How Civitas Energy Uses Electrification and Offsets to Reduce Emissions

Civitas Resources is a Colorado-based oil and gas producer that produces around 160,000 barrels a day. It is also Colorado’s first carbon neutral energy producer.

Although a young company – it was formed just under a year ago from the merger of 5 separate oil and gas producers – it has embedded sustainability at its core from inception, explains Brian Cain, Chief Sustainability Officer at Civitas Resources.

In this interview, Cain discusses how his company is tackling the challenges of sustainability, explains why they’re focusing on a $18 million retrofit of their pneumatic devices, and offers his perspectives on the challenges and opportunities of decarbonization.

Diana Davis, Oil and Gas IQ: We're seeing a concerted effort by both politicians and regulators to push for decarbonization in the industrial sector. How is that affecting your business?

Brian Cain, Civitas: There are a couple of ways that we are approaching this. First, we believe that it’s best for us to focus on controlling what we have within our control. That’s why the decarbonization of our scope one and scope two emissions is a priority for us.

We are in the midst of an energy transition. It’s a transition that will last many years. And we know that there is no transition without fossil fuels. The question is, then, how do we decarbonize the production of the products that we produce?

There are a few things we can do. First, we prioritize operational emission reduction. That is our foremost priority.

To achieve this, the first step is to engage in an extremely robust process of measurement and reporting.

We are a fairly new company; we were created on November 1st of last year.  We were formed through the merging of now 5 legacy oil and natural gas companies in our state of Colorado.

As you can imagine, we had five different data streams coming together and different work processes coming together that we had to take great effort to sort out.

We adopted the most robust measurements as a standard. We have conducted hand counts of our pneumatic devices, for instance, which is fairly rare within our industry segment.

We’ve been very intentional in our operations to fearlessly understand our numbers. Then, based on understanding our operational emissions and opportunities we focus on reducing them.

Today, we understand not only where most emissions are coming from but also which of these areas in our portfolio are the lowest cost to reduce. The intersection of those two ideas is your low hanging fruit. That’s what you want to attack first.

We’ve laid out our opportunities according to an internal carbon abatement curve, so we know where our low hanging fruit is. We can see projects where we can invest $25 per tonne of carbon reducted, for instance, while we know that others may take us up to $60.00 per tonne to reduce.

For us, legacy pneumatic devices are our clearest low hanging fruit.

Pneumatic devices were invented last century to operate wells. They regulate themselves by releasing little puffs of methane into the atmosphere. At the time they were created, the technology was considered brilliant. Today, we know that they are a big threat to climate change because of their methane emissions. 

We've begun a robust retrofit of our pneumatic devices. We are spending about $6 million a year over the next three years; that alone will result in a nearly 40% reduction in our corporate scope one emissions.

Diana Davis, Oil and Gas IQ: As such as young company, why was sustainability prioritized? I would have thought that bringing five different companies together would have been a challenge enough!

Brian Cain, Civitas: Although we're a new company, we're made up of industry veterans. We have leadership that came from four out of the five companies that we've integrated.

We all knew each other and we all knew that we have an incredible opportunity here. Colorado's regulations around air and the environment are already some of the most robust in the United States for oil and gas development.

We decided early on that we wanted to take the lessons from our legacy ventures and build this company as carbon neutral from day one.

We’re tackling operational emissions as a first priority and then we offset residual emissions through certified offsets.

Diana Davis, Oil and Gas IQ: Where are you now in terms of the replacement of the pneumatic devices?

Brian Cain, Civitas: We started that this year. This year, we're probably going spend about $2 million as we get the permits approved working through our regulatory agencies. Then over the next three years, we’ll be spending about 6 million a year for the full retrofit.

Diana Davis, Oil and Gas IQ: What have been the big challenges along the way? Are there organizational or technical challenges that you've needed to overcome?

Brian Cain, Civitas: Supply chain issues have affected probably every business these last few years. For us, actually getting the new equipment is something that can pose a significant hurdle to progress.

There’s also been a regulatory challenge.  In looking to put instrument air compressors on to our location, we need to sundry permits from our state regulator. That poses a significant bureaucratic challenge if we have to get permits for each new piece of equipment, given the scale of what we’re trying to achieve.

So, we’re in the process of discussing with our regulator a way to bulk process this new equipment. We’ve shown them that this technology won’t just reduce emissions, but it will eliminate them altogether. We’ve found the regulator is quite open to this because we think that they believe our retrofit is the kind of thing they want to see more of, but the details aren’t yet finalized.

Diana Davis, Oil and Gas IQ: How much do you expect to save or reduce in terms of carbon emissions based on the pneumatics program?

Brian Cain, Civitas: When completed, we'll have eliminated approximately 5,00000 metric tons of CO2.

Diana Davis, Oil and Gas IQ:  Any lessons you learned along the way that you would share with other operators or other companies that are considering similar programs?

Brian Cain, Civitas: There are a few things specific to our industry. We really value electrification; powering our drilling rigs through the grid has a number of benefits. Rigs were traditionally powered by rows of diesel generators. These diesel generators create a lot of noise and emissions.

For the local landowners and community, electrification allows us to get those emissions out of the area and take them back to the utility power plant, which is where those emissions were designed to come from. Electric drilling rigs are also nearly silent.

So not only does electrification reduce noise and emissions, it also greatly reduces truck traffic.  It eliminates all the traffic you need to haul fuel back and forth to those generators all day and night. It takes those trucks off the road so that you don't have traffic in the area or in the community and it doesn't put additional wear on the roads.

The other thing that is close to my heart is the use of offsets.

We’ve seen a lot of companies and a lot of industries that have set targets for net zero carbon neutrality that are years into the future.

But, with a commitment to carbon neutrality that utilizes operational reductions in tandem with the purchase of offsets, you must financially account for your emissions on an annual basis, so it helps by changing the economics of decision-making. It means that at the end of every year you are on the hook – you’re paying the piper for every ton of emissions that you didn't reduce or eliminate that year.

Understanding that key concept can tend accelerate significant emissions reduction projects. In my earlier example about the pneumatic project, that's a three-year project for us.  If we were to drag that project out, or do nothing for the next 10 years, we would be on the hook for an incremental $40 million in carbon offsets.

So, in using offsets, we are creating a financial incentive to reduce operational emissions that is understood throughout the organization. That not only results in emissions reduction progress, but it helps you build an internal culture that prioritizes accomplishing your environmental goals.

Diana Davis, Oil and Gas IQ:  It sounds like sustainability is built right into your company culture. How does that manifest itself? How do you get that to permeate through your business culture?

Brian Cain, Civitas: It starts at the top. We were very fortunate early on to have a chairman and board of directors who believe that one of our pillars is that our company is going to be a leader in the environmental, social and governance space. That’s built right into our brand DNA.

What came along with that was the resources and the authority to look within our portfolio and make changes. I'm one of the only chief sustainability officers in our segment of the independent oil and natural gas world. My department is fully staffed, with engineers and air scientists. We have a carbon solutions manager.

We are committed to legitimacy in in what we're doing.

As we go throughout the organization, we go into the field, we hold lunch and learns and we spread our message and we talk to people about what we're doing. We're proud that we’re sourcing good ideas from our field organization. Frankly, that is where a lot of good ideas come from.

At the end of the day, we couldn't do anything if we didn't have empowerment from, not just executive leadership, but from the directors and the chairman of the board.

Interested in Learning More About this Topic?

Brian Cain will be speaking at our upcoming Decarbonizing America’s Industrial Sector conference taking place in Palm Springs September 13-15, 2022. Join over 200 of your industry peers as they advance clean manufacturing and help reinvigorate America's industrial sector.

Download the agenda here.