Environmental

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Climate and GHG Emissions

We calculate our Scope 1 GHG emissions in accordance with Subpart C (Stationary Fuel Combustion) and Subpart W (Petroleum and Natural Gas Systems) of the EPA Greenhouse Gas Reporting Program. Pursuant to the EPA’s rules and regulations, emissions are reported according to defined “industry segments” as opposed to a single set of emissions at the operator level. There are five industry segments under the EPA’s reporting framework for petroleum and natural gas companies: Production; Gathering and Boosting; Processing; Transmission and Storage; and Distribution. The significant majority of our operations (and consequently our Scope 1 GHG emissions) fall within the Production segment.

In November 2018, we completed the spin-off of Equitrans Midstream Corporation (New York Stock Exchange: ETRN), a separate, publicly traded company formed to hold our former natural gas gathering, transmission, storage and water services businesses (the ETRN Spin-Off). Following the ETRN Spin-Off, we no longer held a material amount of midstream assets, and accordingly, we stopped including our Scope 1 GHG emissions from our remaining limited midstream assets (which fall within the Gathering and Boosting segment) in our ESG Reports following the ETRN Spin-Off.

Although we still only own an insignificant amount of midstream assets, we are disclosing 2018, 2019 and 2020 emissions from these assets as identified below as emissions from the Gathering and Boosting segment. We have no emissions within the Processing, Transmission and Storage or Distribution segments.

Scope 1 GHG Emissions (metric tons CO₂e)^[1]

PIE CHARTS

Scope 1 Emissions Sources (metric tons CO₂e)

Scope 1 GHG Emissions Intensity^[8]

While we have not historically tracked our Scope 2 GHG emissions (i.e., indirect GHG emissions from purchased electricity to power certain of our operations), we developed a methodology to calculate these emissions in 2020, and are including the data for the first time in this report. A third-party entity, typically a utility, generates these emissions at their facility.

The two prevailing methods for calculating Scope 2 GHG emissions are the market-based approach and the location-based approach. Under the market-based approach, Scope 2 emissions are calculated based on the reporting company’s contracts with electric utilities. Under the location-based approach, Scope 2 emissions are calculated based on the average emissions intensity of the reporting company’s local power grid. We use the location-based approach to calculate our Scope 2 emissions.

Scope 2 GHG Emissions (metric tons CO₂e)^[9]

Similar to Scope 2 emissions, we began efforts to track and understand our Scope 3 GHG emissions (i.e., other indirect emissions) in 2020. There are 15 categories of Scope 3 emissions. To fully understand our Scope 3 emissions, for 2020, we calculated our Scope 3 emissions within all 15 categories. We then conducted a materiality assessment to determine which of the 15 categories are material to helping our stakeholders understand our Scope 3 emissions impact.

As is the norm within our industry, the substantial majority of our 2020 Scope 3 emissions were generated from category 11 (use of sold products). As such, we are reporting only Scope 3 emissions from category 11, which is also in line with the industry benchmarking analysis we conducted as a part of our Scope 3 materiality assessment.

Scope 3 GHG Emissions (metric tons CO₂e)^[10]

 As discussed in our Climate Strategy and Sustainable Value Creation, the Evolve aspect of our strategy focuses on realizing the full potential of our current asset base. The purpose of evolution is to distinguish our capabilities from those of our peers, differentiating EQT. In line with that focus, we have set the following short- and medium-term goals for our Production segment operations to keep us on track:

Achieve net zero Scope 1 and Scope 2
GHG emissions by 2025 

Reduce our Scope 1 GHG emissions intensity to below 160 MtCO2e/Bcfe (representing an approximately 70% reduction compared to 2018 levels) by 2025 

Reduce our Scope 1 methane emissions intensity to 
below 0.02% (representing an approximately 65%
reduction compared to 2018 levels) by 2025 

To further demonstrate that our impact on climate change is a priority for EQT, we have tied our 2021 incentive compensation program, under which our executives and other employees participate, to a reduction in our Scope 1 GHG intensity.

As is demonstrated by our emissions intensity targets, we are planning to achieve our goal of net zero Production segment Scope 1 and 2 emissions by 2025 primarily through operational improvements. In 2020, we conducted an inventory of our Scope 1 emissions to determine which of our activities are the primary drivers of our GHG emissions. Based on our analysis, we determined that a substantial portion of our Scope 1 emissions are generated from one piece of equipment — pneumatic devices.

Although the vast majority of pneumatic devices used in the oil and gas industry are powered by natural gas, alternative available options are powered by nitrogen, compressed air, or other non-GHG emitting sources — each of which eliminates emissions from the pneumatic device with, in certain instances, de minimis increases in emissions attributable to power generation. We believe that we can replace our natural-gas-powered pneumatic devices across our asset base in their entirety with only a limited capital outlay, which we believe is unique in the industry and is driven by the high productivity-to-well (and site) ratio of our asset base. Doing so will constitute a substantial portion of our emissions reduction goals.

 [POTENTIAL PLACEHOLDER FOR IMPACT OF ELIMINATING PNEUMATICS ON GHG AND METHANE EMISSIONS CHARTS - PER EQT]

While we are already operating at an industry-leading emissions intensity level — in part driven by prior adoption of emissions-friendly operational technologies like electric frac crews and hybrid drilling rigs — we fully anticipate additional opportunities for operational improvements above and beyond our pneumatic device replacement initiative, albeit of lesser impact, to contribute to achieving our net zero goal.

As we prioritize emissions reduction opportunities, we place a premium on true emissions reduction. This is not only when making capital allocation decisions for emissions elimination programs versus generating offsets and purchasing credits, but also in how we prioritize projects that will support actual emissions reductions versus emissions reported pursuant to EPA guidance. For example, starting in 2020, we began a process to replace our natural-gas-powered pneumatic devices on newer well sites. Our internal research has shown that actual annual emissions attributable to pneumatic devices during the first two years of the productive life of a well are roughly equal to the actual emissions for the remaining balance of the well’s life. Importantly, while these early life pneumatic device emissions likely exceed the flat annual emissions attributed under EPA guidelines (which apply a single emissions factor regardless of the life of the well), we also found that EPA guidelines result in inflated emissions for the remainder of the life of the well.^[11] As such, when we initiated our pneumatic device replacement program in 2020, we began by targeting all new development and all sites that were within their first two years of production. Quite simply, our goal is to reduce actual emissions, not “desktop” emissions. Further to that end, we are actively developing plans to increase our usage of next-generation monitoring technologies — such as those employed in our pilot project with Project Canary/IES TrustWell — across a broader portion of our asset base. While we already employ leading practices in detection, we are driven to constantly improve our ability to identify and quickly address potential emissions incidents.

We are also committed to doing what we can — in light of who we are — to accelerate a sustainable pathway to a low carbon future. In one regard, this means leveraging the impact of our operating model through consolidation, and thereby accelerating a reduction of emissions within the natural gas production industry. In another, it means buttressing our efforts to reduce our emissions with carbon offset creation opportunities. In addition to generating credits that could be attached to our products to facilitate the establishment of differentiated products markets, we believe that opportunities exist for us to create offsets through activities that are consistent with our core competencies.

Additionally, while our net zero target does not include our Scope 3 emissions, we are exploring ways to meaningfully impact the emissions impact of the use of the products we sell and of others in the industry. As we noted above, our recent technological and cultural transformation has instilled across our organization the mentality, approach and nimbleness necessary to adapt in dynamic environments. These changes have been intentional and were pursued in part to allow EQT to evolve. The reality is that we do not believe that setting a net zero Scope 3 emissions target at this time is the optimal manner for EQT to contribute to an acceleration of a sustainable pathway to a low carbon future. Our track record demonstrates, for instance, that we can advance the rate of improvement in meeting a 1.5-degree scenario through consolidation, though consolidation would inherently attribute to our Company Scope 3 emissions of any future acquired company (emissions that would exist even if they were not acquired by us). We believe that advancing the collective goal of prevailing climate science should be the driving factor in shaping our strategy, and we will do just that.

To that end, we believe that we will have a competitive advantage in emerging energy transition technologies, many of which may not directly affect our reported emissions but still further this collective goal. We believe that our leadership has a demonstrable leading-edge track record in assessing and commercializing emerging technologies. When combined with being the largest producer of low-cost, low-carbon intensity natural gas, we believe we have a competitive advantage as a primary energy source for helping to decarbonize the domestic grid.

We believe these goals provide the right pace and targets to guide our strategy and decision-making throughout the Company, will continue to position EQT as a leader and the energy industry, and will accelerate a sustainable pathway to a low carbon future.

^[1] EQT is subject to the methodologies for reporting GHG emissions under Subpart C (Stationary Fuel Combustion) and Subpart W (Petroleum and Natural Gas Systems) of the EPA Greenhouse Gas Reporting Program. We calculate our Scope 1 GHG emissions using EPA calculation guidelines under 40 CFR Part 98 Subpart Q. Under this Rule, hydrofluorocarbons, perfluorinated chemicals, sulfur hexafluoride and nitrogen trifluoride are not expected to be emitted in this sector. Our Scope 1 GHG emissions figures include all of our Scope 1 GHG emissions, regardless of size. Subpart W only requires certain GHG emissions to be reported to the EPA if the emissions exceed a certain specified level, so in some cases our Scope 1 GHG emissions disclosed in this report may be greater than the amount we report to the EPA. Additionally, although not shown in our total Scope 1 GHG emissions figure, we had 6,326, 4,721 and 3,782 metric tons carbon dioxide equivalent (CO₂e) attributable to our fleet operations in 2018, 2019 and 2020, respectively.

^[2] Our 2018 emissions figures include emissions from our midstream operations that were subsequently transferred to Equitrans Midstream Corporation in connection with the spin-off of Equitrans Midstream Corporation as a separate, publicly traded corporation in November 2018.

^[3] Combustion emissions include emissions from our diesel and natural gas drill rigs, completion engines, stationary engines, reboilers, gas processing units (GPUs), vapor destruction units (VDUs) and generators.

^[4] Process emissions originate from our glycol and desiccant dehydrators.

^[5] Other vented emissions include emissions from our storage tanks, reciprocating compressors, well liquid unloading operations, pneumatic controllers and pumps.

^[6] Fugitive emissions include equipment leak surveys and population count emissions.

^[7] For purposes of this report, we use the AXPC’s definition of “flaring,” which is the flaring of wellhead gas from the primary separator at assets operated by EQT. This definition of flaring specifically does not include (i) combustion of low-pressure gas volumes from crude oil/condensate and produced water storage vessels or other low-pressure separators for the purpose of controlling emissions, or (ii) flaring from drilling and/or well completion, which are either (a) exempt from reporting to the EPA (e.g., flaring gas during the drill-out phase of completing a well), or (b) disclosed in our EPA emissions inventory reports under emissions from other sources (e.g., flaring associated with the operation of VDUs is captured under combustion emissions, and flaring associated with the operation of glycol dehydrators is captured under process emissions). For further discussion of our venting and flaring practices, see Venting/Flaring Practices.

^[8] In prior years we have calculated our intensity metrics using net production of hydrocarbons as the denominator in the calculation. We have decided to switch to using gross production of hydrocarbons as the denominator for our intensity metrics, beginning with this year’s report. While there is no standard formula for calculating emissions intensity, we believe gross production is a more accurate representation for calculating our intensity, because gross production is a measure of the actual volume of hydrocarbons produced from the wells we operate. Accordingly, we have restated our 2018 and 2019 Scope 1 GHG emissions intensity metrics using gross production as the denominator in the calculation. We have also provided our net production volumes in the Corporate Profile section of this report, in the event a reader desires to calculate our intensity metrics using net production.

^[9] Scope 2 emissions include only indirect emissions from EQT’s operations — does not include possible indirect emissions associated with the Chevron Assets.

^[10] Scope 3 emissions include only indirect emissions from EQT’s operations, and exclude possible indirect emissions associated with the Chevron Assets.

^[11] We presented these findings to the EPA in November 2020 in part to assist in their analysis on how to best tackle pneumatic device emissions.