In response to questions at its AGM last week, the company said the adoption of global policies to limit global warming to 2C were always front of mind, particularly when it was running the ruler over potential asset acquisitions and planning future production.
Woodside managing director Peter Coleman said it was important to test the resilience of the Woodside portfolio over time, particularly as global governments move to limit global temperature rises to 2C under the Paris Agreement.
He said Woodside was constantly testing its portfolio against net zero carbon emissions, and it would not invest in those parts of the world where it the company thinks that any exploration may result in discoveries that may not be sustainably produced over time.
Woodside said that, in terms of oil exploration, it was looking towards assets such as Senegal that could be exploited before any global cap on carbon emissions became binding, but its long term focus was on gas, which could enter new markets.
He noted that gas was less carbon intensive than many other energy sources, particularly coal, which is why Woodside has spent the past 12 months looking to create new markets for its products not just in the traditional power generation markets, but in the emerging LNG transport markets, particularly shipping.
International shipping is "basically unregulated" outside territorial waters, and there is a huge opportunity from an LNG sales and emissions control point of view to create LNG as a fuel of choice, he said.
The company is also working to reduce its own emissions.
Woodside was Australia's tenth largest greenhouse gas emitter last year, responsible for 10MMtpa of emissions, and its emissions are on an upward trend with the growth in LNG production.
Woodside chairman Michael Chaney said the company had rolling targets to reduce emissions each year, and that topic was "front of mind" in the decision making process.
The company also explained that its executive payment structure included incentives to reduce emissions, as global oilers such as Shell are increasingly adopting, however, the company said bonuses for short-term targets, such as reserves replacement, which could run counter to the 2C climate target would not be removed.
Chaney said flaring intensity was down 50% over recent years thanks to more efficient operations.
"One of the largest parts of our emissions profile is in CO2 emissions, and that is the hardest part to do anything about, because it is associated with the gas in the reservoir, and the only way you can do anything about it is really through sequestration," he said.
"It is very expensive to do, but it is always under discussion as we develop new fields it will be part of the equation."
The company also builds into its economics a carbon price on the assumption that one could be introduced in the future, so it knowns that any price will not render future developments uneconomic or marginal.
Coleman said that the company was also adopting most of the recommendations from the international Task Force on Climate-related Financial Disclosures, improving transparency in its annual reporting.
This year the company stepped up its sustainability disclosures, and it has already adopted most of the TCFD recommendations, with the balance to be reviewed over the back half of the year.
The aim is to move to full disclosure, matching the TCFD's intent, if not chapter and verse with all the recommendations.
Chaney said the reports were important, as despite the inroads being made by renewables and electric vehicles, it appeared they would make "relatively small inroads into the total energy scene".
"We have no doubt that gas in particular will be a very important energy source for decades to come, so we don't see any of our assets being stranded in that sense," he said.
