Chevron Corporation Quantification ofGHGs Based on Methods from theAmerican Petroleum Institute

IPCC Expert Meeting on Application of 2006 IPCC Guidelines to Other Areas
Sofia, Bulgaria
July 2014© 2014 Chevron

Introduction

 Responsible for Chevron’s corporate GHG reporting Provide support to business units for complying with GHG regulations© 2014 Chevron

2Agenda Overview of Chevron’s GHG Inventory Methodology
 Examples of IPCC Methodologies Used for Facility-level Reporting© 2014 Chevron

3

Chevron GHG Inventory Overview

 Chevron has publicly reported its
GHG emissions since 2002

© 2014 Chevron4Chevron GHG Inventory Overview

 Chevron has publicly reported its
GHG emissions since 2002
 Corporate GHG Reporting Protocol© 2014 Chevron

5Chevron GHG Inventory Overview

 Chevron has publicly reported its
GHG emissions since 2002
 Corporate GHG Reporting Protocol– Standard calculation method basedon American Petroleum Institute’s(API) “Compendium of GHG
Emissions Methodologies for the Oil
and Natural Gas Industry”

Business units may use methodologies
required by local governments in place of API© 2014 Chevron

6Chevron GHG Inventory Overview

 Chevron has publicly reported its
GHG emissions since 2002
 Corporate GHG Reporting Protocol– Standard calculation method basedon American Petroleum Institute’s(API) “Compendium of GHG
Emissions Methodologies for the Oiland Natural Gas Industry”– Accounting and reporting based onInternational Petroleum Industry
Environment Conservation
Association (IPIECA) guidelines© 2014 Chevron7

Chevron GHG Inventory Overview

 Chevron has publicly reported its
GHG emissions since 2002
 Corporate GHG Reporting Protocol– Standard calculation method basedon American Petroleum Institute’s(API) “Compendium of GHG
Emissions Methodologies for the Oiland Natural Gas Industry”– Accounting and reporting based on
International Petroleum Industry
Environment Conservation
Association (IPIECA) guidelines

 Uncertainty assessments also basedon IPIECA guidance© 2014 Chevron8

American Petroleum Institute Compendium Background Represents oil and gas industry best practices for estimating GHG
emissions– Collaborated with other industry-related protocol developmentorganizations– Began in 2001

 Emission factors drawn from sources including:– US Energy Information Administration– US Environmental Protection Agency– IPCC– Industry data– Forums– Foreign regional associations or governmental agencies© 2014 Chevron9

Boundaries – based on IPIECA guidelines Organizational Boundaries– Equity Share– Operational Control

 Operational Boundaries– Scope 1 – Direct Emissions• Stationary combustion• Mobile combustion• Flaring• Venting• Process emissions– Scope 2 – Indirect

WBCSD/WRI GHG Protocol• Imported electricity andsteam– Scope 3 – Indirect• Product combustion© 2014 Chevron10

Emerging trends in carbon pricing mechanisms

 National and sub-national governments around the world are
implementing carbon pricing mechanisms and/or mandatory reporting
regulations
Government Type of GHG regulation
US Federal

Mandatory reporting

California

Cap and tradeEU

Cap and trade

Australia

Cap and trade/tax

Kazakhstan

Cap and trade

South Africa

Carbon tax

South Korea

Cap and trade

Canada prov. Cap and trade
China cities© 2014 Chevron

Cap and trade11

Emerging trends in carbon pricing mechanisms

 National and sub-national governments around the world are
implementing carbon pricing mechanisms and/or mandatory reporting
regulations© 2014 Chevron

Government

Type of GHG regulation

GHG Calc Method

US Federal

Mandatory reporting

US Federal

California

Cap and trade

California

EUCap and trade

EUAustralia

Cap and trade/tax

Australia

Kazakhstan

Cap and trade

KazakhstanSouth Africa

Carbon tax

South Africa

South Korea

Cap and trade

South Korea

Canada prov. Cap and trade

Canada prov.

China cities

China cities

Cap and trade12

Specific examples of IPCC methods used

 Kazakhstan Chevron facility– IPCC methodology used as a basis for accounting for national GHG
mandatory reporting requirements and for cap-and-trade system– Noted a 3 million tonne CO2e difference between IPCC-based
government method and API© 2014 Chevron

13

Details on differences between API and Kazakhstan(RoK/IPCC) governmental methodEmission type© 2014 Chevron% difference (positive means
RoK is greater)

Stationary combustion – diesel-2%

Stationary combustion – gas-3%

Vehicle combustion – rail

2%

Vehicle combustion – gasoline-1%

Vehicle combustion – diesel

4%

Venting

0%14Details on differences between API and Kazakhstan(RoK/IPCC) governmental method
Emission typeLeaks – Oil andgas production% difference(positive means
RoK is greater)
14657%

Comments

Fugitives less significant incorporate API calculation – highH2S content means all piping must
be welded and underground

IPCC EF range: 0.0000015 to 0.06 Gg CH4/10^6 m^3(-12.5% to +800% uncertainty)
Chevron selected: 0.03 as ‘average’© 2014 Chevron15

Details on differences between API and Kazakhstan(RoK/IPCC) governmental method
Emission type% difference(positive means
RoK is greater)

Comments

Leaks – Oil andgas production

14657%

Fugitives less significant incorporate API calculation – highH2S content means all piping must
be welded and undergroundLeaks – Gas
transport

17350%

Used tier 1 for RoK (transportedvolume), corporate API used countof regulating stations© 2014 Chevron16

Details on differences between API and Kazakhstan(RoK/IPCC) governmental method
Emission type% difference(positive means
RoK is greater)

Comments

Leaks – Oil andgas production

14657%

Fugitives less significant incorporate API calculation – highH2S content means all piping must
be welded and undergroundLeaks – Gas
transport

17350%

Used tier 1 for RoK (transportedvolume), corporate API used countof regulating stations

Leaks – Gas
processing-67%

Same equation, different emission
factor© 2014 Chevron17

Leaks – Gas processing

SourceDescriptionFactor

Derivation

IPCC
1.B.2.b.iii.3

Default weighted
factor for gas
processing fordevelopingcountries

0.15 – 0.25
tonnes CH4 per10^6 m^3
produced (-40%to +250%)

Lower limit based on
developed countries’
factors(Canadian Ass.of Oil
Producers 2004, API
2004, GRI/EPA 1996,
EPA 1999)

API Table
6.2

Facility levelaverage fugitiveemission factors
for gas processing
plants

1.032 tonnes
CH4 per 10^6m^3 processed(+/- 82.2%)

GRI/EPA study v2 (1996)© 2014 Chevron18

Details on differences between API and Kazakhstan(RoK/IPCC) governmental method
Emission type% difference(positive means
RoK is greater)

Comments

Leaks – Oil andgas production

14657%

Fugitives less significant incorporate API calculation – highH2S content means all piping must
be welded and undergroundLeaks – Gas
transport

17350%

Used tier 1 for RoK (transportedvolume), corporate API used countof regulating stations

Leaks – Gas
processing-67%

Same equation, different emission
factorFlares30%

Used tier 2 for RoK (defaultemission factor), vs tier 3(composition) for corporate API© 2014 Chevron19Emission Factor Uncertainties (IPCC GL 4.2.2.7.1)

 IPCC GL Vol 2 Ch 4 Fugitive Emissions– “These uncertainties … reflect the level of uncertainty that may beexpected when the corresponding emission factors are used to develop
emission estimates at the national level.
– Use of the presented factors to estimate emissions from individual
facilities or sources would be expected to result in much greater
uncertainties.”© 2014 Chevron

20

IPCC and Republic of South Africa (RSA) RSA in the process of developing a carbon tax that will affect Chevron
facilities– Mandatory GHG reporting methods being developed based on IPCC
guidance– Subset (likely excluding fugitives) of those methods are expected to beused to calculate carbon tax

 Categorization of “process emissions”– RSA in discussions on the treatment of process emissions acrossindustries to be covered by tax• “Process emissions” according to API include hydrogen plants, glycol
dehydrators, fluid catalytic cracking units• IPCC makes no differentiation© 2014 Chevron

21Summary Chevron leverages the API Compendium as a basis for corporate
reporting Chevron business units may opt to use local regulatory methods
instead, if applicable– Growing numbers of national/sub-national carbon pricing mechanisms
mean growing numbers of calculation methods

 IPCC methods for national level inventories are being used to
calculate facility level emissions, including those with wide uncertainty
ranges© 2014 Chevron22