Progress and Challenges for Health, Safety, and the Environment in Exploration and Production

Lyn Arscott, SPE, Consultant

Introduction

A computer-based survey was taken of the program committee members of the first Asia Pacific Conference on Health, Safety, and Environment (HSE) in Oil and Gas Exploration and Production, which was held in Kuala Lumpur during 19–21 September 2005. The committee members, experts in their fields, were asked to express their opinions on the progress of the industry on HSE issues over the past 5 years and the effort that the industry should make over the next 5 years. This was the second time this survey has been conducted. The first time was at the SPE Seventh International Conference on HSE held in Calgary during 29–31 March 2004, and the results were reported in the July 2004 issue of JPT.1 The Kuala Lumpur results and the Calgary results are presented in the tables below. It should be noted that informal surveys were taken of the program committee members of the previous six SPE international conferences on HSE starting in 1991, but they were not in the same format as the two conferences mentioned above, so a quantitative comparison is not possible.

Methodology

The committee members were asked to complete a web-based questionnaire with the following questions:

How would you rate the progress made by the industry in the following subjects over the past 5 years (excellent, good, moderate, poor, very poor)?
How would you rate the effort that the industry should make in the next 5 years (much more effort, more effort, same effort, less effort, much less effort)?
How would you rate the effort regulators should make in the next 5 years?
How would you rate the effort that nongovernmental organizations (NGOs) should make in the next 5 years?

The method of scoring and ranking is summarized in the appendix. A summary of the status of the industry programs is shown in Table 1, with the full results in Tables 2–4.

Comparison of Calgary and Kuala Lumpur Results

When comparing the two surveys, it is important to note that the Calgary conference was an international conference and the committee members represented a global viewpoint. The Kuala Lumpur conference had an Asia Pacific focus, so it is expected that committee members reflected a regional focus although many of them had wide international experience. The 18-month difference in time between the surveys is probably not enough to see significant change in industry progress or future focus. Given the above considerations, there was a good correlation between the opinions of the members of the two program committees. Only nine questions out of 47 showed a difference in score exceeding 15%. Of particular note in the survey on Industry Progress, the Kuala Lumpur committee members gave a much higher score than the Calgary committee members on Engagement and Training of Employees, Reporting of Environmental Performance, Implementation of Sustainable Development Programs, and Engagement of Stakeholders, but gave a lower score for Implementation of HSE Systems. For the survey on Future Effort, the Kuala Lumpur committee members gave much more importance to the Application of Technology to Improve HSE Performance than the Calgary committee members. The net result of these differences in scores means that, based on the Calgary results, Environmental Performance would move from maturing to mature and Engagement and Training of Employees would move from mature to maturing.

Comments on the Status of Industry Programs

The six issues in the first column of Table 1 are the highest-ranked items in the Progress list based on the results from Kuala Lumpur as shown in Table 2 and have been categorized as “mature,” while the six issues in the third column of Table 1 are a combination of the highest-ranked items in the Future Effort list in Table 2 and the lowest-ranked issues from the Progress list and have been categorized as “needs more effort.” The issues in the second column are primarily in between the other two categories and have been categorized as “maturing.”

1. Mature Programs. The issues in the first column of Table 1 represent many years of industry effort. The implementation of HSE management systems has been an item of much attention for every SPE international HSE conference since the first one in The Hague in 1991. The management system2 of the OGP was introduced in 1994 and has been used as a guide for many companies. It is interesting to observe that both Management Systems and Engagement and Training of Employees were ranked at the top of the Progress list but at the bottom of the Future Effort list. However, a score in the 50s for future effort means between “same effort” and “more effort.” This is interpreted to mean that training and management systems are still important and their implementation should not backslide, but their maturity is such that there are additional issues that require increased attention from their historic baseline activity. Some companies (e.g., ExxonMobil and Chevron) have titled their management systems “Operational Excellence” to include a wider range of issues than just HSE to ensure that the operations are safe, reliable, efficient, and environmentally sound.

2. Maturing Programs. Within the industry, Safety Programs are regarded as more mature than Environmental Protection Programs and much more mature than Health Programs, so these three subjects appear in three different columns in Table 1. The special issue of Collaboration with Contractors to Improve Safety Performance is ranked seventh in progress but first in future effort, so it appears in the “maturing” category. The OGP global survey shows that contractor safety performance has made great progress in closing the gap with company employee safety performance.3 Approximately 70% of the oilfield labor force is contracted, and it is important for the operator and the contractor to coordinate HSE management systems. In comparison with the mature process of collecting global statistics for safety, the collection of global statistics for environmental performance is maturing slowly. Incidents of oil spills have been published,4 and individual companies have published their own environmental reports. The Global Reporting Initiative5 is finally getting more recognition since the publication of the Intl. Petroleum Industry Environmental Conservation Assn./American Petroleum Inst. report on Sustainability Reporting.6 The two issues of Development and Implementation of International Standards and Application of Technology to Improve HSE Performance are longtime objectives of the industry.

3. Needs More Effort. The low score for progress in Health Performance from Kuala Lumpur and Calgary is supported by similar responses from international conferences over the past 14 years. To bring more focus to the situation, OGP produced a report on Strategic Health Management7 in 2000, and OGP/IPIECA produced A Guide to Health Impact Assessments8 in 2005, but attempts to produce a global metrics report have been a struggle. Social Responsibility Programs were given a low score for progress and a high score for future development, which means that partnerships, stakeholder dialogue, anticorruption programs, and transparency are regarded as important challenges for the future. The OGP/IPIECA report on Key Questions in Managing Social Issues in Oil and Gas Projects9 presents a very good guide for managing such programs. The issue of Engagement of Stakeholders was marked higher in progress in both the Kuala Lumpur and Calgary surveys than Implementation of Social Responsibility Programs including Partnership, although it is an integral part of the latter issue. This means that much more needs to be done in developing and implementing social development programs than just opening dialogue with stakeholders. Similarly, Incorporation of Environmental Impact Assessments was scored higher than Management of Operations in Sensitive Areas, although the former is a major part of the latter. Again, this means that the industry is doing a better job in assessment but needs to do more in implementation.

Also given a low score for progress and a high score for future development was Implementation of Sustainability Concepts. Sustainable development10 is broadly defined as seeking the appropriate balance among economic, social, and environmental goals. This balance may differ among societies, depending on their current status of development. For example, developed societies are using more of their economic capital to rebuild environmental capital, while developing societies may be using more environmental capital to build their economic and social capital. Some examples of industry progress in sustainable development may be found in the IPIECA/OGP submission to the World Summit on Sustainable Development in Johannesburg in 2002.11

The challenge of Global Climate Change has been recognized in the industry for some time, and there are many examples of significant reductions in the emissions of greenhouse gases from reduced venting and flaring of produced natural gas and increased energy efficiency. The score on progress on this issue over the past 5 years was 27, or below moderate, but the score for the next 5 years is 69, meaning more effort is needed.

The implementation of Biodiversity Concepts was also given a low score of 24 (poor to moderate) for progress over the past 5 years but a fairly high score of 61 for future effort. A group of oil and gas companies have worked with some leading conservation NGOs over the past few years to form the Energy and Biodiversity Initiative,12 and they have produced an excellent guide to managing biodiversity. Some oil and gas companies such as Chevron and ExxonMobil have recently assigned senior employees to coordinate this effort within their companies.

Regulators

The respondents were mostly from industry, so the results in Table 3 offer some clear insights as to what the industry expects from the regulators over the next 5 years.

1. Regulations should be based on good science, and it is an obligation for industry to cooperate with governments to conduct the necessary research to provide that science.

2. There is a need for governments to cooperate with stakeholders to create a balance between prescriptive regulations and performance-based regulations and to be consistent with sustainable-development concepts. An excellent example of a performance-based regulatory system is the safety case system in the U.K. North Sea. In this example, the operator and the regulator agree on the required level of performance for reducing risk, and the operator then decides how to achieve that performance goal. Risk-based and performance-based systems are a challenge for regulators because the decision on whether an operator is in compliance requires a degree of judgment that, in turn, requires a high degree of training on the part of the regulators.

3. There is a need in the international regulatory community for consistency of regulations across international boundaries, equitable enforcement, and greater transparency. These objectives will help the anticorruption objectives of the industry. Many of the world’s major oil- and gas-producing countries are ranked very high in the corruption index developed by an NGO called Transparency Intl.13

NGOs

The results from Kuala Lumpur and Calgary shown in Table 4 were remarkably similar and called for more coordination among NGOs to contribute toward constructive dialogue with the public and to ensure that accurate data are supplied. This includes environmental and social assessments and cooperation with all stakeholders in determining the appropriate balance among the economic, social, and environmental aspects of sustainable development.

Acknowledgment

The author would like to acknowledge Paul Gerber of the SPE staff in Richardson for setting up the questions on the SPE website and providing a tabulation of the results.

References

Arscott, Lyn: Progress and Challenges for Health, Safety, and Environment in Exploration and Production, JPT (July 2004).
Guidelines to the Development and Application of Health, Safety and Environmental Management Systems, OGP report #6.36/210 July 1994. www.ogp.org.uk.
Safety Performance of the Global E&P Industry 2004 Data, www.ogp.org.uk.
Intl. Tanker Owners Pollution Federation (ITOPF) www.itopf.com/stats.html.
Sustainability Reporting Guidelines, GRI 2002, www.globalreporting.org.
Oil and Gas Industry Guidance on Voluntary Sustainability Reporting, IPIECA/API report April 2005.
Strategic Health Management, OGP, www.ogp.org.uk.
A Guide to Health Impact Assessments in the Oil and Gas Industry, IPIECA/OGP 2005.
Key Questions in Managing Social Issues in Oil and Gas Projects, IPIECA/OGP report #2.85/332, October 2002
Arscott, R.L.: Sustainable Development in the Oil and Gas Industry, JPT (August/September 2003).
Industry as a Partner for Sustainable Development, IPIECA/OGP report to the 2002 World Summit on Sustainable Development.
Integrating Biodiversity Conservation into Oil and Gas Development, The Energy Biodiversity Initiative, www.theebi.org.
2005 Corruption Perception Index, www.transparency.org.

Appendix

Description of Committee Members

Committee Base		Employment Affiliation
Health	19%	Operating Company	35%
Environment	42%	Contractor/Consultant	48%
Safety	39%	Academia	3%
		NGO	6%
		Government	6%

Scoring Methodology

To create a list in seriatim, responses were given the individual scores shown in Table 5, and the total score was normalized to make the maximum score equal to 100. For example, if all 28 respondents from the Kuala Lumpur survey marked excellent on a question relating to Progress, the total score would be 28x3=84, and this was then set to 100 by multiplying by 100/84, or 1.19.

If 10 respondents marked excellent, 10 marked good and 8 marked moderate on a question, the total score would be
(10x3)+(10x2)+(8x1)x1.19, or 69. Similarly, the Calgary results from 50 respondents were presented on a comparable basis with 100 as the maximum score possible. A normalized group score of say, 55, indicates that progress on that issue has been graded between moderate and good. It is recognized that this is not a rigorous indicator of a respondent’s opinion between excellent and good, but it allows a simple means to list the replies in some order of priority.

Lyn Arscott, SPE, is a consultant to the international oil and gas industry specializing in sustainable development. He was 1988 SPE President and was an SPE Distinguished Lecturer on the subject of sustainable development in the oil and gas industry in 2001–02. He is an Honorary Member of SPE and the American Inst. of Mining, Metallurgical, and Petroleum Engineers. From 1998 to 2001, he was Executive Director of the Intl. Assn. of Oil & Gas Producers (OGP). He is a past Chairman of the American Petroleum Inst. General Committee on Health and Environment and past Chairman of the Western States Petroleum Assn. committee on Environment, Health, and Safety. Arscott retired from Chevron Corp. in 1998, where his assignments included Senior Executive Consultant for Exploration and Production reporting to the Chairman of the Board and Corporate General Manager of Health, Environment, and Safety. He was a member of the Chevron Corporate Management Committee. He holds BS and PhD degrees in engineering from the U. of Nottingham, England.