Cenovus Energy Inc. (TSX: CVE) (NYSE: CVE) is establishing
ambitious environmental, social and governance (ESG) targets to
guide performance in its four ESG focus areas: climate &
greenhouse gas (GHG) emissions, Indigenous engagement, land &
wildlife, and water stewardship. These targets reflect the
company’s continued integration of sustainability into its strategy
and business plan to help foster long-term resilience. Leading
safety practices, strong governance and ongoing innovation remain
foundational to Cenovus. The ESG targets are part of Cenovus’s
focus on maintaining a low cost structure, growing free funds flow
and shareholder returns, and continuing to strengthen its balance
sheet as it implements the five-year business plan that was
communicated at Investor Day in October.
“Our environmental practices, low-emissions oil sands operations
and the relationships we’ve built with residents in areas where we
operate - including Indigenous communities - demonstrate our
commitment to sustainability leadership,” said Alex Pourbaix,
Cenovus President & Chief Executive Officer. “The meaningful
targets we’re announcing today build on our achievements to date
and position us to thrive in the transition to a lower-carbon
future. I’m confident we have the right business model and talent
in place to achieve them.”
Focus area |
2030 targets |
Climate & GHG emissions |
- Reduce emissions intensity by 30%(1)
- Hold absolute emissions flat(1)
|
Indigenous engagement |
- Achieve a minimum of $1.5 billion of additional spending with
Indigenous businesses
|
Land & wildlife |
- Reclaim 1,500 decommissioned well sites
- Complete $40 million of caribou habitat restoration work
|
Water stewardship |
- Achieve a fresh water intensity of maximum 0.1 barrels per
barrel of oil equivalent
|
(1) Includes scope 1 and 2
emissions from operated facilities (see Definitions section). Uses
a 2019 baseline.
In addition to its 2030 climate & GHG emissions target,
Cenovus’s long-term ambition is to reach net zero emissions by
2050.
The company’s 2030 ESG targets and long-term net zero emissions
ambition were established through a rigorous process that involved
work with external ESG consultants and included robust scenario
analysis. The work examined additional actions that could be
integrated into the company’s business plan and long-term strategy
to further improve ESG performance. The assessment indicated that
Cenovus has several options it can pursue to achieve the 2030
targets. The company is now conducting further analysis of the
various opportunities available and expects to provide more
information later in the year as part of the disclosure for its
normal course business planning. These opportunities are
anticipated to align with the priorities outlined in its current
five-year business plan.
Climate and greenhouse gas emissionsGovernments
around the world are supporting the transition to a lower-carbon
future by introducing increasingly stringent climate-related
policies and creating incentives for emissions-reduction solutions.
Companies that fail to adapt will face growing carbon-related
risks, while those that act now will position themselves for
long-term business resilience. That’s why Cenovus is focused on
demonstrating equally strong financial, operational and ESG
performance.
“A global transition to a lower-carbon future is underway and
Cenovus intends to be a part of that future,” said Pourbaix. “This
is a complex challenge and requires exploring multiple options and
opportunities. Our culture of innovation and sustainability
leadership at Cenovus, alongside our relentless focus on cost
management and operational excellence will support us in
determining the best actions to pursue.”
The company’s operations rank amongst the lowest in the context
of production emissions intensity compared to its oil sands peers.
Cenovus has demonstrated leadership through per-barrel GHG
emissions reductions at its oil sands operations of approximately
30% over the past 15 years. Building on this, the new 2030 GHG
emissions targets are among the most ambitious in the world for an
upstream exploration and production company.
Cenovus is targeting to reduce its per-barrel GHG emissions by
30% by the end of 2030, using a 2019 baseline, and hold its
absolute emissions flat by the end of 2030. This target addresses
scope 1 and scope 2 emissions from its operations (see Definitions
section).
The company is adopting a GHG emissions strategy that includes
multiple options to reach its targets. Opportunities that have been
identified are at various stages of advancement, and include:
additional operational optimization, incorporating cogeneration
capacity into future oil sands phases, more extensive deployment of
solvent technology, further advancement of the methane emissions
reduction initiatives already underway at its Deep Basin operations
and additional operational efficiencies, including the use of data
analytics. The company is also considering other direct and
indirect initiatives that generate credible, additional and
permanent carbon offsets.
Cenovus’s ambition of reaching net zero emissions by 2050 is
currently intended to address scope 1 and 2 emissions and will
require ongoing focus on technology solutions beyond those that are
commercial and economic today. Cenovus continues to identify
opportunities to participate in longer-term solutions to address
emissions from its operations and beyond. Examples of collaborative
efforts the company is currently participating in include:
co-founding Evok Innovations to work with global clean technology
companies on environmental solutions; co-funding the NRG COSIA
Carbon XPRIZE that is searching for ways to turn captured CO2
emissions into valuable products; and partnering with the
Massachusetts Institute of Technology (MIT) Energy Initiative,
which is tackling the world’s most pressing energy challenges,
including climate change.
Indigenous engagementIn addition to robust and
meaningful consultation practices, Cenovus is committed to
supporting economic reconciliation through business partnerships.
Since 2009, Cenovus has spent almost $3 billion with Indigenous
owned or operated businesses. The company is now targeting
additional cumulative spending with Indigenous businesses of at
least $1.5 billion over the next decade as it continues to enable
neighbouring communities to share in the benefits that come from
responsibly developing oil and natural gas resources. Cenovus’s
2030 Indigenous business spend target reflects cost efficiencies
achieved by the company over the last few years as well as reduced
annual capital spending compared with Cenovus’s first few years of
operation.
“Indigenous communities are among our closest and most important
neighbours,” Pourbaix said. “I’m proud of the relationships we have
built to date and believe that our commitment over the next 10
years will further improve the fabric of these local
communities.”
Cenovus’s Indigenous Inclusion Advisory Committee, created in
2017 and comprised of senior leaders from various functions, will
guide the plan to achieve the target as well as other
considerations such as increasing direct Indigenous employment at
the company. To further support the health and well-being of
Indigenous communities, Cenovus continues to partner with local
non-profit organizations that offer programs to help address needs
identified by community leaders. Cenovus has also committed to
additional company-wide Indigenous awareness training for its
staff, which is aligned with a call to action in Canada’s Truth and
Reconciliation report.
Land and wildlife Cenovus is continuing to
build on its leading land restoration and wildlife protection
activities with the addition of two new commitments. The first is a
proactive approach to managing reclamation obligations with a
commitment to complete reclamation of 1,500 decommissioned well
sites over the next 10 years, representing 75% of the company’s
existing well sites that are no longer in use and are set for
reclamation. The company has also joined the Alberta Energy
Regulator’s Area-Based Closure program that sets an annual spending
target for each company and allows the company to work with
industry peers to reduce costs and increase efficiency.
The second component of the land and wildlife commitment is to
voluntarily spend $40 million between 2016 and 2030 to restore more
land within caribou ranges than is disturbed by Cenovus’s activity.
This 2030 target is an extension of the 2016 announcement of a $32
million, 10-year caribou habitat restoration program, the largest
project of its kind in the world. The program involves restoring up
to 4,000 kilometres of linear land disturbances and planting up
to five million trees. Protection of caribou, listed as a
threatened species by the federal government, is a priority for
Cenovus as caribou ranges are spread across the oil sands region of
Alberta. As part of Cenovus’s ongoing commitment to caribou habitat
restoration, the company has cumulatively planted one million trees
since 2013.
“Biodiversity is extremely important to our business and to our
stakeholders in the areas where we operate,” said Pourbaix. “Our
activities on the landscape are temporary, and we have always taken
a proactive approach to liability management, developing
reclamation plans even before we begin work on a project. We will
continue to take biodiversity considerations into account as we
plan business decisions in the future in an effort to reduce our
company’s impact on land and wildlife.”
Water stewardshipCenovus is already a leader in
managing fresh water intensity compared to its oil sands peers and
has set a target across its oil sands and Deep Basin operations of
a maximum of 0.10 barrel of fresh water use per barrel of oil
equivalent by the end of 2030. This exceeds a target set by
Canada’s Oil Sands Innovation Alliance (COSIA) for in-situ
producers of 0.18 barrel by 2022.
“Managing our use of water resources efficiently and responsibly
is not only important to the environment, but also helps support
our low cost structure,” said Pourbaix. “The vast majority of the
water we use for our oil sands operations is produced water or
saline water that’s not fit for consumption or agricultural use.
Our non-saline water use is well below the industry average, and
we’re always looking for ways to further reduce the amount of water
we use and be more efficient with how we use it.”
SafetyDelivering safe and reliable operations
is the top priority for Cenovus and the company continues to build
on its track record of industry-leading safety performance. It
recently contracted a third party to conduct an independent safety
culture survey and is using the results to identify specific
opportunities to further improve safety performance and strengthen
its safety culture. The company’s corporate scorecard measures and
rewards staff at all levels based on personal and process safety
performance.
Integrating ESG into strategySince Cenovus
launched as a publicly-traded company 10 years ago, it has been a
core company belief that operating in a safe, ethical, legal, and
environmentally and socially responsible manner is inextricably
linked to generating strong business results and creating
shareholder value. This commitment is consistent with the ongoing
evolution of principles of sustainable resource development.
Cenovus established the four ESG focus areas after a thorough
external analysis of which ESG topics are considered most material
to the company and are of greatest priority for external
stakeholders. This analysis was combined with an internal review,
facilitated by third-party consultants, of the ESG factors
considered by senior leaders and other staff to have the most
meaningful impact on company performance and add the most value for
shareholders and other stakeholders.
The four ESG focus areas are integrated into Cenovus’s capital
allocation framework, and the company has established a
Sustainability Advisory Council of leaders from across the company
to further embed sustainability into the culture. The Board has
designated the Safety, Environment, Reputation and Reserves
Committee as having primary responsibility for sustainability, with
the Sustainability Advisory Council reporting into it, and other
committees and the Board as a whole sharing oversight
responsibility and engaging in frequent ESG discussions. The
company also plans to transition its annual ESG disclosure report,
which receives external verification on key ESG performance
metrics, to align with recommendations from the Task Force on
Climate-related Financial Disclosures (TCFD) and the Sustainability
Accounting Standards Board (SASB) as well as consideration of the
UN Sustainable Development Goals. Future ESG reports will also
include updates on progress towards the targets, starting with the
2019 ESG report scheduled for release in mid-2020.
ESG link to executive compensationCompensation
for Cenovus’s executive team, and especially its President &
CEO, is linked to an annual scorecard that includes financial and
operating metrics as well as safety and environmental performance,
including oil sands emissions intensity and process safety events.
The scorecard also impacts compensation for employees at all levels
of the corporation. As Cenovus works to further integrate the ESG
focus areas and targets into its long-term strategy, consideration
will be given to enhanced opportunities to link ESG performance to
executive and staff compensation.
DEFINITIONSScope 1 emissions are direct
emissions from owned or operated facilities. Cenovus accounts for
emissions on a gross operatorship basis. This includes fuel
combustion, venting, flaring and fugitive emissions. It does not
include emissions from the 50% non-operated ownership in the
company’s refineries or emissions from non-operated Deep Basin
assets.
Scope 2 emissions are indirect emissions from the generation of
purchased energy for the company’s operated facilities. For
Cenovus, this is limited to electricity imports.
ADVISORY
Forward-looking Information
This news release contains certain forward-looking statements
and forward-looking information (collectively referred to as
“forward-looking information”) within the meaning of applicable
securities legislation, including the United States Private
Securities Litigation Reform Act of 1995, about our current
expectations, estimates and projections about the future, based on
certain assumptions made by us in light of our experience and
perception of historical trends. Although Cenovus believes that the
expectations represented by such forward-looking information are
reasonable, there can be no assurance that such expectations will
prove to be correct. Readers are cautioned not to place undue
reliance on forward-looking information as actual results may
differ materially from those expressed or implied.
Forward-looking information in this news release is identified
by words such as “anticipate”, “believe”, “can”, “committed”,
“continue”, “expects”, “focus”, “guidance”, “opportunity”, “plan”,
“potential”, “priority”, “pursue”, “strategy”, “target”, “will”,
“would be” or similar words or expressions and includes suggestions
of future outcomes, including statements about: Cenovus’s 2030
climate change and GHG related targets and further ambitions,
including our ability to lower GHG emissions on both an absolute
basis and in terms of intensity in our operations and in respect of
Cenovus's target of reducing GHG emissions intensity by 30% and
holding absolute emissions flat by 2030, and its ambition of
reaching net zero emissions by 2050 (which is inherently less
certain due to the longer time frame and certain factors outside of
our control as outlined in more detail below); Cenovus’s ability to
achieve its targets and ambitions while maintaining a low cost
structure and focus on growing free funds flow and shareholder
returns and its options and opportunities to achieve such targets
and ambitions; our ability to maintain low steam to oil ratios;
Cenovus's plans with respect to continued Indigenous engagement,
including its target to spend $1.5 billion with Indigenous owned or
operated businesses over the next 10 years and the expected
benefits to neighbouring communities; Cenovus’s plans with respect
to land restoration, including its commitment to reclaim 1,500
decommissioned well sites over the next 10 years; projections for
future years and our plans and strategies to realize such
projections; strategy and related milestones and schedules as they
relate to our four ESG focus areas; references to Cenovus's 2030
ESG targets and commitments and further ambitions, including the
areas of focus which Cenovus will take to achieve such targets,
commitments and ambitions and the impacts of working towards such
targets, commitments and ambitions; the opportunities related to
setting and achieving targets, commitments and ambitions for ESG
focus areas; the capital costs associated with achieving the ESG
focus area targets, commitments and ambitions; our ability to
remain financially resilient, create value for shareholders and
thrive in a lower-carbon future; laws and government policy,
including those relating to climate change, and the impact thereof;
effective risk management; and our expectations regarding emissions
compliance costs.
Developing forward-looking information involves reliance on a
number of assumptions and other factors and consideration of
certain risks and uncertainties, some of which are specific to
Cenovus and others that apply to the industry generally. The
factors or assumptions on which our forward-looking information is
based include the following:
In respect of our 2030 GHG targets, we have assumed: Cenovus's
ability to successfully pursue NPV-positive capital investment
opportunities and other operational measures, including the
successful application to Cenovus's current and future operations
of existing technology and new technology that is expected to be
commercial in the near term; the successful implementation of our
proposed or potential strategies and plans to reduce emissions;
projected capital investment levels, the flexibility of our capital
spending plans and the associated source of funding; and Cenovus's
ability to otherwise access and implement all technology necessary
to achieve our 2030 GHG targets, the development and performance of
technology and technological innovations and the future use and
development of technology and associated expected future
results.
In respect of our 2050 net zero GHG ambition, we have assumed
the same factors as in respect of our 2030 GHG targets applied over
a longer term and will also rely on certain other factors and
events coming to fruition, which are, to a large extent, outside of
our control and thus less certain than those assumptions and
factors that relate solely to our 2030 GHG targets, which includes
continued development of commercial feasible carbon capture,
utilization and storage (CCUS) technology and its future economic
viability in Alberta; additional infrastructure to be built by
industry or government sources to support CCUS and other
technologies; and collaboration with partners to fund R&D into
cost improvements and novel approaches to carbon capture.
In addition, and generally in respect of the targets,
commitments, ambitions, strategy and related milestones and
schedules as they relate to our four ESG focus areas and the other
forward looking information in this news release, we have assumed:
Cenovus's ability to successfully pursue NPV-positive capital
investment opportunities and other operational measures, including
the successful application to Cenovus's current and future
operations of existing technology and new technology that is
expected to be commercial in the near term; projected capital
investment levels, the flexibility of our capital spending plans
and the associated source of funding; Cenovus's ability to
otherwise access and implement all technology necessary to achieve
our targets, commitments and ambitions, the development and
performance of technology and technological innovations and the
future use and development of technology and associated expected
future results; continuing collaboration with certain regulatory
and environmental groups; the accuracy of reserves and resources
estimates; commodity prices; demand levels for oil, natural gas,
gasoline, diesel and other energy sources; the availability of
transportation for our products; certain levels of future energy
use and consumption of oil and gas; Cenovus’s carbon price outlook;
the performance of assets and equipment; cost reductions and
sustainability improvements position for resiliency at bottom of
the cycle commodity prices of about US$45/bbl WTI and C$44/bbl WCS;
applicable laws and government policies, including royalty rates,
and laws and policies relating to climate change; future production
rates; the sufficiency of budgeted capital expenditures in carrying
out planned activities; the receipt, in a timely manner, of
regulatory and partner approvals, as applicable; Cenovus's ability
to generate sufficient cash flow to meet current and future
obligations; estimated abandonment and reclamation costs, including
associated levies and regulations applicable thereto; Cenovus’s
ability to, either internally or by working with external partners,
develop cost effective technologies to reduce freshwater use and/or
reduce overall steam requirements; the accuracy of third-party data
upon which we rely; the availability and cost of labour and
services; Cenovus's ability to obtain and retain qualified staff
and equipment in a timely and cost-efficient manner; the
availability of Indigenous-owned or operated businesses; Cenovus's
ability to access sufficient capital to pursue sustainability and
development plans; Cenovus's ability to implement capital projects
or stages thereof in a successful and timely manner; and other
risks and uncertainties described from time to time in the filings
Cenovus makes with securities regulatory authorities.
The risk factors and uncertainties that could cause our actual
results to differ materially, include: (i) impediments to Cenovus
meeting its 2030 climate and GHG emissions targets and further
ambitions, including: the effects of the implementation of
cogeneration and potential increases in our steam-to-oil ratio on
our overall emissions; Cenovus's ability to develop, access or
implement some or all of the technology necessary to efficiently
and effectively operate assets and achieve expected future results,
including in respect of climate and GHG emissions targets and
ambitions, the commercial viability and scalability of emission
reduction strategies and related technology and products; the
development and execution of implementing strategies to meet
climate and GHG emissions targets and ambitions, including
uncertainty over solvent supply and transportation, reservoir
performance and capital spending estimates; uncertainty regarding
the status of offsets, including due to cogeneration and renewable
energy generation, recognition under future government policies and
by ESG rating organizations and the measurability of offsets to
count as emissions reductions; uncertainty in respect of CCUS
regarding the eligibility of the credit generating pathways and the
volatility of the price-signal in the credit market and the
durability of the related policy through government changes; and
(ii) impediments generally to our business and in respect of
Cenovus meeting its targets, commitments, ambitions, strategy and
related milestones and schedules as they relate to our four ESG
focus areas and the other forward looking information in this news
release, including: increasing stakeholder consideration of ESG
factors and risks, including among credit rating agencies, lenders
and investors, which may impact Cenovus's ability to access capital
required to finance growth and sustaining capital expenditures; the
inability to receive necessary regulatory approvals in a timely
manner; reputational risk, including among stakeholders and
government; maintenance of key relationships with government and
other regulatory bodies; risks associated with technology and its
application to Cenovus's business; volatility of and other
assumptions regarding commodity prices; market competition,
including from alternative energy sources; potential failure of
products to achieve or maintain market acceptance; risks associated
with fossil fuel industry reputation and litigation related
thereto; changes in general economic, market and business
conditions; the effectiveness of Cenovus's risk management program;
Cenovus's ability to develop, access or implement some or all of
the technology necessary to efficiently and effectively achieve
expected future results, including on a commercial scale; the
occurrence of unexpected events such as fires, severe weather
conditions, explosions, blow-outs, equipment failures,
transportation incidents and other accidents or similar events;
unexpected cost increases or technical difficulties in constructing
or modifying manufacturing or refining facilities; availability of,
and our ability to attract and retain, critical talent; our
possible failure to obtain and retain qualified staff and equipment
in a timely and cost-efficient manner; risks associated with
climate change and our assumptions relating thereto; changes in the
regulatory framework in any of the locations in which we operate,
including changes to the regulatory approval process and land-use
designations, royalty, tax, environmental, greenhouse gas, carbon,
climate change and other laws or regulations, or changes to the
interpretation of such laws and regulations, as adopted or
proposed, the impact thereof and the costs associated with
compliance; the political and economic conditions in the countries
in which we operate or supply; and the occurrence of unexpected
events such as war, terrorist threats and the instability resulting
therefrom.
In addition, there are risks that the effect of actions taken by
us in implementing targets, commitments and ambitions for ESG focus
areas may have a negative impact on our existing business, growth
plans and future results from operations.
Readers are cautioned that the foregoing lists are not
exhaustive and are made as at the date hereof. Events or
circumstances could cause our actual results to differ materially
from those estimated or projected and expressed in, or implied by,
the forward-looking information. For a full discussion of Cenovus's
material risk factors, see "Risk Management and Risk Factors" in
our Management's Discussion and Analysis for the period ended
December 31, 2018, available on SEDAR at sedar.com, on EDGAR at
sec.gov and on Cenovus's website at cenovus.com. Cenovus undertakes
no obligation to update or revise any forward-looking information
except as required by law.
Cenovus Energy Inc.Cenovus Energy Inc. is a
Canadian integrated oil and natural gas company. It is committed to
maximizing value by sustainably developing its assets in a safe,
innovative and cost-efficient manner, integrating environmental,
social and governance considerations into its business plans.
Operations include oil sands projects in northern Alberta, which
use specialized methods to drill and pump the oil to the surface,
and established natural gas and oil production in Alberta and
British Columbia. The company also has 50% ownership in two U.S.
refineries. Cenovus shares trade under the symbol CVE, and are
listed on the Toronto and New York stock exchanges. For more
information, visit cenovus.com.
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