A Message from Our Chairman and CEO
As I write this, the COVID-19 pandemic has caused unprecedented social and economic upheavals worldwide, undermining oil demand at a time when our industry already faced a growing oversupply. The subsequent oil price collapse tested the strength of our strategic planning. ConocoPhillips responded efficiently and adapted quickly, stepping up to the challenges of a volatile and uncertain market that is now in early recovery. I am proud of the efforts of our employees and appreciative of the support of our stakeholders.
During these trying times, our top priorities have been protecting the wellbeing of our workforce and their families, mitigating the spread of COVID-19, and running the business safely. Yet we have also retained focus on our core mission – investing in development of the energy supply essential to human and economic progress, while effectively managing social and environmental concerns, including climate change.
In doing so, we are striving to meet the objectives of the Paris Agreement to manage climate in the context of sustainable development, and the United Nations Sustainable Development Goals that guide global actions to address social and environmental issues. In addition, we are conducting our business in a manner to maintain our financial viability and competitiveness through an energy transition.
Our business planning process tests portfolio and capital allocation choices against a wide range of energy scenarios. It incorporates input from stakeholders and establishes priorities based on regular assessments of business risk and impact. The resulting business plan is by design responsive to challenges and resilient to risks. It reflects and leverages our competitive advantages, including strategic flexibility, low cost of supply, low sustaining price and strong balance sheet.
Along with financial performance, we are committed to performance with a purpose and broader sustainability. This has been the case since the 2003 introduction of our first sustainable development and climate change positions. Now collectively referred to as ESG (environmental, social and governance) performance, the concept entails responsibly delivering long-term value to all stakeholders, including our home communities, employees and shareholders.
In serving the communities where we live and work, we provide investment and jobs, mitigate impacts to water resources and biodiversity and respond to local concerns. For investors, governance-related priorities include management of environmental and social risks, for which responsibility extends from our board of directors downward to our executive leadership team and managers and employees at all levels. Their assessments of risks inform decisions ranging from long-term strategy to facility design. For stakeholders in general, priorities include management of risks related to climate change, human capital management, human rights and protection of water resources.
Our actions speak clearly. We advocate enactment of a well-designed U.S. price on carbon through our membership in the Climate Leadership Council; we believe this would be the most effective tool to reduce greenhouse gases economy wide. To protect water resources, we are developing centralized gathering and distribution systems in the Delaware and Montney basins that reuse treated produced water for hydraulic fracturing. This reduces freshwater consumption, produced water disposal volumes and tanker-truck traffic. On Alaska’s North Slope, we have protected subsistence resources by meeting with community leaders and residents to gather local and traditional knowledge, then revising our Willow project development plan.
We are often asked how we measure successful ESG performance. As an exploration and production company, we define success as meeting society’s energy needs while reducing operational impacts, advocating for sustainable policy, valuing community input, building resiliency and creating shared value for stakeholders. We recognize society’s rising expectations for ESG performance, and plan to be the company of choice for stakeholders through our strong strategic planning, focus on environmental and social performance and active external engagement. We will keep you informed of our progress.
Ryan Lance, Chairman and Chief Executive Officer