Shell Oil President on methane emissions, carbon capture

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• Hari Sreenivasan:

  Gretchen Watkins, the president of Shell Oil, has taken a firm stance on methane emissions. I recently spoke with her about regulation and her ideas for the new Biden administration.

  Our interview took place before Thursday's news that the American Petroleum Institute – the chief lobbying arm of the oil and gas industry – had reversed its longstanding opposition to Obama-era methane regulations.

  You've said in the past that the Trump administration's rolled back for methane emissions regulation was frustrating and disappointing. Tell me why you decided to take a position like that, because usually people in your industry don't?

• Gretchen Watkins:

  We have absolutely committed to natural gas as being a very important transition fuel as we move from fossil fuels to renewable fuels. But it's only going to be a good transition fuel if there are low to no emissions. And so it's absolutely critical that we as a company get this right, and frankly, we as an industry get this right because the natural gas loses its effectiveness as a good transition fuel if we have these emissions.

  And so, we have done a lot of work at Shell to really reduce and eliminate, in many cases, our emissions. Some examples I can give you from West Texas. We drill hundreds of wells in West Texas. It used to be industry standard that every well would have its own flare stack. Now we have about 30 wells that go into one central facility and there's only one flare stack for about 30 wells. And that's only used if we have an emergency upset of sorts. So we've done a lot of engineering, a lot of investment to really reduce our emissions. And we feel it's absolutely critical for our industry to be part of that reduction going forward.

• Hari Sreenivasan:

  In Texas, in the Permian Basin, there is the Texas Railroad Commission. Recently, there was an individual that was elected to it who is still questioning climate science in an incredibly influential role. How, if you're an energy company that actually believes that climate change is real, climate science is real, how do you convince localities that this matters?

• Gretchen Watkins:

  Part of my job at Shell is being very vocal externally about what we believe we need as a company, but also as an industry to, to be socially responsible, but also you know thrive as a business. And so, sometimes I go to Capitol Hill or go to the state capitols with partners that we work with, such as the Environmental Defense Fund and oftentimes when I come there with a partner like that, it really can change the conversation.

• Hari Sreenivasan:

  What's interesting is, is on the one hand you have partnerships like the EDF, the Environmental Defense Fund, which people would be shocked by. And then on the other hand, you've written somewhere between a $12 and $15 million check to the American Petroleum Institute, which lobbied for some time against the, kind of, regulations over methane, cheered for it when the Trump administration rolled things back. How do you square which partner gets your attention with such different views?

• Gretchen Watkins:

  We're actually very happy to be working with the Environmental Defense Fund and happy to be working with the American Petroleum Institute.

  The API provides us, most critically I think, the industry, with a suite of safety standards that we feel are actually very important in terms of how we operate, how we build things, how we design things and have been for for decades.

  Now, in places where we deviate, we are very clear that we deviate, and we've been and will continue to be willing to to be vocal about that, methane being one of those.

• Hari Sreenivasan:

  What are you expecting from a new administration?

• Gretchen Watkins:

  We pride ourselves in being a good community citizens, good corporate stakeholders, and so we will welcome the opportunity to work very, very closely with them.

  We're very strong sponsors of the Paris Agreement, all of the corporate targets that we've set from our net zero emissions by 2050 down to the fact that my — my compensation year on year is based on hitting emissions reductions targets. We've got both near term and long term goals, and those are very much aligned with Paris. And so we feel that that is a very good step. I'm very supportive of that.

• Hari Sreenivasan:

  If you had any suggestions to give to Joe Biden or his team that might be influencing policy where you work? What are the things that you think could be achieved right off the bat that wouldn't be controversial, would be perhaps bipartisan?

• Gretchen Watkins:

  One thing that I think would be incredibly beneficial is instituting some sort of a carbon market, a carbon market that provides a level playing field for for all — for all industries, for all different types and sizes of players, but also really, I think, attracts capital to some very crucial technical developments that we need in this country, and frankly the world needs in order to to reach our emissions targets and things that that really includes, in particular carbon capture and sequestration.