- Corporate Responsibility
- Royalty Owners
Founded almost a century ago, Southwestern Energy is a leading U.S. producer of natural gas and associated liquids focused on responsibly developing core positions in the nation’s two premier natural gas basins: the Appalachia and Haynesville basins. Our operations in Pennsylvania, West Virginia and Ohio are primarily focused on the Marcellus and Utica shale formations. Our operations in Louisiana, acquired from Indigo Natural Resources in September 2021, are primarily focused on the Haynesville and Bossier formations. We also perform drilling and completions activities on our assets and provide water and services that are strategically integrated with and economically beneficial to our exploration and production operations. In November 2021, SWN announced an agreement to acquire GEP Haynesville, which will expand operations in Louisiana.
SWN’s strategy is to responsibly develop core positions in the two premier US gas basins in a manner that creates sustainable value for stakeholders, protects financial strength and progresses leading execution to realize the tangible benefits of scale. Our strategy has four pillars.
In 2020, Southwestern Energy delivered strong results based on a business plan designed to further strengthen the Company and sustainably unlock shareholder value. We considerably reduced our cost structure, progressed our differentiated operational competitive advantages and captured the tangible benefits of scale with a strategic acquisition. Most importantly, we reported record environmental and safety performance. Taken together, these actions enhanced the resiliency and sustainability of the Company, positioning SWN to generate free cash flow that will enable us to reduce debt and increase balance sheet strength.
A high performance culture is also foundational to our strategy and is driven by our shared passion to stretch the limits of what is possible. That culture is underpinned by our Formula, which guides how we create sustainable Value+ for our stakeholders. The Right People doing the Right Things to develop our underlying Assets includes an unwavering commitment to health and safety and environmental, social and governance (“ESG”) corporate responsibility.
Our corporate strategy and approach to ESG, governed by the following principles, is a key differentiator.
- Sustainable and responsible natural gas development is essential to a lower carbon energy future.
- Creating sustainable value requires meaningful and impactful actions that consider our stakeholders’ perspectives and align with our corporate strategy.
- Being socially responsible includes protecting the health and safety of our employees and contractors, recognizing the personal value of every employee, believing that every person should be treated fairly and with respect, and positively impacting the communities in which we work and live.
Together, these principles enhance SWN’s position as an industry leader and the value we create for our stakeholders. As we execute our corporate strategy, we will do so in a manner that reflects these ESG principles, with the following focus areas:
SWN is proud of our historical environmental performance and seek to leverage and improve upon that performance. In 2014, SWN was a founding member of the ONE Future coalition, an organization working to reduce methane emissions across the energy value chain. We have already achieved a methane intensity 73% lower than the 2025 ONE Future target, and, in 2019, had the lowest greenhouse gas intensity among our American Exploration and Production Council peers as reported in their annual survey.
Continuing to build on our role as a leader in environmental performance requires a commitment to an objective assessment of our operations and effective utilization of technological advancements.
As a proof-point of this commitment, in 2017, SWN was one of the first operators to certify wells in Appalachia. Certification is a process by which an independent third party verifies that the operator has utilized industry-leading standards and practices in all phases of its operations, including well design, drilling, completions, production, permits and compliance coupled with responsible environmental and community performance. Critically, certification provides our stakeholders objective and independent third party data affirming SWN’s sustainable approach to responsible natural gas production. Together with our continuous emissions monitoring systems, well certifications provide measured, credible and verifiable information affirming our commitment to environmental stewardship.
In June, 2021, we announced the execution of an agreement to obtain independent, responsibly sourced gas (RSG) certification through Project Canary’s stringent TrustWell™ standards and continuous emissions monitoring across all our existing and future unconventional Appalachia wells. Project Canary will also initiate the installation of its Canary X, solar-powered continuous methane leak monitoring devices on all SWN Appalachian pad locations..
Projects such as well certification and continuous methane monitoring are fundamental to our business, as stakeholders increasingly seek verifiable data regarding environmental performance.
Progressing leading execution is one of our four strategic pillars. Beyond promoting safe and efficient operations, leading execution also mitigates environmental impact. For example, drilling longer laterals increases capital efficiency and reduces the number of surface drilling locations. Compressed cycle times lower well costs and further reduce related operational emissions.
We are not satisfied, however. We understand that achieving our collective global environmental goals, especially with respect to emissions, requires added intentionality.
In line with our emission reduction priorities and initiatives, we assessed the largest sources of our greenhouse gas emissions, which are combustion equipment and natural gas pneumatic devices. Based on this analysis, we have identified and plan to implement specific projects that reduce methane and carbon dioxide emissions in the short- and medium-term.
Additionally, as part of our comprehensive approach to further reducing methane emissions, natural gas pneumatic devices will be replaced on new and existing pads with lower-emission devices. To further reduce carbon dioxide emissions, we plan to minimize combustion during completion operations, explore technological advancement on emissions from gas-powered compressors, and utilize electric pad compressors where grid reliability is available.
With our continuous improvement mindset, we are prioritizing the reduction in the environmental impact of our own operations. We recognize, however, the practical challenges of fully negating our environmental impact through operational improvements alone. We believe offsets should not substitute for meaningful operational reduction efforts and should be derived from impactful and verifiable projects. At this time, we remain focused on reducing our own impact, while concurrently assessing the potential use of offsets in the future.
Driven by our ONE Team culture, our employees and contractors work together with the goal of achieving zero safety or environmental incidents. This culture is reinforced by visible leadership engagement and training programs to drive continuous improvement. SWN leaders, including senior management, are evaluated on and held accountable for the HSE and ESG performance of their teams, including methane intensity, which was added as an annual bonus metric in 2021.
We strive to continue cultivating our inclusive culture that appreciates people’s inherent uniqueness, welcomes diversity of background and thought, fosters open communication, encourages fair treatment and prioritizes the value and potential of our employees. Such inclusion and collaboration – which is the right thing to do – also promotes organizational performance excellence.
Like many of our industry peers, we recognize we have progress to make on relevant diversity metrics despite the initiatives we already have in place. We will continue to pursue meaningful advancements through a comprehensive approach, including leadership education and awareness sessions, recognition and rewards, expanded and targeted recruiting, focused career development programs and partnerships with diversity focus organizations.
We aim to make meaningful, beneficial and lasting impact in the communities in which we are privileged to live and operate. Accordingly, our efforts are responsive to the needs and priorities of local stakeholders. For example, 2020 marks the fifth year that we have achieved fresh water neutrality, returning more fresh water back to the environment than we used in operations. This was achieved through water reuse and recycling efforts, as well as through the completion of 10 water conservation projects in collaboration with multiple governmental agencies, nongovernmental organizations and local community organizations. Being a good neighbor also extends to the logistics of our water management. Transporting water to our drilling locations via pipelines, which we do in both Pennsylvania and West Virginia, reduces well costs and also lessens the impact on the environment and local communities by removing water hauling trucks from the roads. Since 2015, we have removed over 1.3 million water truckloads from the road in our local communities.
At SWN, we seek to maintain robust and transparent governance best practices and disclosures. This means that while we work to drive business and operational results that create value for our stakeholders, we also operate with an unwavering focus on ethics, integrity and model corporate citizenship.
Since 2013, well before most of the industry, we have published an annual Corporate Responsibility report. This report aligns with the Global Reporting Initiative (GRI) Standards requirements at the Core level. A separate appendix contains the GRI index and reporting boundaries. Our disclosures are also informed by the Sustainability Accounting Standards Board’s (SASB) standards for Oil and Gas Exploration and Production, the Task Force on Climate-related Financial Disclosures (TCFD), and several other reporting frameworks and scorecards relevant for our industry, like International Petroleum Industry Environmental Conservation Association (IPIECA). Our report leverages these leading frameworks while also highlighting innovative efforts that are unique to SWN. As the requirements of our stakeholders evolve, we will enhance our ESG disclosures to maintain transparency.
SWN’s Board of Directors and management team work together to identify risks to the organization and develop appropriate responsible mitigation measures. This iterative process, which extends to ESG as well as other matters, safeguards the organization from emerging risks and ensures alignment with our stakeholders. In 2020, to maintain proper oversight of ESG-related matters, the Nominating and Governance Committee added Company Culture to its primary risk oversight responsibilities, and the Compensation Committee expanded its oversight to Human Capital initiatives. Finally, the Board added an additional environmental metric in the Key Performance Indicators which are used to set incentive compensation levels.
SWN has developed a comprehensive approach to ensure disciplined decision making throughout its organization. For example, before executing strategic transactions, a rigorous review process is conducted that includes assessments by independent third-party experts. Potential transactions must meet strategic objectives including improving key financial metrics, strengthening inventory and reserve balances and leveraging SWN’s core competencies in large scale natural gas development.
SWN is a Learning Organization
While we are proud of what we have achieved, we are committed to doing more. Periodically, we review our goals and metrics to assess if they are sufficiently challenging, help deliver a meaningful impact, and align with our stakeholders’ interests. We also regularly evaluate potential changes to our metrics and goals to ensure alignment with our ESG strategy and evolving best practices and market demands. Our commitment is evidenced by our growing investment in programs related to our ESG priorities, including an expected investment of more than $6 million in 2021 and $15 to $20 million in 2022.
Looking ahead, the following are the top priorities for integration into our ESG strategy:
- Explore opportunities to continuously monitor and certify all Haynesville production as responsibly produced;
- Pursue further elimination of emissions through reduction initiatives, including the assessment of long-term reduction targets following the full integration of acquired assets;
- Initiate impactful programs to serve the communities in our new operating area of Louisiana;
- Extend achievement of fresh water neutrality;
- Progress diversity and inclusion initiatives, including recruiting, developing and retaining diverse talent;
- Continue to nurture strong ONE Team culture of HSE as a core value in all areas of operations; and
- Continue robust governance practices, including assessment of newly emerging risks.