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Advisian’s insight on the recent release of the Oil and Gas Sustainability Atlas.
Advisian, the independent consulting business line of the WorleyParsons Group, welcomes the recent UNDP, IFC and IPIECA “Mapping the Oil and Gas industry to the Sustainable Development Goals: An Atlas” publication for public comment. Key for the industry, irrespective of location, is to foster, grow and maintain a constructive relationship with impacted communities. Through our experience with clients in the oil and gas sector, Advisian has taken the opportunity to highlight our insights with respect to Sustainable Development Goals (SDGs). Further, we were keen to offer potential approaches to achieve more sustainable outcomes for industry and communities alike.
This article is part of the wider Advisian series focussed on sustainability globally, sharing insights from teams across Advisian, based on our client engagement and other research we have completed. We will be publishing a series of thought pieces in the coming months, offering deeper insight into industry and communities, their challenges and opportunities.
We welcome any feedback or queries you may have.
The United Nations Development Programme (UNDP), the International Finance Corporation of the World Bank Group (IFC) and International Petroleum Industry Environmental Conservation Association (IPIECA) issued the “Mapping the Oil and Gas industry to the Sustainable Development Goals: An Atlas” for comment. Advisian welcomes the publication of this atlas as a means to share best practice between oil and gas companies, government and academia on a global basis.
Through our work with clients, Advisian has gained insight into what works well in the Oil and Gas industry. In this paper, Advisian seeks to offer our thoughts and insight, being complementary to the atlas. We offer action-oriented examples, of the kind of initiatives operators could implement to achieve a specific sustainable development goal, whilst improving their “License to Operate” position and therefore increase profitability and attractiveness to shareholders.
Advisian has found that successful companies commit to a set of Sustainable Development Goals (SDG) in their respective policies. Specifically, compliance with general principles, within a broad set of SDGs, is usually embedded in company policies. The strategic decisions of these organisations are influenced by “License to Operate” type questions at Board Level. Instances in the last few decades such as Macondo and Brent Spar brought to bear the impact of public perception and the associated political response.
Advisian also sees a greater emphasis of SDGs during due diligence assessments in Mergers and Acquisitions. The impact of misaligned goals or certain legacies can weigh heavy on a combined balance sheet. This trend reflects a more general industry development; Advisian has observed a more holistic approach to corporate risk management including a broad range of SDGs.
In the execution of client projects, our observation is that more baseline surveys are being included for a broader range of project and operational activities; achieving more sustainable outcomes for communities than what was historically observed. These baseline surveys set the environmental and social framework to implement SDG related activities. Advisian suggests that in certain instances contract and procurement activities for goods and services should include clear expectations on environmental, health and social goals for the project and its affected communities. All of these activities underpin the License to Operate approach. In this context, special mention has to be made in nurturing, developing and collaborating local content and local talent where large companies work outside the base country and bring expertise and investment to another region. Advisian sees the great synergies and long-term potential for solid relationships between host nations and operators.
This first section applies principally to the following SDGs:
Some examples of components of these plans are listed below:
The above examples apply to the following SDGs in part or holistically:
In Advisian’s view the need to be holistic, and therefore meaningful, extends to the assessment of well-being for all ages in a community to not merely assess illness, or physical sickness, to be able to arrive at a sustainable outcome.
Advisian promotes the use of Unmanned Autonomous Vehicles (UAVs) to replace mundane tasks, and reduce travel requirements in operating environments, by utilising smart analytics, to replace the need for travel to an exception/ intervention basis. Furthermore, Advisian also has first-hand experience in conducting aerial surveys and reducing exposure to operatives on the ground.
Advisian is actively supporting clients in introducing Renewable Energy sources to reduce the reliance on traditional energy sources and diversify. Advisian has begun publishing a number of thought pieces in New Energy which explore the impact of new energy generation and storage systems on our society.
Advisian has assisted a State Government frame their Biofuel strategy by identifying specific growth regions where biofuels could play a role in the regional fuel mix. In order to arrive at a holistic high level strategy, the client needed to consider technical, business and policy aspects to formulate a plan to attract potential developers and help existing primary industries diversify away from their historic markets.
Advisian wholeheartedly supports the proposition that urgent action must be taken to combat climate change and its impacts. Furthermore, we unanimously endorse the significant practical role that Carbon Capture and Storage (CCS) or Carbon Capture Use and Storage (CCUS) must play in the oil and gas industry in order to achieve the 2DS. Advisian believes that the oil and gas industry is uniquely placed to be a leader in this endeavour in both the upstream and downstream components, which is unique and unlike any other resource industry. In the upstream component, the gas separation process inherent in this activity enables the lowest cost method of CO2 separation. Pioneering projects like Statoil’s Sleipner have been capturing and safely storing CO2 in geologic reservoirs for almost 20 years through this process. Other activities such as Australia’s Gorgon project also separate the CO2 from gas processing for geologic storage. Furthermore, enhanced oil recovery (EOR) projects have, until the recent decline in oil prices, provided the other commercial business cases for CCS in the oil and gas industry.
The application of CCS in the hydrocarbons business are critical in proving to stakeholders (regulators, financiers and community’s) that CCS is commercially available and in giving confidence that geologic storage can be done safely.
The gas industry’s downstream component can also play a significant role in combating climate change by applying CCS to gas-fired power generation. According to the International Energy Agency (IEA 2016), CCS must contribute approximately 12% of cumulative emissions reductions in the energy sector in order to achieve the 2DS. The IEA also estimated that 250 GW of gas-fired power plants are equipped with CCS and provided around 4% (1 485 TWh) of global power generation in 2015. In addition, the IEA forecast that 42% of gas-fired power generation will come from plants equipped with CCS by 2050.
Another unique facet of applying CCS to the oil and gas industry is the ability to capture and safely store CO2 at large scale (millions of tonnes CO2) that are required to make a meaningful reduction in emissions to atmosphere. To date very few industries have practically demonstrated this like the oil and gas industry.
A key challenge is that oil and gas industry will need to collaborate with stakeholders from other industries such as power generation and cement production, for example, who may have different operating cultures.
Advisian also believes that the Oil and Gas industry can learn from other adjacent resource intensive industries. As part of an environmental, social, health impact assessment for a mining project, Advisian investigated health issues as holistic in nature and not merely illness, or physical sickness. The assessment included the WHO, World Bank, ICMM and IFC protocols. Social and health determinants were used in the baseline profiling. Importantly population health dynamics were assessed by Advisian at the baseline stage and compared against the project effects. As a result, health management plans were developed for future monitoring and mitigation.
Kai Eberspaecher, Senior Associate, Brisbane
Allison Hanly, Principal Consultant, Brisbane
Chai McConnell, Senior Associate, Brisbane
Juan Ramón Miguélez, Operations Director, Madrid
Geetha Ramesh, Principal Consultant, Calgary
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