Climate Change

Advancing Wind Power

Nexen is a 50% partner in the 70.5-megawatt (MW) Soderglen wind farm in southern Alberta and we own 100% of the carbon credits associated with its production.

Carbon credits accumulated through Soderglen can be used to offset emissions generated at Nexen-regulated facilities in Alberta (for example, Long Lake and the power station at our Balzac gas plant). This program is managed by Alberta Environment through Alberta’s Specified Gas Emitters Regulation. Since 2007, the Alberta Government has been regulating GHG emissions from industrial operations under this act, which requires facilities to reduce GHG emission intensity by 12% below a facility-specific baseline level. Compliance with the regulation can be achieved in three ways:

• Reducing emission intensity to meet the target intensity.
• Surrendering Alberta-based emission offset credits purchased or self generated (like the credits we generate through our Soderglen wind farm).
• Paying into the provincially mandated technology fund managed by the Climate Change and Emissions Management Corporation at $15 per tonne of carbon dioxide equivalent which is then invested in technology projects aimed at reducing emissions.

Our Participation

Nexen operates in some jurisdictions, including Alberta, B.C. and the UK, where GHG emissions are regulated and compliance requirements are clear. In addition to the carbon credits earned by our Soderglen wind farm, we choose to pay into a technology fund managed by the Climate Change and Emissions Management Corporation, a compliance mechanism established under Alberta’s Specified Gas Emitters Regulation. The fund is directed towards researching and developing new low-carbon technologies Nexen believes will offer long-term benefits for the industry and the province.

Nexen also participates in the European Union Emissions Trading Scheme, which enables us to meet UK compliance requirements through direct emissions reductions as well as the acquisition of European Union Allowances (EUAs) or other eligible credits specified by the Kyoto Protocol. In 2010, we purchased 22,362 tonnes of allowances to meet the requirements for our operated facilities in the UK North Sea.

Collaborating with Policymakers

World energy demands are increasing and hydrocarbons will continue to be a dominant part of the energy mix for decades to come. Companies like Nexen are in the business of responsibly developing the oil and gas resources our economies require. Part of that responsibility includes taking action on climate change and working towards a lower carbon future.

But transitioning to a lower carbon future also means focusing on energy consumption. Looking at a barrel of oil from the time it's produced to when it's used by consumers, approximately 20% of life cycle emissions are associated with the exploration, production, refining and distribution of oil. The other 80% of oil’s GHG emissions come from vehicle combustion. Industry, governments and consumers need to work together on a suite of solutions involving power sources (hydrocarbon fuels, biofuels, electricity), powertrains (internal combustion engines, hybrids, electric motors, flex-fuel vehicles) and transportation systems.

Nexen is an active industry leader in the public policy arena through our work with governments and other stakeholders. Our efforts are focused on encouraging energy and climate change policies that are fair, transparent and provide clarity for companies, shareholders and the public alike.