Carbon Management

Meeting the continuous growth in energy demand while reducing emissions and mitigating climate change is a complex challenge that will require significant technology advancements, effective and coordinated energy policies and targeted capital investments.

We recognize the challenge in front of us and, as an industry-leading midstream operator, we are committed to being part of the solution. As most forecasts suggest, we believe that achieving a low-carbon economy will require all forms of energy, including oil and natural gas, for at least the next several decades. We also believe that understanding the critical role of energy in society and the various emissions reduction pathways can help our industry identify and implement effective climate change solutions without sacrificing economic and humanitarian imperatives.

Approach

At Crestwood, we continue to focus on growing our business in a responsible manner. We utilize a strict set of standard operating procedures for emissions management that is realistic, practical and cost-effective. We remain committed to ensuring that all our assets are incorporated into our rigorous sustainability practices, and we are focused on continuing to deliver energy responsibly and sustainably using an authentic and transparent approach. 

Key 2022 Achievements:

Governance 

Our commitment to mitigating climate change risks extends to all levels of the organization, from front-line employees to the Board of Directors. Crestwood’s Board of Directors’ Sustainability Committee is responsible for overseeing our carbon management and climate strategies, as well as developing environmental goals that are tied to employee compensation. 

We report our emissions to the Sustainability Committee quarterly through an internal multi-discipline Carbon Management Working Group that consists of leaders from our operations, environmental services and sustainability departments. The executive sponsors of this group include our chief operating officer and our president. The Board of Directors and the Sustainability Committee are also responsible for reviewing the results of our annual ERM process and providing oversight of our climate-related risks. For additional information, please see the Sustainability Strategy and Governance section. 

To foster accountability for achieving our ESG goals across the entire company, we link sustainability key performance indicators to both executive and employee compensation.

As part of our continued commitment to environmental stewardship, we have developed clear and measurable KPIs for 2023, including a new KPI focused on methane detection devices.

2022 Carbon Management Key Achievements

Commitments	Key Achievements
Annual GHG Intensity Reduction	5% reduction in methane intensity rate from 2021 levels 26% reduction in methane intensity rate from our 2022 KPI goal linked to compensation
	Incorporated Oasis Midstream and Sendero Midstream assets into our carbon management practices Performed methane detection flyovers on all acquired assets within 180 days
	Conducted LDAR/Flyovers on 100% of our facilities with methane emission sources
	Replaced 100% of our high-bleed pneumatic controllers and continued to route blowdown emissions to a control device where available
	Continued to follow procedures outlined in our Flaring Minimization Policy
Scope 2 Emissions	Employed optical character recognition (OCR) technology to minimize manual calculations and improve the accuracy of Scope 2 emissions data
	Reviewed the application of variable frequency drives (VFD) to minimize power across our footprint and have installed VFD's at all applicable locations to minimize power consumption
Carbon Acquisition/ Divestiture Protocol	Developed a Carbon Acquisition/Divestiture Protocol that formalizes how we handle transferred emissions for strategic transactions in support of our goal to reduce our emissions intensity rate
	Utilized the Protocol for two acquisitions and two divestitures
Continuous Methane Emissions Monitoring	Installed continuous methane detection devices at 13% of our facilities, testing three different technologies Installed devices at newly acquired Oasis Midstream assets
	Participated in Cheniere-led Quantification, Monitoring, Reporting and Verifying (QMRV) Midstream Project to further test multiple technologies for methane detection and establish baseline emission levels
Responsibly Sourced Gas	Provided comments to the MiQ Midstream Protocol via GPA Midstream Association
	Monitored responsibly sourced gas (RSG) market developments and engaged key customers on potential RSG partnerships
Investment in Emissions Data Collection	Conducted an emissions digitalization pilot at Herradura compressor station to improve the accuracy and availability of emissions data
	Reviewed and selected an industry-leading software platform to enhance our emissions data frequency
Investment in Climate Technology	Continued to assess next-generation methane detection technology
	Continued to install solar panels to power meter stations across our pipeline assets
Industry and Trade Group Participation and Leadership	Continued participation in ONE Future, The Environmental Partnership, the EIC/GPA ESG Working Group and other trade associations to proactively ensure a more sustainable future for the energy industry
	Senior vice president for ESG and corporate communications sits on the ONE Future Board of Directors
	Continued senior leadership participation in industry conferences ensuring continued collaboration and discussion around carbon management in the energy sector

Assessing and Managing Climate Risk

Understanding, managing and reporting on climate-related risks and opportunities is critical for our business. We integrate climate-related considerations into key business planning and decision making and incorporate these considerations into our annual ERM process. It is the responsibility of our executives and management team to implement this risk assessment and management process. To learn more about how we identify and manage climate-related risks, please see the Risk Management section. 

In alignment with TCFD, we consider both physical risks – those associated with physical impacts from climate change – and transition risks – those that stem from regulatory, economic, market, technological and other societal changes associated with the transition to a lower-carbon economy. 

Transition Risks 

We have outlined our identified transition risks below and provided a brief description of the potential financial impacts and mitigation strategies associated with those risks. 

Climate-related Physical Risks

In 2022, we engaged with a third party to conduct a TCFD-aligned physical risk assessment of Crestwood’s top revenue generating assets. The purpose of the assessment was to consider and better understand how our business might perform under different future states and to prioritize protection against and adaption towards probable natural hazard scenarios to our properties and business. 

The assessment evaluated the exposure of 11 sample Crestwood locations/assets to a specific natural hazard within the framework of climate change impacts based on various models, including government hazard models and National Oceanic and Atmospheric Administration (NOAA) climate change projections, as well as other models and projections. The hazards utilized in the assessment included: 

Our operations team reviewed the hazard findings and the recommended mitigation and adaption strategies and determined that Crestwood has a high level of resiliency to the assessed physical risks. We acknowledge that we will need to take these physical risks, and others that emerge over time, into consideration for our overall business strategy.

Risk Assessment Findings 

A summary of the physical risk assessment findings, including a description of each scenario evaluated, risk descriptions, potential business impacts and mitigation strategies, are listed below.

Emissions Performance 

While operational emissions from midstream companies represent a small portion of total GHG emissions across the value chain, we believe it is our responsibility to proactively limit the environmental impacts of our operations as much as possible. 

In 2022, our GHG intensity rates increased due to the acquisitions of Oasis Midstream and Sendero Midstream assets and the acquisition of First Reserve’s 50 percent interest in Crestwood Permian Basin Holdings LLC (CPJV), which resulted in the assets no longer being reported as a joint venture entity. In addition to the increases associated with the acquisitions, our absolute GHG emissions also increased due to legacy system expansions and increased throughputs.

Our methane intensity rate decreased by 5 percent from 2021 levels, 58 percent from 2018 levels and was 26 percent lower than our 2022 KPI goal that is tied to employee compensation.

We immediately took action to detect and reduce emissions from the newly-acquired assets, which included three gas processing plants, one crude stabilizer and terminal and 17 compressor stations. Within 180 days of acquisition, we performed methane detection flyovers on each asset, and we installed continuous methane detection devices on the Oasis Midstream assets in North Dakota. 

Our divestitures conducted in 2022 did not provide any reductions to our emissions performance.

We are resolute in our efforts to reduce our emissions intensity as we responsibly grow our business through strategic acquisitions and continue to help meet increasing demand for reliable and affordable energy.  

Timeline: Incorporating Acquired Assets into our Carbon Managment Practices

Emissions Management Collaboration

As a company, we actively participate in several voluntary initiatives aimed at reducing GHG emissions across our industry. We believe that coordination, collaboration and sharing best practices increases innovation and helps us develop more effective solutions. Our employees not only participate in collaborative industry efforts, but they chair committees and, in some cases, hold Board positions. 

ONE Future

Crestwood has been an active and collaborative member of ONE Future since 2020 and our senior vice president for ESG and corporate communications sits on the Board. We continue to meet and exceed the ONE Future methane emissions targets for both the Gathering & Boosting and Processing segments. 

Looking Ahead

Our focus in 2022 was to set a strong foundation for our carbon management efforts, with an emphasis on data management. In 2023, we plan to continue building upon that foundation by: 

• Developing a dedicated ESG budget to further reduce emissions intensity at our highest emitting assets, focusing on efforts that will produce the greatest reduction in emissions
• Annually identifying and prioritizing facilities where modifications will lead to reduced emissions
• Deploying continuous methane monitoring devices across 40 percent of our compressor facilities by year end, with plans to reach 100 percent by 2024 
• Concluding the Cheniere-led QMRV project and incorporating lessons learned 
• Continuing to expand our emissions digitization initiative focused on improving the accuracy and availability of our emissions data 
• Exploring the development of an internal cost of carbon and integrating it into project valuations, equipment selection and retrofits
• Staying abreast of RSG market developments in the midstream industry and engaging with key customers on potential RSG partnerships

For additional information on how we manage emissions, please see the following documents: