Devon Energy Corporation is a publicly listed oil and gas company headquartered in the USA. In 2020, it had USD 4.83 billion in revenue and a reported 1,400 employees*. Devon Energy is an upstream oil and gas company. The company recently closed the sale of its Canadian assets to focus entirely on its onshore oil operations in the USA.
Devon Energy has set one target aiming to reduce the company’s methane emissions intensity by 11.6% between 2018 and 2025. Reducing methane emissions in upstream oil and gas activities is arguably an efficiency measure rather than a decarbonisation ambition. To demonstrate its commitment to the low-carbon transition, Devon Energy should set long-term and intermediate targets aligned with its 1.5°C pathway, covering its scope 1 and 2 emissions and its scope 1, 2 and 3 emissions.
Although Devon Energy has a low-carbon transition plan, it remains extremely limited. The company’s plan is focused on short-term methane emissions reduction and efficiency gains, as opposed to a long-term strategy to transition away from oil and gas activities. The company has not identified any low-carbon business model opportunities.
Devon Energy will be required to make substantial changes to its business to align with the low-carbon transition. With policymakers and investors increasingly being driven by the Paris Agreement goals, implementing these changes in a planned and controlled manner will be essential for the success of the company.
Devon Energy’s overall oil and gas extraction volumes decreased between 2014 and 2019, due to the sale of its Canadian operations in 2019. However, the company has continued to extract onshore oil and gas in the USA, with oil beginning to occupy an increasing share of the fuel mix. This has prevented the company’s fuel mix from changing at a rate sufficient to drive alignment with its 1.5°C pathway, which requires an annual reduction of 9% in scope 1 and 2 emissions intensity from 2019 to 2024. The company should invest in low-carbon technologies and focus its activities away from fossil fuel extraction.
Devon Energy’s low-carbon capital expenditure (CapEx) demonstrates limited financial commitment to adopting technologies required to reduce emissions. In 2019, the company invested USD 1 million in low-carbon and mitigation technologies. This expenditure went towards optical gas imaging (OGI) cameras used for methane leak detection. The expenditure represents an extremely low proportion (0.1%) of the company’s total spending and lags far behind the sectoral expectation that oil and gas companies should invest 77% of CapEx in low-carbon projects to align with a 1.5°C scenario.
Devon Energy does not directly advocate or oppose climate policy. However, the company’s CEO is on the Board of Directors and on the Executive Committee of the American Petroleum Institute (API), a trade association reported to have opposed numerous climate policies in the USA. API pledged itself to fighting the Biden Administration’s commitment to halt new oil and gas development on federal lands, as well as efforts to phase out gasoline and diesel fuelled cars and trucks. Devon Energy does not have a policy in place to manage engagement with trade associations like API on climate change issues.
Devon Energy receives a trend score of -. If the company were reassessed in the near future, its score would likely decrease. With only a methane reduction target in place, and with insufficient commitment to reducing its scope 1 and 2 emissions intensity, the company is not on track to achieve a low-carbon transition aligned with its 1.5°C pathway. Devon Energy has not identified any low-carbon business activities, and its capital expenditure plans do not indicate financial commitment to improving its low-carbon performance.
Devon Energy has set a target to bring down its methane emissions intensity rate to 0.28% or lower by 2025. This translates to a reduction of 11.6% between 2018 and 2025. The company has not committed to any reductions in its scope 1 and 2 or its scope 1, 2 and 3 emissions intensities.
To reduce its methane emission, Devon Energy is eliminating routine flaring in its Delaware Basin operations and expanding its methane leak detection programs. Focusing only on methane emissions reductions, which is arguably an efficiency measure, is insufficient to align with the low-carbon economy.
Changes to Devon Energy’s fuel extraction mix between 2014 and 2019 failed to drive reductions in its scope 1 and 2 emissions intensity as in line with its 1.5°C pathway. The share of oil in the company’s sold product mix increased over this period, from 35% in 2014 to 50% in 2019. This has resulted in an increase in the emissions intensity of the company’s sold products, as oil has a higher in-use combustion factor.