Deliverables
Main findings:
In reviewing the degree to which HSEQ management is being seen and integrated with CSR in the offshore oil and gas industry the following were key findings:
- An emerging issue is that management of HSEQ issues is most consistently reported, but it sometimes lacks evidence of strategic level management particularly in smaller operations.
- Where other CSR issues are being tackled it is often not clear whether there is any real effort in 'operationalising' their policy. In other words there is very little integration with normal business operations - objectives may be limited to contributing to local charities either in resources or time for example. In this respect there is agreement with one of the findings from WP4 which recommends developing a user-friendly method of reporting based on the GRI principles made relevant to the oil and gas industry, which could also be context specific, i.e. more detailed and sector specific information.
- There may be a lack of guidance on management tools, thinking on integration of tools such as EHS risk assessment tools, Environmental Impact Assessment (EIA) and Social Impact Assessment (SIA). Likewise design concepts such as inherent safety, cleaner technology and design for environment (DfE) may have much in common.
- To date very little information has emerged on guidance managing HSEQ/CSR issues throughout the supply chain.
Overall, there appears to be continued emphasis on the need for a business case for managing CSR issues, and whilst the industry would clearly welcome more evidence on the business benefits there is a danger that this emphasis may damage the trust of external stakeholders. Whilst recognising the societal benefits of both the products of the oil and gas industry and the employment it provides, there are other reasons for business to contribute to sustainable development, not least moral reasons but also strategically, it provides evidence to persuade governments and increasingly influential international bodies not to implement unwanted legal requirements.
Recommendations:
From the review of HSEQ management with respect to CSR, the following areas could warrant further research, particularly in relation to the offshore oil and gas industry:
- Development of case studies illustrating good practice on the management and integration of HSEQ/CSR issues within and throughout the supply chain. The development of such could come out of research into the identification and review of drivers and motivations for SMEs, suppliers and contractors to become socially responsible e.g. offer financial subsidies, procurement practices, regulations in developing countries, etc.
- Critical review of CSR through dialogue on the feasible extent and depth of CSR - are there limits for companies and what is the role of governments, regulators and other stakeholders? Included in this would a review as to the extent by which CSR in relation to the integration of HSEQ is becoming increasingly regulated, and to what level can this effectively be enforced?
- A review of company contributions to social sustainability, particularly relating to the significant global issue of poverty - a problem that cannot be faced simply by philanthropic donations.
List of activities for this WP:
During the 3 year programme, this WP has been involved in a number of activities. We have contributed to key events co-ordinated either by the network project team (DNV) as well as to events convened by other WPs. In particular, this includes:
- Attendance of WP8a representatives to WP4 meetings
- Contributions to the WP4 World Bank E-conference on CSR in the oil & gas industry.
- Attendance and presentations at all Plenary Meetings for TRENDS
- Participation in all WP Leaders and Steering Committee teleconferences and meetings.
In addition, we have organised and run two workshops in the process of developing a set of comparative case studies of companies and there approach to HSEQ and CSR management. These two workshops were held at Modena University, Italy and were attended by TRENDS partners and other external stakeholders and interested parties.
Furthermore, we have supported TRENDS partners by providing the interview aids to collect a series of case studies to compare the way in which HSEQ management is integrated or not with CSR. These detailed case studies have been subsequently developed into web-based pdf versions that provide a comparative overview of the varying approaches. These case studies have been approved by the companies concerned and are available on the TRENDS website.
The case studies comprised:
- Clean Water Systems Limited (UK).
- Galp Energia SGPS S.A. (Portugal).
- North Sea Operator (UK).
- Sacor Maritima S.A. (Portugal).
- Polish Oil and Gas Company Ltd. Division Zielona Gora (Poland).
Main findings: One of the aspects of WP10 focused on identifying new networking opportunities for the European offshore industry that would enhance its sustainability and competitiveness in supplying energy from European waters. As part of this, the scope for applying new developments in offshore oil and gas supply to renewable sources of energy was explored, because this is assumed to play a role in achieving overall sustainability (both in terms of productivity as well as competitiveness) of the industry.
They therefore also serve as priorities for involving stakeholders. As key themes for the offshore business they were identified as follows: Maximizing production from existing oil and gas fields Decommissioning of existing platforms and pipelines at the end of their productive lives Exploiting Arctic and deep-water fields Developing wave energy Enhancing the contribution to energy supplies of offshore wind energy Using depleted reservoirs for the storage in bulk of carbon dioxide that has been trapped from the combustion of fossil fuels (this could include the in situ conversion of natural gas to hydrogen, with storage of the carbon dioxide produced). Using the triple bottom line to assess performance: WPs 1-4 identified current 'gaps' in understanding (or needs) aimed at enhancing the capability of European offshore companies in oil and gas production. These capabilities have been collated, and their relevance to the business areas listed above was assessed using the concept of triple bottom line accounting.
Therefore what could be considered as priority (or 'core') needs were defined as those that are potentially capable of enhancing two if not all three aspects of the triple bottom line. Perceived key drivers in raising the profile of stakeholder dialogue: Brent Spar is seen to be one of the most important events that raised the profile of stakeholder engagement and dialogue within the industry. Other factors: High level of existing regulation, particularly in relation to environmental impact assessments, planning applications, risk assessments, etc. Reputational risk in relation to the media and the public at large. Increasingly stakeholder dialogue is being seen as part of the risk management agenda Stated policy objectives of senior management/Board commitment NGOs continue to voice their concerns and demand an improved communication progress Offshore oil and gas (upstream) production is increasingly seen as part of the life cycle of energy production.
The co-ordination and liaison between government and industry and others on environmental matters requires redesigning and re-energising to ensure that it is properly directed, effective and efficient. Perceived challenges to "walking the talk" on stakeholder dialogue: There are a number of challenges faced by stakeholders within this sector, both industry and otherwise. On the whole though it appears as if there is some recognition of the value of stakeholder dialogue; however, some challenges were identified. Recommendations: Possible development of further case studies articulating the business benefits of effective stakeholder dialogue and enabling the sharing of information across the industry.
Possible development of a model outlining an approach to establishing successful joint working arrangements that would help to improve and broaden stakeholder input. Look at ways of establishing formal processes for sharing good practice or experiences gained from stakeholder dialogue more widely, given that internally processes and resources are in place, e.g. intranets, company standard and guidelines, specific people, etc. Furthermore the value of transferring good practice in QR and HS to SMEs involved in late-life production, decommissioning and renewables. Look at ways to map and communicate concisely the numerous and overlapping industry bodies and initiatives that exist at international, national, regional and local levels (as the first section of this report indicates). Consideration of means to verify claimed 'good' corporate practice (disconnect between corporate and operations) as investors and other stakeholders are increasingly wary of corporate reporting that may prove to be technically correct but fails to provide a true picture of the company's health and prospects.
Consider ways, e.g. forum organisation, by which to consider integrated approaches to obtaining and managing sea data. One of the aspects of WP10 focused on identifying new networking opportunities for the European offshore industry that would enhance its sustainability and competitiveness in supplying energy from European waters. As part of this, the scope for applying new developments in offshore oil and gas supply to renewable sources of energy was explored, because this is assumed to play a role in achieving overall sustainability (both in terms of productivity as well as competitiveness) of the industry. They therefore also serve as priorities for involving stakeholders.
As key themes for the offshore business they were identified as follows:
- Maximizing production from existing oil and gas fields
- Decommissioning of existing platforms and pipelines at the end of their productive lives
- Exploiting Arctic and deep-water fields
- Developing wave energy
- Enhancing the contribution to energy supplies of offshore wind energy
- Using depleted reservoirs for the storage in bulk of carbon dioxide that has been trapped from the combustion of fossil fuels (this could include the in situ conversion of natural gas to hydrogen, with storage of the carbon dioxide produced).
Using the triple bottom line to assess performance:
WPs 1-4 identified current 'gaps' in understanding (or needs) aimed at enhancing the capability of European offshore companies in oil and gas production. These capabilities have been collated, and their relevance to the business areas listed above was assessed using the concept of triple bottom line accounting. Therefore what could be considered as priority (or 'core') needs were defined as those that are potentially capable of enhancing two if not all three aspects of the triple bottom line.
Perceived key drivers in raising the profile of stakeholder dialogue:
Brent Spar is seen to be one of the most important events that raised the profile of stakeholder engagement and dialogue within the industry.
Other factors:
- High level of existing regulation, particularly in relation to environmental impact assessments, planning applications, risk assessments, etc.
- Reputational risk in relation to the media and the public at large.
- Increasingly stakeholder dialogue is being seen as part of the risk management agenda
- Stated policy objectives of senior management/Board commitment
- NGOs continue to voice their concerns and demand an improved communication progress
- Offshore oil and gas (upstream) production is increasingly seen as part of the life cycle of energy production
- The co-ordination and liaison between government and industry and others on environmental matters requires redesigning and re-energising to ensure that it is properly directed, effective and efficient.
Perceived challenges to 'walking the talk' on stakeholder dialogue:
There are a number of challenges faced by stakeholders within this sector, both industry and otherwise. On the whole though it appears as if there is some recognition of the value of stakeholder dialogue; however, some challenges were identified.
Recommendations:
- Possible development of further case studies articulating the business benefits of effective stakeholder dialogue and enabling the sharing of information across the industry.
- Possible development of a model outlining an approach to establishing successful joint working arrangements that would help to improve and broaden stakeholder input.
- Look at ways of establishing formal processes for sharing good practice or experiences gained from stakeholder dialogue more widely, given that internally processes and resources are in place, e.g. intranets, company standard and guidelines, specific people, etc.
- Furthermore the value of transferring good practice in QR and HS to SMEs involved in late-life production, decommissioning and renewables.
- Look at ways to map and communicate concisely the numerous and overlapping industry bodies and initiatives that exist at international, national, regional and local levels (as the first section of this report indicates).
- Consideration of means to verify claimed 'good' corporate practice (disconnect between corporate and operations) as investors and other stakeholders are increasingly wary of corporate reporting that may prove to be technically correct but fails to provide a true picture of the company's health and prospects.
- Consider ways, e.g. forum organisation, by which to consider integrated approaches to obtaining and managing sea data.
Main findings:
Tradition and goals in the industry with respect to Corporate Social Responsibility (CSR):
- The oil and gas industry was among the first to start working systematically with CSR. The most known cases triggering the stakeholders' claim for CSR also stem from the oil and gas business.
- The goal is for total integration of CSR in 'everyday-business'.
- Good CSR management is also good risk management, and builds both brand value and credibility in the financial sector.
Gaps and challenges were identified following the state-of-the-art review of CSR within the oil and gas industry:
- The industry is very diverse as to degree of implementation, and gaps of progress and maturity of CSR work is large within the industry. CSR is not well established across the supply chain
- A major concern by suppliers was that no reference is given in the bidding process that CSR performance may count.
- Environmental reporting is quite well developed, but reporting on social performance is not so well developed yet.
- The financial sector is an increasingly strong driver for CSR; the oil and gas companies should therefore use such reporting to inform the investor and banking community.
- In today's world of information and knowledge, companies need to take into consideration all parties involved. The public will no longer tolerate "closed doors policies.
Recommendations:
- Learning by sharing successful and less successful cases.
Organise national teams that collect cases and management system information with suppliers and petroleum companies and undertake comparative analyses that explore the learning and improvement potential with the participating companies.
Document and analyse management systems in contractor/supplier relations, looking at the compatibility between management systems across organisational boundaries in integrated commercial operations.
- Report on a set of Minimum Requirements:
As the Global Reporting Initiative (GRI) principles http://www.globalreporting.org/ are generally accepted as a basis for reporting they should be adapted to meet oil and gas industry-specific needs today they are too general/global and we need a more locally relevant way of organizing the reporting for companies active in the oil and gas sector. It also seemed necessary that the way the report is presented should be done differently, according to the audience you are reporting to.
- Determine the operational materiality of good CSR:
Establishing relevant Key Performance indicators (KPI's) for allowing a good CSR management. Investors want more and more proper evaluation as a tool that reflects better how the CSR related issues will affect the 'bottom-line' and long-term company performance.
- Develop stakeholder dialogues:
In today's climate of 'transparency', mapping your stakeholders, getting to know all entities that you impact and are affected by is important. Get stakeholders involved and make them responsible for viewing and implementing policies and regulations as their own, and ask their help to find better and more optimal solutions to existing problems.
- Cooperate with NGO's and International Institutions:
NGO's can offer conflicting advice. A successful stakeholder dialogue is one that doesn't aim for consensus, for it does not have to be the goal of stakeholder dialogues. It is more of an awareness-building activity that results in better approaches and solutions and creates understanding and respect among opponents.
Multinational institutions are a good platform for arranging and consulting stakeholder dialogues (as TRENDS experienced with cooperating with the World Bank Institute).
Main findings:
Taking new technology into use is generally inducing uncertainty. Oil & Gas companies are generally not willing to accept such risks considering the large downsides of failures in terms of lost production and SHE considerations. However, reluctance to new technology implies lost opportunities for the industry as well as for the state in way of reduced income and slow development towards safer and more environmentally friendly energy production. The obvious way to mitigate this situation is to adopt methods for qualifying new technology, and thereby reduce the risks related to it. A generic work process for qualification of new technology is laid down in DNV-RP-A203, 2001.
The generic nature of DNV-RP-A203, 2001 has revealed a need to develop complementary guidelines addressing specific types of technology. The members prioritized to develop three documents referred to as Appendixes to DNV-RP-A203 (although to be issued as separate documents); one for sub-sea technology, one for down-hole systems and one for renewable energy systems.
Further, it was recognized that important experience using DNV-RP-A203 since it was released in 2001 should be reflected in these Appendixes. To enable the authors to do so, document to be regarded as a brief 'forecast' to how the structure of a revised qualification work process could look like was written within TRENDS. Further, it was noted that DNV-RP-A203 should be more specific regarding SHE considerations. Also, a JIP proposal for revising DNV-RP-A203 was drafted as a basis for post-TRENDS activities.
Recommendations:
- DNV RP-A203 should be revised within a post-TRENDS JIP to include experience from use since it was issued in 2001. The new RP should be more explicit regarding issues related to SHE.
- Appendixes for other types of technology, in particular emerging technology for reduction of climate change, should be developed.
List of activities:
- Workshop in London for discussion and outlining of further activities.
- Coordination of activities (DNV) to develop appendixes to DNV-RP-A203 including outlining a 'forecast' for a revised qualification work process.
- Development of 'Sub-sea Appendix to DNV-RP-A203' (Headed by DNV and Cranfield University).
- Development of 'Down-hole Appendix to DNV-RP-A203' (Headed by Proneta).
- Development of 'Renewables Appendix to DNV-RP-A203' (Headed by Cranfield University).
- Various workshops and phone conferences within the above activities.
- Drafting a JIP proposal for revising DNV-RP-A203(DNV).
Main findings:
The TRENDS work package on environmental risk assessment has achieved the major goals. It has described the current state of the art within risk assessment tools by describing the ERA technologies used for operational and accidental discharges from production offshore. Second, it has highlighted the limitations of the PEC_PNEC approach in relation to ERA used offshore and finally identified the need for validation of risk assessment in and output.
The TRENDS project enabled a pan-European dialogue between domain experts on environmental risk assessments (BMT, SINTEF, DHI, TNO, RF, DNV and MTS) on existing state of the art environmental information systems and the foundation of their environmental impact assessments methodologies and models.
- Risk assessment tools- The project has covered the rationale and theoretical background for the different ERA modelling tools, both for accidental and for operational discharges, used for the offshore oil and gas industries.
- Limitations of the PEC_PNEC approach- The PEC_PNEC ratio is very well suited for screening purposes and prioritising hazards as it is applied in CHARM and EUSES. However, it does not comply with the definition of risk in various guidelines for risk assessment.
- Validation of risk assessment- The needs for validation of the parameters used in ERA have been highlighted. One important issue is the need of better background data that will enhance the value of the ERA.
Recommendations:
The project has described the rationale and theoretical background for the different ERA modelling tools, both for accidental and for operational discharges and has four main recommendations:
- The project recommends performing an inter-calibration of the various models in use for risk assessment for offshore oil and gas industry.
- There is a clear need to fill the gap between modelling and monitoring, i.e. the background information used to run ERA models are not based on sufficient knowledge of the effects to the ecosystem.
- There is a need to have a more unified approach to accidental risk and operational risk assessments.
- There is a need to develop more stochastic models which can forecast risks, taking account of the probabilistic nature of the underlying processes and their controlling parameters.
Follow up from TRENDS:
The projects ideas are being advanced after TRENDS through participation in major initiatives on development of environmental decision support systems (e.g. through the IST programme of EC FP7), and are also being considered further through interaction with the industry body EUROGIF and the industry directly.
The participants within WP8b are regularly working with environmental risk assessment, it will therefore be a natural continuation to see for a development of the projects ideas described below aiming to get support from international funding mechanisms. The WP8b coordinator will invite the participants from this WP8b to a discussion for activating the project ideas described below.
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