Assessing and Valuing Impacts on Natural Capital: A Whole-O&G Company Approach

Abstract

Abstract Current and future disclosure frameworks and environmental legislation require oil and gas companies to disclose their environmental and social impacts and how their environmental, social and governance (ESG) practices affect their business. Reads, a commercially available tool developed by Repsol to help organizations manage their impacts on nature through a natural capital valuation approach, enables companies to integrate environmental considerations into their business strategies for better decision-making. Since the initial version of the approach was presented at the 2018 SPE Congress (SPE-190678-MS), Reads has evolved to align with the Natural Capital Protocol and the ISO 14008:2019 standard. The methodology that supports this unique approach has been made publicly available by Repsol. This manuscript presents the results of the company's natural capital assessment, with results from nearly 40 industrial facilities such as refineries, chemical plants, exploration and production facilities, combined cycle power plants, wind, solar and hydro power generation, covering most stages of the energy value chain. By applying Reads to the assets operated by Repsol, the most significant impacts on natural capital are identified, allowing the definition of an environmental management roadmap that includes the best impact reduction measures from a CBA and NEBA perspective. A ranking of Repsol's assets based on a standardized index of natural capital impacts was obtained for 2022. This approach addresses impacts on climate change, water resources and ecosystem services and biodiversity. Impact intensity indicators, using gigajoules as the energy unit, were used to allow comparisons regardless of the size and type of energy produced by the facilities. The main impact categories per business are summarized with an emphasis on the types of impacts that represent a greater percentage of the global impact for each activity, including O&G production, energy generation, and industrial activities, in both offshore and onshore environments. The benefits of this corporate portfolio analysis include facilitating the development and prioritization of specific action plans, justifying corporate decisions on materiality for reporting and identifying urgent actions. Furthermore, as Reads allows for the inclusion of restoration and offsetting activities, this analysis can be used to support the decision making of any organization on the path to decarbonization, and sustainability beyond carbon, and/or to meet its net positive impact ambition.