Our Approach to Strategy
Best in Class Health, Safety and Environment and Integrated Sustainability are two of Vermilion's six key strategic objectives, resulting in environmental considerations being engrained in all portions of our business. This provides corporate direction for programs that have the potential to enhance our performance and operational efficacy. The progress of these objectives is tracked on a monthly, quarterly and annual basis and shared across all levels of staff (Office staff, Field staff, management, senior management, etc.).
The decision in 2015 to establish Integrated Sustainability as a strategic objective supported previous alterations to our project management framework (site specific and play development level) to enhance aspects of sustainability and climate change (regulatory change, enhanced water management, emissions reduction, footprint reduction / ecosystem fragmentation minimization). This has a direct impact on our long term sustainability strategy. The aspects of climate change that influence our sustainability strategy include, but are not limited to: 201-2
- physical changes resulting from temperature change
- regulatory changes
- the need to adapt our operations to potential changing climate extremes, and
- the identification of green solutions in the communities where we live and work.
We are committed to reducing the impact our operations have, beginning with being compliant in all regulatory regimes, across all business units, while providing long-term growth and income to our investors. These are primary drivers for identification and implementation of climate change initiatives such as emission reductions and fuel efficiency.
Sustainability initiatives are assessed on a project-specific basis, including aspects such as the benefit to the communities where we operate, the benefit to the environment (reduced carbon emissions or fuel consumption, carbon offset, water reduction / reuse, etc.), and financial considerations.
Vermilion emphasizes projects that will have a positive, lasting impact both short term and long term. We leverage our successes to inform initiatives that are in the assessment, planning or initial implementation stages. Examples include (see our Environment section for further details):
- The cogeneration project in Vermilion's Parentis operation in France. Vermilion captures waste heat from our produced water stream to heat a local 15-hectare greenhouse that produces more than 6,000 tonnes of fresh tomatoes annually. This project was selected by the French Minister of Economy to be the recipient of the 2013 Circular Economy Award for Industrial and Regional Ecology, has been leveraged in an industry-wide research document and has now led to another geothermal project, focusing on eco-housing.
- We have identified several other potential geothermal projects that are in the assessment phase that will provide a low carbon energy option as a direct result of our operations and infrastructure. These types of projects have the potential to offset the financial impacts associated with the price of carbon, while providing either Vermilion or a third party with the ability to reduce emissions.
- Constructing Vermilion's corporate head office to the Leadership in Energy and Environmental Design (LEED) Gold standard. LEED® certification is a structured, audited process that assists design teams in aligning building construction and intent of "green" or high performance design.
- Adjusting long term operating strategies to ensure efficient and effective resource development. An example of this is the reduction of fresh water use in France (18% from 2015 to 2016).
In 2019, the Board of Directors, executive team and senior management, including the managing directors of our business units, participated in a robust scenario analysis, examining two key scenarios from the World Economic Forum that bring together the work of significant contributors in this area, from the International Energy Agency to Carbon Tracker. These scenarios compare a Gradual and a Rapid transition to low carbon, with the latter meeting the aims of the Paris Agreement to limit global temperature increases to 1.5ºC to 2 ºC, with 1.5 ºC preferred. This provided an opportunity to assess the key factors impacting the speed of the energy transition, including the influence of new energy technologies, the potential speed of adoption of these technologies, the anticipated changes in policy and regulation surrounding the energy transition and their rate of change, and emerging market pathways such as India. The scenario analysis extended to the risks and opportunities related to these climate-related factors, the resulting impacts on the company’s future not just in the short-term, but in the medium to long term (2050+), and strategies for Company resilience – overall and by business unit. A review of the results of this analysis is underway, and will inform our continuing work on updating our sustainability strategy through 2020, including our current climate-related emission reduction targets.
Overall, our strategy to address the impact of these risks, and ensure our resilience under various scenarios, focuses on the following:
- Lower carbon fuels. Since 2012, we have shifted our production mix towards natural gas, as a cleaner burning fuel than other fossil fuels, and we continue to focus on reducing the carbon intensity of the oil and gas that we produce. This includes producing fuel that is used within the country of production wherever possible, reducing the carbon footprint associated with transportation of the fuel to consumers, and to increased national energy security.
- Greater energy efficiency. Many energy-and operational efficiency initiatives go hand-in-hand, which in turn helps us to 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. Our emissions reduction initiatives have resulted in Vermilion having a top quartile emissions intensity (emission rate per BOE produced) compared to our peer group.
- Socially responsible fuels. We are committed to ensuring that our fuels are produced in the most environmentally and socially responsible manner possible, 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 framework of health, safety, environmental and human rights legislation.
- Renewable energy. We are continuing to pilot the production of renewable energy, including geothermal energy, for which our internal expertise in engineering, geoscience and drilling is particularly well suited. This work has begun with a focus on 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 other areas, including biogas and the conversion of traditional oil and gas assets to geothermal production.
- Transparency and reporting. We have established a strong record of reporting on greenhouse gas emissions, energy usage and other key environmental metrics. This data is helping us to understand our opportunities for improvement, and we will continue to use it to determine emissions and energy reduction targets.