is a growing stakeholder interest related to Scope
3 disclosures. In 2016, IPIECA published Estimating petroleum
industry value chain (Scope 3) greenhouse gas emissions [11] to
provide additional oil industry methodology guidance for the 15
categories.
.
Definitions are taken from sustainability reporting guidance for
the oil and gas industry. IOGP Report 437. 4(th) Edition 2020.
www.ipieca.org
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