Authentic Decarbonization: Crestwood’s Carbon Management Plan

The goal is not “net-zero”, but to provide a realistic, cost-effective solution to decarbonization.  

The continuous growth in energy demand and the global need for emissions reduction poses many complexities for the oil and gas industry. Decarbonization efforts, from strategy through to execution, require targeted investments, advancements in technology and industry-wide collaboration.  

As key players in the energy supply chain, facilitating the transportation, storage and processing of oil and natural gas, the midstream industry is faced with the huge responsibility of minimizing emissions and contributing to global climate goals.  

Crestwood Equity Partners LP, a Houston-based player with a substantial portfolio of midstream infrastructure has made promising progress in their energy transformation journey. In an industry where many organizations claim net-zero goals and targets, Crestwood is focusing on a realistic, more transparent, and practical approach to emissions reductions through their Carbon Management Plan (CMP). 
 
Joanne Howard, Senior Vice President, Sustainability & Corporate Communications of Crestwood Equity Partners LP joins us ahead of her panel at the Decarbonizing Oil & Gas Summit, taking place this September 25-27 in Houston, to discuss Crestwood’s authentic approach.  

In this interview, we delve into the data and regulatory challenges faced by the midstream industry, along with the technological initiatives and successes driving Crestwood’s decarbonization efforts.

Maryam Irfan, Industrial Decarbonization Network: How are you approaching the energy transition at Crestwood? 

Joanne Howard: At Crestwood, we are taking a very different approach. We have not published a net zero target, nor do we have a long-term emissions reduction goal. We’re taking an authentic and practical approach to emissions reduction. In January of 2022, we published our Carbon Management Plan which focuses on emissions reduction activities over a three-year period and outlines our eight key commitments. Most importantly, it describes our mechanisms for achieving these commitments. When determining our targets, we underwent a data visualization process to better understand our largest emitting sources and equipment. Based on that, we developed a plan that will lead to cost-effective emissions reduction and the minimization of climate-related risk. 

I believe that if you are going to set a long-term net zero goal, you need to have a clear understanding of how you will achieve those emissions reductions and avoid falling into the trap of greenwashing. That’s why we have provided a transparent roadmap detailing how we will reduce our greenhouse gas (GHG) emissions intensity rate on a year-on-year basis. We also recognize that Crestwood is currently in a growth phase. From 2021 to early 2023, we have been working on a regional consolidation strategy involving a series of transactions aimed at responsibly acquiring mid-stream assets to expand our business in core basins. 

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Despite this growth, we have managed to decrease our methane emissions by 5% since 2021. Furthermore, our methane emissions intensity rate has reduced by 58% since 2018. One of the key initiatives outlined in our CMP is the development of a carbon acquisition/divestment protocol, which strengthens our carbon management processes and formalizes how we handle transferred emissions from recent and future acquisitions, as well as divestitures.

As we acquire these assets, we ensure their integration into our CMP and work on reducing those emissions overtime. Likewise, when we divest assets, we strive to transfer our practices to the new owners.

We have been developing and implementing this approach since last year, and it has already been applied to two divestitures and two acquisitions. We outline how we will incorporate our CMP within those assets within a certain timeframe and conduct flyovers and install continuous methane monitoring to detect leaks and perform necessary repairs. Through these efforts, we have successfully detected and repaired approximately 98% of leaks in one acquired asset without disrupting our customers.  
I believe this demonstrates the authenticity of our approach compared to a net-zero goal, which often lacks accountability.

Maryam Irfan, Industrial Decarbonization Network: What metrics or indicators do you use to measure success in this area?

Joanne Howard: We have two main approaches to measuring success. Firstly, we are committed to advancing sustainability within the company, and we link those metrics, specifically methane emissions intensity, to both employee and executive compensation. Additionally, we focus on leak detection, repairs, and flyovers at 90% of our facilities. Our goal is to implement methane detection devices, such as continuous monitors, in 40% of our facilities by the end of 2023. 

These metrics serve as key indicators of success for us and by aligning them with key performance indicators (KPIs) for employee compensation, we are not only actioning our commitments but fostering a culture of sustainability within our employees’ work practices and the organization. The aim is to build a culture that prioritizes sustainability, particularly in the field, just as we have successfully done with safety. 

Secondly, by issuing a CMP, we’ve taken a transparent and authentic approach to avoid any form of greenwashing. We’ve established a cross-functional carbon management team, which I lead as Head of Sustainability. We meet monthly to ensure we meet our deliverables, monitor progress, track achievements, and hold ourselves accountable to the goals set within our CMP. 

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Maryam Irfan, Industrial Decarbonization Network: What are some of the challenges you face within the midstream industry?

Joanne Howard: Crestwood is taking a very industry-focused approach to ESG and emissions reduction. We believe that the entire industry needs to accurately disclose emissions to enable investors to make fair comparisons. To address this, we have led the development of an ESG midstream reporting template with industry trade associations, Energy Infrastructure and GPA Midstream. This is to ensure that all companies are using the same definitions and methodology for calculating ESG metrics, allowing for consistent and meaningful comparisons. 

Midstream, as its own sector, presents many nuances and complexities that a lot of stakeholders don’t fully understand. Crestwood, for example, operates primarily as a gathering and processing company, while others are involved in constructing large-scale interstate pipelines. Despite the differences in operations, we share common challenges, such as making technology advancements, coordinating effective energy policies, and meeting targeted capital investments. 

One major challenge for the midstream industry is recognizing the limitations and complexities associated with Scope 3 emissions. Calculating Scope 3 emissions requires quantifying and verifying data throughout the entire value chain, from production to end use. This includes activities beyond our visibility and control. Moreover, as we transport and store the products, we don’t always know the ultimate destination of end users, which further complicates emission calculations. 

Another issue is double counting Scope 3 data between the initial producers and end users. Data will be duplicative because many mid-stream companies share the same upstream and downstream customers, receiving the same emissions reports and hence double, triple counting their emissions.  

Maryam Irfan, Industrial Decarbonization Network: What are some of the practices or opportunities you see succeeding in light of these challenges?

Joanne Howard: I believe it is crucial for the energy sector to prioritize the accuracy and rigor of Scope 1 and Scope 2 emissions before tackling Scope 3 emissions.  
The approach towards Scope 3 emissions requires industry collaboration, working closely with regulators and investors to ensure a comprehensive understanding on the complexities involved in Scope 3 reporting, specifically within the midstream industry. 

Maryam Irfan, Industrial Decarbonization Network: What role does emerging technology play in abating emissions? Is there anything specific you’re applying at Crestwood?

Joanne Howard: Investment in technology is key. At Crestwood, one of our commitments is to continuously explore and adopt climate technology and next-generation methane detection technologies. In 2022, we conducted a pilot program involving three different next-generation, continuous methane monitoring technologies and established a test facility at a compressor station in Wyoming to conduct a comprehensive evaluation of these technologies. Based on the results, we selected two technologies and this year, we are scaling up their implementation, targeting 40% of our facilities. 

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Maryam Irfan, Industrial Decarbonization Network: How easy has it been to deploy and test these technologies?

Joanne Howard: Deploying and testing requires significant time and effort from our operations and air quality teams. It involves a meticulous process of installing methane detection devices and analysing collected data. Our teams have to determine the nature of detected events, whether it’s a blow down, an operational activity, or something detected at a different nearby facility. 

The collaboration, however, between operations and our air quality teams has been crucial. It enables us to identify previously unknown events through our leak detection and repair programme. So, I think, taking a multi-technology approach to methane management is essential, combining leak detection and repair (LDAR) efforts, aerial flyovers, and continuous monitoring devices. 

Another initiative that we were part of the past couple of years was our participation in the Cheniere-led Quantification, Monitoring, Reporting and Verifying (QMRV) Midstream Project. This project focuses on quantifying, measuring, reporting, and verifying methane emissions. We collaborated with other midstream operators to test different methane detection technologies and partnered with leading academic institutions to enhance our understanding of methane emissions associated with the operation of natural gas gathering, processing, transmission, and storage systems. 
As part of the project, we were able to establish a baseline for our emissions and enrolled three of our assets in the project at the start of 2021. The project has recently concluded but it serves as a good example of the midstream industry coming together to collaborate and test new technologies. 

Maryam Irfan, Industrial Decarbonization Network: Do you see future regulatory requirements impacting Crestwood’s emissions reduction strategy?

Joanne Howard: It is a bit of a regulatory tsunami right now for energy companies in the United States with the Methane Fee in the Inflation Reduction Act, the ongoing monitoring of the SEC climate disclosure rule, and the various changes occurring at the EPA. It is essential for us to closely monitor these regulations and be proactive in our approach. For instance, our CMP has a strong focus on reducing methane emissions, which will help mitigate the impact of the Methane Fee expected in 2024/2025.

Regarding the SEC climate disclosure rule, we are taking proactive measures in our ESG reporting practices. We are working closely with our internal audit and financial reporting teams to ensure robust controls of our Scope 1 and Scope 2 emissions as these regulations may impact our financial filings. 

Maryam Irfan, Industrial Decarbonization Network: What more can you or the industry be doing to fast track decarbonization? What are your top priorities for the next 3 years?

Joanne Howard: As an industry, we can continue to increase access to effective energy solutions. Natural gas presents a transformative opportunity for North American energy security and economic growth as an abundant energy source that is affordable, clean burning and versatile. The energy transition will take time and natural gas can help support a lower-carbon future. Crestwood’s critical infrastructure will continue to responsible deliver natural gas as global demand increases. 
The midstream sector is actively engaged in various initiatives, such as carbon capture and storage (CCS), hydrogen blending, responsible sourced gas (RSG), and evaluating emerging technologies. It is important to continue reducing emissions throughout the value chain and optimize operational practices accordingly. Additionally, identifying innovative, cost-effective technologies that align with each organizations’ specific needs is crucial. It's all about collaboration, transparency, and authentic disclosure, given the growing political polarisation and concerns of greenwashing surrounding ESG practices. 

At Crestwood, our primary focus over the next 18 months is to execute the deliverables we have outlined in our CMP. This includes ensuring the robustness of our Scope 1 and Scope 2 emissions data. We are currently undertaking a significant effort to digitize our data, enabling us to monitor our emissions monthly and preparing us for upcoming regulations. 

The energy transition is a long-term strategic endeavour, and we understand the importance of following an authentic plan that includes innovation and collaboration.  

Maryam Irfan, Industrial Decarbonization Network: What are you most looking forward to in your participation at the Decarbonizing Oil and Gas Summit?

Joanne Howard: It serves as an excellent platform for the industry to come together, share best practices, foster collaboration, and support innovation. I am looking forward to sharing and discussing authentic approaches to emissions reductions.

Plus, given the recent external developments related to ESG and decarbonization, industry collaboration is vital, and we’re committed to being part of the solution.  

Interested in learning more?

Joanne Howard will be speaking at this year's Decarbonizing Oil & Gas Summit, taking place at the Norris Conference Centre, Houston this September 25-27, 2023. Join us and over 200 industry experts to learn more about how the oil and gas industry is approaching (and progressing!) decarbonization roadmaps across geographies and value chains. Download the agenda for more information.