Phillips 66: Report on Direct Methane Measurement

November 27, 2024 As You Sow

WHEREAS: At least a quarter of currently observed global warming is caused by methane emissions from human sources.[1] Methane is 30 times more potent than carbon dioxide over a 100-year period, [2] meaning the immediate reduction of methane is critical to addressing the climate crisis.

Nearly a third of U.S. methane emissions originate from the energy sector, specifically via gas and petroleum systems venting, flaring, and leaking.[3] Methane emissions can be quantified directly through measurement, including handheld, aerial, or satellite surveys, or indirectly through calculations and modeling. Estimates improve when site-level and direct measurement methodologies are reconciled with modeled estimates.[4]

Studies show that methane emissions from natural gas and petroleum systems may be more than four times higher than Environmental Protection Agency (“EPA”) modeled estimates.[5] The EPA methodology fails to capture major leaks, wasting valuable product, and substantially underestimating the climate impact of natural gas and petroleum systems. By capturing methane, Phillips 66 can transform a potent greenhouse gas into a valuable energy resource, reducing its climate impact and maximizing its economic potential. For these reasons, shareholders urge companies to supplement reporting under EPA methodology with more accurate measurement.

Investors, regulators, and civil society increasingly expect companies to measure and mitigate their methane emissions proactively. Companies that do not address this critical issue risk misrepresenting emissions reductions. Such discrepancies undermine confidence in emissions reporting. Methane emissions are increasingly monitored by third-party satellites,[6] and new federal methane regulations have been approved, furthering the need to measure methane more comprehensively.

Over 140 companies, including Williams, Chenerie, and Chevron have joined the Oil and Gas Methane Partnership (OGMP), committing to improve methane data quality and consistency.[7] Phillips 66 has not. While the Company indicates that it is exploring direct measurement technologies, Phillips 66 does not report on the results of these tests, or the impact that more accurate methane measurement could have on company-wide operational emissions estimates.[8]

BE IT RESOLVED: Shareholders request that the Board issue an analysis of the reliability of Phillips 66 Company’s methane emission disclosures. The report should:

Summarize the outcome of efforts to directly measure methane emissions, using recognized frameworks such as OGMP;

Provide investors with insight as to whether there is likely to be a material difference from the Company’s published estimates of methane emissions; and

Assess the degree to which the difference may also alter the Company’s Scope 1 emissions estimates.

The report should be made public, omit proprietary information and be prepared expeditiously at reasonable cost.

SUPPORTING STATEMENT: Shareholders additionally recommend that the report include, at management discretion:

Provide a narrative explanation of the difference between the Company’s estimated methane emissions and the Company’s direct measurements, or any third-party measurements, by site or region;