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Under investor pressure, Exxon issues climate analysis

ExxonMobil released today an analysis for how its oil and natural gas resources would fare in a carbon-constrained world.

Why it matters: The analysis is the latest in a string of moves by publicly traded oil companies in response to investor pressure to disclose the risks that action on climate change poses to their fossil-fuel products.

Highlights:

  • Less than 5% of Exxon’s total value is represented by oil and gas resources that “may not be attractive investments” in a world that cuts greenhouse gas emissions the necessary amount to keep temperatures below a 2-degrees Celsius, the analysis says.
  • Low-cost producers are likely to fare better than others in a carbon-constrained world, said an analyst who has reviewed the report.
  • “This may validate the company’s historically strict capital discipline relative to some of its bigger-spending brethren,” said the analyst, who spoke on the condition of anonymity as the report was just being released.

The big picture: There’s growing concern about the potential for oil and gas companies’ assets to become stranded in a world that drastically cuts greenhouse gas emissions, and in fact some environmentalists are pushing for this. Some oil executives reject this notion, but it’s nonetheless a key component of an overall debate about how fossil-fuel companies handle a transition to a lower-carbon world.

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