NOBLE ENERGY INC (NBL)

2015 Climate Risk Disclosure Analysis

Industry Group: Oil & Gas

Standard Industrial Classification: Crude Petroleum & Natural Gas

Index Membership: S&P 500, Russell 3000

Financial Year End: Dec 2014

and Properties This Annual Report on Form 10-K and the documents incorporated herein by reference contain forward-looking statements based on expectations, estimates and projections as of the date of this filing. These statements by their nature are subject to risks, uncertainties and assumptions and are influenced by various factors. As a consequence, actual results may differ materially from those expressed in the forward-looking statements. See Item 1A. Risk Factors General Noble Energy, Inc. (Noble Energy, the Company, we or us) is a leading independent energy company engaged in worldwide crude oil, natural gas and natural gas liquids (NGLs) exploration and production. Founded in 1932, Noble Energy is a Delaware corporation, incorporated in 1969, and has been publicly traded on the New York Stock Exchange (NYSE) since 1980. We have a unique history of growth, evolving from a regional crude oil and natural gas producer to a global exploration and production company included in the S&P 500. Our purpose, Energizing the World, Bettering People's Lives , reflects our commitment to find and deliver energy through crude oil, natural gas and NGL exploration and production while embracing our commitment to contribute to the betterment of people's lives in the communities in which we operate... 10-K Filing (2015-02-19)

Disclosure Breakdown

Disclosure Rank

91st percentile in Russell 3000

Disclosure Abstract

26 Relevance:
4%
Examples include:
 * the Ministry of Mines, Industry and Energy which, under such laws as the hydrocarbons law enacted in 2006 by the government of Equatorial Guinea, regulates our exploration, development and production activities offshore Equatorial Guinea;
 * the Ministry of National Infrastructures, Energy and Water Resources which regulates our exploration and development activities offshore Israel and the Israeli electricity market into which we sell our natural gas production;
 * the Israeli Antitrust Commission which reviews Israel's domestic natural gas sales and ownership in offshore blocks and leases;
 * the Ministry of Energy, Commerce, Industry and Tourism which regulates our exploration and development activities offshore Cyprus;
 * the Department of Energy and Climate Change which regulates our exploration and development activities in the UK sector of the North Sea;
 * the Petroleum Directorate which regulates our exploration activities offshore Sierra Leone; and the Department of Mineral Resources which regulates our exploration activities offshore the Falkland Islands.
Examples of US federal agencies with regulatory authority over our exploration for, and production and sale of, crude oil, natural gas and NGLs include:
 * the Bureau of Land Management (BLM), the Bureau of Ocean Energy Management (BOEM) and the Bureau of Safety and Environmental Enforcement (BSEE), which under laws such as the Federal Land Policy and Management Act, Endangered Species Act, National Environmental Policy Act and Outer Continental Shelf Lands Act, have certain authority over our operations on federal lands and waters, particularly in the Rocky Mountains and deepwater Gulf of Mexico;
 * the Office of Natural Resources Revenue, which under the Federal Oil and Gas Royalty Management Act of 1982 has certain authority over our payment of royalties, rentals, bonuses, fines, penalties, assessments, and other revenue;
 * the US Environmental Protection Agency (EPA) and the Occupational Safety and Health Administration (OSHA), which under laws such as the Comprehensive Environmental Response, Compensation and Liability Act, the Resource Conservation and Recovery Act, the Oil Pollution Act of 1990, the Clean Air Act, the Clean Water Act, the Safe Drinking Water Act, and the Occupational Safety and Health Act have certain authority over environmental, health and safety matters affecting our operations;
 * the US Fish and Wildlife Service and US National Marine Fisheries Service, which under the Endangered Species Act have authority over activities that may result in the take of any endangered or threatened species or its habitat;
 * the US Army Corps of Engineers, which under the Clean Water Act has authority to regulate the construction of structures involving the fill of certain waters and wetlands subject to federal jurisdiction, including well pads, pipelines, and roads;
 * the Federal Energy Regulatory Commission (FERC), which under laws such as the Energy Policy Act of 2005 has certain authority over the marketing and transportation of crude oil, natural gas and NGLs we produce onshore and from the deepwater Gulf of Mexico; and the Department of Transportation (DOT), which has certain authority over the transportation of products, equipment and personnel necessary to our onshore US and deepwater Gulf of Mexico operations.
27 Relevance:
20%
In 2009, the EPA launched a program that requires many suppliers of hydrocarbon fuels or industrial chemicals, manufacturers of vehicles and engines, and other facilities that emit 25,000 metric tons or more of carbon dioxide equivalent per year to report their annual GHG emissions. In November 2010, the EPA issued final regulations requiring such annual reporting of GHG emissions from qualifying facilities in the upstream oil and natural gas sector, including onshore production and offshore platforms (Subpart W). The first annual reports under Subpart W were due in 2012 for 2011 emissions. Substantially all of our onshore US properties are subject to the Subpart W reporting requirements. Information in such reports could form the basis of future GHG regulations
On August 16, 2012, the EPA issued New Source Performance Standards (NSPS) and National Emission Standards for Hazardous Air Pollutants to control air emissions associated with crude oil, natural gas and NGL production, including natural gas wells that are hydraulically fractured. These regulations require technologies and processes that, while reducing emissions, will enable companies to collect additional natural gas that can be sold. The EPA's final standards also address emissions from storage tanks and other equipment. The final rules establish a phase-in period that is intended to ensure that manufacturers have time to make and broadly distribute the required emissions reduction technology. Until January 2015, for example, owners and operators of natural gas wells must either flare their emissions or use emissions reduction technology called 'green completions,' technologies that are already widely deployed at wells. In 2015, all newly fractured natural gas wells will be required to use green completions. The EPA's final rules are expected to have minimal impact on our business. The reduction of GHG emissions already was one of our priorities and we have been working to improve our methods to reduce GHGs through operational and business practices. For example, we use green completions on a number of our wells to comply with Colorado Oil and Gas Conservation Commission (COGCC) rules. Additionally we have undertaken emission reduction projects such as our US Vapor Recovery Unit (VRU) program, where we have installed VRUs to capture natural gas that would otherwise be flared on a substantial number of our tank batteries In March 2014, the Obama Administration released a Strategy to Reduce Methane Emissions that includes consideration of both voluntary programs and targeted regulations for the oil and gas sector. Towards that end, the EPA released five draft white papers on methane emissions, volatile organic compound (VOC) emissions, and emission mitigation measures for natural gas compressors, hydraulically fractured oil wells, pneumatic devices, well liquids unloading facilities, and natural gas production and transmission facilities. Building on its white papers and the public input on those documents, the EPA has announced that it intends to issue a proposed rule in the summer of 2015 to set standards for methane and VOC emissions from new and modified oil and gas production sources and natural gas processing and transmission sources. The EPA intends to issue a final rule in 2016. As another prong of the strategy, BLM is expected to propose standards in 2015 for reducing venting and flaring 27 on public lands. The EPA and BLM actions are part of a series of steps by the Obama Administration that are intended to result by 2025 in a 40-45% decrease in methane emissions from the oil and gas industry as compared to 2012 levels Also, the EPA has proposed to strengthen the National Ambient Air Quality Standard for ozone.
item 1a. Risk Factors
38 Relevance:
8%
Loss of production or limitations on our access to reserves in one of our core operating areas could have a significant negative impact on our cash flows and profitability Exploration, development and production activities as well as natural disasters or adverse weather conditions could result in liability exposure or the loss of production and revenues Our operations are subject to hazards and risks inherent in the drilling, production and transportation of crude oil, natural gas and NGLs, including:
 * injuries and/or deaths of employees, supplier personnel or other individuals;
 * pipeline ruptures and spills;
 * fires, explosions, blowouts and well cratering;
 * equipment malfunctions and/or mechanical failure on high-volume, high-impact wells;
 * leaks or spills occurring during the transfer of hydrocarbons from an FPSO to an oil tanker;
 * loss of product occurring as a result of transfer to a rail car or train derailments;
 * formations with abnormal pressures and basin subsidence which could result in leakage or loss of access to hydrocarbons;
 * release of pollutants;
 * surface spillage of, or contamination of groundwater by, fluids used in operations;
 * security breaches, cyber attacks, piracy or terroristic acts;
 * theft or vandalism of oilfield equipment and supplies, especially in areas of active onshore operations;
 * hurricanes, cyclones, windstorms, or 'superstorms' which could affect our operations in areas such as the Gulf Coast, deepwater Gulf of Mexico, Marcellus Shale or Eastern Mediterranean;
 * winter storms and snow which could affect our operations in the DJ Basin and Marcellus Shale;
 * extremely high temperatures, which could affect third party gathering and processing facilities in the DJ Basin;
 * volcanoes which could affect our operations offshore Equatorial Guinea;
 * flooding which could affect our operations in low-lying areas;
 * harsh weather and rough seas offshore the Falkland Islands, which could limit certain exploration activities;
 * other natural disasters; and pandemics and epidemics, such as the Ebola virus, which is ongoing in certain regions of West Africa and may adversely affect our business operations through travel or other restrictions.
43 Relevance:
2%
Even where we have some contractual control over the transportation of our production through firm transportation arrangements, third-party systems and facilities may be temporarily unavailable due to market conditions or mechanical reliability or other reasons, including adverse weather conditions
Third-party systems and facilities may not be available to us in the future at a price that is acceptable to us.
46 Relevance:
2%
Exploratory drilling activities may be curtailed, delayed or canceled, or development plans may change, resulting in significant exploration expense, as a result of a variety of factors, including:
 * lower commodity price outlook;
 * title problems;
 * near-term lease expiration;
 * decisions impacting allocation of capital;
 * compliance with environmental and other governmental requirements;
 * increases in the cost of, or shortages or delays in the availability of, drilling rigs, equipment and qualified personnel;
 * unexpected drilling conditions;
 * pressure or other irregularities in formations;
 * equipment failures or accidents; and adverse weather conditions.
50 Relevance:
2%
On the other hand, GHG emissions regulations may increase the demand for natural gas as fuel for power generation.
item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
61 Relevance:
59%
Summary of Significant Accounting Policies Climate Change The matter of climate change has become the subject of a significant public policy debate. While climate change remains a complex issue, some scientific research suggests that an increase in GHGs may pose a risk to the environment
The crude oil and natural gas exploration and production industry is a source of certain GHGs, namely carbon dioxide and methane, and future restrictions on the combustion of hydrocarbons or the venting of natural gas could have a significant impact on our future operations. We are actively monitoring the following climate change related issues:Impact of Legislation and Regulation The commercial risk associated with the exploration and production of hydrocarbons lies in the uncertainty of government-imposed climate change legislation, including cap and trade schemes, carbon taxes, and regulations that may affect us, our suppliers, and our customers. The cost of meeting these requirements may have an adverse impact on our financial condition, results of operations and cash flows, and could reduce the demand for our products In June 2013, President Obama unveiled a Presidential climate change action plan designed to reduce carbon emissions in the US, prepare the US for potential climate change impacts, and lead international efforts to address potential global climate change. In furtherance of that plan, the Obama Administration has launched a number of initiatives, including the development of standards to increase vehicle fuel economy and a Strategy to Reduce Methane Emissions from the oil and gas industry. See also Items 1. and 2. Business and Properties - Regulations. We are continuing to monitor implementation of the Presidential climate change plan Impact of International Accords The Kyoto Protocol to the United Nations Framework Convention on Climate Change (Protocol) went into effect in February 2005 and required all industrialized nations that ratified the Protocol to reduce or limit GHG emissions to a specified level by 2012. The US did not ratify the Protocol. Parties have agreed to a second commitment period of the Kyoto Protocol which will last until December 31, 2020. International negotiations over a new climate change accord are continuing. While no new accord has been adopted that would affect our operating locations, the current state of development of many initiatives makes it difficult to assess the timing or effect of any pending discussions of future accords or predict with certainty the future costs that we may incur in order to comply with future international treaties or regulations Indirect Consequences of Regulation or Business Trends We believe there are both risks and opportunities arising from the global response to potential climate change. In terms of opportunities, the regulation of GHGs and introduction of formal technology incentives, such as enhanced oil recovery, carbon sequestration and low carbon fuel standards, could benefit us in a variety of ways First, sales of natural gas comprised approximately 55% of our 2014 total sales volumes from continuing operations. The burning of natural gas produces lower levels of GHG emissions as compared to fuels such as liquid hydrocarbons and coal. In addition, public concern about nuclear safety has increased. These factors could increase the demand for natural gas as fuel for power generation. Also, should renewable resources, such as wind or solar power, become more prevalent, natural gas-fired electric plants may provide an alternative backup to maintain consistent electricity supply.
61 Second, market-based incentives for the capture and storage of carbon dioxide in underground reservoirs, particularly in oil and natural gas reservoirs, could benefit us through the potential to obtain GHG allowances or offsets from or government incentives for the sequestration of carbon dioxide
Finally, future GHG standards for vehicles, could result in the use of natural gas as transportation fuel.
79 Relevance:
8%
78 In the Gulf of Mexico, we self-insure for windstorm related exposures. Currently, our Gulf of Mexico assets are primarily subsea operations; therefore, our direct windstorm exposure is limited. However, we do have some exposure through the use of third party production platforms and one Noble-owned floating production facility. In addition, the cost of windstorm insurance continues to be very expensive and coverage amounts are limited. As a result, we currently believe it is more cost-effective for us to self-insure, or absorb any physical loss or damage to these assets, including any business interruption attributable to windstorm exposures.

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