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2016 Sustainability Report
Values Matter
2016 Sustainability Report
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2016

Greenhouse Gas Emissions

Our Emissions Performance

We continued to improve our emissions inventory and quantification methodology in 2015, which is primarily based on the API Compendium of Greenhouse Gas Emissions Methodologies for the Oil and Natural Gas Industry.

In 2015, we decreased our gross greenhouse gas emissions while increasing production. This also reflects a decrease in our emissions intensity on a per unit of production basis. We have achieved this success thanks to our energy efficiency programs, emission reduction initiatives and an operational structure that maximizes production while reducing our footprint and energy consumption intensity. (see Performance Metrics)

While our production increased by 11% from 2014 to 2015, Vermilion's gross emissions profile decreased by 11.5% during the same period. This absolute reduction reflects a 24% decrease in emissions intensity.

In 2015, our gross Scope 1+2 emissions decreased 9%. When compared to our 2015 Scope 1 and 2 emissions, we have avoided 93,020 tCO2e. Of this value, 53,168 tCO2e is directly related to emission reduction projects in Canada and France, while the remaining avoided emissions are related to producing oil and gas more efficiently.

Notes: Production referenced is only for operated business units falling under the financial control boundary, not total corporate production. As per the GHG protocol, our emissions calculations reflect an adjustment to base year emissions to allow for a comparison in terms of operational size. 

Fugitive Emissions

Our active fugitive emissions (FE) monitoring program is aimed at reducing preventable losses to the atmosphere. We complete fugitive emissions qualitative surveying (i.e. thermal imaging) to identify potential sources of fugitive emissions in the methane value chain. Once point sources are identified, facilities engineering prepares appropriate mitigation action plans to sources where practical. Fugitive emissions surveying is completed across Vermilion's operations. These programs vary in extent based on business unit, and range from select major facilities and smaller locations up to 25% of assets in a BU per year. We also undertake reviews of the low pressure venting that occurs at our operations in Australia, and use the data to determine appropriate risk mitigation measures. In 2012, we initiated a review of emissions associated with our Australia operations, and in 2014 we completed an emissions accounting review to increase the accuracy of our emissions calculations.

Vermilion complies with all regulatory requirements relating to emission reporting and reduction. We are also actively monitoring regulatory changes in our operating areas, including Alberta, to anticipate potential changes and ensure that we are in a position to comply with future requirements.

Reducing Flared and Vented Volumes of Gas

Canada

In April 2014, we closed the purchase of a small private company with light-oil assets in Southeast Saskatchewan.  In the short period of time that we have owned these assets, we have made important improvements that reflect Vermilion’s focus on safety, operational excellence and continuous improvement; 2015 reflects the first complete calendar year of operation for this asset.

A significant focus has been on the reduction of flared and vented solution gas at these sites through gas conservation.  In 2015, through the construction of new infrastructure, tying our production into gathering systems, installing vapour tanks with flares, upgrading battery flares including upgraded ESD systems, and converting to instrumental air systems, we have reduced emissions in our Southeast Saskatchewan assets by 42%. We are targeting a 50% reduction in gross emissions from our Saskatchewan asset by 2020 compared to 2014 emissions levels.

In addition to reducing our Canadian volumes of flared and vented gas, we have in recent years taken actions to reduce our emissions in our other business units.

France

Gas Export System

The oil producing field of Vic Bilh has, in the past, generated an average of 25,000 m3/day of associated gas, which we had flared since October 2013 due to the shutting-in of the Lacq gas treatment facility operated by another operator. With this facility under new operatorship and the construction finalized in 2015 of additional infrastructure required to tie the gas into the SOBEGI operated gas processing facility, we were able to conserve the associated gas from our Vic Bilh operations, providing energy to local industrial consumers that represents a CO2 savings of 22,800 tonnes. We are targeting a 65% reduction in emissions associated with gas management at this facility, compared to a 2014 base year.

In 2014, we engaged experts to help us determine the feasibility of upgrading the associated gas produced at our Chaunoy and Vaudoy oil batteries in the Paris Basin. By producing electricity with a gas engine, we have determined that it is possible to reduce the flaring of the associated gas, and sell the electricity to the local utility company. Due to the reduction in energy prices over the last two years, these projects are not economical to pursue at this time; however, we will continue to review the opportunities.

Gas MicroTurbine System Pilot Project

In 2015, we began looking at turning our solution gas – which is traditionally destroyed in an oxidizer – by transforming it into electricity, with an option to produce waste heat for other users. We partnered with Capstone, leasing a C30 turbine that offers combustion to reduce emissions to the atmosphere.

We tested the turbine between November 2015 and March 2016 at our Parentis battery. In addition to a quiet, odourless and smokeless operation, the turbine continues to power a resistance of 25Kw (a large radiator) using 10Nm3 / hour of process gas (approximately 3% of our total quantity of gas). We are continuing our testing of the turbines using our Parentis and Cazaux batteries, with the intention to eliminate the use of oxidizers by replacing them with turbines. 

The Netherlands

In 2013 we implemented a compressor reconfiguration project at our treatment center in Garijp with the intent of reducing energy consumption and associated emissions.  These compressors are electrically driven and the project resulted in an absolute reduction in power consumption of 35% or 3MWh (consumption reduced from 8MWh to 5MWh). This is an initiative that, on an annual and continuing basis, reduces power consumption by 26,280 MWh and Scope 2 emissions by an estimated 9,700 tonnes CO2e.

Vermilion is also examining the potential replacement of gas at another site in 2013 with the goal of reducing the energy intensity (through an absolute target) of compression in our Netherlands operations. In addition, we have commenced implementation of an NOx reduction project on a compressor in the Netherlands.

Vermilion’s focus on Integrated Sustainability is demonstrated through our continued business relationship with leading organizations such as Delta. In our northern region in The Netherlands, for example, we tendered our power supply contract to three different providers, and selected Delta as our provider of choice. This partnership has resulted in a quantifiable reduction on Vermilion’s emissions through the purchase of 100% green power from our largest power provider (of 3 providers) there, resulting in an estimated 91% reduction in Scope 2 emissions in that business unit (an estimated 35,990 tCO2e). The commitment governing this green power purchase came into effect in 2016. 

Australia

Water that is naturally present in the Wandoo reservoir from which the hydrocarbons are extracted is treated, processed and discharged as produced formation water. To manage the water discharge, we have developed a produced formation water and ballast water management framework. The objective of the framework is to monitor and manage potential impacts on the marine environment via routine daily, monthly and annual monitoring, as well as actions undertaken if the results exceed the defined threshold values. We are also continually working to optimize our operations, through technology, to further remove hydrocarbons from this water stream.

 

Reducing Greenhouse Emissions with Geothermal Energy

Greenhouse Expansion & Study (Parentis-en-Born, France)

summary

In 2008, Vermilion teamed up with four agricultural engineers who wanted to create an economically and ecologically viable greenhouse operation in which to grow tomatoes. The result was the construction of a 10-hectare greenhouse that will be heated without carbon emissions for at least 25 years, thanks to the caloric content from Vermilion’s produced water stream at our major facility adjacent to the greenhouse in Parentis-en-Born. By demonstrating proof-of-concept, our partnership with Tom d’Aqui has been credited as being the catalyst for three new projects launched independently of Vermilion in 2014-15, which have generated significant additional economic benefits for the community in Parentis.

We believe there are opportunities for other organizations to apply similar technology and principles in their own operations. This belief, coupled with our desire to demonstrate leadership and excellence in all that we do, is why we encouraged AVENIA to launch an industry and country-wide study to identify the potential of waste energy use from oil and gas operations. In addition to contributing financial support towards the study, we have provided the expertise of our people, and have actively encouraged other companies to participate in the study. The results of the study, which also focuses on geothermal potential, will be available to all oil and gas players in France, and will be released following a detailed review by AVENIA.    

The tomato greenhouse project is currently producing 6,000 tonnes of tomatoes per year, creating 150 local jobs, and avoiding 10,000 tonnes of CO2e.

Eco Neighbourhood 1

Eco-Neighbourhood (La Teste de Buch, France)

We signed a 30-year partnership in 2015 with French land developer Pichet to provide heat for up to 450 homes in a newly planned eco-neighbourhood complex. Construction of the eco-neighbourhood, which is located in the community of La Teste, in the south west of France, started in Q2 of 2015 and is expected to be completed in 2018. The project involves the construction of 450 housing units, 30% of which are intended as low-cost housing. It also includes the construction of a community centre and various sports facilities.

Starting in September 2016, Vermilion will supply 70% of the energy necessary to heat these homes thanks to a "petrothermal" solution, using energy from oil well injection water from the nearby Les Arbousiers and Les Pins fields. The remaining 30% will be supplied by the use of gas resulting from biomass, thanks to a COFELY/ENGIE boiler. For users, this will generate a 65% decrease in their energy bill.

The signing of the eco-neighbourhood charter by all stakeholders will occur later in 2016, with the awarding of the seal of approval and the arrival of the first residents of the eco-neighborhood expected in October 2016.

Eco Neighbourhood 2

How it will work:

Once construction is complete, we anticipate the recycled heat from Vermilion’s produced water source in the Arcachon Basin will be able to provide approximately 80% of the heating requirements of these 450 homes.

Geothermal Pilot Project (The Netherlands)

In February 2014 we sent a notification letter to the Ministry of Economic Affairs in The Netherlands indicating that we wished to utilize Vermilion’s subsurface, HSE, and drilling expertise to aid in the development of localized geothermal projects for the benefit of local communities that host our operating activities, as well as to create synergies with our commercial and industrial neighbours. 

To date, we have focused our activities on converting three depleted gas wells in the province of North Holland to a geothermal pilot project to support a regional business park development.  We have committed nearly 100,000 euros to this project to date, and are currently in the execution phase of the feasibility study, working to progress this pilot project to the construction phase in 2016. Reflecting our long-term, committed approach to emissions and energy reduction, we expect to continue our work on this project through 2020.

We are also developing geothermal assessment plans on new gas drilling prospects so that a single drilling operation can address the potential of both natural gas and geothermal energy opportunities. It is our belief that combining the planning and development of natural gas and geothermal opportunities through a single operation provides a net benefit to all stakeholders since it will ultimately result in more natural gas and geothermal energy opportunities being pursued to the benefit of both local and national stakeholders.

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Vermilion Energy