Letter to Stakeholders
As a major global oil and natural gas company, we at ConocoPhillips recognize that our responsibilities to society
merely begin with our traditional and most important role of
providing the energy that powers modern life.
Our responsibilities also extend to the manner in which
we conduct our operations, our adherence to the highest legal
and ethical standards, our environmental performance, the
practice of good corporate citizenship in the communities in
which we operate, and the quality of our interactions with our
stakeholders – in effect, the public at large.
Consequently, in 2003 we established a formal set of
commitments to the public, and we followed that by publishing
our first baseline sustainable development report in 2005. As
you will find in this 2006 report, we are making considerable
progress toward meeting those commitments and are working
to achieve further improvement. In fact, we believe that our
ongoing business success depends on satisfying the varied
expectations of our many external stakeholders.
Those expectations begin with reliable energy supplies.
We believe that the key to building a secure energy future is
the efficient use of a variety of sources. While these sources
include the familiar fossil fuels – oil, natural gas and coal –
they extend to such alternatives as oil sands and natural gas
hydrates, nuclear power and renewable forms of energy such
as wind and solar power. All must be intensively developed
during the decades ahead.
We are working to develop a number of these potential
resources, while also enhancing the world’s capability to transport
currently stranded energy supplies to new international markets.
We focus these efforts in areas that offer us opportunities to
leverage our technical expertise and build on our existing presence.
For example, since our last sustainable development
report in 2005, we have matured into a much more substantial
energy producer. We became North America’s largest
nongovernmental natural gas producer through the acquisition
of Burlington Resources in March 2006. We also became one
of the world’s leading producers of heavy oil after forming a
joint venture with EnCana Corporation in early 2007.
Elsewhere, gaining access to international resources has
become increasingly difficult for publicly held companies. In
many countries, there are political, legal, tax or economic barriers
to entry. In others, social instability poses insurmountable
risk. We have even faced government expropriation of our
investments in some cases.
Additionally, such major projects as the proposed
Alaskan and Mackenzie Delta natural gas pipelines have been
slowed by regulatory and public policy issues, while proposed
construction of liquefied natural gas receiving terminals has
been delayed or abandoned due to local opposition.
While such factors are often beyond our control, we
believe that our best opportunities to gain approval to operate in
new areas must come through our performance and willingness
to address environmental and social concerns. Consequently,
sustainable development considerations are integrated into our
decision-making and risk-management planning.
The broad public concern over global climate change
serves as a good example. We believe this issue requires
serious attention, and therefore in April 2007, we joined the
U.S. Climate Action Partnership in support of a mandatory
national framework to reduce greenhouse gas emissions. We
also pledged $1 million to support the Climate Change Policy
Partnership, a four-year university-industry collaboration
launched in 2006 to develop remedial policies.
In the meantime, we are working to address the environmental,
technological and economic impact of greenhouse
gases and other emissions in our operations. We incorporate
the potential long-term cost of carbon into our capital spending
plans. Additionally, we are improving the energy efficiency
of our refineries and investigating the potential use of carbon
capture and storage technology as a means to reduce emissions
(see the Climate Change section).
To improve the environmental performance of our
products, we implemented a clean fuels program in the
United States to meet tighter governmental standards on
highway fuels that were enacted to improve air quality. An
investment of more than $2 billion over five years led to the
timely introduction of ultra-low-sulfur diesel fuel and
low-sulfur gasoline. We also increased production of
gasoline blended with ethanol in order to meet renewable
fuels standards.
We currently are bringing second-generation renewable
fuels to market. During 2006, we successfully commercialized
our technology to transform soybean oil into renewable diesel
fuel at a test at one of our refineries in Europe. In the United
States, we subsequently announced a strategic alliance with
Tyson Foods, the multinational food producer, to use byproduct
animal fat as a raw material in renewable diesel fuel.
Other research into biorenewable fuels includes the
potential use of cornstalks and fast-growing crops such as
switch grass to further supplement fuel supplies. We recently
established an eight-year, $22.5 million research program at
Iowa State University to develop these technologies and
overcome their operational and environmental challenges.
In recognition that access to clean water poses an increasingly
important environmental concern, in 2007 we began incorporating
into our business planning each business unit’s projections of
water use and capital projects associated with water management.
This enhances our focus on sound water management practices.
Throughout our company, we work to guard the environment
against accidental releases. For example, we recently completed
a major construction program to convert our entire fleet of
ocean-going tankers to double-hulled vessels.
To move closer toward our goal of operating with zero
injuries, occupational illnesses and safety incidents, we are
striving to eliminate unplanned events by strengthening our
mechanical and operating-integrity programs. As part of this
effort, we are re-examining our process safety management
systems to identify opportunities for improvement and to
incorporate recent advances.
A key indicator of our safety performance is the total
recordable rate for employees and contractors, which improved
six percent in 2006 compared with the previous year. However,
we still have a long way to go. During 2006, a number of serious
incidents occurred and three people lost their lives at work.
Consequently, we must redouble our efforts in the critical areas
of personal and process safety.
In the external community, in order to gain better
understanding of stakeholders’ views and convey information
on energy issues, we launched a “Conversation on Energy”
public outreach program directed at communities across
America. We are meeting with members of the general public,
government and the media to discuss the challenges of
satisfying growing energy demand in an environmentally
responsible way.
The knowledge gained through such outreach efforts
reaffirms our belief that our long-term success as a company
depends on the choices we make today in not only growing
our business but also in meeting the needs and expectations
of our stakeholders. As this report will show, our commitments
to sustainable development help guide those choices.
We recognize that this is a continuous journey, with new
challenges facing us every step of the way. But we are determined
to achieve ongoing progress. Please visit our sustainable
development Web site at http://www.conocophillips.com/sd
to let us know how we are doing.
Sincerely
J. J. Mulva
Chairman and Chief Executive Officer
