Integrated Sustainability was established in 2015 as one of six Matters of Importance within Vermilion’s business framework, or VET Vision, which we revitalized in 2020-21. In our new VET Vision, each of our Matters of Importance has a clear 2030 outcome, along with a strategy for achieving it. Within Integrated Sustainability, our goal is to be an energy producer of choice for our key stakeholders: our people, shareholders, communities, governments and regulators, customers, partners and suppliers. This contributes significantly to Vermilion’s Purpose: to responsibly produce essential energy, while delivering long-term value to our stakeholders.
To achieve our 2030 sustainability outcome, our strategy identifies three key areas:
This provided an opportunity to assess major factors impacting the speed of the energy transition, including the influence of new energy technologies, their potential speed of adoption, anticipated changes in energy policy and regulation and their rate of change, and emerging market pathways such as India. The scenario analysis extended to the risks and opportunities related to these factors, the resulting impacts on the company’s future in the short, medium and long term (2050+), and strategies for resilience – overall and by business unit.
Countries in all of our operating regions are implementing policies to create a low-carbon future for the world’s economy. As a global energy producer, we have an opportunity to be part of the solution: to help ensure the supply of safe, reliable and affordable energy during this transition. That’s why we have set an aspirational target of net zero emissions from our operations by 2050 (Scopes 1 and 2).
We recognize this must be founded on a clear pathway. Supported by our existing track record in setting and meeting emission reduction targets, we are continuing the journey with a target to reduce our company’s Scope 1 emissions intensity by 15-20% by 2025, compared to a 2019 baseline. We have also committed to setting additional targets every five years, which will include assessing how Scope 3 emissions and intensity may be reduced.
Our plan rests on three strategic activities:
- Focusing on efficient and responsible production of oil and natural gas, viewing emissions as potential energy source:
- Lower carbon fuels. Since 2012, we have shifted our production mix towards natural gas as a cleaner burning fuel than other fossil fuels. We also sell our fuels within the country of production wherever possible, reducing the carbon footprint associated with transportation of the fuel to consumers while increasing national energy security.
- Socially responsible fuels. We are committed to ensuring that our products are produced in an environmentally and socially responsible manner, respecting worker rights and community engagement. We operate in regions noted for their stable, well-developed fiscal and regulatory policies related to oil and gas exploration and development, and for their robust health, safety, environmental and human rights legislation.
- Transparency and reporting. We have established a strong record of reporting on greenhouse gas emissions, energy usage and other key environmental metrics, which has supported our emission reduction targets.
- Implementing technically and economically feasible options for emission reduction, covering combustion, flaring, venting and fugitive emissions:
- Greater energy efficiency. Many energy and operational efficiency initiatives go hand-in-hand, which in turn helps us minimize our carbon footprint and reduce greenhouse gas emissions.
- Lower greenhouse gas emission intensity. We are committed to reducing the greenhouse gas emissions associated with our production, with particular focus on methane.
- Exploring new and evolving technologies and processes to identify synergistic fits for our business in both traditional and renewable energy production:
- Alternative energy. We are continuing to develop our knowledge and use of alternative energy sources, including geothermal energy, for which our internal expertise in engineering, geoscience and drilling is particularly well suited. This work has begun with the geothermal potential of our produced water, supporting a circular economy model that conserves, reuses and recycles resources to better protect our environment. It is also expanding into areas such as biogas and the conversion of traditional oil and gas assets to geothermal and hydrogen production.
We are committed to reducing the impact our operations have, beginning with regulatory compliance across all business units. Our conservation efforts are further focused in three areas:
- Water: We recognize water as a basic human right, and as a vital resource that is shared among many stakeholders in our communities. We are therefore committed to protecting both the supply and the quality of water sources in our areas of operation by:
- Proactively preventing harm and supporting healthy surface and groundwater bodies
- Reducing potable and freshwater usage to the lowest level practical, and
- Taking a lifecycle and circular economy approach to water, exploring opportunities to reuse and recycle products such as produced water
- Asset Retirement Obligations: We are adapting our long-term Asset Retirement Obligation management to include revitalizing or reusing assets to benefit our environment and our communities.
- Biodiversity: We are focusing on protecting the species and habitats around us by proactively identifying biodiversity risks and opportunities, and implementing associated plans.
Our communities comprise a wide diversity of people and organizations, but they have one key thing in common: they care deeply about the safety, environmental stewardship and corporate citizenship that we bring to our local operations. In addition, our people care deeply about their communities – whether we work there or live there, these are the places we call home.
We therefore steward our operations and relationships to demonstrate our commitment to being a responsible producer and a valued and trusted neighbor and business partner, including:
- Transparency with respect to safe and environmentally responsible operations, including our potential impacts on local communities
- Maintaining strong, genuine relationships with our communities, with engagement based on respect, listening and openness, and
- Creating a shared value focused on local economic and social development
With these broader categories, Vermilion emphasizes initiatives that will have a positive, lasting impact both short-term and long-term. We assess these on a project-specific basis, including benefit to the communities where we operate, benefit to the environment (reduced carbon emissions or fuel consumption, carbon offset, water reduction/reuse, etc.), and financial considerations. Progress is being tracked on a monthly, quarterly and annual basis, shared with all staff (office, field staff, management, etc.), and used to support initiatives that are in the assessment, planning or initial implementation stages.
Risks and Opportunities
Our strategy is informed by our analysis of sustainability-related risks and opportunities, including those related to climate and water, in short-term (0-3 years), medium-term (3-6 years) and long-term (6-50 years) horizons. These are described below, with their potential company and financial impact (assessed using processes such as scenario analysis, cost projections and our Emissions Long-Range Planning tool), and our resulting management approach. Our annual CDP Climate Change and Water Security submissions provide additional information, including where in the value chain these risks and opportunities occur.