МИНИСТЕРСТВО ОБРАЗОВАНИЯ И НАУКИ РОССИЙСКОЙ ФЕДЕРАЦИИ
федеральное государственное автономное образовательное учреждение
высшего профессионального образования
«Северный (Арктический) федеральный университет имени М.В. Ломоносова»
Кафедра экологии и морфологии человека
Березина Диана Яновна
Институт
ИЕНиТ
курс
II
группа
301567
45.03.02 Экология
ВЫПУСКНАЯ КВАЛИФИКАЦИОННАЯ РАБОТА
(ДИПЛОМНАЯ РАБОТА)
Внедрение экологического менеджмента на предприятия
нефтегазодобывающей отрасли
Утверждена
приказом №
от «___» марта 2017г.
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Руководитель работы
И
О.П.
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Консультанты
Нормоконтроль
О.П.
Трубицина
Рецензент
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Постановление Государственной экзаменационной комиссии от
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выполнил и защитил дипломную работу с оценкой
Председатель ГЭК
Секретарь ГЭК
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(инициалы, фамилия)
_____________
Table of contents
Introduction..................................................................................................................... 3
Chapter 1 ENVIRONMENTAL MANAGEMENT IN THE RUSSIAN OIL AND GAS
ENTERPRISES..............................................................................................................8
1.1 Concept of environmental management....................................................................8
1.2 Environmental management in Russia...................................................................16
1.3 Risk management....................................................................................................24
1.4 The regulation of environmental quality through the environmental management
system........................................................................................................................... 30
1.5 Environmental policy..............................................................................................35
1.6 Environmental impact assessment...........................................................................37
Conclusion on the first chapter.....................................................................................45
Chapter 2 IMPLEMENTATION OF ENVIRONMENTAL MANAGEMENT IN THE
OIL AND GAS INDUSTRY........................................................................................47
2.1 Environmental management of investment projects in the oil and gas industry......47
2.2 Environmental responsibility of the Russian oil and gas companies.......................54
2.3 Environmental practices of oil and gas companies against the Sustainability
Reporting Guidelines....................................................................................................63
Conclusion on the second chapter.................................................................................54
Chapter 3 GUIDELINES FOR IMPLEMENTATION OF ENVIRONMENTAL
MANAGEMENT IN THE OIL AND GAS INDUSTRY..............................................78
3.1 Environmental tools and techniques........................................................................78
3.2 Application of environmental management system.................................................80
Conclusion on the third chapter....................................................................................89
Conclusion....................................................................................................................94
References..................................................................................................................... 98
2
Introduction
Nowadays environmental protection is one of the priorities and its management
is a rather difficult task. The main difficulty is the keeping of the rates of industrial
development and minimization of the negative consequences that enterprises possess for
nature. It can also be noted that international attention to the level of environmental
performance steadily increases in the developed countries and large regional economic
blocs in which environmental values are more actively and successfully integrated into
economic development strategies.
A particular way to solve environmental problems of industrial production is
considered to be environmental management. It serves as a key aspect of sustainable
development and refers to the highest priorities of industrial activity and
entrepreneurship. Environmental management is a safe management of modern
production, which seeks an optimal relationship between environmental and economic
performance. It is a structured system or environmental tool which, once implemented,
helps an organisation to identify the environmental impacts resulting from its business
activities and to improve its environmental performance.
Over the past decades, the structure of the economy, depreciation of major
assets, increased accident rate of production and other factors have caused a significant
increase in negative anthropogenic impact on the environment and natural resources. The
oil and gas industry is one of the most resource-intensive and environmentally dangerous
sectors of the economy. In addition, the main companies of this industry are vertically
integrated, which expands the range of their negative impact on the environment:
geological exploration, development of fields, production, transportation and processing
of oil and gas, bringing products to consumers and its implementation, withdrawal of
deposits and capacities from exploitation, and remediation of contaminated areas.
The exploitation of oil and gas reserves has not always been without some
ecological side effects. Oil spills, damaged land, accidents and fires, and incidents of air
and water pollution have all been recorded at various times and places. Recently, the
social impact of operations, especially in remote areas like the Arctic, has also attracted
3
attention. There is international interest in the Arctic because vast oil and gas resources
have been discovered there. Thus, it is important that companies operating in this area
should do it with an appreciation to the people living there and with proper regard for the
environmental and social settings.
The oil and gas industry has worked for a long time to meet the challenge of
providing environmental protection. Much has already been achieved but the industry
recognizes that even more can be accomplished.
Therefore, the tasks of developing and implementing scientific and technical
innovations, namely, environmental management, are put forward to increase
environmental safety in modern conditions at enterprises. In addition, there is
implementation of energy saving and energy efficiency programs in the sphere of
environmental safety, the widespread use of resource-saving, environmental, low- and
non-waste technologies.
An urgent scientific task is the study of methods and the development of new
mechanisms for the introduction of environmental management in the oil and gas
industry based on the experience of various Russian companies working in this field.
The scientific novelty of the work is connected with the fact that on the basis of
a comprehensive analysis of environmental safety aspects in the Russian oil and gas
companies we will determine the ways to improve the mechanisms for regulating
environmental safety in this sector.
The practical value of this study is that the theoretical provisions and
recommendations contained in this thesis can be used for the implementation of
environmental management in industrial enterprises, as well as for carrying out an
individual approach either for the environmental authorities or for industrial enterprises
in order to green their production and management. Also, this study is helpful for
ensuring their environmental and economic sustainability. In addition, the results of this
study can be used to develop special courses on environmental management.
Research problem:
Various aspects of the implementation of environmental management are
highlighted in the works of foreign and domestic scientists. In the domestic literature,
general approaches and methodology for the development, implementation and operation
of environmental management systems (EMS) are considered in the works of Bobylev
4
S.N., Golub A.A., Guseva T.V., Zaik I.A., Ignatyeva M.N., Makarov S.V., Molchanov
Ya.P., Mochalov L.A., Pakhomov N.V. Practical approaches and various aspects of the
development and implementation of EMS at enterprises are analyzed in the works of
Babinova Yu.V., Gabova I.Ya., Daiman S.Yu., Zuev V.I., Krupinina N.N., Pauli D.,
Soviakin V ., Tikhomirov N.P., Tulupov A.S., Chizhikov V., Shapkin A.S., Yaroshenko
Yu.G. Environmental management is reflected in the research of foreign scientists (K.
Nort, K. Richter, A. Endres, etc.) and in the practice of Western enterprises in Finland,
Germany, and the United States.
Despite the large number of works the most attention in these studies was paid to
assessing the impact of the company's activities on the environment (water, air, soil,
noise), but environmental and economic issues that are related to the need to create
environmental management system at Russian enterprises or at least to adapt existing
systems of greening borrowed from the Western enterprises did not find any reflection in
them. So far, issues related to the formation of a unified approach to environmental
management and the mechanism for introducing an environmental management system at
an industrial enterprise have been little studied, and they require further analysis. All
these factors mentioned above lead to the necessity to carry out this research work.
Research purpose: To determine the ways to enhance the mechanisms of
implementation of environmental management on the basis of the complex analysis of
the Russian oil and gas companies.
Research object: environmental management.
Subject of research: oil and gas industry.
Research hypothesis: In this work we will try to determine the ways to enhance the
mechanisms of implementation of environmental management on the basis of the
complex analysis of the Russian oil and gas companies. This aim demands the statistic
analysis of a big amount of data that is published on the web sites of the Russian oil and
gas companies. According to the results of our study we will determine the most effective
ways of implementation of environmental management in this sphere.
In order to gain these results we are going to use the following methods in our
study: system analysis of data, modeling method, methods of the logical, mathematical,
technical and economic and factorial analysis.
5
Aims of research
1.
Methods of research
(according to the chapters).
To conduct a comparative analysis of the Logical, mathematical, technical-
results of solving the optimal control problem, found economic and factor analysis
by different methods.
2.
Experimentally show the effectiveness of the Modeling method
proposed algorithm that implements the technology
of greening.
3.
Develop mechanisms for implementation of System analysis, modeling method
environmental
management
in
oil
and
gas
enterprises.
The expected results of the study:
1.
The comparative analysis of the results of the solution of a task of different
optimum control methods is carried out.
2.
Efficiency of the offered algorithm realizing technologies of greening is
experimentally shown.
3.
Mechanisms of implementation of environmental management at the oil
and gas production enterprises are developed.
6
1. ENVIRONMENTAL MANAGEMENT IN THE RUSSIAN OIL AND GAS
ENTERPRISES
1.1 Concept of environmental management
Environmental management is management of organisation’s activities that have
or may have an impact on the environment. It is a continuous cycle of planning,
implementing, reviewing and improving the process and actions that an organisation
undertakes to meet its environmental targets and requirements. Environmental
management system (EMS) is also a system that complies with the requirements of
international standards such as ISO 14001 and EMAS which is the part of the overall
management system that includes organisational structures, planning activities,
responsibilities, practices, procedures, processes and resources for developing,
implementing, reviewing and maintaining the environmental policy [Weib].
An EMS manages the environmental impacts of an organisation. The expected
outcome of which is continuous improvement in environmental management [Weib].
EMS standards are kept very general because they are intended to be applicable in
many or even all over the world. However, organisations that implement an EMS can
adapt their EMS exactly to their needs. Organisations that do not have sighnificant
environmental impacts themselves can focus their EMS on the environmental
performance of suppliers, while organisations with significant environmental impacts can
focus on operating more environmentally friendly [Weib].
Both the ISO 14001 standard and EMAS only specify the structure of an EMS.
The content is up to the organisation itself. The organisation decides what it wants to do,
and the EMS organises the proces. If the organisation focuses the EMS on specific
operational practices then operating costs can be reduced and environmental risks
minimized. The objectives for improvement are set by the organisation itself [Weib].
ISO 14001 is not the only environmental management system scheme
existing in Europe. A second scheme, the eco-management and audit scheme
(EMAS) that has been operating since 1993 [Hunt].
Differences between ISO 14001 and EMAS are the following:
7
- Whereas ISO 14001 is applicable worldwide, only EU member states can
participate in EMAS.
- Unlike ISO 14001, EMAS is not a standard but a Regulation (A
Regulation is a type of EU legislation).
- While a whole company, a specific site or a specific activity can be certified
to ISO, only individual sites can be registered under EMAS.
- Whereas ISO 14001 is applicable to all organizations, only companies
performing industrial activities specified in the EMAS Regulation can participate in
EMAS.
- When ISO 14001 only contains requirements for an environmental
management system,
the
EMAS
regulation contains
requirement
for
an
environmental management system, requires a firm to produce an environmental
statement, and requires that a firm’s EMS and statement be independently verified
[Hunt].
EMAS demands a firm to produce an environmental statement that describes
the firm’s environmental management system and its environmental performance.
The statement must be publicly available and must include the following: a
description of the company’s activities at the relevant site; an assessment of all the
significant environmental issues of relevance to the activities concerned; a summary
of the figures on pollutant emissions, waste generation, consumption of raw
materials, energy and water, noise and other significant environmental aspects as
appropriate; other factors regarding environmental performance; a presentation of the
company’s environmental policy, programme and management system implemented
at the site; the deadline set for the submission of the next statement; the name of
the accredited environmental verifier [Hunt].
ISO 14000 consists of an evolving series of generic standards developed by the
International Standards Organisation (ISO), that provides business management with the
structure for managing environmental impacts. The standards include a broad range of
environmental disciplines, including the basic management system (14001); auditing
(ISO 14010); performance evaluation; labelling (ISO 14020 and 14024); life-cycle
analysis; and product standards. Any of these standards can be used in its basic form or
be further adapted and implemented into national standards system [UNEP].
8
An EMS is a systematic approach for an organisation to achieve environmental
and other organisational goals. Since organisations of all kinds increasingly want to
achieve and demonstrate sound environmental performance, an EMS can help to comply
with environmental laws and regulations as well as with expectations from customers and
other stakeholders. It can compound an organisation’s organisational goals with its
environmental goals and enable environmental obligations to be managed effectively.
Moreover, an EMS can manage potential liabilities by systematically identifying risks
and avoiding environmental and financial damages [Weib].
Some of the numerous benefits of an EMS are: improved environmental
performance, enhanced compliance, prevention of pollution, resource conservation, new
customers/markets, increased efficiency/reduced costs, enhanced employee morale,
enhanced image with the public and investors/stakeholders, employee awareness of
environmental issues and responsibilities, reduced liabilities, competetive advantages,
fewer accidents [NFS International].
Generally, the cost of implementation of EMS depend on the amount and nature of
an organisation’s environmental impacts, on the existatnce and stage of development of
environmental management in the organisation, and the speed at which implementation is
undertaken. However, it is possible to distinguish between both internal and external
costs caused by implementing an EMS. Internal labour costs, for both managers and other
employees, are the greatest cost for most organisations. The costs can also include: staff
time spent establishing and maintaining the system; payment of consultants, if used
to help establish the system; payment of ISO 14001 certifier/EMAS verifier [NFS
International].
External costs mainly occur during the process of implementation of an EMS and
possibly also no further external coaching of the improvement process after certification.
These exteral costs include: outside staff training, consultant fees, in-house trainig and
specialized training costs, certification costs, internal manpower costs, investment costs
for improving environmental performance (depending on the targets set up in an
environmental management programme) [Weib].
Usually the implementation of an EMS brings more benefits than costs. In any
case, in order to help to avoid unexpected surprises, the potential costs of implementation
need to be evaluated before the process starts. An EMS is often built on existing
9
production or quality management systems. When such systems are weak, ineffective or
simply do not exist, then there is a need to establish a better management framework
before focusing on the details of the EMS [Weib].
While there are obviously costs involved in setting up and operating an
environmental management system, the system can also bring great benefits. A firm
should establish an environmental management system if it believes that the
benefits from doing so will overbalance the costs involved [Hunt].
The profit that arises from establishing of EMS is impressive. An EMS takes a
systematic approach to environmental management and a systematic approach is a
cost-effective approach. The environmental review highlights all the areas of the
firm where improvement in performance is needed. With this information, a firm
can assess which improvements will produce the greatest benefits in terms of cost
savings and reduction of risk, and deal with these areas first. The firm can then
set targets that benefit both itself and the environment [Hunt].
An EMS not only requires companies to set themselves targets but ensures
that they meet them. A company must organise a management programme for
achieving its targets, make sure that the resources are available for it to be carried
out, monitor its environmental performance to check if it has met its targets and
take corrective action if it finds it has not [Hunt].
As well as bringing about a continual improvement in environmental
performance, an EMS enables a firm to ensure it is complying with relevant
legislation and regulations. The environmental review considers all the legislation and
regulations with which the firm should be complying and then the firm must
establish procedures for checking compliance and for taking corrective action wheathe
it should discover instances of non-compliance [Hunt].
ISO 14001 and EMAS not only enable a firm to meet its environmental
policy commitments and its objectives and targets, they also enable the firm to
demonstrate sound environmental management to stakeholders. There may be
considerable public relations benefits and increased market opportunities for a firm
that can demonstrate to the outside world that it has a sound system of
environmental management [Hunt].
10
Having a management system can mean less supervision from environmental
regulators and preferential treatment from banks and insurers. And the fact that an
EMS demonstrates good environmental management may also improve company’s
ability to attract investment [Hunt].
An EMS encourages an organization to continuously improve its environmental
performance. The system follows a repeating cycle. The organization first commits to an
environmental policy, then uses its policy as a basis for establishing a plan, which sets
objectives and targets for improving environmental performance. The next step is
implementation. After that, the organization evaluates its environmental performance to
see whether the objectives and targets are being met. If targets are not being met,
corrective action is taken. The results of this evaluation are then studied by top
management to see if the EMS is working. Management revises the environmental policy
and sets new targets in a revised plan. The company then implements the revised plan.
The cycle repeats, and continuous improvement occurs [epa.gov].
The most commonly used framework for an EMS is the one developed by the
International Organization for Standardization (ISO) for the ISO 14001 standard.
Established in 1996, this framework is the official international standard for an EMS
which is based on the Plan-Do-Check-Act methodology. The five main stages of an EMS
are: commitment and policy, planning, implementation, evaluation and review [epa.gov].
Oil and gas development activties are expected to grow and be carried out safely
with minimum adverse environmental impact, only through a strong company
commitment to environmental protection. The government also needs to have a solid
understanding of exploration and production operations and how they may affect the
environment. The activities on both sides should be complementary to achieve the mosteffective and environmentally friendly approach. It is generally acknowledged that this
approach:
-
Systematically integrates environmental issues unto business decisions through the
-
use of formal management systems;
Integrates health, safety and environmental management into a single programme;
Considers all environmental components (air, water, soil, etc.) in decision making
at strategic and operational levels;
11
-
Prevents waste at its source through pollution prevention techniques and making
maximum re-use of waste components, rather than installing expensive treatment
-
for discharges;
Evaluates alternatives on a cost/benefit/risk basis that includes environmental
values;
Aims at minimizing resource inputs;
Innovates and endeavours for continual improvements [UNEP].
Both EMAS and ISO 14001 require companies to
carry
out
an
environmental management system audit. This means that a company must check to
see whether its environmental management system fulfils the requirements of these
documents [Hillary].
An environmental audit is a tool that is used to check whether a company is
doing what it should be doing. Environmental auditing originated in North America
in the 1970’s as a management tool to ascertain whether or not companies were
complying with the increasingly numerous and complex laws and regulations that
were coming into force at that time. Checking whether the activities of a company
that are covered by environmental legislation actually comply with that legislation
is called a legislative compliance audit [Hillary].
Perhaps a company has a waste management policy, or has agreed to abide
by its industry sector guidelines on waste management. In this case the company
may want to carry out an audit to check that its waste management activities
conform with the requirements of its policy or the industry sector guidelines. Or
maybe a company has in place certain procedures for carrying out important
operations. In this case the company may want to carry out an audit to check that
the relevant staff members are adhering to these procedures [Hillary].
Maybe a company decides to purchase another company. In this case it may
want to do a preacquisition audit to check, for example, that this company is
doing what it should be doing in terms of complying with all relevant legislation
and any industry guidelines which it has signed up to [Hillary].
Environmental indicators express useful and relevant information about a
firm’s environmental performance and its efforts to influence its performance. So
what is environmental performance? Environmental performance can be defined as,
‘the results of an organization’s management of its environmental aspects’ and, as
12
noted in before, an environmental aspect refers to, ‘an element of an organization’s
activities, products or services that can interact with the environment’ [MorrisonSaunders].
Examples of indicators include: tonnes of SO 2 released per year, tonnes of
CO2 released per unit of production, litres of water used per year, kilogrammes of
hazardous waste produced per year, number of legislative breaches per year, savings
achieved
through
energy
efficiency
measures, number
of
environmental
improvement suggestions from employees and number taken up by management,
number of complaints received about environmentally related matters, number of
employees trained versus number needing training [Morrison-Saunders].
To estimate and evaluate the environmental impact caused by the production
processes, Environmental Accounting (EAc) and Cleaner Production (CP) are
frequently used. The CP methodology is quite similar to the guidelines for
Environmental Accounting (EPA, 1995). This outlines procedures for conducting a
preliminary assessment to identify opportunities for waste reduction or elimination.
Further it describes how to use the results of this preassessment to give priority
to areas for detailed assessment, how to use the detailed assessment to develop
pollution prevention options, recycling and recovery, and how to implement those
options that withstand feasibility analyses. However, there is no environmental
impact assessment evaluations built into this method [Morrison-Saunders].
Environmental performance evaluation (EPE) is the process that organizations
can use to measure, analyze and assess their environmental performance against a
set of criteria. EPE helps to understand what their environmental aspects are, and
determines what their significant environmental aspects may be. This lets the
organization form a baseline from which objectives and targets for improvements
can be derived. Therefore EPE is central to improvements of environmental
performance and to compare an organization’s performance against another similar
organization (benchmarking). An organization that is committed to improving its
environmental performance needs to be able to measure its performance level.
With the help of Environmental Performance Indicators (EPIs) a company will be
able to do so. An EPI should reflect changes over a period of time, be reliable and
13
reproducible, and be calibrated in the same terms as the policy goals or aims they
are linked to [Morrison-Saunders].
UNEP defines Environmental Impact Assessment (EIA) as a tool used to
identify the environmental, social and economic impacts of a project prior to
decision-making. It aims to predict environmental impacts at an early stage in
project planning and design, find ways and means to reduce adverse impacts,
shape projects to suit the local environment and present the predictions and options
to decision-makers. By using EIA both environmental and economic benefits can
be achieved, such as reduced cost and time of project implementation and design,
avoided treatment/clean-up costs and impacts of laws and regulations. Although
legislation and practice is different around the world, the fundamental components
of an EIA would necessarily include the following stages:
- Screening to determine which projects or developments require a full or
partial impact assessment study;
- Scoping to identify which potential impacts are relevant to assess (based
on legislative requirements, international conventions, expert knowledge and public
involvement), to identify alternative solutions that avoid, mitigate or compensate
adverse impacts on biodiversity (including the option of not proceeding with the
development,
finding
alternative designs
or
sites
which
avoid
the
impacts,
incorporating safeguards in the design of the project, or providing compensation for
adverse impacts), and finally to derive terms of reference for the impact
assessment;
- Assessment and evaluation of impacts and development of alternatives, to
predict and identify the likely environmental impacts of a proposed project or
development, including the detailed elaboration of alternatives;
- Reporting the Environmental Impact Statement (EIS) or EIA report,
including an environmental management plan (EMP), and a non-technical summary
for the general audience.
- Review of the Environmental Impact Statement (EIS), based on the terms
of reference (scoping) and public (including authority) participation.
- Decision-making on whether to approve the project or not, and under what
conditions; and
14
- Monitoring, compliance, enforcement and environmental auditing. Monitor
whether the predicted impacts and proposed mitigation measures occur as defined
in the EMP. Verify the compliance of proponent with the EMP, to ensure that
unexpected impacts or failed mitigation measures are identified and addressed in a
timely fashion [UNEP].
1.2 Environmental management in Russia
Nowadays energy demand is very high so the need for oil and gas is at an all-time
high. Global oil demand is predicted to increase by more than a third by 2035.With this
energy demand, the oil and gas industry is being challenged to increase production
efficiencies in its crude oil and natural gas resources. The ability of the industry to
address a number of operational challenges will be crucial in ensuring that future demand
is met with adequate supply [White Paper].
During recent years, oil and gas companies have made profound investments in
their safety and environmental functions. These investments have made the companies’
safety and environmental systems more advanced, and have enabled the companies to
become much more ambitious in their safety goals. Indeed, it ’s not unusual for oil and
gas companies nowadays to have an aim to zero injuries and fatalities. For most
companies, however, this goal has remained difficult to achieve. Even if fatalities only
happen at a fifth or a tenth the rate of 20 years ago, they still happen [Clark, Verity,
Landau].
The Russian Federation is one of the world’s leaders by oil and gas reserves and
production. Today, Russia produces one seventh of primary energy resources of the
globe. There are 12.9% of world’s explored reserves of oil and 36.4% of gas. The
economy of our state greatly depends on efficiency of oil and gas producers. Oil and gas
production is rather a complicated and long process from field search to raw material
transportation to a processing or consumption facility.
At any stage, the entire
complex of specialized equipment is used assuring volume of crude materials, people
safety and environmental security [mir-forum.ru].
15
Environmental management in Russia faces severe problems, both from Sovietera and continuing environmental degradation and due to the weakness of current
institutions with responsibilities for environmental protection.
The Russian Federation possesses one-third of the world’s known natural gas
reserves and is one of the major oil-producing countries in the world acording to the
International Energy Agency. It also has plentiful technical expertises to manage and
protect these resources, and nongovernmental organizations of scientifically sophisticated
activists that are willing to preserve them. However, ecological conditions continue to
fall into decay in many geographic areas and economic sectors, resources decrease, and
resource productivity declines. Environmental policymaking is not pervasive and many
of the institutions responsible for it are lacking stability. All these factors lead to an
environmental failure of oil and gas idustrial sectors in Russia [Wernstedt, p. 4].
The biotic and geopolitical importance of
our country and the potentially
destabilizing effects of poor environmental management in enterprises make the state of
the Russian environment a global concern. The main sources of water, air and soil
pollution are oil and gas industries [Wernstedt, p. 4].
All over the country, oil and gas enterprises have largely been privatized—the
government share in major Russian oil companies is about 25%—but new
capital
investment in oil extraction and refining and labor and capital productivity are
considerably low in comparison to other countries [McKinsey Global Institute, 1998].
Western Siberia is one of the oil- and gas-richest areas that is important to the
national economy providing government revenues and export earnings. However, the
decades of energy extraction in this region have clearly degraded its environmental
conditions. Water bodies are directly contaminated from spilled oil and brine along
pipelines and is readily observable at well sites, native forest cover is heavily stressed
with constructions and logistics, local air quality has deteriorated, and development at
extraction sites, access roads, and towns has significantly effected the hydrology of the
area. These changes have had negative influence not only on the environment but even
on local residents and industrial workers. For example, 74 percent of the region’s 300
plus respondents to the RLMS perceive that chronic illnesses in their families are due at
least in part to poor environmental conditions [Mroz et al., 2001].
16
Nizhnevartovsk that is in the Khanty Mansi autonomous region—a region that
accounts for roughly onehalf of Russian oil production – also faces ecological
brakedown. It has been estimated that from 92 to 98% of the volume extracted from the
field is water due to past efforts to reinject water to maximize the volume of recovered
oil [Personal Communication, Nizhnevartovsk Environmental Committee, 1996; The
Economist, 2001]. This brings an intimidating environmental problem: once the water is
separated, it receives inadequate treatment and often is discharged to receiving surface
waters [Wernstedt, p. 8].
Oil and gas industries usually have limited funds to invest in technology upgrades
and pipeline maintenance. While state-owned monopoly are improving gas pipelines and
oil trunklines the field pipelines that are owned by local producers need better
maintenance. For example one quarter of Nizhnevartovsk’s 11,000 kilometers of pipeline
infrastructure need to be replaced every year, yet many local producers have insufficient
revenues to fund this maintenance. [Sagers, 2000].
Other difficulties that Russian oil and gas industry is faced with are high capital
costs and barriers to foreign investment arising from the uncertainty of productionsharing legislation, shareholder protection, and restrictions on imported physical capital
limit the upgrading of production and transport facilities. Ths underinvestment may lead
to oil spills and pipeline leaks that have influence local environment [Wernstedt, p. 10].
Population around oil and gas developing sites grow or at least remain rather
stable. For example the population of the city of Nizhnevartovsk increasing from
roughly sixteen thousand residents in 1970 to nearly 250,000 residents in the mid-1990s
and stabilizing or dropping only slightly since then. However, funds for infrostructer are
limited and dicrease even more. This leads to the drinking water and wastewater
problems because not everyone can afford battled or filtered water that causes
gastrointestinal illnesses [Wernstedt, p. 13].
Russian enterprises operate at a considerable distance from a competitive market
economy, in the sense that economic relations, even for private enterprises, are dominated
by barter, negotiation over favorable tax treatment, unstable interenterprise contractual
arrangements, tight social obligations to local communities, and other factors that are
the antithesis of a wellfunctioning, competitive market economy. Investments in physical
capital to promote maximum production efficiency and profit and environmental
17
protection are sufficiently low. On the other hand the investments go to goodwill with
local, regional, and federal authorities — by providing services, bribes, or other favors
that later can be used to secure favorable treatment [Wernstedt, p. 17].
Even when economic incentive schemes work, the incentives may be too low to
make a difference. For instance, the Nizhnevartovsk Environmental Committee issued
80 fines for nearly $2.5 million to polluting enterprises in 1995 (the latest year for which
figures are available) that was supposed to be spent for the oil pipeline spills. Many of
these fines were never collected, but even if they had been, their low-level cost relative
to mitigation costs meant their revenue raising properties always would prevail over
changing behavior and improvement of environmental quality. This is a spreadinge
problem throughout Russia, one that bedevils both the use of incentives and the threat of
enforcement in environmental media resources [Wernstedt, p. 17].
Environmental monitoring, a staple of enforcement, is difficult in Russia because
of the expanses that come from the vastness of the territory.
Each station in the water
quality monitoring network in Russia averagely covers an area greater than 9,000 square
kilometers, with stations in the more isolated parts of central and eastern Russia covering
areas more than 250,000 square kilometers. Moreover, monitoring traditionally is not set
up to meet effluent standards. The vast and sophisticated network of the national
hydrometeorological and environmental monitoring system (Roshydromet), for example,
focuses on surface ambient conditions
and long-term forecasts of environmental
conditions, rather than on effluent quality [Zhulidov et al., 2000].
This meets the
purposes of the monitoring of environmental outcomes though is not particularly suited
for determination of site-specific discharge violations [Wernstedt, p. 19].
There is always a variety of potential risks and negative impact on the
environment because of oil and gas exploration. Consequences depend upon the stage of
the process, the size and complexity of the project, the nature and sensitivity of the
surrounding environment and the effectiveness of planning, pollution prevention,
mitigation and control techniques [UNEP, p. 17].
Exploration of oil and gas bring first of all economic, social and cultural changes
into the areas of its performance. It affects local groups and indigenous peoples as well. It
brings changes into land-use patterns, logging, hinting, fishing, social structure and
organization, employment opportunities and income differentials, infrastructure and
18
transportation. There are of course positive changes like improved infrastructure, water
supply, sewerage and waste treatment, but there are also unpredicted consequences that
can arise in case of improper management and planning [UNEP, p. 18].
The emissions from oil and gas industry are related to global issues such as
stratospheric ozone depletion and climate change. The main emission gases are: carbon
dioxide, carbon monoxide, methane, volatile organic carbons and nitrogen oxides. Ozone
depleting substances are used in some fire protection systems, principally halon, and as
refrigerants. Approximately 10 % of world methane emissions are from oil and gas
industry. Industry is improving the processes of gas emissions and these emissions are
actually decreasing though there is still place for improvement [UNEP, p. 19].
Water pollution occurs because of the processes such as: spills, leakage, sewerage,
sanitary and domestic wastes, drilling and drainage. The high pH and salt content of
certain drilling fluids and cuttings poses a potential impact to fresh-water sources.
Produced water is the largest volume aqueous waste arising from production operations,
and some typical constituents may include in varying amounts inorganic salts, heavy
metals, solids, production chemicals, hydrocarbons, benzene, PAHs, and on occasions
naturally occurring radioactive material [UNEP, p. 20]. There are also negative terrestrial
and ecosystem impacts that also need more regulation and investments.
Russia is one of the five “coastal” countries that are particularly interested in the
Arctic territories because of the oil and gas deposits. The Arctic includes the territories of
eight countries, five of which are considered to be “coastal states”, namely, the Russian
Federation, United States of America, Canada, Norway and Greenland (Kingdom of
Denmark). Although the Exclusive Economic Zone (EEZ) of Iceland is within the Arctic,
its landmass lies just to the south of the Arctic Circle. Sweden and Finland do not have
coastlines within the Arctic [OGP].
The Arctic is currently the source of about 10 per cent of the world’s oil
production and 25 per cent of the world’s gas production (USGS, 2008). Russia is
currently the major contributor of the Arctic oil (80 per cent) and gas (99 per cent) to
world production (AMAP, 2007). The largest volumes of Russian oil and gas are from the
onshore Timan-Pechora and West Siberian basins. Within its Arctic basins, Russia holds
over 75 per cent of the known oil and over 90 per cent of the known gas reserves. Russia
expects to start its first Arctic offshore oil production in 2012
19
or 2013 from the
Prirazlomnoye field in the Pechora Sea. In the future, gas and condensate are likely to be
produced from the Shtokman field in the Russian Barents Sea [OGP].
The oil and gas industry has decades of experience in developing the oil and gas
resources of the Arctic; onshore production started in the 1920s and offshore production
in the 1970s. To date, significant volumes of oil, gas and natural gas liquids have been
produced, primarily from the West Siberian Basin and North Slope of Alaska, and more
recently from the northern Norwegian Sea (AMAP, 2007).
The hydrocarbon basins in the Arctic are thought to hold a significant proportion
of the world’s remaining undiscovered hydrocarbon reserves (USGS, 2008) and
continue to be explored by oil and gas companies and resource owners [OGP].
The International Association of Oil & Gas Producers (OGP) has actively
contributed to the development of Arctic standards or guidelines for environmental
protection. OGP (and its predecessor E&P Forum) published Oil & Gas Exploration and
Production in Arctic and Sub-Arctic Onshore Regions – Guidelines for Environmental
Protection (OGP, 1993), and Oil & Gas Exploration & Production in Arctic Offshore
Regions – Guidelines for Environmental Protection (OGP, 2002). OGP is currently
coordinating a joint industry project on Arctic oil spill response technology. IPIECA (the
global oil and gas association for environmental and social issues) along with the
American Petroleum Institute (API) is developing complementary guidance on oil spills
in ice [OGP].
Recognising the advances in design, technology and operational practice, along
with the increased interest and experience in Arctic oil and gas and the need for the
highest level of environmental protection, OGP is updating its two OGP Environmental
Guidelines documents in this consolidated Good Practice Guide (GPG) [OGP].
Development of oil and gas in the Arctic faces many social and environmental
challenges. The pace and location of future development will be determined by a number
of factors including acceptability to society, a continuing demand for hydrocarbons,
viable economics, favourable regulatory regimes, technology development and the safety
and wellbeing of employees and communities. Operators will continue to be responsible
to the wider society for demonstrating that risks are recognised and managed [OGP].
International and national operator and contractor organisations facilitate
communication and knowledge sharing between industry sectors and with external
20
organisations. The industry is represented by:
Association
International Oil and Gas Producers
(OGP); IPIECA, the global oil and gas industry association for
environmental and social issues; International Association of Geophysical Contractors
(IAGC); International Association of Drilling Contractors (IADC) OGP also maintains
formal links with shipping and other industries: Oil Companies International Marine
Forum (OCIMF), International Marine Contractors’ Association (IMCA) [OGP].
OGP also represents member companies in discussions with organisations
including the International Maritime Organization (IMO), International Whaling
Commission (IWC), International Union for the Conservation of Nature (IUCN) and
relevant Non-Governmental Organisations (NGOs). OGP maintains formal and informal
links with the Arctic Council and its Working Groups. An increase in cross-sector and
business forums to discuss future Arctic developments is expected [OGP].
Physical conditions in the Arctic with regard to oil and gas development are
changing. Changes in weather and oceanographic patterns have had consequences over
various timescales for example for sea ice cover, sea level, iceberg calving, coastal
erosion and permafrost integrity. Seasonal loss of ice cover has been projected on various
time scales [OGP].
Changes in the maritime environment have implications for the construction and
operation of offshore facilities, and the associated export routes for hydrocarbons.
Changes to the terrestrial environment may influence the construction and operation of
landbased facilities [OGP].
The oil and gas industry designs its facilities for extremes of weather in areas
where it operates and this is also true for Arctic conditions. As it pursues its Arctic
strategy, the oil and gas industry is monitoring closely the future changes in the Arctic
and will adopt appropriate practices to ensure safe design for foreseeable conditions
[OGP].
There is a binding legal regime that applies in the Arctic under the UN Convention
of the Law of the Sea (UNCLOS, 1982). In addition, many international treaties apply to
the Arctic and several bi-lateral treaties have been established between Arctic nations.
Signatories to these conventions apply the provisions via their domestic legislation
[OGP].
21
Some significant International Conventions that apply to the Arctic include:
Vienna Convention for the Protection of the Ozone
Substances that Deplete the
Ozone
Layer; Montreal Protocol on
Layer; Basel Convention on the Control of
Transboundary Movements of Hazardous Wastes and their Disposal; United Nations
Framework Convention on Climate Change; Kyoto Protocol to the United Nations
Framework Convention on Climate Change; United Nations Convention on Biological
Diversity; Stockholm Convention on Persistent Organic Pollutants [OGP].
1.3 Risk management
Risk management is an integral part of day-to-day business activities in the energy
industry. Oil and gas companies face risks rang in from volatile commodity prices, which
are less linked to basic supply and demand but more to global socioeconomic factors, to
increased health, safety, and environmental pressures resulting from past and recent
major accidents negatively impacting the environment, industry image, and its social
lease.
However, risks related to asset damage, business interruption, pollution, injuries to
people, and damage to properties is intrinsic in normal oil and gas activities. Then there
are the additional risks of non-compliance and of major cost overruns for large
construction projects so common in today's industry. These are just a few examples of the
serious risks and threats that can impact oil and gas companies. Technology can help
mitigate these risks.
The upstream oil and gas industry manages a wide range of risks, including
political, societal, asset integrity, commercial, reputation, safety and environment. Risk
management for Arctic conditions has to follow a structured approach to:
identify
hazards and effects that may arise from routine, emergency and past activities; assess
significance, taking into account probability and consequences; document each risk
(eg in a risk register) with applicable legal and other standards; establish realistic and
achievable objectives and performance criteria; define risk reduction measures that are
suited to Arctic conditions [OGP, 2007].
Risks may be identified at different levels by an organisation. While entering the
Arctic, top management should take into consideration the special challenges of
22
operating in the Arctic when evaluating the company or venture risk profile and defining
its Arctic strategy. Project and operational risks are typically identified within a project or
asset team as part of the environmental and social impact assessment process. The
environmental hazards, their likelihood and consequences should be regarded according
to Arctic conditions. In support of its Arctic strategy, an operator should maintain and
implement plans for achieving its objectives and meeting its performance criteria.
Site design should incorporate adequate interception systems to minimise damage
from minor incidents
and fugitive sources. Although the risk of major oil spills from
properly managed operations is low, maintaining effective containment and clean-up
measures are essential [OGP, 2007].
All activities, including seismic studies and exploration drilling, and sites such as
camps, pipelines and transportation routes, should have adequate contingency plans in
place to deal with spills, not only of oil but also fuel, chemicals and hazardous materials.
Plans should be based upon the risk, location, volume and type of potential spill. The type
of spill response equipment, manpower and organisation required to effectively respond
to incidents, both large and small, should be included in the plan, together with the
identification and protection of vulnerable and sensitive areas[OGP, 2007].
The plan should clearly identify the actions necessary in the event of a spill: the
communications network, the organisation structure and the individual responsibilities of
key emergency personnel, together with the procedures for reporting to the relevant
authorities. The plan should deal with disposal of recovered material, contaminated waste
and debris generated by the spill, and the transportation and housing of support personnel
brought in for clean-up activities. The plan must be exercised and reviewed periodically
to ensure its adequacy, and personnel trained to be competent in fulfilling their expected
roles and responsibilities, as an oil spill is one of the main dangers for the Arctic
environment [OGP, 2007].
Oil spills can enter streams and rivers, although the presence of surface water is
limited seasonally in the Arctic. The presence of groundwater should be a main concern
in relation to spills outside of the permafrost areas. In northern regions, even if
appropriate technology is available, oil spill counter measures may be more difficult to
cope with due to extremely cold temperatures, the presence of ice, long periods of
darkness, intense storms and lack of support facilities. The movement, velocity and
23
stability of the ice can also be a factor, as can water temperature, current strength and
wind speed [OGP, 2007].
Equipment resources that should be available for oil spill response may include:
landing craft, barges, tugs, fishing vessels, dredges, igniters, lightering vessels
pumps,
tenders,
helicopters,
and
fixed-wing aircraft, booms, stationary skimmers,
advancing skimmers, sorbents, earth-moving equipment, pressure washers, vacuum
trucks and waste storage containers. If chemical dispersants are used, it is important to
choose those that are effective, have low toxicity, that do not have a tendency to bioaccumulate and that are biodegradable. Prior approval for their use in such emergencies
should be obtained where there is such a statutory requirement. Manpower resources
should be described in the contingency plan [OGP, 2007].
Implementing and using Risk Management is a necessary and growing activity in
today’s unstable economy. The Committee of Sponsoring Organizations defines Risk
Management as a process affected by an entity’s board of directors, management and
other personnel; this process is applied within a corporation, designed to identify
potential events which may affect the entity and manage risks to be within its risk
appetite. In addition, Risk Management is a process that provides reasonable assurance
regarding the achievement of the company’s objectives. Companies can identify, assess,
respond, and monitor the outcomes of the corporation’s leading risk factors with an
Enterprise Risk Management system in place.
It is od great importance that oil production companies take strategic risks. Energy
exploration and production (E&P) companies must employ new ways to find and extract
reserves; otherwise, all of their revenue is generated from a product with a quantity that is
finite and decreases over time. To stay afloat, E&P companies must grow their revenue
bases by acquiring or finding new reserves. The most recent way of doing that has been
via shale formations. In fact, the output of rigs in shale formations account for virtually
all oil production growth in Russia and abroad. This, of course, is part of the phenomenon
known as “fracking”: extracting oil from underground rocks by blasting them with a
mixture of sand, chemicals, and water [apqc.org].
Many of the E&P enterprises that invested in fracking were less stable than other
companies. In 2013 more than a quarter of all shale investment was done by firms with
debts of more than three times their gross operating profits. With a break-even point of
24
$70 per barrel and current oil prices dipping below $50 per barrel, many of these
operations will likely go bust [apqc.org].
Situations that should have been considered involve emerging risks (ones that
could affect an organization’s financial strength, reputation, or competitiveness) have
come to fruition in the last few months, including: political obstacles, increased supply,
decreased demand, power players, foreign policy, declines in output [apqc.org].
Effective enterprise risk management (ERM) programs consist of tools for the top
executives of the company to use to ensure they know what threats are out there and what
those threats could mean in terms of shareholder value and market capitalization
[apqc.org].
Best-practice organizations have primary goals of ensuring sound risk planning by
focusing senior management and boards on risks that are capable of affecting strategy;
creating value for key stakeholders by ensuring beneficial execution of strategy; ensuring
that risks are properly identified, assessed, monitored, and mitigated; and creating a riskintelligent culture to keep decision makers engaged in the process [apqc.org].
Companies that have foreseen this oil boom and/or bust, or at least have put in
place a stop-gap strategy to prevent conditions of getting worse, will likely bounce back
faster than those who have not. Those who have considered new rounds of innovation in
drilling, standardization, and techniques for fracking may be put in a better position once
prices eventually rebound. They will be back up to speed much faster than the ones still
recuperating from this wild ride [apqc.org].
In the oil and gas industry, managing capital projects, in particular large capital
projects, in a global environment is becoming increasingly complex. This is especially
the case as large reserves are being depleted and the industry copes by drilling multiple
smaller wells to compensate [Bigliani].
Oil and gas companies need to make strategic decisions about which projects
should be developed first to ensure their company's best performance. Then there are
decisions about equipment resources: When is the best time to reserve a rig? Should the
decision be based on getting the best rate even if the rig will not be needed at that exact
moment? Or should a firm wait until the exact date for a drilling project is known and
risk the equipment not being available, or the threat of higher rental rates? How does an
equipment shortage impact planned revenues? Do key decision makers have the ability to
25
review this information and prioritize projects based on equipment resources? The same
resource issues are faced for human capital tied to exploration and production (E&P)
projects. Are the appropriate teams in place for a project, or has an unexpected failure at
another location impacted the project? [Bigliani].
As a result, the project portfolio needs to be dynamically managed as a process, in
which the list of projects can be constantly revised, and new projects evaluated, selected,
and prioritized based on parameters of importance to the company such as level of risk,
expected return on investment, economy considerations, etc. Existing projects can be
accelerated, stopped, or reprioritized, and resources can be allocated and reallocated to
the most appropriate active projects as needed [Bigliani].
The oil and gas industry is operating in increasingly remote geographical locations
and harsher environmental conditions, with unconventional processes to extract
hydrocarbons. Joint collaboration between large producers on risky international
exploration and production (E&P) projects is common. Articulated E&P sharing
agreements with multiple stakeholders need to be managed. High rates of non-productive
time demand action, and overall equipment efficiency needs to grow [Bigliani].
All in all, companies share the same primary goal of needing to produce
hydrocarbon as efficiently and cost effectively as possible. One strategy for achieving this
has been the adoption of a "digital oilfield" or "integrated operations" to enhance
reservoir recoverability, optimize production, and reduce economic, environment, health,
and safety risks. Initially this strategy was only associated with upstream, but companies
are increasingly focused on accessing and managing key asset-related data to improve
decision making across the entire enterprise from field to refinery [Bigliani].
Light, sweet crude oils are in short supply, and the less expensive heavy, sour
crudes are more plentiful worldwide. However, not all refineries are currently configured
to handle the heavier oils. Refiners need conversion capacity for hydro-skimming,
cracking, and coking to capitalize on the sour crude discounts. At the same time, stricter
fuel standards have forced refineries to retool to be able to accommodate new fuel mix
requirements, especially in North America and Europe [Bigliani].
Another challenge lies in having the right crude available based on the demand
pattern for products. Refiners must make decisions about whether to buy crude of the
quality needed to meet the forecast demand for specific products and put this crude in
26
storage or wait to buy the crude on an as-needed basis. If a company receives the crude
on time, the plant must make decisions on how to blend based on the margin for that
product. One other aspect is how processing heavy oil impacts emissions at the plant. In
response to the changing properties of crude, refiners are responding with initiatives
to increase their flexibility of production and see this as a major competitive advantage
[Bigliani].
A shortage of expert resources is not new to the industry. This problem has
existed for several years. Shortages are mainly in the highly technical areas such
as geology and geophysics and petroleum engineering. In some geographies there
is also a shortage of IT personnel with expertise in some of the more complex
information technologies, such as high-performance computing (HPC), used to
support analysis of large volumes of scientific and engineering data in exploration
and production [Bigliani].
The industry has always been involved in efforts related to critical
infrastructure protection. However, with the progressive digital evolution toward
smart oilfields and refineries of the future, IT and OT security has been receiving
greater attention. Concerns were originally raised about the security of process
systems with the revelation that the highly sophisticated Stuxnet virus is capable of
invading process control systems, and potentially disrupting processes by invading
control systems on drilling rigs and in the refinery. More recently the cyber attacks
on Saudi Aramco and RasGas were a huge shock for many oil and gas
organizations in the Middle East region [Bigliani].
The world's largest oil-producing company, Saudi Aramco, was the victim of
a significant cyber attack on August 15, 2012. The oil giant announced that
30,000 of its workstations had been infected by a virus. Moreover, on August 27,
Qatar's natural gas pumper, RasGas, was hit by a similar attack, resulting in the
company being taken offline for a few days. A group of hackers calling
themselves the Cutting Sword of Justice claimed responsibility for the attack on
Saudi Aramco. They allegedly infected the organization's systems with a replicating
malicious software (malware) for political reasons. Some IT analysts credit a virus
called Shamoon for both attacks. Both Saudi Aramco and RasGas managed to
limit the damage, as the attacks did not affect extraction or processing, but such a
27
bold attack had important repercussions on the IT strategies of oil and gas
organizations operating in the Middle East, demanding new projects on risk
assessments, new IT security policies, and the adoption of additional security
solutions [Bigliani].
Nowadays energy demand is very high so the need for oil and gas is at an all-time
high. Global oil demand is predicted to increase by more than a third by 2035.With this
energy demand, the oil and gas industry is being challenged to increase production
efficiencies in its crude oil and natural gas resources. The ability of the industry to
address a number of operational challenges will be crucial in ensuring that future demand
is met with adequate supply [White Paper].
During recent years, oil and gas companies have made profound investments in
their safety and environmental functions. These investments have made the companies’
safety and environmental systems more advanced, and have enabled the companies to
become much more ambitious in their safety goals. Indeed, it ’s not unusual for oil and
gas companies nowadays to have an aim to zero injuries and fatalities. For most
companies, however, this goal has remained difficult to achieve. Even if fatalities only
happen at a fifth or a tenth the rate of 20 years ago, they still happen [Clark, Verity,
Landau].
The Russian Federation is one of the world’s leaders by oil and gas reserves and
production. Today, Russia produces one seventh of primary energy resources of the
globe. There are 12.9% of world’s explored reserves of oil and 36.4% of gas. The
economy of our state greatly depends on efficiency of oil and gas producers. Oil and gas
production is rather a complicated and long process from field search to raw material
transportation to a processing or consumption facility.
At any stage, the entire
complex of specialized equipment is used assuring volume of crude materials, people
safety and environmental security [mir-forum.ru].
Russia is one of the northern countries that has intentions of working and
exploiting oil and gas in the Arctic. According to the fact that the Arctic has a very unique
and fragile environment it is importatnt to evaluate all the risks that might happen there.
The Arctic occupies almost 30 million km2. It includes open ocean and marginal
seas totaling over 14 million km2, and a coastline length of approximately 45,390 km.
The Arctic includes the territories of eight countries, five of which are considered to be
28
“coastal states”, namely, the Russian Federation, United States of America, Canada,
Norway and Greenland (Kingdom of Denmark). Although the Exclusive Economic Zone
(EEZ) of Iceland is within the Arctic, its landmass lies just to the south of the Arctic
Circle. Sweden and Finland do not have coastlines within the Arctic [OGP].
There is international interest in the various governance aspects of the Arctic, and
an appreciation that its peoples need to be respected and its natural resources developed
with proper regard for the environmental and social settings. Each country regulates the
exploration and development of its natural resources under domestic legislation, with
appropriate environmental controls, and in accordance with the international treaties to
which they are party [OGP].
In addition to the regulatory regimes, there are numerous voluntary measures to
protect the Arctic. In particular the Arctic Council facilitates international cooperation on
the Arctic environment, involving representatives of the Arctic countries, indigenous
peoples and observer states and organizations.
Risk reduction is a continuous process that involves the operator, the regulatory
authorities and other stakeholders. Standard and specific mitigations may be required by
the regulatory authorities and should be incorporated into company operational plans
(NMFS & BOEM).
On the bases of a thorough knowledge of the environment, the mitigation
hierarchy is: avoid the impact if possible; minimise impacts that are unavoidable;
restore when feasible; manage residual impacts, including compensation or offsets. The
sharing of good practice between operators can help towards the objective of minimising
risk to people, property and the environment.
1.4 The regulation of environmental quality through the environmental
management system
The first step towards the regulation of environmental quality is establishing a
management plan that should be prepared in order to address wildlife interactions with
personnel and property. In all operations, starting with surveys and extending through
decommissioning and after use, the prohibition on hunting, disturbing and feeding
wildlife by company and contract employees should be strictly enforced. Controls should
29
apply to leisure and off-duty periods as well as working periods. The non-local company
workforce should keep within the defined boundary of the site, to the agreed access
routes and, when necessary, be segregated from local communities [OGP].
There are eleven principles of collaborative problem solving. Such collaboration is
an inclusionary process that promotes lateral communication and shared decisionmaking. It helps stakeholder groups to develop policy recommendations on a variety of
public issues. The eleven principles are: Purpose-Driven, Inclusive, Not Exclusive,
Educational, Voluntary, Self-Designed, Flexible, Egalitarian, Respectful, Accountable,
Time Limited, Achievable [gdrc.org].
Environmental Decision-Making deals with very broad and diverse values,
interests, and participant goals. It deals with participant goals and with what has been
learned regarding how best to manage participant involvement. It also covers the
negotiation of the major issues and works on comprehensive decision-making. The
various EDM activities should be effective and efficient. It provides learning and
guidance for all participants to maintain good EDM process and product [gdrc.org].
The process of decision making consists of four stages: defining the problem,
finding the information, processing the knowledge, and taking the decision. The
important thing is that implementing the decision (actors and actions), as well as
monitoring and evaluating the actions taken, are integral parts of the decision. The EDM
should also be based on principles of legitimacy, equity, efficiency and effectiveness
[gdrc.org].
If there are conflicts or some issues that arouse during the implementation of
environmental management there is a tool called mediation. Mediation is a voluntary
collaborative process where individuals who have a conflict with one another identify
issues, develop options, consider alternatives, and develop a consensual agreement
[gdrc.org].
Mediation is a means to resolve disputes without resorting to litigation or other
adversarial modes of dealing with conflict. By seeking a "win-win" solution, acceptable
to both sides, mediation promotes better understanding among disputants. It also costs
less, results in more lasting agreements than litigation, and can be used for emotionally
sensitive disputes where other forms of conflict resolution are inappropriate [gdrc.org].
30
Mediation might be more useful if it is used at the early stages of conflict because
it preserves important relationships, allows for sensitive negotiations to occur in private,
and allows for negotiations to be confidential [gdrc.org].
Any conflict can be resolved in nine easy steps. First of all, the conflict should be
defined. Then, both persons should be focused on the problem itself but not against each
other, and try to solve it in a climate of cooperation. Chances of mending increase if the
strengths of the relationship, the shared concerns and needs are given more attention than
the lone unshared separation. To solve a conflict one should learn to be an active listener
and choose a place to resolve a conflict carefully. Large numbers of conflicts can be
resolved without killing or wounding the other side, provided the strategies for
peacemaking along with training the forgiveness skills and learning how to start with
small but doable things [gdrc.org].
The exploration of oil and gas is followed by certain risks that can be prevented
with the help of risk management that consists of risk perception, risk analysis, and risk
preparedness. Traditionally, the field of risk management has three elements identification of risks, risk assessment and implementation of solutions and plans
[gdrc.org].
Risks may be divided into three tiers. In the lower band, the public readily accepts
risks because benefits are felt to outweigh the disadvantages. In the upper band, risks are
regarded as completely unacceptable and must be reduced even at very high cost or, if not
possible, the activities must cease. The intermediate region is one in which decisions on
risk reduction are made by trading off associated costs and benefits [gdrc.org].
Risk determination involves the related processes of risk identification and risk
estimation. Risk identification is the process of observation and recognition of new risk
parameters or new relationships among existing risk parameters, or perception of a
change in the magnitudes of existing risk parameters [gdrc.org].
Risk, at the general level, involves two major elements: the occurrence probability
of an adverse event and the consequences of the event. Risk estimation, consequently, is
an estimation process, starting from the occurrence probability and ending at the
consequence values [gdrc.org].
Risk acceptance implies that a risk taker is willing to accept some risks to obtain a
gain or benefit, if the risk cannot possibly be avoided or controlled. The acceptance level
31
is a reference level against which a risk is determined and then compared. If the
determined risk level is below the acceptance level, the risk is deemed acceptable. If it is
deemed unacceptable and avoidable, steps may be taken to control the risk or the activity
should be ceased. The perception and the acceptance of risks vary with the nature of the
risks and depend upon many underlying factors. The risk may involve a "dread" hazard
or a common hazard, be encountered occupationally or non-occupationally, have
immediate or delayed effects and may effect average or especially sensitive people or
systems [gdrc.org].
Individuals, corporations, and governments make important decisions every day.
To make the best decisions, they need to accurately weigh the relative benefits and costs
of various alternatives. In general, the term "full cost accounting" refers to the process of
collecting and presenting information to decision makers on the trade-offs inherent in
each proposed alternative. The process can be especially important for government
agencies that represent a variety of interests when deciding how to allocate public funds
and/or natural resources [gdrc.org].
The fundamental economic concept in FCA is opportunity cost. This definition of
cost refers to the value of opportunities that are given up when a choice is made to use a
limited resource for a specific purpose. Opportunity costs are typically measured in terms
of direct or indirect changes in market values, but can also be measured as changes in
non-market values (i.e., not reflected in market transactions). It can also be described
according to legal responsibilities assigned for paying the costs. Costs for which each
resource user is legally responsible for paying are private costs. The material used in
filling the wetland is a private cost because payment of a fair market price is required to
use the material. Opportunity costs that are not the private responsibility of the resource
user are deemed external costs or (negative) externalities [gdrc.org].
The political and institutional context in which environmental decisions will be
made in the new millennium is the product of two deep-seated transformations. The first
is a continuing shift away from a process of policy-making dominated by state action at
the global and national level, to a more complex, multi-level system of environmental
governance. This links global processes, through activities at the regional and the local, to
the individual consumer or citizen via a series of interconnections. The term 'governance'
captures the transition to a more poly-centric mode of environmental decision-making
32
and refers to the emergence of new styles of governing in which the boundaries between
public and private sector, national and international are more blurred [gdrc.org].
The second change is the slow but steady extension of environmental imperatives
into previously 'non' environmental sectors such as agriculture, trade and energy
production. The challenge for policy-makers at all levels of governance is to find the
means of securing environmental policy integration, rather than treating the 'environment'
as a discrete, self-standing area of decision-making one step removed from the driving
forces of environmental change [gdrc.org].
Decision tools are needed to support and inform environmental decisions made at
each of the different levels and in the various sectors to ensure the overall mix is
consistent and supportive of sustainability. One of the key research challenges is to
identify opportunities for scaling up or scaling down the experience of successfully
applying tools at particular levels. There is an equally urgent need for tools that promote
coordinated decision-making across sectors and levels of governance in pursuit of
sustainable development [Staib].
Environmental management decisions are used to raise the preparedness for
emergency situations in the oil and gas industry. Contingency planning should facilitate
rapid mobilization and effective use of manpower and equipment necessary to carry out
and support emergency response operations. Where appropriate, operators may find it
effective to integrate their contingency arrangements using mutual aid agreements
[Staib].
Approaches to strategic management and methodologies used by organizations are
numerous and vary considerably with many organizations now integrating their
environmental management processes into normal business processes. This integration
should start at the strategic level. This can be done progressively (an incremental
approach) or in a bolder way by placing environment at the centre of strategic planning
and management (transformational approach) (Dunphy et al, 2003). The strategic
paradigm of sustainable development that supports the transformational approach is
becoming a rallying point for business organizations but the theory appears to be ahead of
practice at the moment.
1.5 Environmental policy
33
An environmental policy is a set of fundamental principles and objectives
which helps an organisation to put its environmental commitment into practice. It
is the foundation upon which improvement of environmental performance and an
EMS can be built. The environmental policy is the basis for any organisation’s
EMS. It is the policy that establishes the objectives against which an EMS will be
judged. It sets both long term and short term strategies, it defines the direction in
which the EMS is supposed to go.
The policy should create a vision for everybody working in the organisation.
Since the policy can greatly influence an organisation’s public image, it should be
clear, understandable and verifiable. Many organisations already have some type of
environmental policy, even if it is not written down. This could be, for instance,
that an organisation has committed itself to complying with environmental
legislation or to avoid major environmental impacts. Documenting these written or
unwritten commitments may be a first step in developing an environmental policy.
The policy should relate to products and services, as well as supporting
activities.
The
results
of
a
preliminary
review and
the
analysis
of
the
environmental aspects of products, services and activities need to be considered
before finalizing the policy. This may give insights on how the organisation
interacts with the environment and how well environmental challenges are being
met. For example, information obtained during the preliminary review might help
define specific policy commitments.
The environmental policy needs to be explicit enough to be audited. This
means that it cannot be too general. Measurable goals and commitments need to
be set. Commitments made in the policy must be realistic, and how these
commitments will be met needs to be planned.
Environmental Law is a mixture of state, federal, and international treaty law that
concerns about the environment and protecting natural resources. It also can be described
as the network of treaties, statutes, regulations, and common and customary laws
addressing the effects of human activity on the natural environment. Environmental laws
often relate to such issues as pollution of soil, air, or water; global warming; and
depletion of oil, coal, and clean water [hg.org].
34
Environmental law is divided into two categories: pollution control and
remediation on the one hand, and conservation of natural resources on the other. The
source of authority for these laws derives from many sources, and is heavily influenced
by international treaties. Many of these treaties make impact on reducing greenhouse gas
emissions, prohibiting the hunting or fishing of endangered species, or even banning the
testing of environmentally destructive weapons, such as atomic bombs [hg.org].
As a rule, violations of environmental laws are handled in a civil manner, with the
imposition of fines or civil damages to injured parties. Although an emerging trend is
spreading through the field of environmental law in favor of the passage of state laws
criminalizing environmentally destructive behavior. This measure leads to prison time for
those who violate property use laws in protected areas (such as building a home on
protected wetlands) and business executives who allow their companies to pollute
[hg.org].
Environmental laws are also relevant to product design in the form of emissions
control, environmentally friendly materials, and energy-efficient electronic devices. They
relate with tax laws in the form of incentives for activities intended to benefit the
environment, like fuel efficient vehicles and the installation of solar panels. They also
affect housing codes in the form of requirements for insulation, heat transfer through
windows, and non-polluting construction materials. Frankly, environmental laws are all
around us and affect nearly every aspect of our daily lives in many different ways
[hg.org].
The broad category of "environmental law" may be broken down into a number of
more specific regulatory subjects. While there is no single agreed-upon taxonomy, the
core environmental law regimes address environmental pollution. A related but distinct
set of regulatory regimes, now strongly influenced by environmental legal principles,
focus on the management of specific natural resources, such as forests, minerals, or
fisheries. Other areas, such as environmental impact assessment, may not fit neatly into
either category, but are nonetheless important components of environmental law
[Meenakshi Saxena, p. 4].
1.6 Environmental impact assessment
35
The term environmental assessment (EA) is used for the assessment of the
environmental consequences (positive and negative) of a plan, policy, program, or project
prior to the decision to move forward with the proposed action. In this context, the term
'environmental impact assessment' (EIA) is usually used when applied to particular
projects and the term 'strategic environmental assessment' applies to policies, plans and
programmes. Environmental assessments may be governed by rules of administrative
procedure in regard to public participation and documentation of decision making, and
may be subject to judicial review [foe.co.uk].
The main purpose of the assessment is to make sure that decision makers consider
the environmental impacts when deciding whether or not to proceed with a project. The
International Association for Impact Assessment (IAIA) describes an environmental
impact assessment as "the process of identifying, predicting, evaluating and mitigating
the biophysical, social, and other relevant effects of development proposals prior to major
decisions being taken and commitments made." EIAs are unique by the fact that they do
not require adherence to a predetermined environmental outcome, but rather they require
decision makers to account for environmental values in their decisions and to justify
those decisions in light of detailed environmental studies and public comments on the
potential environmental wallop [foe.co.uk].
Engineering and consulting companies work hand in hand as contractors for
mining, energy, oil and gas companies executing EIAs. Companies operating globally
such as Royal Haskoning DHV, Golder Associates, Amec Foster Wheeler, Schlumberger
Water Services are an example of a much bigger pool of expertise globally. These
contractors are the ones not only in charge of preparing an EIA study but most
importantly getting these studies approved by each country government offices prior to
the execution of a project. Each country will also have its own local contractors offering
the same kind of service hence breaking out monopolies by increasing the supply of EIAs
execution consultants [foe.co.uk].
Environmental threats do not have national borders. International pollution can
have detrimental effects on the atmosphere, oceans, rivers, aquifers, farmland, the
weather and biodiversity all over the world. Global climate change is transnational.
Specific pollution threats include acid rain, radioactive contamination, debris in outer
space, stratospheric ozone depletion and toxic oil spills. The Chernobyl disaster,
36
precipitated by a nuclear accident on April 26, 1986, is an obvious reminder of the
devastating effects of transboundary nuclear pollution [Sands P., 1989, p. 402].
Environmental protection is inherently a cross-border issue and has led to the
creation of transnational regulation via multilateral and bilateral treaties. The United
Nations Conference on the Human Environment (UNCHE or Stockholm Conference)
held in Stockholm in 1972 and the United Nations Conference on the Environment and
Development (UNCED or Rio Summit, Rio Conference, or Earth Summit) held in Rio de
Janeiro in 1992 were key in the creation of about 1,000 international instruments that
include at least some provisions related to the environment and its protection [Weiss E.,
p. 32].
The United Nations Economic Commission for Europe's Convention on
Environmental Impact Assessment in a Transboundary Context was negotiated to provide
an international legal framework for transboundary EIA [Weiss E., p. 32].
However, as there is no universal legislature or administration with a
comprehensive mandate, most international treaties exist parallel to one another and are
further developed without the benefit of consideration being given to potential conflicts
with other agreements. There is also a problem of international enforcement. This has led
to duplications and failures, in part due to an inability to enforce agreements. An example
is the failure of many international fisheries regimes to restrict harvesting practices
[unece.org].
1.7 Equipment optimization as a part of environmental management
Modern oil and gas production equipment is a complex of units comprising: pump,
well and control head equipment; automated plants for collection and measurement of
production performance; equipment for offshore oil and gas producing platforms; crude
hydrocarbons rectification, refining and processing units; and great number of other oil
and gas processing equipment [mir-forum.ru].
Year by year more requirements are imposed to equipment used, so Russian
scientists and designers develop more advanced models for oil and gas industry.
Improvements are generally made in regards to energy consumption and furthering
environmental safety [mir-forum.ru].
37
Equipment used at oil and gas fields can be classified as follows: equipment used
for various field operations; well development equipment; reservoir gas and oil hoisting
equipment; equipment to effect a reservoir; well repair equipment; equipment for oil and
gas gathering and preparation for transportation [mir-forum.ru].
At each field development stage, special equipment is used. In the course of
exploration drilling, autonomous boring machines are used designed with considering
main requirement of minimum energy consumption along with keeping operating
features [mir-forum.ru].
Production drilling means availability of equipped area and power supply. That is
why drilling equipment is designed with account for external power sources. Another
important feature of these operations is opportunity to drill directional wells. So, several
wells from one platform can be drilled thus increasing its productive capacity.
Profitability can be raised by proper selection of pumps, since their wearing
qualities and efficiency directly affect the total income of a company [mir-forum.ru].
Also is necessary a service equipment complex used for service engineering of all
equipment of the platform, appraisal depreciation of all units and components and
carrying out of running repair [mir-forum.ru].
The priority task of Russian oil companies consists in purchase of up-to-date
equipment and adoption of new technologies. Use of obsolete equipment is not profitable
and can be dangerous. Due to new technologies, well efficiency can be raised
significantly and oil and gas output can be increases [mir-forum.ru].
In 2014 the United States was the fourth largest source for Russian imports of oil
and gas equipment, holding an 8 percent market share. The largest Russian sources for oil
and gas equipment were based in China, Germany and Italy with 17, 16, and 11 percent
respectively [2016 ITA Upstream Oil and Gas Equipment Top Markets Report].
More than half of Russia’s oil and gas equipment imports are represented by
machinery and mechanical appliances, filter/purify machines for gases and tankers for the
transportation of goods [2016 ITA Upstream Oil and Gas Equipment Top Markets
Report].
The slowed economic growth is based on declining oil prices, coupled with a lack
of economic reforms and various economic sanctions that put pressure on Russia’s
currency and bankung sector as well as reduce access to foreign financing and new
38
technologies. Due to these reasons Russian national oil companies revised their
investment plans and become less likely to support the development of technical
challenging and uneconomic deposits (i.e. improvement of oil and gas equipment). In
order to meet production targets Russian oil and gas companies have doubled efforts tp
maximize conventional deposits, including stimulation and drilling in existing
brownfields, and some grrenfield development instead of developing oil and gas
deepwater, Arctic offshore and shale [2016 ITA Upstream Oil and Gas Equipment Top
Markets Report].
In the context of this policy and due to thew current stagnation of the Russian
economy, U.S. componies’ participation in Russian’s oil and gas sector will be limited.
The current economic sanctions will probably cause U.S. companies to encounter more
competition in Russia’s oil and gas industry because the Russian government is
encouraging greater import substitution. There has been growing sentiment in Russia for
more domestically sourced technology and services since sanctions were introduced, and
not only in the sub sectors which were specifically sanctioned (deepwater, Arctic
offshore and shale) but also the other types of equipment and technology that is used in
conventional oil and gas exploration and production. The main technologies for import
substitution in 2016 include horizontal drilling, well completion and stimulation, and
technology to facilitate the low ering of equipment into the wellbore [2016 ITA Upstream
Oil and Gas Equipment Top Markets Report].
The equipment update is importatnt for oil and gas companies because it cuts
production costs and improve productivity. Industries that use advanced techniques, such
as optimized inventory management, collaborative supplier relationship management and
so on have more advantages comparing to the companies that do not invest into their
equipment improvement. Even though the economic situation is not so productive for oil
and gas companies right now the continuous equipment improvement will lead to the
better enviromental situation, time saving on different operations and reduction of
ecological risks in the oil and gas industry. Thus, the ecological improvement may
eventually reduce the risk of non-compliance and improve health and safety practices for
employees and the public.
Nowadays energy demand is very high so the need for oil and gas is at an all-time
high. Global oil demand is predicted to increase by more than a third by 2035.With this
39
energy demand, the oil and gas industry is being challenged to increase production
efficiencies in its crude oil and natural gas resources. The ability of the industry to
address a number of operational challenges will be crucial in ensuring that future demand
is met with adequate supply [Clark].
During recent years, oil and gas companies have made profound investments in
their safety and environmental functions. These investments have made the companies’
safety and environmental systems more advanced, and have enabled the companies to
become much more ambitious in their safety goals. Indeed, it ’s not unusual for oil and
gas companies nowadays to have an aim to zero injuries and fatalities. For most
companies, however, this goal has remained difficult to achieve. Even if fatalities only
happen at a fifth or a tenth the rate of 20 years ago, they still happen [Clark].
The Russian Federation is one of the world’s leaders by oil and gas reserves and
production. Today, Russia produces one seventh of primary energy resources of the
globe. There are 12.9% of world’s explored reserves of oil and 36.4% of gas. The
economy of our state greatly depends on efficiency of oil and gas producers. Oil and gas
production is rather a complicated and long process from field search to raw material
transportation to a processing or consumption facility. At anystage, the entire complex of
specialized equipment is used assuring volume of crude materials, people safety and
environmental security [Clark].
Modern oil and gas production equipment is a complex of units comprising: pump,
well and control head equipment; automated plants for collection and measurement of
production performance; equipment for offshore oil and gas producing platforms; crude
hydrocarbons rectification, refining and processing units; and great number of other oil
and gas processing equipment [mir-forum.ru].
Year by year more requirements are imposed to equipment used, so Russian
scientists and designers develop more advanced models for oil and gas industry.
Improvements are generally made in regards to energy consumption and furthering
environmental safety [Clark].
Equipment used at oil and gas fields can be classified as follows: equipment used
for various field operations; well development equipment; reservoir gas and oil hoisting
equipment; equipment to effect a reservoir; well repair equipment; equipment for oil and
gas gathering and preparation for transportation [White Paper].
40
At each field development stage, special equipment is used. In the course of
exploration drilling, autonomous boring machines are used designed with considering
main requirement of minimum energy consumption along with keeping operating
features [White Paper].
Production drilling means availability of equipped area and power supply. That is
why drilling equipment is designed with account for external power sources. Another
important feature of these operations is opportunity to drill directional wells. So, several
wells from one platform can be drilled thus increasing its productive capacity [ White
Paper].
Profitability can be raised by proper selection of pumps, since their wearing
qualities and efficiency directly affect the total income of a company [White Paper].
Also is necessary a service equipment complex used for service engineering of all
equipment of the platform, appraisal depreciation of all units and components and
carrying out of running repair [White Paper].
The priority task of Russian oil companies consists in purchase of up-to-date
equipment and adoption of new technologies. Use of obsolete equipment is not profitable
and can be dangerous. Due to new technologies, well efficiency can be raised
significantly and oil and gas output can be increases [White Paper].
In 2014 the United States was the fourth largest source for Russian imports of oil
and gas equipment, holding an 8 percent market share. The largest Russian sources for oil
and gas equipment were based in China, Germany and Italy with 17, 16, and 11 percent
respectively [2016 ITA Upstream Oil and Gas Equipment Top Markets Report].
More than half of Russia’s oil and gas equipment imports are represented by
machinery and mechanical appliances, filter/purify machines for gases and tankers for the
transportation of goods [2016 ITA Upstream Oil and Gas Equipment Top Markets
Report].
The slowed economic growth is based on declining oil prices, coupled with a lack
of economic reforms and various economic sanctions that put pressure on Russia’s
currency and bankung sector as well as reduce access to foreign financing and new
technologies. Due to these reasons Russian national oil companies revised their
investment plans and become less likely to support the development of technical
challenging and uneconomic deposits (i.e. improvement of oil and gas equipment). In
41
order to meet production targets Russian oil and gas companies have doubled efforts tp
maximize conventional deposits, including stimulation and drilling in existing
brownfields, and some grrenfield development instead of developing oil and gas
deepwater, Arctic offshore and shale [Clark].
In the context of this policy and due to thew current stagnation of the Russian
economy, U.S. componies’ participation in Russian’s oil and gas sector will be limited.
The current economic sanctions will probably cause U.S. companies to encounter more
competition in Russia’s oil and gas industry because the Russian government is
encouraging greater import substitution. There has been growing sentiment in Russia for
more domestically sourced technology and services since sanctions were introduced, and
not only in the sub sectors which were specifically sanctioned (deepwater, Arctic
offshore and shale) but also the other types of equipment and technology that is used in
conventional oil and gas exploration and production. The main technologies for import
substitution in 2016 include horizontal drilling, well completion and stimulation, and
technology to facilitate the low ering of equipment into the wellbore [Clark].
The equipment update is importatnt for oil and gas companies because it cuts
production costs and improve productivity. Industries that use advanced techniques, such
as optimized inventory management, collaborative supplier relationship management and
so on have more advantages comparing to the companies that do not invest into their
equipment improvement. Even though the economic situation is not so productive for oil
and gas companies right now the continuous equipment improvement will lead to the
better enviromental situation, time saving on different operations and reduction of
ecological risks in the oil and gas industry. Thus, the ecological improvement may
eventually reduce the risk of non-compliance and improve health and safety practices for
employees and the public.
Conclusion on the first chapter
Environmental management is management of organisation’s activities that have
or may have an impact on the environment. It is a continuous cycle of planning,
42
implementing, reviewing and improving the process and actions that an organisation
undertakes to meet its environmental targets and requirements. Environmental
management system (EMS) is also a system that complies with the requirements of
international standards such as ISO 14001 and EMAS which is the part of the overall
management system that includes organisational structures, planning activities,
responsibilities, practices, procedures, processes and resources for developing,
implementing, reviewing and maintaining the environmental policy.
Both the ISO 14001 standard and EMAS only specify the structure of an EMS.
The content is up to the organisation itself. The organisation decides what it wants to do,
and the EMS organises the proces. If the organisation focuses the EMS on specific
operational practices then operating costs can be reduced and environmental risks
minimized. The objectives for improvement are set by the organisation itself.
The profit that arises from establishing of EMS is impressive. An EMS takes a
systematic approach to environmental management and a systematic approach is a
cost-effective approach. The environmental review highlights all the areas of the
firm where improvement in performance is needed. With this information, a firm
can assess which improvements will produce the greatest benefits in terms of cost
savings and reduction of risk, and deal with these areas first. The firm can then
set targets that benefit both itself and the environment.
The most common standardised EMS is ISO 14001, an international
environmental management standard which was first published in 1996. In fact, ISO
14001 has now become so commonly accepted that it has superseded or been
merged into several previous standards
(e.g. British Standard 7750). Other more
encompassing environmental standards have incorporated ISO 14001 as a key element.
One example of the latter is the Eco-Management and Audit Scheme (EMAS), the EU
supported management system and certification scheme, which goes beyond the scope
of ISO 14001 in that it establishes minimum standards for auditing and the elaboration
of environmental reports (the two standards also differ with respect to the requirements
to environmental audits).
Environmental management in Russia faces severe problems, both from Sovietera and continuing environmental degradation and due to the weakness of current
institutions with responsibilities for environmental protection.
43
There is always a variety of potential risks and negative impact on the environment
because of oil and gas exploration. Consequences depend upon the stage of the process,
the size and complexity of the project, the nature and sensitivity of the surrounding
environment and the effectiveness of planning, pollution prevention, mitigation and
control techniques.
Development of oil and gas in the Arctic faces many social and environmental
challenges. The pace and location of future development will be determined by a number
of factors including acceptability to society, a continuing demand for hydrocarbons,
viable economics, favourable regulatory regimes, technology development and the safety
and wellbeing of employees and communities. Operators will continue to be responsible
to the wider society for demonstrating that risks are recognised and managed.
The upstream oil and gas industry manages a wide range of risks, including political,
societal, asset integrity, commercial, reputation, safety and environment.
management for Arctic conditions has to follow a structured approach to:
Risk
identify
hazards and effects that may arise from routine, emergency and past activities; assess
significance, taking into account probability and consequences; document each risk
(eg in a risk register) with applicable legal and other standards; establish realistic and
achievable objectives and performance criteria; define risk reduction measures that are
suited to Arctic conditions.
The environmental policy should create a vision for everybody working in the
organisation. The environmental policy is the basis for any organisation’s EMS. It
is the policy that establishes the objectives against which an EMS will be judged.
It sets both long term and short term strategies, it defines the direction in which
the EMS is supposed to go.
The equipment update is importatnt for oil and gas companies because it cuts
production costs and improve productivity. Industries that use advanced techniques, such
as optimized inventory management, collaborative supplier relationship management and
so on have more advantages comparing to the companies that do not invest into their
equipment improvement. Even though the economic situation is not so productive for oil
and gas companies right now the continuous equipment improvement will lead to the
better enviromental situation, time saving on different operations and reduction of
ecological risks in the oil and gas industry. Thus, the ecological improvement may
44
eventually reduce the risk of non-compliance and improve health and safety practices for
employees and the public.
Information technology can help mitigate operational risks. Organizations that
understand their risk profile and take concrete action to mitigate risks will be
better positioned to be successful in the marketplace. IDC Energy Insights
recommends the following to oil and gas companies:
- Consider developing a corporatewide approach to managing information in
the plant. Best practices cover use of technology to support operations, business
analytics,
application
integration, EHS compliance,
and
enterprise content
management.
- Work to develop business processes for operations and identify document
control workflow for approvals within the organization, including the transmittal
and standard operating procedure (SOP) processes. Determine how often you wish
to share documents with vendors, partners, regulators, and others. Work together to
develop a coding standard for components/documents to ensure that there is
consistent master data management.
- Participate in industry associations and user communities to help arrive at
standards for sharing of content and supporting well and plant workflows.
- Look to areas of high vulnerability in your operation such as current
processes that still rely on paper files that can potentially be difficult to find and
update and may be misfiled or lost and ultimately expose your company to
regulatory or internal audit failures.
- Focus on process improvements that will allow more effective creation and
sharing of content both inside and outside the firewall. A good area to start would be
the transmittal and SOP processes.
- In this time of increased regulatory pressure, look at solutions that
optimize the way you manage, share, store, and archive content to comply with
environmental, health, and safety regulations.
- Look at deploying information rights management tightly integrated with
content management to ensure that only authorized recipients can view, copy, print,
or edit confidential information.
45
- Reassess your customer communications capabilities to ensure timely and
personalized correspondence tailored to the delivery requirements of the recipient,
including customers and regulatory agencies.
- Take a more holistic approach of your asset information to ensure that
drawings, records and other documentation are properly identified, stored, classified,
accessible, accurate, and appropriately safeguarded.
- Familiarize yourself with emerging asset management standards such as
PAS 55 and ensure that future asset management solutions that are deployed in
your company operations adhere to such standards.
- Evaluate solution vendors that have the flexibility to support mobile access
of project and plant information, which enables and optimizes access of information
wherever it is accessed.
- Consider solutions that provide options to deploy cloud-based solutions and
can support projects that require cloud deployments.
46
II. IMPLEMENTATION OF ENVIRONMENTAL MANAGEMENT IN THE OIL
AND GAS INDUSTRY
2.1 Environmental management of investment projects in the oil and gas industry
In order to define a particular way to implement environmental management of
investment projects in the oil and gas industry we are going to analyze and summarize the
experience of the development of environmental management systems and social aspects
of investment projects on the example of a compressor station (CS) "Port" North
European Gas Pipeline (the customer - JSC "Gazprom Invest West", a project invested a
group of banks and credit agencies - BNP Paribas , ECGD, SACE) and the main gas
pipeline Sakhalin - Khabarovsk - Vladivostok (the customer - JSC "Gazprom invest
Vostok", a project invested by JSC "Gazprom").
Gazprom didn't have its own environmental management system at the very
beginning of the gas pipeline building. Its development and implementation became a
condition of project financing and the priority of creditors' claims - a group of foreign
banks and credit agencies (BNP Paribas, ECGD, SACE), and their environmental
consultant - D'Appolonia Italian company. The originally developed environmental and
social aspects management was integrated and project oriented. It included environmental
aspects of the activities of both investors and building contractors, and it was also based
on the standards of the International Finance Corporation [SJC Gazprom].
Construction of the integrated management mechanism at (CS) "Port" is based on
two types of complementary actions: 1) distribution of responsibilities within and
between levels, and 2) the integration of activities and information flows through the
interaction between the levels. These two types of activities: distribution and integration,
that are carried out through environmental management procedures [SJC Gazprom].
The most important component of the functioning of the integrated management
system is the interaction with stakeholders. Dialogue with stakeholders is a tool to
identify and assess the importance of social influences and impacts of the project, as well
47
as a tool for identifying unpredictable reactions to the activities carried out and its impact
on the project. Without maintaining this dialogue can not be achieved in the full social
impact of the investment, since this is where the most effective development of solutions
to prevent and / or mitigate negative effects and the implementation of the possible
positive effects [SJC Gazprom].
As an outcome when we consider the experience of functioning environmental and
social aspects management of investment project it should be noted that multi-level
governance system of significant environmental and social aspects of the scale, structure,
resource maintenance of an appropriate set of obligations on the project in the
environmental and social fields. According to this approach EMS oriented company
achieves the result and move on to greater efficiency due to structural and functional
restructuring of the organization. Moreover, restructuring project created at the early
stages of the project cycle allows you to find the optimal solution and the allocation of
resources for the functioning of EMS [SJC Gazprom].
The situation with the trunk pipeline Sakhalin-Khabarovsk-Vladivostok was
initially fundamentally different. There environmental and social aspects management
developed within the framework of the planned training of LLC "Gazprom Invest
Vostok" for certification according to standard ISO 14001. At the stage of identifying
significant environmental aspects, when the construction works were in full swing,
certain problems were identified: a lack of methodological basis for assessing the
significance of the specific impact on the environment in the preparation and conduct of
construction; the absence of a mechanism of interaction with contractors in the field of
environmental protection, particularly the absence of the conditions of such cooperation
in the contractual documentation, that led to the separation between the establishment of
environmental objectives and ways to achieve them; finally, the lack of direct
communication between stakeholders [2].
Construction of the environmental aspects of the control system in this case was
based on two key resources: 1) development of a set of normative documents,
supplementing the provisions of GOST R ISO 14000 - 2007 and fills a gap in
standardized requirements; and 2) the integration of EMS with the procedures of the
quality management system processes, which are determined by the target setting and
ways to achieve business process of "Gazprom Invest Vostok" (in particular for the
48
business processes for the design organization, design, and obtaining permits, conclusion
construction contracts and service delivery, management of construction and installation,
commissioning works) [GOST R ISO 14001].
The construction of the ecological and social aspects of management systems or
environmental management systems (EMS) based on the requirements of the standards
series GOST R ISO 14000 (ISO 14000) requires development of significant additions in
content procedures and regulatory provision, and the mechanisms of their
implementation, also considering the specification of the investment project at all its
stages [GOST R ISO 14001].
The management of the ecological component of investment projects is based on
methodological approach in which evaluation of the significance of environmental and
social impacts of the project at its various stages is associated with the construction,
implementation and improvement of EMS. Evaluation of EMS is based on criteria such
as the ability to take into account the specifics of the current project and to achieve
significant environmental and social effects [Romanov].
The functioning of the EMS as a dynamic system is especially important in the
implementation of investment projects in the oil and gas industry because it is connected
with high-risk and environmental hazards, affecting virtually all components of the
environment. The great length and scale of production facilities, such as pipelines,
involve a wide range of groups and organizations whose interests are affected by start-up
and implementation of the investment cycle. The stage of construction makes different
social and environmental impacts, as it includes a primary, destructive implementation of
foreign technical systems in natural systems and well-established way of local people.
This process brings a transition to the new man-made landscapes, and adaptation of the
population to the new conditions. Design and creation EMS can prevent, reduce or
minimize such effects at the preparation phase of the project [Romanov].
As we can see at the Table 1 international EMS standards cover all stages of the
investment cycle, and at the same time carry out the vertical integration of requirements,
including the level of investment policies, regulatory requirements to ensure the
management systems, requirements for operational and control management procedures
and their correction. In Russia the investment activity is one of the types of economic
activity that is not supported by environmental legislation standardized requirements that
49
take into account the specification of the preparation and implementation of investment
projects, making it difficult to follow the provisions of the law [Romanov].
EMS standards for different levels of investment management at various stages of
the investment cycle (Table 1):
Table 1
Stage
Operation
level
International
Pre-investment
Operational
(investment
(production and
rationale, building
Investment (design engineering,
provision
project)
logistical support, building)
services)
Examples: Policy and Standards of social and economic sustainability of
International financial corporation; Ecological and social policy and Standards of
project realization of the European bank of reconstriction and development;
Ecolofical aspects of the investment policy of the Euroasian bank of
development.
ISO 14000 not adapted to the
specification of the investment project
National
-
No standards for the stage of design
engineering and environmental impact
assessment
ISO 14000 doesn't consider the
specification of the investment project
No standards for the stage of design
engineering and environmental impact
assessment
Corporational
(Gazprom)
-
JSC Gazprom EMS standards can't be
applied to the design stages and the
environmental impact assessment, they
are not adapted to the peculiarities of the
building stage.
50
ISO 14000
Example: ISO
14001 - 2007
EMS system
of Gazprom:
"The
environmental
impact
assessment in
the system of
ecological
management",
"Planning for
the
Environmental
safety", "The
process of
identification
of
environmental
aspects in the
environmental
management
system"
Separation of the state investment policy from the environmental requirements is
transmitted to the level of corporate investment management. The absence of integrative
interactions between investment and environmental policies of Gazprom, the absence of
the guidelines for environmental results create difficulty in determining the development
of the environmental management in the oil and gas investment projects. Corporate
standards and other regulatory documents on EMS, such as "the environmental
management
system
of
Gazprom",
Recommendations
on
"Planning
for
the
Environmental safety" of Gazprom, "The process of identification of environmental
aspects in the environmental management system" of Gazprom, developed in accordance
with GOST R ISO 14001-2007 (ISO 14001), defines the scope of EMS objects of gas
industry during the operational phase, while EMS is characterized by a rigid structure,
staffing constraints, excluding the possibility of changing this structure [Guidance on
ecological management of Gazprom].
Focus on operational phase causes gaps in the corporate normative provision of
environmental management at the stages of project preparation and construction phase
[Guidance on ecological management of Gazprom].
Based
on
the
information
mentioned
above
we
can
outline
several
recommendations on the creation and implementation of environmental and social
aspects management and EMS in the oil and gas investment projects. Firstly, you need a
standardized procedure for determining the areas of responsibility of the customer and
contractors to ensure the environmental safety of oil and gas investment projects that
would regulate the responsibilities of organizing EMS level of investment contracts and
tender documents [Environmental and social procedures].
Secondly, you need a single methodological approach to the identification of
environmental aspects of the project that will be used during the environmental impact
assessment (EIA) on the construction and operational phases, and in the process of EMS
at these stages. Project decisions developed on the basis of design solutions in the field of
environmental protection do not match the list of significant environmental aspects. Thus,
the EMS requirements of the investment project can not be fully achieved [MFK].
Thirdly, organizational interaction between customer and contractors during the
construction phase is fundamentally different from the operational phase, when
51
constantly functioning operating organization works with the same initial list of
environmental aspects and has the ability improve the EMS tools and reach significant
results in improving the environment. During the construction phase there is an active
development of new territories and the corresponding change of the importance of
environmental and social aspects, the dynamic EMS is absol necessary, because its
essential element is the interaction between contractors and stakeholders [MFK].
Fourthly, it is necessary to establish requirements for corporate monitoring and
control functions from the customer that acquire a different structure and the importance
of the implementation of investment projects. Industrial environmental control and
monitoring are followed by monitoring the compliance of the requirements of
contractors; it is also necessary to monitor the implementation of the requirements for
stakeholder engagement [Environmental and social procedures].
According to the information above we can give certain recommendations for the
development and implementation of EMS in the investment projects. The most effective
project-oriented EMS systems are systems
that provide vertical and horizontal
integration of environmental activities of all entities involved in the project - investors,
designers, building contractors, suppliers of material and technical resources.
Identification and detailed analysis of the significant environmental aspects of the
project, as well as the main features of EMS, should be developed by general designer
within the framework and development of environmental measures. In the future, the list
of significant environmental aspects and actual procedures investor will be able to adapt
to the particular situation.
Basic principles of EMS and requirements for environmental activities should be a
part of the contractual documentation of all levels: the investment agreement, the contract
with the general designer, contracts with building contractors and suppliers. Agreement
(for example, "Requirements for Contractors") must contain the rights and obligations of
each subject, performance criteria, mechanisms for monitoring, reporting standards,
administrative and financial control mechanisms.
All interested parties and stakeholders, including the public, business entities in
the project's area of influence, the supervisory authorities should be involved into the
environmental management.
52
The environmental and social aspects of the project should be managed together
on the common principles.
The best way to the efficient functioning of the environmental management of
investment projects can be defined as the management of environmental aspects, carried
out at all stages of the project with the help of the environmental and social assessment
through mechanisms of interaction with contractors and stakeholders. An important
condition of the organization of effective interaction is the regulatory and legal support at
corporate and institutional levels.
2.2 Environmental responsibility of the Russian oil and gas companies
Oil and gas are among the world’s most important resources.The oil and gas
industry plays a critical role in driving the global economy, and the activities of oil and
gas companies have manynegative impacts on the environment, which are becoming
increasingly significant due to the increased use and transport of oil andgas. Many
environmental disasters associated with the activitiesof oil and gas companies also have
material effects on the compa-nies’ financial reports (The International Federation of
Accountants,2010).
For example, a catastrophic oil spill in 2010, caused by anexplosion at a British
Petroleum (BP) drilling rig in the Gulf of Mexico, inflicted majordamage to the
ecosystem and had major financial implications for BP. The Exxon Valdez oil tanker that
ran aground in Alaska’s PrinceWilliam Sound in 1989 caused a major environmental
disaster
withdire
financial
consequences.
Due
to
the
potential
for
environmentaldegradation, many stakeholders have started to pay close attentionto the
environmental implications of the activities of oil and gascompanies. Many international
organizations, governments, andlobby groups have cautioned companies to be more
environmentally responsible, and to consider their impact on society and the environment
[Alazzani].
Nowadays there is a rating of Environmental Responsibility of Oil and Gas
companies in Russia that was first held in 2014, in 2015, and 2016. It was conducted by
the cooperative initiative by CREON Group and WWF Russia with participation of
National Rating Agency. The pilot rating goal was to provide an unbiased and
53
comparable data on environmental responsibility of participants and the impact of
Russian oil and gas industry players on the environment. It is believed that public should
have more excess to such information that will influence the reputation of hydrocarbon
producing and processing companies, and, ultimately, promote environmental risks
management quality resulting in decreased environmental impact [Chetverikov, p. 2].
This rating has been recognised by organizers and representatives of oil and gas
sector so these companies are willingly providing information concerning environmental
impact. Is shows that the rating is becoming a useful tool that stimulates entrepreneurs to
become more transparent in environmental policy matters. The founders of this rating
believe that increased competition in the field of environmental protection will
potentially lead to long-term and cheaper financial resources for the most transparent
companies [Chetverikov, p. 3].
This project has shown that is it a useful tool of influence on oil and gas industry
decision-making processes when it comes to environmental protection. More companies
are willing to show their data and this data becomes more detailed. The rating is some
kind of a bringe that connects industy and society in terms of environmental protection
[Chetverikov, p. 3].
The targets of this rating are:
1. To identify key indicators of impact on environment from oil & gas companies
activities in Russia. The Rating makes it possible to create an immersive quantified
database to be used for calculation of industry average indicators related to discharges,
emissions, and wastes.
2. To compare main oil and gas companies by the following criteria:
• the company’s level of environmental impact per production unit
• the extent of transparency and availability of ecologically significant information • the
quality of eco-management in the company (compliance of activities with corporate and
national environmental policies, best standards and practices)
• the frequency of violating environmental legislation in project execution areas by the
company
• the efficiency of mineral resources extraction.
3. To make record of the year-over-year changes in the above-listed indicators
[Chetverikov, p. 6].
54
Our study is based on the Environmental responsibility rating of the Russian oil
and gas companies is held by CREON group of companies, WWF Russia, Natianal rating
agency (NRA), Ministry of natural resources and environment of the Russian Federation,
etc. Two years have passed after the first rating had been published and today it is stated
that the project has been a success. The rating is recognized in the industry, which was
proven with the meeting of the rating organizers and representatives of Oil & Gas sector
that took place on July 5, 2016. The event, dedicated to the rating methodology
adjustments, gathered employees of 10 companies who introduced over 50 different
initiatives and suggestions [Kilzie].
In 2016 the rating methodology has undergone through certain adjustments. In
particular, the criterion that stimulates companies to establish and develop programs for
biodiversity preservation in the areas of operation will now be accounted for in the final
rating results, whereas previously it was applied in the test status only. Furthermore, the
criterion covering greenhouse emissions dynamics has become quantifiable value and,
thus, has been transferred from Environmental Management to Environmental Impact. In
addition, the criterion that evaluates the level of public disclosure of incidents with
considerable social and environmental impact and of pending environmental conflicts has
been expanded — from now on the rating also takes into account whether rated
companies undertake corresponding recovery and conflict mitigation measures.
A new framework criterion was also introduced — indicator of whether “green
office” principles are incorporated in environmental policies of rated companies.The
elevated rating recognition and efficiency is further supported with improved public
availability of information on rated companies. During the first year only 3-4 companies
publicly disclosed corresponding reports with respect to the range of quantitative rating
indicators, yet today over ten of rating participants share this information. New
quantifiable values improve calculations reliability of industry averages that represent
overall environmental impact of Oil & Gas segment. The goal of each responsible
company is to further improve average industry values [Kilzie].
The most visible trend of the rating held in 2016 comparing to 2015 is the growth
of environmental responsibility and trasparency for most companies. The three rating
leaders are Sakhalin Energy, Gazprom, and Surgutneftegaz. Sakhalin Energy has
improved its position from 2014 and 2015 and now is the leader of the final rating, while
55
Gazprom and Surgutneftegaz lost one position each. The best rating dynamics were
shown by Exxon NL, Total PPP, LUKOIL, and Zarubezhneft. Also, LUKOIL, and
Zarubezhneft made public a large volume of information in the Internet sites and their
subsidiaries [Chetverikov, p.22].
Thus, we can see that the rating of oil and das enterprises has positive effects in
the sphere of environmental improvements and public acknowledgement (Table 2).
Table 2
Final
position
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20-21
20-21
Company
Sakhalin Energy
(Sakhalin-2)
Gazprom
Surgutneftegaz
LUKOIL
Salym Petroleum
Development
Exxon Neftegaz
Limited (Sakhalin1)
NOVATEK
Gazprom Neft
Rosneft
Zarubezhneft
Irkutsk oil company
(INK)
Total PPP
Tatneft
Bashneft
Transneft
Tomskneft VNK
Slavneft
NNK/Alliance
Russneft
Neftisa/Belkamneft
Arcticgas
Environment
al impact
rating point
1,8
1,6364
1,6364
1,5455
Environme
ntal
manageme
nt
Disclosure/
Transparan
cy
2
1,7778
1,8571
1,8571
1,8571
1,8571
1,6667
1,5556
1,5556
1,5556
1,5
1,8571
1,7
1,6
1,0909
1,2727
1,1
1,2857
1,7143
1,5714
1,2857
1,1429
1,3
1,2
1,2727
0,4545
0,9
0,1818
0,1818
0,1818
0
0
0
According to the rating of
1,5714
1
0,8571
0,5714
0,5714
0,4286
0,1429
0,1429
0
0
Rating
2015
final
position
Final
rating
point
3
2
1
5
1,8593
1,7201
1,6830
1,6527
7
1,6376
9
12
10
6
4
1,6302
1,4063
1,3795
1,3555
1,2397
14
11
8
13
15
16
17
18
19
20
21
1,2217
1,1831
1,0539
0,8076
0,6386
0,4733
0,4627
0,2934
0,2328
0,1481
0,1481
1,3333
1,3333
1,3333
1,2222
1,3333
1,2222
0,7778
0,8889
1,1111
0,4444
0,6667
0,7778
0,5556
0,5556
0,4444
0,4444
Environmental Responsibility of Oil and Gas
companies in Russia that was held in 2015 by by CREON Group and WWF Russia with
participation of National Rating Agency the three rating leaders are Sakhalin Energy,
56
Gazprom and Surgutneftegaz in their environmantal responsibility and trasparency. As a
matter of fact all these companies correspond to the environmental standard ISO 14001.
Also, LUKOIL, and Zarubezhneft made public a large volume of information in the
Internet sites and their subsidiaries [Kilzie].
Traditionally, the basic principle of the rating compilation is that exclusively
publicly available information is used. Therefore, the focus was primarily on the
completeness and quality of environmental information disclosed. Rating organizers
note that the business transparency level of Russian Oil & Gas companies increases every
year both with respect to the number of disclosed environmental protection aspects, and
in terms of quality of the latter. The participating companies cooperate with rating
organizers extensively at the rating preparation stages. Thus, in August-November
2016, 15 out of 21 rated companies accepted the rating organizers’ suggestion to
disclose additional information on environmental responsibility or submit corresponding
comments. This year, two different levels of business transparency on the matter were
singled out:
- Sufficient level of business transparency Majority of rated companies (15 of
21 participants) fall within this level. These companies publish environmental
responsibility
reports
and
disclose information
on
implemented environmental
management system and environmental impact from their operations in the special
sections of their official sites. Nine companies (Rosneft, Lukoil, Gazprom Neft,
Tatneft, Bashneft, Gazprom, Sakhalin Energy, NOVATEK, and Zarubezhneft) publish
non-financial reports, which comply with international GRI (Global Reporting
Initiative) standards. Another six companies (Surgutneftegaz, Exxon NL, Salym
Petroleum, Irkutsk NK, Transneft, and Total PP) publish environmental reports in
accordance with internal corporate standards rather than following GRI requirements.
- Insufficient level of business transparency 6 of 21 rating participants that do
not publish non-financial reports and only disclose very limited information on
environmental aspects of their operations at their official sites fall within this level.
Namely, these companies are Slavneft, Tomskneft VNK, Russneft, Alliance/NNK,
Neftisa-Belkamneft, and Arcticgas [Kilzie].
The best known global voluntary international standard of non-financial
reporting is Global Reporting Initiative (GRI). GRI G4 guidelines was published in
57
May 2013. As opposed to the previous version, this guidelines established only two
levels of compliance with GRI recommendations: basic and expanded.
Whereas at
the moment of first rating compilation only one Russian oil & gas company
published sustainable development report with account for GRI G4 requirements, by the
end of 2015, however, a total of nine Russian oil & gas companies implemented
GRI G4 standards. All these companies publish reports that meet basic level of
compliance requirements. Expanded level reports are not yet being published by any
company [Kilzie].
Fundamental improvements in Russian environmental management
fundamental reshaping of Russian institutions.
This includes establishing
require
more
competitive real-market relations rather than virtual economic ones, establishing a rule
of law, decreasing corruption significantly, implementing a tax code that is transparent
and does not penalize environmental compliance, and attracting foreign direct
investments that provide management and technological improvements rather than what
is often perceived to be second-rate technology and lower levels of environmental
protection. It also likely requires instilling in businesses and individuals a sense of
environmentally responsible behavior. This is a difficult tightrope act when enterprises
face market pressures to shed themselves of the historical social responsibilities they
have had to local communities, and citizens search for meaningful ways to be civically
engaged in the face of day-to-day economic pressures [Chetverikov, p. 26].
So, we can highlight several effective applications of environmental management
on oil and gas enterprises:
-
appropriate international and national laws, regulations and guidelines;
coherent procedures for decisions on projects/activities;
legislation with clearly defined responsibilities and appropriate liabilities;
appropriate monitoring procedures and protocols;
enforceable standards for operations;
performance reporting;
adequately funded and motivated enforcement authorities;
appropriate sanctions and political will for their enforcement [UNEP, p. 28].
Oil and gas development activities are expected to grow to meet the need of
rapidly industrializing countries, and can be carried out safely with minimum adverse
environmental impact, only through a strong company commitment to environmental
protection. The host government also needs to have a solid understanding of exploration
and production operations and how they may affect the environment. The activities on
58
both sides should ideally be complementary to achieve the most cost-effective and
environmentally sound approach. So, we can identify key points that should be
considered and to my opinion are the most efficient during the process of implementation
of environmental management in enterprises:
- systematical integration of environmental issues into business decisions through
-
the use of formal management systems;
integration of health, safety and environmental management into one program;
taking into consideration all the areas that might be at risk (water, air, soil, etc.)
-
before making any strategic decision;
use waste prevention techniques, re-use waste components;
minimize resource inputs;
bring innovations and constant improvements into all industrial processes.
Many companies operate in widely varying climatic, geographic, social and
political circumstances. Sometimes legislative frameworks and socio-economic and
physical infrastructures are highly sophisticated. Companies need a consistent
management approach that can be realized through the introduction of environmental
management system. There are such standards as ISO 14001, OHSAS 18001 that provide
system models that can be used by companies in order to improve their operating
efficiency and reduce environmental impacts. On the Table 3 we can see the companies
that have already introduced environmental system management and got certain
certificates and others that haven’t done it yet.
Table 3
Environment
Name of the
company
Environmental Environment
Environmental
policy
review
al
Environme
al
management Environment
programme
system
al audit
ntal
statement
Verification
and
Registration
ISO
9001:2008,
ISO 14001,
+
Surgutneftegaz
Sakhalin
Energy
(Sakhalin-2)
Zarubezhneft
+
+
Environment
+
+
al
19001,
management
ISO/TS
structure
29001
ISO 14001:
Sustainable
+
development
OHSAS
+
+
+
policy
2009, ISO
26000:2010
+
+
59
ISO 14001:
+
+
+
+
+
+
LUKOIL
2004,
OHSAS
18001: 2007
ISO 14001:
+
+
+
+
+
+
NK Rosneft
2004,
OHSAS
18001: 2007
ISO 14001:
Salym
HSSE
+
Petroleum
management
Development
system
+
Tatneft
Gazprom
Exxon
Neftegaz
Limited
+
Resource
Saving Policy
+
+
+
+
+
+
+
+
+
+
+
+
+
+
+
+
+
+
+
OHSAS
18001: 2007
(Sakhalin-1)
Gazprom Neft
Total PPP
2004,
+
+
+
+
ISO 14001:
2004
ISO 14001:
2004,
OHSAS
18001: 2007
ISO 14001:
2015
No information
Integrated
Health,
Safety and
NOVATEK
Health and
Environment
Safety
Management
Environment
System
Policy
(IMS)
ISO
14001:2004,
Certificate of
Registration
+
+
+
+
+
Occunation
health &
safety
management
Bashneft
Irkutsk
system
ISO 14001:
Oil
Company
(INK)
AK Transneft
+
+
+
+
+
+
+
+
+
+
+
+
2004,
OHSAS
18001: 2007
ISO 14001:
2004 + Cor
60
1: 2009
ISO 14001:
Tomskneft
VNK
Slavneft
NNK/Aliance
+
+
+
+
+
+
2004,
OHSAS
18001: 2007
+
+
+
No information
Environment
al
improvement
program at
the oilfields
of the
Variogan
Russneft
Neftisa/Belka
mneft
Arcticgas
region
+
+
+
+
No ecological information, subsidiary of Gazprom and NOVATEK
As we can see from the Table 3 environmental review was done by 14 companies
out of 21 (67%), 14 companies have environmental policies (67%), 15 companies have
environmental programmes (71%), 13 companies have environmental management
systems (62%), 13 companies held environmental audit (62%), 17 companies present
their environmental statements (81%), and 12 companies have verification and
registration (57%).
2.3 Environmental practices of oil and gas companies against the Sustainability
Reporting Guidelines
The interesting question is if the use of a voluntary standard assessment system for
environmental reporting could help mitigate the damage caused by oil and gas companies
to developing nations.What level of data reporting by these companies is needed to allow
the assessment of environmental practices? To answer these ques-tions, we evaluate the
environmental practices of several oil and gas companies against the Sustainability
Reporting Guidelines issued in 2006 by the Global Reporting Initiative (GRI), also
known as ‘G3’ [Alazzani].
The GRI was established as a voluntary co-operative initiative in late 1997 by the
Coalition for Environmentally Responsible Economies.Its aim is to provide a
61
standardized and generally accepted sustainability reporting framework. The first set of
formal SustainabilityReporting Guidelines was published in June 2000. The GRI
framework is globally recognized as the most widely used sustainability reporting tool;
the performance indicators listed there in are used to measure and report an
organization’s economic, environmental, and social performance, in what is also known
as ‘triple bottom line’or ‘People, Planet, Profit’ reporting (GRI, 2012). So, we choose
several oil and gas companies for detailed analysis [Alazzani].
We assessed to what extent the companies followed the GRI Sustainability
Reporting Guide-lines. We chose the GRI indicators because they provide the most
comprehensive reporting framework of principles, standard disclosures, indicators and
reporting protocols, augmented by a series of sector specific supplements and resource
documents. The guidelines cover three dimensions: environment, economic, and social.
We focused only on the environment dimension [Alazzani].
We found that reasonable efforts were made to disclose environmental
performance indicators, particularly those relating to theprotection and restoration of
habitats, greenhouse gas emissions, and significant spills. However, none of the
companies disclosed information on the percentage of their products that are sold, or
onthe percentage of their packaging materials that are reclaimed bycategory. We conclude
that the GRI Sustainability Reporting Guidelines provide a robust tool for reporting
comprehensive progress concerning issues relating to environmental concerns raised by
amultitude of stakeholders [Alazzani].
Companies selected for this study were chosen by the following criteria: they are
within oil and gas industry; they are top Russian companies, that participated in the
Environmental rating held by the CREON group; they have made a formal commitment
to consider the environment. The selected companies were:
- Sakhalin Energy Investment Company Ltd. (Sakhalin Energy-2) is developing
the Piltun-Astokhskoye oil field and the Lunskoye gas field off the north-eastern coast of
Sakhalin. Its activities include production, transportation, processing, and marketing of
oil and natural gas. The company operates under the Production Sharing Agreement
(PSA) signed between Sakhalin Energy and the Russian Federation (represented by the
RF Government and Sakhalin Oblast Administration) in June 1994. This Agreement was
the first PSA in Russia [sakhalinenergy.ru].
62
The company pursues the goal of not harming people, protecting the environment
and contributing to sustainable development. This attitude is beneficial to the residents of
Sakhalin and other key stakeholders. The Russian Federation and Sakhalin Oblast receive
numerous benefits from the Sakhalin-2 project, including billions of dollars in
investments,
high
local
employment,
contracts
for
Russian
businesses,
etc
[sakhalinenergy.ru].
Health, Safety, Environment (HSE) and Social Performance (SP) management is
an integral part of the entire corporate management system. Sakhalin Energy is guided in
its HSE and SP activities by the following fundamental policies: Sustainable
Development Policy; Commitments and Policy on Health, Safety, Environment and
Social Performance adopted in 2001 and updated in 2013; Health, Safety, Environment
and Social Performance Management System; and HSE and Social Action Plan
[sakhalinenergy.ru].
- Gazprom views its mission as ensuring a reliable, efficient and balanced supply
of natural gas, other energy resources and their derivatives to consumers. Gazprom’s
strategic goal is to establish itself as a leader among global energy companies by
diversifying sales markets, ensuring reliable supplies, improving operating efficiency and
fulfilling its scientific and technical potential [gazprom.ru].
Gazprom holds the world’s largest natural gas reserves. The Company’s share in
the global and Russian gas reserves amounts to 17 and 72 per cent respectively. Gazprom
accounts for 11 and 66 per cent of the global and national gas output correspondingly. At
present, the Company is actively implementing large-scale gas development projects in
the Yamal Peninsula, the Arctic shelf, Eastern Siberia and the Russian Far East, as well as
a number of hydrocarbon exploration and production projects abroad [gazprom.ru].
Gazprom’s EMS encompasses various management levels ranging from the
Company’s Board of Directors to subsidiary headquarters and facilities. The EMS is
deployed at 36 of Gazprom’s wholly-owned subsidiaries specialized in exploration,
production, transmission, storage and processing of gas and gas condensate, as well as
investment activities. The economic and environmental effect of Gazprom’s
Comprehensive Environmental Program (2011–2015) totaled some RUB 44.6 billion
[gazprom.ru].
63
- Oil and gas producer Surgutneftegas is one of the largest companies in the
Russian oil sector. Over many years, the company has been leading the industry in terms
of exploratory and development drilling, as well as the number of production wells
brought on stream. The company was the first in Russia to develop the complete cycle of
gas production and processing, gas-based power generation, and petrochemical
feedstock. Divisions of the company are involved in the whole range of prospecting and
reservoir management operations, construction of facilities, environmental safety, and
process automation [surgutneftegas.ru].
Environmental management structure of OJSC “Surgutneftegas” functions as a
part of integrated management system of the Company. Application of the environmental
management system mechanisms provides the Company´s activity for achieving of its
main goal in the field of the environment protection: systematic increase of ecological
safety of the production by implementing comprehensive ecological programs
[surgutneftegas.ru].
Constant monitoring of environmental performance and control of its compliance
with laws and regulations and corporate standards is an integral part of the environmental
management. At the same time, particular attention is paid to increasing of personnel
awareness and competence level and ensuring that each employee realizes one´s role in
environmental protection activity of the Company [surgutneftegas.ru].
- LUKOIL is one of the major international oil and gas companies that accounts
for more than 2% of the world's oil production and around 1% of the proven hydrocarbon
reserves. While having the full production cycle, the Company exercises full control over
the whole production chain — from oil and gas production to petroleum product sales.
The Russian Federation accounts for 88% of hydrocarbon reserves and 83% of
hydrocarbon production, with the main activities concentrated in four federal districts,
including the Northwestern, Volga, Urals and Southern Federal Districts [lukoil.ru].
Sustainable development objectives are integrated into the general business
strategy and achieved as part of the target programs and development plans developed for
specific business segments.
While developing and approving plans, budgets and
investment programs, the Board of Directors takes into account the objectives outlined in
the Environmental Safety Program of the LUKOIL Group Organizations, as well as in the
Policy and Functional Strategy for Personnel Management, and in the charity and
64
sponsorship programs. Achievement of strategic objectives is monitored at the strategic
and operative levels [lukoil.ru].
- Salym Petroleum Development N.V. (SPD) is a Joint Venture set up in 1996 with
a view to develop the Salym group of oilfields in Western Siberia. SPD shareholders on a
50:50 basis are Shell Salym Development B.V. and Gazprom Neft. SPD has come to a
region which has for many years been the heartland of the Russian oil industry. Major
Russian oil companies operate here. These are staffed with highly skilled oil
professionals and have an abundant experience of working in tough Siberian climate
conditions [salympetroleum.ru].
Environmental protection is an underlying principle in SPD’s operations. Our
environmental programs and projects are generated pursuant to the requirements of the
Russian
environmental
legislation
and
international
environmental
standards
[salympetroleum.ru].
SPD’s success in environmental activities has been acknowledged by relevant
regional state authorities as well as independent auditor companies. SPD is a winner of
the regional contest ‘Best Environmentally Safe Oil & Gas Producing Enterprise of
Yugra’ in 2014 and 2016. At the 7th All-Russia Conference ‘Ecology and Production.
Outlook For Development Of Economic Framework For Environmental Protection’,
following the results of 2012, our company was included in the list ‘100 Best
Organizations of Russia. Ecology and Environmental Management’[salympetroleum.ru].
- The Sakhalin-1 Project, operated by Exxon Neftegas Limited, is one of the
largest single international direct investments in Russia and an excellent example of how
advanced technologies are being applied to meet the challenges of the world’s growing
energy demand. Over its years of production operations, the multi-billion dollar project
has exhibited exemplary operational, environmental, and safety performance, and has
provided significant benefits to Russia and its people [sakhalin-1.ru].
Exxon Neftegas Limited Environmental Protection Policy is the policy of the
Sakhalin 1 Project and its operator, Exxon Neftegas Limited (ENL), to conduct its
business in a manner that is compatible with the balanced environmental and economic
needs of the Sakhalin 1 Project communities. ENL is taking the environmental
vulnerability of Sakhalin Island into consideration and believes that Sakhalin-1 resources
can be developed on the basis of principles of environmental responsibility, meaning the
65
prevention or mitigation of adverse impact through the use of carefully developed design
solutions and measures to avoid or mitigate impact. ENL is committed to continuous
efforts to improve environmental performance throughout its operations [sakhalin-1.ru].
- PAO NOVATEK is one of the largest independent natural gas producers in
Russia. The Company is principally engaged in the exploration, production, processing
and marketing of natural gas and liquid hydrocarbons and have 20 years of operational
experience in the Russian oil and natural gas sector [novatek.ru].
NOVATEK’s core producing assets are located in the Far North, a harsh Arctic
region with vast mineral resources and a fragile and vulnerable eco-environment.
Throughout all of its operations the Company is committed to environment protection. In
2015 environmental expenditures of NOVATEK, its subsidiaries and joint ventures
aggregated RR 776 mln. NOVATEK has implemented a corporate-wide Health, Safety
and Environmental (“HSE”) Policy and all of the Company’s principal subsidiaries and
joint ventures operate an Integrated Health, Safety and Environment Management System
(IMS), which comply with the international ISO 14001:2004 and OHSAS 18001:2007
standards. In 2015, NOVATEK successfully passed another IMS compliance audit
[novatek.ru].
- Gazprom Neft Group consists of more than 70 production, refining and sales
subsidiaries in Russia, neighbouring countries and further afield. The Company refines
approximately 80% of all the oil it produces, one of the highest ratios of all Russian
companies in the sector. Gazprom Neft is the third-largest oil company in Russia by
refining volume and fourth largest in terms of production. Gazprom Neft operates in
Russia’s major oil and gas regions: in the Khanty-Mansi and Yamalo-Nenets Autonomous
Districts and in the Tomsk, Omsk and Orenburg regions. The Company’s major refining
facilities are in the Omsk, Moscow and Yaroslavl regions, and also in Serbia.
Additionally it has production projects outside Russia — in Iraq, Venezuela and other
countries [gazprom-neft.ru].
The company’s environmental management system, fully compliant with
international ISO 14001 standards, has been in operation throughout the Gazprom Neft
Group of Companies since 2014, and is reviewed annually by an independent audit
organisation. The company’s compliance with ISO 14001:2015 standards was again
confirmed in 2016 [gazprom-neft.ru].
66
Published environmental information was collected from the companies’
sustainability reports (SR) or corporate social responsibility (CSR) reports. The main tool
used for analyzing the published data was content analysis, which is a “technique for
making inferences by objectively and systematically identifying specified characteristics
of messages” (Holsti, 1969).
We considered environmental practice and reporting as a single construct,in which
companies perform environmental activities and disclose such activities in their social
responsibility (SR/CSR) reports. We detected the presence (1) or absence (0) of certain
words and concepts in texts covering environmental practices and activities in corporate
disclosures within SR/CSR. The disclosure of related information was thus assumed to
reflect the environmental activities adopted by thecompany. Our evaluation of the eight
chosen companies’ environmental reports against the GRI guidelines is summarized in
Table 4. The GRI guidelines provide clear definitions for each indicator, which make it
easy and accurate to assess the companies’environmental performance. Furthermore,
coding was simplified because some companies provided an index that was crossreferenced withthe GRI indicators [Alazzani].
Table 4
GRI
indicators
Materials
used by
weight or
volume
Percentage
of materials
used that are
recycled
input
materials
Direct
energy
consumption
by primary
energysourc
e
Indirect
consumption
by primary
source
Energy
saved due to
conservation
Sakhali
n-2
Gazpro
m
Surgutnefteg
az
LUKOI
L
Salym
Petroleu
m
Exxon
Neftega
z
NOVATE
K
Gazpro
m Neft
0
1
0
0
0
0
0
0
0
0
1
0
0
0
0
0
1
1
1
1
1
1
0
1
1
1
1
1
0
1
1
1
1
1
1
1
0
1
0
1
67
and
efficiency
improvemen
ts
Initiatives to
provide
energyefficient or
renewable
energybased
products and
services, and
reductions in
energy
requirements
as a result of
these
initiatives
Initiatives to
reduce
indirect
energy
consumption
and
reductions
achieved
Total water
withdrawal
by source
Water
sources
significantly
affected by
withdrawal
of water
Percentage
and total
volume of
water
recycled and
reused
Location and
size of land
owned,
leased,
managed in,
or adjacent
to, protected
areas and
areas of high
biodiversity
value
outside
protected
areas
Description
of
significant
impacts of
activities,
products,
1
1
1
1
1
1
1
1
1
1
0
1
1
0
0
0
1
1
1
1
0
0
0
0
1
1
0
1
0
0
0
0
1
0
0
1
1
0
1
0
1
1
1
1
1
1
0
1
0
1
1
1
1
1
1
1
68
and services
on
biodiversity
in protected
areas and
areas of high
biodiversity
value
outside
protected
areas
Habitats
protected or
restored
Strategies,
current
actions, and
future plans
for
managing
impacts on
biodiversity
Number of
IUCN Red
List species
and national
conservation
list species
with habitats
in areas
affected by
operations,
by level of
extinction
risk
Total direct
or indirect
greenhouse
gas
emissions by
weight
Other
relevant
indirect
greenhouse
gas
emissions by
weight
Initiatives to
reduce
greenhouse
gas
emissions
and
reductions
achieved
Emissions of
ozonedepleting
substances
by weight
1
1
0
1
1
1
1
1
1
1
0
1
0
1
0
0
1
1
0
0
1
0
0
0
1
0
1
1
1
1
1
1
1
0
0
0
0
0
0
0
1
1
1
1
1
1
1
1
1
1
0
1
1
0
0
0
69
Nox, Sox,
and other
significant
air emissions
by type and
weight
Total water
discharge by
quality and
destination
Total wight
of waste by
type and
disposal
method
Total
number and
volume of
significant
spills
Weight of
transported,
imported,
exported or
treated waste
deemed
hazardous
under the
terms of the
Bazel
Convention
Annex I, II,
III, VIII<
and
percentage
of
transported
waste
shipped
international
ly
Identify,
size,
protected
status, and
biodiversity
value of
water bodies
and related
habitats
significantly
affected by
the reporting
organizaton's
discharges of
water and
runoff
Initiatives to
mitigate
environment
al impacts of
products and
1
1
1
1
1
1
1
1
1
1
1
1
0
0
0
0
1
1
1
0
1
1
1
1
1
1
1
1
0
1
0
0
1
1
1
0
1
0
0
0
1
1
1
1
0
1
0
1
1
0
0
0
0
1
0
1
70
services, and
extent of
impact
mitigation
Percentage
of products
sold and
their
packaging
materials
that are
reclaimed by
category
Monetary
value of
significant
fines and
total number
of nonmonetary
sanctions for
noncompliance
with
environment
al laws and
regulations
Significant
environment
al impacts of
transporting
products and
other goods
and
materials
used for the
organization'
s operations,
and
transporting
members of
the
workforce
Total
environment
al protection
expenditures
and
investments
by type
Total
environment
al items
disclosed
1
0
0
0
0
0
0
0
1
1
1
0
1
1
1
1
1
0
1
0
0
1
0
0
1
1
1
0
0
0
0
0
28
24
18
18
17
14
12
11
In our assessment of the eight oil and gas companies’ environmental reports
against the GRI indicators, their reported environmental performance was scored between
11 and 28 (out of a maximum score of 30). The highest level on environmental
71
performance was reported by Sakhalin Energy (Sakhalin-2); the lowest by Gazprom
Neft. The remaining companies scored between 12 and 24. In order to get a better
understanding we looked at the environmetnal activities that were most and least
commonly practiced by the companies. We found that the following three
environmentally responsible practices were implemented: habitats protected and
restored; monetary value of significant fines and total number of non-monetary sanctions
for non-compliance with environmental laws and regulations. By contrast we found that
almost all companies disclosed information about: Percentage of products sold and their
packaging materials that are reclaimed by category, possibly because this requirement is
not applicable to them.
Content analysis of the environmental reports of the eight most environmentally
responsible oil and gas companies we selected indicates that they made reasonable efforts
to disclose their environmental performance inaccordance with the GRI Sustainability
Reporting Guidelines. These guidelines appear to provide a robust and readily available
tool for reporting comprehensive progress concerning all aspects of environmental
activities. The voluntary adoption of the guidelines by a vast majority of the oil and gas
companies increases transparency, credibility and comparability in sustainability
reporting. Governments and professional bodies should support the adoption of these
international reporting standards, and third-party assurance adds value or credibility to
the reports of those companies that have adopted it. Our research is limited in that we
adopted a case study approach, examining the reports of only a few companies; therefore,
our conclusions may not be representative of the general group or population. In addition,
during scoring, environment indicators can be fallible and may be some errors can occur
by scoring activity that should not be scored, or omitting activity that should be scored.
Conclusion on the second chapter
The functioning of the EMS as a dynamic system is especially important in the
implementation of investment projects in the oil and gas industry because it is connected
with high-risk and environmental hazards, affecting virtually all components of the
environment. The great length and scale of production facilities, such as pipelines,
involve a wide range of groups and organizations whose interests are affected by start-up
72
and implementation of the investment cycle. The stage of construction makes different
social and environmental impacts, as it includes a primary, destructive implementation of
foreign technical systems in natural systems and well-established way of local people.
This process brings a transition to the new man-made landscapes, and adaptation of the
population to the new conditions. Design and creation EMS can prevent, reduce or
minimize such effects at the preparation phase of the project.
In Russia the investment activity is one of the types of economic activity that is
not supported by environmental legislation standardized requirements that take into
account the specification of the preparation and implementation of investment projects,
making it difficult to follow the provisions of the law.
Recommendations on the creation and implementation of environmental and social
aspects management and EMS in the oil and gas investment projects:
- firstly, you need a standardized procedure for determining the areas of
responsibility of the customer and contractors to ensure the environmental safety of oil
and gas investment projects that would regulate the responsibilities of organizing EMS
level of investment contracts and tender documents;
- secondly, you need a single methodological approach to the identification of
environmental aspects of the project that will be used during the environmental impact
assessment (EIA) on the construction and operational phases, and in the process of EMS
at these stages;
- thirdly, organizational interaction between customer and contractors during the
construction phase is fundamentally different from the operational phase, when
constantly functioning operating organization works with the same initial list of
environmental aspects and has the ability improve the EMS tools and reach significant
results in improving the environment;
- fourthly, it is necessary to establish requirements for corporate monitoring and
control functions from the customer that acquire a different structure and the importance
of the implementation of investment projects.
The best way to the efficient functioning of the environmental management of
investment projects can be defined as the management of environmental aspects, carried
out at all stages of the project with the help of the environmental and social assessment
through mechanisms of interaction with contractors and stakeholders. An important
73
condition of the organization of effective interaction is the regulatory and legal support at
corporate and institutional levels.
Environmental Responsibility of Oil and Gas companies in Russia was conducted
by the cooperative initiative by CREON Group and WWF Russia with participation of
National Rating Agency.
The most visible trend of the rating held in 2016 comparing to 2015 is the growth
of environmental responsibility and trasparency for most companies that can be seen on
the Table 2. The three rating leaders are Sakhalin Energy, Gazprom, and Surgutneftegaz.
Sakhalin Energy has improved its position from 2014 and 2015 and now is the leader of
the final rating, while Gazprom and Surgutneftegaz lost one position each. The best rating
dynamics were shown by Exxon NL, Total PPP, LUKOIL, and Zarubezhneft. Also,
LUKOIL, and Zarubezhneft made public a large volume of information in the Internet
sites and their subsidiaries.
Fundamental improvements in Russian environmental management require
fundamental reshaping of Russian institutions.
This includes establishing
more
competitive real-market relations rather than virtual economic ones, establishing a rule
of law, decreasing corruption significantly, implementing a tax code that is transparent
and does not penalize environmental compliance, and attracting foreign direct
investments that provide management and technological improvements rather than what
is often perceived to be second-rate technology and lower levels of environmental
protection. It also likely requires instilling in businesses and individuals a sense of
environmentally responsible behavior.
From the Table 3 we can see we found out that environmental review was done by
14 companies out of 21 (67%), 14 companies have environmental policies (67%), 15
companies have environmental programmes (71%), 13 companies have environmental
management systems (62%), 13 companies held environmental audit (62%), 17
companies present their environmental statements (81%), and 12 companies have
verification and registration (57%).
We evaluated the environmental practices of several oil and gas companies against
the Sustainability Reporting Guidelines issued in 2006 by the Global Reporting Initiative
(GRI), also known as ‘G3’.
74
Companies selected for this study were chosen by the following criteria: they are
within oil and gas industry; they are top Russian companies, that participated in the
Environmental rating held by the CREON group; they have made a formal commitment
to consider the environment. The selected companies were: Sakhalin Energy Investment
Company Ltd. (Sakhalin Energy-2), Gazprom, Surgutneftegas, LUKOIL, Salym
Petroleum Development N.V. (SPD), Exxon Neftegas Limited, NOVATEK, Gazprom
Neft.
Published environmental information was collected from the companies’
sustainability reports (SR) or corporate social responsibility (CSR) reports. The main tool
used for analyzing the published data was content analysis; we objectively and
systematically identified specified characteristics of messages.
In our assessment of the eight oil and gas companies’ environmental reports
against the GRI indicators, their reported environmental performance was scored between
11 and 28 (out of a maximum score of 30). The highest level on environmental
performance was showed by Sakhalin Energy (Sakhalin-2); the lowest by Gazprom
Neft. The remaining companies scored between 12 and 24.
We found that the following three environmentally responsible practices were
implemented: habitats protected and restored; monetary value of significant fines and
total number of non-monetary sanctions for non-compliance with environmental laws and
regulations. By contrast we found that almost all companies disclosed information about:
Percentage of products sold and their packaging materials that are reclaimed by category,
possibly because this requirement is not applicable to them.
75
III
GUIDELINES
FOR
IMPLEMENTATION
OF
ENVIRONMENTAL
MANAGEMENT IN THE OIL AND GAS INDUSTRY
3.1 Environmental management tools and techniques
According to the data that is given in the tables above we picked the Russian oil
and gas companies with the highest environmental performance. These companies are:
Sakhalin Energy, Gazprom, Surgutneftegaz, LUKOIL, Salym Petroleum Development,
Exxon Neftegaz Limited, NOVATEK, and GAzprom Neft. Their indicators allow us to
look closer at the way of implementation of environmental management at these
companies. Studying of the information given on the web sites of these companies gives
us a chance to highlight the basic principles of environmental management that they have
been using.
76
Publication of an environmental policy statement is only one part of a multi-stage
process that companies undertake in order to assess their environmental performance and
to manage their environmental impacts. Often companies also employ a range of tools
that frequently draw on the management control practices used in other aspects of the
firms’ operations. Sometimes these practices are formalised as an explicit environmental
management system. Though the EMSs of different organisations may be different
widely in details, they usually include the following parts – henceforth referred to as the
key elements: an environmental policy statement; an initial review; environmental
objectives and targets; implementation procedures; internal monitoring and auditing; and
internal reporting. For a company wishing to implement these elements it is important to
establish and maintain a system of environmental management appropriate to the
enterprise [OECD].
Some firms choose self-designed EMSs that are tailored to the individual
company requirements and problems. Others use or adapt environment management
standards. The advantages of tailor-made management systems on the one hand and
standardised systems on the other have been discussed in relation with other areas of
management, and there appear to be similar discrepancies with regards to EMSs.
Standards may enhance the credibility of firms’ environmental measures if the
management standards are widely accepted, and standardised systems provide quick
and relatively inexpensive access to advanced management techniques. On the other
hand, a potential drawback of standardised systems is that they may not be entirely
suited
to individual company
needs. The degree of coverage of environmental
management system varies from company to company [Sadler].
Various tools have been developed to assist companies in implementing their
EMSs, including Environmental Impact Assessment, Environmental Accounting and
Auditing and Life Cycle Assessment. These tools may be employed for assessing and
monitoring
environmental
impacts
(impact assessment is mandatory
in many
countries), setting a course of action and providing means of communication. For
instance, auditing is an important tool for assuring company managers of the accuracy
of information and at the same time contributing to the external credibility of
companies’ environmental commitment.
77
Companies that have committed themselves to a high standard of environmental
management also want to guard themselves against being tainted by possible shortfalls
in the environmental performance of their suppliers and contractors. Supply chain
auditing
has therefore emerged, providing corporate buyers with comprehensive
environmental information on the products, components or materials they produce [OGP,
1994].
Consistent with the regulations of the the Russian Federation and requirements of
regulatory authorities, where applicable, site specific environmental and compliance
documents should be prepared and submitted for each campaign prior to operations
commencing, taking into consideration all relevant sensitivities and detailing special
conditions or restrictions that apply. The operating company’s environmental policy,
management
structure, procedures
and
compliance
programme
(and, where
applicable, those of its contractors) should be included. Mechanisms to measure
performance should be clearly outlined and designated liaison channels should be
identified, as appropriate [OGP, 1994].
If we talk about operating in the Arctic territories regular and routine consultations
should be arranged with the authorities and local communities including indigenous
groups, fisheries committees, tourism and marine agencies to ensure full awareness of
operating plans and programmes. Plans for such consultations should be prepared before
operations start and should be included within a Stakeholder Engagement Plan,
Communications Plan or similar document. Specific consultations may be required for
the different phases of the petroleum life cycle [OGP, 1994].
While environmental management practices are becoming more widespread, the
demand for high quality environmental reports is mounting. Companies are facing
ever-greater pressure to publish a thorough report on their environmental performance,
including quantitative information going back several years and reference to negative
experiences. A company implementing the environmental management system should
consider undertaking a certain amount of environmental reporting and provide the
public and employees with adequate and timely
information on the potential
environment, health and safety impacts of the activities of the enterprise, and
engage in adequate and timely communication and consultation with the communities
directly affected [OECD].
78
An increasing number of oil and gas companies publish information on the
environmental impact of their activities. However, in the absence of internationally
agreed reporting standards, the content of such reports ranges from rudimentary
pieces of information to full-scale sustainable development reporting. So, it is
important to make information on environmental performance available to the public in
the future, whether in a stand-alone environmental report or included in the company’s
annual report.
In the absence of an agreed standard for environmental reporting, oil and gas
companies make their own choices as regards the scope and depth of their reporting.
Four
indicators of differences
between the
contents and scope of
existing
environmental performance reports are: the publishing of quantitative data; whether
performance is compared with targets, whether the report is verified by a third
party; and whether the report includes environmental cost accounting.
If a company’s environmental performance report is to be comparable with those
of other companies (and with the company’s own past) it is essential that quantitative
information is made not only public but also that data is presented in a comparable way,
i.e. reporting on same indicators, same units and presenting accurate data. The majority
of the companies that were examined in this study do include this data in their
performance reports.
An interesting development over the last years has been a tendency for companies
to highlight the economic value of their environmental efforts and the business
integration of their environmental management systems. One of the visible results has
been a co-evolution of environmental performance reporting with environmental cost
accounting – that is accounting for the financial and non-financial costs and benefits
of pursuing a company’s environmental policies.
Companies face public expectations that they take steps to ensure the adequacy
of arrangements for the health and safety of their employees, and the effectiveness of
these arrangements is an important contributor to the overall safety performance of
the company.
Over the years, these efforts have become progressively more
formalised and structured through the introduction of legislation, the application of
risk assessment and audit procedures
to
a widening
range of hazards, and
the
development of standards and guidance. The issue of occupational health and safety is
79
important for the implementation of the EMS, not least as several of the environmental
provisions of our study refers to companies’ responsibility to uphold environment,
health and safety standards as closely related issues. Oil and gas companies should
maintain
contingency
plans
for preventing, mitigating and controlling
serious
environmental and health damage from their operations [OECD].
Like environmental management systems, occupational health and safety systems
come in two shapes, namely off-the-shelf standards and systems tailored to individual
companies. However, a comprehensive occupational and safety system commonly
includes the following elements: the formulation of an occupational health and safety
policy; the identification of risks and legal requirements; objectives, targets and
programmes that ensure continual improvement; management activities to control
occupational health and safety risks; monitoring of the system’s performance; and
continual reviews, evaluation and improvement of the system.
Considering the significance of sound environmental management we are
now in agreement that that environmental management is worth investing. Now
there is a need for a company or an organization to know how to go about it. In
order to undertake any task one needs appropriate tools. This chapter describes a
range of
environmental
management
tools
-
tools that
a
company
or
an
organization can use to effectively manage its environmental and social affairs.
There is a set of certain tools that remain usuful and efficient for all kinds of
companies, these tools include: environmental management systems, environmental
auditing, environmental labeling, life cycle assessment, environmental indicators,
environmental policies, eco-balances, environmental reporting, environmental charters.
According to the practicies of the oil and gas companies that gained the top places
in out ratings we can identify certain requirements for developing an EMS. In order to
develop an EMS that meets the requirements a company must take the following
steps:
- first it must produce an environmental policy that contains commitments to
legislative compliance and to continually improving its environmental performance;
- next it must set targets relating to these commitments and devise a
programme
for meeting
these
targets.
80
Targets
for
improving
environmental
performance should be based on a comprehensive review of its environmental
activities;
- it must then take the measures necessary to implement the programme;
- having implemented the programme, it needs to check that it has been
successful in meeting its targets. Corrective action must be taken in instances
where this is not the case. The EMS must be audited periodically to check it is
functioning as it should;
- finally, the firm needs to carry out a management review of the EMS,
making any changes
necessary in light of
the
audit results
and changing
circumstances. Having met its first set of targets the firm must set itself a new set
of targets so as to meet its policy commitment to continual improvement.
Environmental auditing is a tool for checking whether a firm or an
organization is doing what it should be doing. For instance a legislative
compliance audit checks that those activities of the firm covered by environmental
legislation (i.e. what it is doing) actually comply with that legislation (i.e. what it
should be doing). An environmental audit will tell a firm or an organization
whether its waste management practices (i.e. what it is doing) conform with the
industry sector best practice guidelines it has committed itself to following.
Environmental indicators allow a firm to measure both its environmental
performance and its efforts to improve its performance. Indicators can be used
within an environmental management system to check that a firm has met the
targets it is required to set for itself, but can equally well be used in firms that
have not developed an EMS.
A company eco-balance records the various raw materials, energy, resources,
products and wastes entering, held within and leaving a company over a specified
period of time. In other words, it provides a record of a company’s physical
inputs, stock and outputs. Once a company knows exactly what is coming in and
going out, it can begin to assess the particular environmental impacts of those
inputs and outputs. An eco-balance therefore enables a firm to undertake the
comprehensive environmental review of its activities required by ISO 14001 and
EMAS and to go on and set targets for improving its environmental performance
[Sadler].
81
Life cycle assessment (LCA) is a tool for identifying and assessing the
various environmental impacts associated with a particular product. LCA takes a
“cradle to grave” approach looking at the impacts of the product throughout its life
cycle i.e. from the raw materials acquisition (the “cradle”) through its production
and use to its final disposal (the “grave”). LCA allows manufacturers to find ways
of cost-effectively reducing the environmental impact of a product over its life-cycle
and to support their claims about the environmental impact of their products
[Sadler].
Environmental labeling schemes award an environmental label to those
products that are judged to be less harmful to the environment than others within
the same product group. Firms that wish for their products to be considered for a
label must apply to the scheme organizer. To be awarded a label, a product has to
meet a set of environmental criteria drawn up for its product group by the labeling
scheme organizer. The criteria relate to the complete product life-cycle and are
drawn up using LCA. They are set so that only a certain percentage of products
within a group, say 20-30%, can meet them. Hence environmental labels can be
used as marketing tools as they signify that a product is one of the least
environmentally harmful products in its group [Sadler].
Having undertaken various environmental management initiatives to improve
its environmental performance, an oil and gas company may wish to communicate
the results of these initiatives to the outside world. One way of doing this is by
publishing an environmental report. Issuing an environmental report can improve a
firm’s public image and lead to improved relationships with stakeholders. To date,
it is mainly large companies that have issued such reports but small and medium
scale companies may also find environmental reporting a useful tool.
There are a number of environmental charters and guidelines to which a
firm/company or an organization can subscribe in order to demonstrate its
commitment to responsible environmental management [Sadler].
Producing a policy is an important first step towards achieving effective
environmental management. Setting out your aims and intentions with respect to
the
environment
is
an
important
first step
towards
achieving
effective
environmental management. Having done this, a company can then take the
82
measures necessary to achieve them. By taking appropriate measures i.e. by
carrying out effective environmental management, a company can gain the benefits
that such management brings.
An environmental
policy
provides
important
information
to
external
stakeholders on company’s aims and intentions with respect to the environment.
Having an environmental policy can enhance company’s reputation with external
stakeholders such as customers and the local community. It shows that an
organization have made a start on dealing with environmental performance.
However, to make sure a company’s reputation isn’t tarnished in any way, it is
important that all stakeholders see evidence that a company is taking action to
realize the aims and intentions set out in environmental policy.
Large organizations are becoming increasingly concerned to ensure that the
environmental management of their suppliers is of an acceptable standard, and it is
absolutely true about companies working in the oil and gas industry. It is therefore
becoming increasingly common for such organizations to require that their suppliers
have an environmental policy. As a responsible company, a company may not have
the luxury of sitting back and deciding whether or not it wishes to produce an
environmental policy. If a major customer requires a company to produce a policy,
it will need to do so or risk losing business. Rather than waiting until they are
asked, it makes sense to prepare a policy in its own time. That way a company is
prepared for any customer that requires it to have one.
Before a company begins to develop a policy it is important to get the
backing of the company’s senior and executive management. This will help to
ensure that the policy is effectively implemented once it has been written. One way
of making management’s commitment visible is to have the policy signed by, for
instance, the company chairman/women and/or the chief executive officer/managing
director. There are a number of sources of useful information that could be used
when developing a policy: Other companies’ environmental policies, company's
employees, other relevant stakeholders, environmental management system schemes,
environmental charters.
An environmental policy is a broad statement of aims and intentions. In
order to achieve these, a company may wish to set itself detailed objectives and
83
targets. However these are generally not included in the policy document itself. In
the beginning, a company may not have done the necessary investigation into its
environmental activities to be in a position to formulate objectives and targets.
And even if it has, the fact that there may be a large number of such objectives
and targets and these will change from year to year, would mean that including
them in the policy document would make it unnecessarily long and complicated. It
is best to separate the statement of aims and intentions from the specific measures
a company intends to implement in order to realize them.
Having developed the environmental policy, it is important to ensure that all
key stakeholders
receive copies.
These stakeholders
may
include
customers,
suppliers, shareholders, regulators and key persons and organizations in the local
community. A company should also be ready to post out the policy to those people
that hear about it and approach you for a copy. One can also publish the policy in
the company’s annual report and website, and all staff should receive a copy of the
policy and the company should ensure that all staff understands the policy and
their role in implementing it.
It would be wrong to view the production of an environmental policy as an
end in itself. A policy has to be implemented i.e. action has to be taken to
achieve its aims and intentions. If a company’s policy is to become a practical
reality, a company will need to: be familiar with those elements of its activities,
products and services which affect the environment; set itself specific objectives
and targets relating to these elements especially those that have or could have a
significant impact on the environment. The aim here is to find ways of improving
its environmental performance that also improve its business performance; take
action to meet these objectives and targets; measure its environmental performance
to check its objectives and targets have been met.
To do this, it will be necessary for a company to manage its environmental
affairs in a systematic way. The following sections describe various environmental
management tools that will allow a company to do this and so gain the benefits
that such management can bring.
3.2 Application of environmental management system
84
The elements of ISO 14001 that is broadly applied in the companies which
received the highest points in our ratings are organized around 5 initial steps, each of
which is briefly described below.
Step 1 - Environmental policy
A firm drafts a policy setting out its intentions in relation to the
environment. The policy must contain commitments to: continual improvement,
prevention of pollution, compliance with relevant environmental legislation and
other legal requirements. ISO 14001 defines “continual improvement” as the
process of enhancing the environmental management system in order to achieve
improvements
in
environmental
performance in
line with
the
organization’s
environmental policy.
Step 2 – Planning
The firm must then set itself objectives and targets relating to its policy
commitments and devise a plan to meet these objectives and targets.
At step 2 the firm must do is to identify what the standard calls its ‘environmental
aspects’. These are defined as, ‘elements of an organization’s activities, products or
services which can interact with the environment’. Once its environmental aspects
have been identified, the firm must establish which of them are ‘significant’ i.e.
which of them have a significant impact on the environment. To identify its
significant environmental aspects, the firm needs to undertake an ‘environmental
review’. It should be emphasized that the environmental review is the foundation
upon which the rest of the management system is built and should be conducted as
thoroughly as possible.
Given that the firm has made a commitment in its policy to comply with
legal and other requirements, the firm must establish what these actually are. This
is done during the environmental review. The firm should consider how it can
keep track of changes in legal requirements so it can remain in compliance.
In order to meet its commitment to legal compliance a firm must set itself
the objective of identifying and correcting any non-compliance. In order to meet
its policy commitment to continual improvement and prevention of pollution, the
85
firm must set objectives and targets in relation to its significant environmental
aspects.
Having set its objectives and targets the firm must now devise a programme
for achieving them. The programme must state the time-frame in which the
objectives and targets are to be achieved and identify the people responsible for
achieving them.
Step 3 - Implementation and operation
Having devised its plan, the firm must then put in place the various elements
necessary for its successful implementation and operation.
At step 3 role, responsibility and authority of everyone involved with the EMS
must be defined. Management must provide the resources necessary for the
implementation of the EMS. (Resources include human resources, technology and
financial resources). The firm’s management must appoint someone who is
ultimately responsible for ensuring that the EMS is established, implemented and
maintained in accordance with the requirements of ISO 14001.
All staff whose work may create a significant impact on the environment must
receive the appropriate training. The firm must make them aware of: the importance of
conformance with the requirements of the EMS; the significant environmental impacts of
their work activities and the environmental benefits of improved personal performance;
their roles and responsibilities in the successful functioning of the EMS.
Staff performing tasks which can cause significant environmental impacts
must be deemed competent to do so. (Competence is assessed on the basis of their
education, training and/or experience).
The firm must establish and maintain suitable procedures for communication
between various parts of the firm regarding the EMS. It must also make provisions
for receiving and responding to relevant communications about its EMS from
external parties.
The firm must establish and maintain information in paper or electronic
form to: describe the elements of the management system and their interaction,
provide direction to related documentation.
86
The firm must establish procedures for controlling all the documents required
by ISO 14001 to ensure, for instance, that they can be located and that they are
periodically reviewed, revised as necessary and approved by authorized personnel.
The firm is required to identify those of its activities that are associated
with the significant environmental aspects covered in its objectives and targets. The
firm then needs to produce documented operating procedures for these activities to
cover situations where, if no procedures existed, the objectives and targets might
not be met.
The firm must also establish procedures relating to the significant aspects of
goods and services used by the organization. All relevant procedures must be
communicated to suppliers and contractors.
The firm must establish and maintain procedures: to identify potential
accident and emergency situations, to respond to these situations should they arise,
and for preventing and mitigating the environmental impacts that may be associated
with them. The firm must periodically test these procedures where practicable and
review and revise them where necessary particularly after the occurrence of
accidents or emergency situations.
Step 4 - Checking and corrective action
Having implemented its plan, the firm must then check to see it has been
successful in meeting its objectives and targets. If any have not been met, then
corrective action must be taken. The entire management system must be periodically
audited to see that it meets the requirements of the standard.
At step 4 firm must establish and maintain documented procedures to monitor and
measure on a regular basis, those areas covered by the objectives and targets in
order to see if the objectives and targets have been met. The firm must also
establish
and
maintain
a documented
procedure
for
periodically
evaluating
compliance with relevant environmental legislation and regulations.
The organization must establish and maintain procedures for the identification,
maintenance and disposal of its environmental records. These records must include
training records, the results of audits and management reviews.
The firm is required to establish and maintain a programme and procedures
for periodic environmental management system audits to be carried out. The audit
87
seeks to determine whether or not the EMS: conforms with the requirements of the
ISO 14001; has been properly implemented and maintained.
The audit programme and procedures should cover: the activities and areas
to be considered in audits, the frequency of audits the responsibilities associated
with managing and conducting audits, the communication of audit results, auditor
competence, how audits will be conducted.
Step 5 - Management review
The firm’s
management
must
periodically
review
the environmental
management system to ensure it continues to meet the needs of the firm. The
review must address the possible need for changes to the firm’s policy, objectives
and other elements of the environmental management system in light of the
following: the audit results, changing circumstances, and the firm’s commitment to
continual improvement.
The commitment to continual improvement and prevention of pollution will
mean
that
new objectives
and
targets
will
have
to
be
set and
changing
circumstances, for instance, the introduction of new products and processes, will
mean that new procedures need to be written and new roles and responsibilities
designated.
Not just anyone can verify that a firm’s environmental management system
and environmental statement meet the Regulation’s requirements. The verification
must be done by an independent accredited environmental verifier.
The oil and gas industry designs its facilities for extremes of weather in areas
where it operates and this is also true for Arctic conditions. As it pursues its Arctic
strategy, the oil and gas industry is monitoring closely the future changes in the Arctic
and will adopt appropriate practices to ensure safe design for foreseeable conditions
[OGP, 2002].
New economic enterprises have emerged and now dominate the Arctic industrial
landscape. These are typically the mineral resource based industries that include oil and
gas development and mining. These enterprises are highly capital intensive, large scale
and have their decision-making centralised in centres far removed from the local peoples
of the Arctic [OGP, 2002].
88
Physical conditions in the Arctic with regard to oil and gas development are
changing. Changes in weather and oceanographic patterns have had consequences over
various timescales for example for sea ice cover, sea level, iceberg calving, coastal
erosion and permafrost integrity. Seasonal loss of ice cover has been projected on various
time scales. Changes in the maritime environment have implications for the construction
and operation of offshore facilities, and the associated export routes for hydrocarbons.
Changes to the terrestrial environment may influence the construction and operation of
landbased facilities [OGP, 2002].
Examples of arctic challenges: remote location; changing ecology; icebergs;
prolonged darkness; mobile pack ice; severe storms; permafrost; earthquakes; sensitive
environment; deep water; climate change; short operating season [OGP, 2002].
Traditionally, Arctic peoples lived seasonally or permanently in small settlements.
However, since the arrival of Europeans and other non-aboriginal groups, there has been
a steady migration from smaller settlements into larger centres. For example, in Alaska,
over a third of the population of that State now lives in and around Anchorage. Despite
the growth in urban centres, a percentage of Arctic people still reside in smaller
communities and practise a subsistence lifestyle based on hunting and trapping, whaling,
f ishing and reindeer husbandry [SDWG].
Other sources of jobs and income include tourism, which is growing in many
regions of the Arctic. Originally tourism was based on sport hunting and f ishing but this
has now expanded to ecotourism. Other contributions to the local economy may come
from the sale of traditional arts and crafts [OGP, 2002].
While people are connected to the modern market economy by cash and wages,
they still rely heavily on traditional lifestyles, acquiring food from the land and sea,
sharing and bartering food and other goods and services. Hunting, fishing, herding and
gathering continue to be of major significance to indigenous peoples of the Arctic in
providing food, social relationships and cultural identity [OGP, 2002].
While people are connected to the modern market economy by cash and wages,
they still rely heavily on traditional lifestyles, acquiring food from the land and sea,
sharing and bartering food and other goods and services. Hunting, fishing, herding and
gathering continue to be of major significance to indigenous peoples of the Arctic in
providing food, social relationships and cultural identity [SDWG].
89
Oil and gas exploration and development can involve power generation,
transportation and infrastructure development, together with the consequent influx of
people. The intensity of such activity can produce a variety of primary, secondary and
cumulative effects which vary with time and distance from the development site. Effects
may sometimes be far removed from the source, for example by contamination of
seasonal watercourses, or by changes in land-use, caused by access routes. It is important
to consider immediate, short-term primary impacts as well as long-term, secondary and
cumulative impacts from separate, but linked operations[OGP, 2002].
At each stage in the development of an oil and gas exploration and production
project, there are specific procedures and actions that can be implemented to prevent
potential harm to the environment and minimise unavoidable impact[OGP, 2002].
Oil and gas companies now place considerable emphasis on building partnerships
and integrating stakeholder concerns into the overall project management cycle. Industry
Associations at international level (eg OGP, IPIECA) and at country level (national oil
industry associations) have an important role in representing their respective membership
in industry discussions with major stakeholders. These associations are also able to
advise members on key stakeholders [OGP, 2002].
At an early stage, operators who intend to be active in the Arctic should identify
the relevant pan-Arctic and local stakeholders who are likely to have interests or
concerns, who may be a source of reliable data and who may have input on likely hazards
and risks. An operator should endeavour to understand the goals and needs of each
stakeholder group and the communications methods that will be appropriate for each,
with due regard for the distances, remote locations, seasonal activities and languages of
the Arctic people. A Communications Plan, including Stakeholder Engagement, can
provide a useful strategic guide for the operator’s personnel.
Within the Arctic regions, the operators must take into account the special needs of
indigenous peoples and should refer to industry guidance in establishing their
engagement strategy [IPIECA].
Exploratory drilling operations produce a variety of discharges, wastes and
emissions. The primary discharges include: drilling muds and cuttings; cementing wastes;
wash water; well completion and stimulation fluids; and production testing wastes.
Associated solid and domestic wastes include excess drilling chemicals and containers,
90
construction materials (pallets, wood, etc), process water, fuel storage containers, power
unit and transport maintenance wastes, scrap metal and domestic and sewage wastes. By
volume and weight, spent drilling mud and cuttings comprise the majority of the waste
and effluent produced [IPIECA].
The effective management of all emissions and discharges begins with pollution
prevention. Pollution prevention refers to the elimination, change or reduction of
operating practices that result in discharges to land, air or water. This principle should be
incorporated into the design and management of E&P facilities and the planning of
associated activities. If elimination of a discharge is not possible, then minimising the
amount of waste or effluent generated should be investigated. Responsible discharge
management may be accomplished through hierarchical application of the practices of
source reduction, reuse, recycling, recovery, treatment and responsible disposal
[IPIECA].
Operators should incorporate adequate preventive measures and systems to deal
effectively with minor operational incidents. Maintaining effective response plans and
spill response capabilities is essential. The response plans should be based on the risk,
location, seasonal conditions, volume and type of potential spill. Most oil spills from
offshore oil and gas facilities are small and are often handled locally. If the spill is such
that it cannot be handled locally, then an enhanced response is required. This enhanced
response could be part of a district, national or regional plan, but all plans should
follow a similar layout and ensure a smooth transition from one level to the next. This is
often referred to as a tiered response. By design, additional tiers are activated as the
capability of each tiered response is exceeded [IPIECA].
Response strategies will be determined by the prevailing environmental conditions
at the time of the incident.
An incident assessment and reporting process should be implemented. The process
should review, analyse and document the situation, including conditions, progress and
prognosis, and should focus on the following where appropriate: status and safety of
personnel, including
safety on ice; status of facility and source; site assessment;
weather conditions (light, air and water temperatures, wind speed and direction, and
tides, if appropriate) [IPIECA].
91
After studying all the information that was published by the oil and gas companies
themselves and the conclusions that were made in the previous chapters we can evaluate
the steps for establishing and implementing an EMS at the oil and gas companies some of
which may also work in the Arctic:
1. Obtain commitment from top management.
2. Define responsibilities, appoint management representative(s), establish EMS steering
committee, develop implementation plan, and undertake initial training on EMS.
3. Undertake an initial environmental review (optional).
4. Identify environmental aspects, legal and other requirements; determine significant
aspects; formulate environmental policy; establish environmental objectives, targets and
programs; estimate the possible environmental risks.
5. Implementation and operation - develop documentation and processes.
6. Develop processes for monitoring, measurement, corrective and preventive action.
7. Develop and deliver EMS training within the organisation.
8. Establish an internal audit program, including training; conduct initial internal audit to
evaluate conformity to requirements of ISO 14001, including evaluation of compliance.
9. Follow up internal audit with improvements to system.
10. Conduct initial management review of EMS.
11. Implement improvements from management review.
Step 3 (initial environmental review) may provide benefit to an organisation
looking at environmental management for the first time and usually covers the following:
identification of environmental aspects; identification of legal requirements and other
requirements
to which the
organisation subscribes; examination of existing
environmental management activities, controls and procedures, including those
associated with procurement and contracting; evaluation of previous emergency
situations and accidents.
Conclusion on the third chapter
According to the data that is given in the tables above we picked the Russian oil
and gas companies with the highest environmental performance. These companies are:
Sakhalin Energy, Gazprom, Surgutneftegaz, LUKOIL, Salym Petroleum Development,
92
Exxon Neftegaz Limited, NOVATEK, and GAzprom Neft. Their indicators allow us to
look closer at the way of implementation of environmental management at these
companies. Studying of the information given on the web sites of these companies gives
us a chance to highlight the basic principles of environmental management that they have
been using.
Various tools have been developed to assist companies in implementing their
EMSs, including Environmental Impact Assessment, Environmental Accounting and
Auditing and Life Cycle Assessment. These tools may be employed for assessing and
monitoring
environmental
impacts
(impact assessment is mandatory
in many
countries), setting a course of action and providing means of communication. For
instance, auditing is an important tool for assuring company managers of the accuracy
of information and at the same time contributing to the external credibility of
companies’ environmental commitment.
Like environmental management systems, occupational health and safety systems
come in two shapes, namely off-the-shelf standards and systems tailored to individual
companies. However, a comprehensive occupational and safety system commonly
includes the following elements: the formulation of an occupational health and safety
policy; the identification of risks and legal requirements; objectives, targets and
programmes that ensure continual improvement; management activities to control
occupational health and safety risks; monitoring of the system’s performance; and
continual reviews, evaluation and improvement of the system.
There is a set of certain tools that remain usuful and efficient for all kinds of
companies, these tools include: environmental management systems, environmental
auditing, environmental labeling, life cycle assessment, environmental indicators,
environmental policies, eco-balances, environmental reporting, environmental charters.
The elements of ISO 14001 that is broadly applied in the companies which received
the highest points in our ratings are organized around 5 initial steps: developing and
environmental
policy, planning, implementation
and
operation, checking
and
corrective action, management review.
The oil and gas industry designs its facilities for extremes of weather in areas
where it operates and this is also true for Arctic conditions. As it pursues its Arctic
93
strategy, the oil and gas industry is monitoring closely the future changes in the Arctic
and will adopt appropriate practices to ensure safe design for foreseeable conditions.
After studying all the information that was published by the oil and gas companies
themselves and the conclusions that were made in the previous chapters we evaluated the
steps for establishing and implementing an EMS at the oil and gas companies some of
which may also work in the Arctic.
Conclusions
This study explores the ways of implementation of environmental management
system at the Russian oil and gas enterprises. This thesis contributes to a better
understanding of this system by providing calculation model to evaluate the most
environmentally friendly oil and and gas companies in Russia, and it evaluates the
ultimate way of implementation of EMS at the companies which also may work in the
Arctic.
94
The study shows that the top companies of our rating have increased their
environmental performance and energy efficiency during the recent years. It also shows
that the environmental management system has acted as a means for environmental
responsibility by improving employees’ knowledge about process with significant
environmental impact and led to identification and evaluation of environmetal risks in the
companies’ production. EMS has led to some upgrades of production equipment, which
has contributed to increasing energy efficiency.
Regarding the social aspects, it was found that the companies’ EMSs act as a
means for social responsibility by increasing the employees training and education in
health and safety issues which helps to develop staff and minimise risks.
In the area of economical responsibility, this study has a limited amount of data.
However, since economical responsibility is about dealing with environmental aspects in
an economical manner, for example eco-efficiency. This thesis shows that companies
have managed to increase the efficiency of their resources that makes them economically
responsible and focusing on the increse of their income.
Sonce the companies have reduced their environmental impact and energy
consumption and supported better social practices, the implementation of EMS can be
seen as a contributing factor towards companies’ progress and sustainable development.
The increasing environmental performance also tells us about the preparedness of the
major Russian oil and gas companies to start oil and gas exploitation in the Arctic.
The main goal of our study was the evaluation of an ultimate implementation of
environmental management at the oil and gas companies, and so this goal has been
achieved. The basic steps are:
1. Obtain commitment from top management.
2. Define responsibilities, appoint management representative(s), establish EMS steering
committee, develop implementation plan, and undertake initial training on EMS.
3. Undertake an initial environmental review (optional).
4. Identify environmental aspects, legal and other requirements; determine significant
aspects; formulate environmental policy; establish environmental objectives, targets and
programs; estimate the possible environmental risks.
5. Implementation and operation - develop documentation and processes.
6. Develop processes for monitoring, measurement, corrective and preventive action.
95
7. Develop and deliver EMS training within the organisation.
8. Establish an internal audit program, including training; conduct initial internal audit to
evaluate conformity to requirements of ISO 14001, including evaluation of compliance.
9. Follow up internal audit with improvements to system.
10. Conduct initial management review of EMS.
11. Implement improvements from management review.
We also would like to note that the lack of available data for some of the studied
variables. Some companies had good and open disclosure on mostly all variables that this
thesis looked into, and some were rather undisclosed on all parts. One could argue that
this could lead to a gap in the validity of the information presented in this thesis, but we
would like to stress the importance of “no reference” in this sense. The topic is
Environmental Management Frameworks in the Oil Industry, and though not addressed
much in this thesis, part of what could be seen as relevant is transparency in
environmental disclosure. As the main methodological part of this thesis was to collect
disclosed data related to EMS.
When it comes to the categories selected, we do recognize alternative and other
categories that could have been used for the study. For this thesis relatively specific
categories and variables were selected because of the comparative needs in relation to the
aim of the paper. If more non-specific categories were selected it would have been
compromising the comparability. As an example it is worth mentioning how companies
often publish highlights of their EMS performance and structure.
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4) Staib, R., Environmental Management and Decision Making for Business, 2015
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96
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