In January 2022, we published our first Carbon Management Plan. This plan outlines Crestwood’s near-term emissions reduction goals, activities and strategies that we intend to implement as we expand our midstream gathering and processing asset portfolio. Our Carbon Management Plan is an authentic approach to managing our critical midstream infrastructure, and it is centered on our public commitment to reduce greenhouse gas (GHG) emissions intensity annually.
As the world transitions to a lower-carbon future, we are committed to doing our part. Crestwood recognizes that changing climate and market conditions can expose our business and operations to risks and opportunities. Understanding the critical role of energy in society and the various pathways for emission reductions can help our industry meet energy demand while reducing risks associated with a changing climate. To provide affordable energy to a growing population while working towards a lower-carbon economy, oil and natural gas will remain an integral part of the energy portfolio for the next several decades.
Crestwood appreciates that as we grow our portfolio of assets and business, it is our responsibility to set in motion our own standard operating practices for emissions management. We remain resolute on incorporating all assets into our best practice sustainability initiatives and remain focused on realistic, practical and cost-efficient emissions reduction programs. Crestwood is committed to an authentic path to becoming an industry-leading midstream operator delivering energy responsibly and sustainably.
We are committed to climate action and believe that transparency, governance and oversight from the top are foundational to our success. Crestwood’s carbon management and climate strategies are driven primarily by the Board of Directors' Sustainability Committee. We report our emissions quarterly to the Board of Directors through an internal multi-discipline Carbon Management Working Group established in 2020. The Board’s Sustainability Committee is also responsible for approving the enterprise-wide compensation goal that is tied to a reduction in methane emissions intensity.
To build responsibility across the organization, we tie sustainability key performance indicators (KPIs) to employee compensation.
We believe our climate change strategy encompasses a practical, continuous improvement approach to reduce industry emissions while simultaneously meeting the world’s growing energy demand. Crestwood’s strategy is to efficiently manage the operations of its vital infrastructure to reduce unnecessary GHG emissions and mitigate the potential for fugitive and process emissions.
Managing GHG emissions, including methane, is an integral part of our overall environmental management program. We work collectively to meet or exceed all regulatory requirements, reduce the emissions intensity of our operations and use cleaner sources of energy where possible.
Carbon Management: Eight Key Commitments
(Click on the plus to read more)
(All emission reductions are from 2020 levels)
Operational emissions from midstream companies account for a small portion of total GHG emissions across the value chain. While our current focus is to reduce Scope 1 and Scope 2 emissions, Crestwood plans to begin Scope 3 emissions analysis in early 2023.
Total Scope 1
Emissions Intensity Rates: 2019-2021
Metric Tons CO2e/$MM Adjusted EBITDA
Metric Tons CO₂e/$MM Adjusted EBITDA
|Metric Tons CO₂e/$MM Adjusted EBITDA||2,287||1,972||1,602|
In 2021, we undertook a data visualization process to help us identify our sources of emissions by asset and equipment type. We found that approximately 70 percent of our Scope 1 emission comes from engines or the combustion of fuel to drive our compressors. Therefore, we are focusing our efforts on analyzing multiple options, including equipment replacement, operational changes and technological innovations, to decrease our emissions.
GHG Emissions Breakdown by Equipment Source
|Source||Metric Tons CO2e|
|Combustion Control Device||63,040|
Active coordination and collaboration across the industry drives innovation and solutions. Crestwood employees participate, chair committees and, in some cases, hold a board position.
In our voluntary partnership with ONE Future, we actively engage with industry peers and advocacy groups to identify technical solutions that better manage emissions, share best practices and reduce emissions. Crestwood has been an active and collaborative member of ONE Future since 2020, and our senior vice president, ESG and corporate communications sits on the board.
ONE Future Methane Emissions Target and Crestwood’s Performance
|Gathering & Boosting||Processing|
ONE Future Target
In 2021, we continued our membership and participation in The Environmental Partnership, a group of energy companies that are focusing on solutions that are technically feasible, commercially proven and will result in significant emissions reductions.
|The Environmental Partnership Goal||Crestwood’s Progress|
|Implement Leak Detection and Repair||100% of relevant Crestwood sites conducted LDAR inspections|
|Replace, remove or retrofit high-bleed pneumatic controllers||100% of high-bleed pneumatic controllers have been replaced|
|Compressor program to reduce emissions for facilities using reciprocating or centrifugal compressors||
Route blowdown emissions to a control device where feasible
Implement low-emission rod packing
Optimize operations maintenance schedules and activities to reduce downtime
|Pipeline blowdown program to reduce emissions for pipeline blowdowns throughout an asset||
Route gas to a control device, when available
Reduce pipeline pressure prior to blowdowns
|Flare management program||
Continued to follow procedures outlined in our Flaring Minimization Policy
Work with producers to ensure gas-gathering infrastructure is present and sufficient in advance of production coming online
Understanding, managing and reporting on climate-related financial risks and opportunities is critical for our business. We integrate climate-related considerations into key business planning and our annual Enterprise Risk Management (ERM) process. It is the responsibility of our executives and management team to implement this risk assessment and management process.
We have identified several potential climate-related risks. This includes physical and transition risks, e.g., effects of climate change on our assets and reduced demand for fossil fuels due to the implementation of policies designed to reduce GHG emissions. We have outlined our potential physical and transition risks and opportunities below, along with brief descriptions of the potential financial impacts.
In late 2022, we plan to assess the need for a Task Force for Climate-related Financial Disclosures (TCFD)-aligned scenario analysis and physical risk assessment of Crestwood operations. We will publish the results of the physical risk assessment in our 2022 sustainability report.
To learn more about how we identify and manage climate-related risks, please see the Risk Management page.
|Type of Risk||Climate-related Risks||Potential Financial Impacts||Mitigation Strategies|
||Policy and Legal||Carbon policies and regulations including carbon pricing||Increased price of natural gas; increase in operating costs||Engage with trade groups and policy makers; reduce GHG emissions across Crestwood's value chain to minimize any financial responsibility and maintain regulatory good standing|
|Regulation monitoring and limiting emissions of GHGs||Increased complexity in maintaining permits and acquiring new permits|
Regulation that bans or limits hydraulic fracturing
|Restricted supply and increased price of natural gas|
|United States government enacting comprehensive climate change legislation||Increased cost to compliance and operating costs|
|Lobbying efforts against institutional investors toward fossil-fuel producers||Decreased valuation of company|
|New emissions regulatory and reporting requirements||Increased cost to compliance and operating costs|
|Reputational||Public sentiment shifting away from fossil-fuel producers||Reduced demand for oil and gas||Corporate governance and transparency; continued engagement with communities; advocacy|
|Market||Unfavorable ESG reviews of our company or industry by third parties||Decreased valuation in company||Continued engagement with trade groups, industry peers, and investors; advocacy; transparency|
|Investor sentiment shifting away from fossil-fuel producers||Reduced demand for oil and gas; decreased valuation of company|
|Physical||Acute||Increased frequency and severity of severe weather events (storms, droughts and flooding)||Interruption of operations; damage to assets; and increased insurance costs||Emergency response plans; risk management processes|
Reducing our methane emissions remains a critical component of our sustainability strategy and Carbon Management Plan. Detecting and repairing methane leaks is vital as we test and deploy new methods to mitigate methane emissions.
Crestwood relies on a variety of tools and techniques as part of our well-established leak detection and repair (LDAR) process. In addition to traditional use of optical gas imaging (OGI) cameras, recent advancements in technologies are providing additional monitoring solutions. Each of these technologies has a specific application or purpose.
Our focus in 2022 is to set a strong foundation, with an emphasis on data management. In early 2022, we incorporated GHG emissions performance into our due diligence process. We are committed to going beyond U.S. EPA emission factors and are prepared to invest in the necessary technology for quantitative emissions calculations and data. Therefore, we expect to:
- Develop more robust GHG emission inventories for Scope 1 and Scope 2 emissions and prepare for a Scope 3 emissions inventory in 2023
- Expand our continuous methane monitoring pilot to three additional locations utilizing multiple technologies including conducting a flyover with Bridger Photonics on 100 percent of our Williston Basin assets, which includes our newly acquired Oasis Midstream facilities
- Incorporate Oasis Midstream assets into our carbon management practices and incorporate emissions indicators into our ESG due diligence process for newly acquired operating activities
- Engage with external parties, such a MiQ to establish midstream RSG standards and prepare the business for RSG certification
- Conduct a full TCFD-aligned scenario analysis and physical risk assessment of Crestwood’s operations in late 2022
- Develop an Acquisition Carbon Protocol to establish due diligence and carbon performance standards for new acquisitions and mergers
- Participate in Cheniere’s quantification, monitoring, reporting and verification (“QMRV”) project for the midstream sector to improve the overall understanding of GHG emissions and further the deployment of advanced monitoring technologies and protocols
For additional information on how we manage emissions, please see the following documents: