What Does Sustainability Mean for Oil and Gas?
After my October column, I heard from some members concerned about my plan to promote sustainability. They equated the term with a “green” agenda, and with stopping the use of fossil fuels. While oil and gas are finite, not “renewable” resources, they are still crucially important to building a more sustainable world and will play a major role for a very long time, not only for global economic growth but also for global social development and human lifestyle enhancement.
In 2015, the United Nations (UN) adopted an ambitious agenda for transforming our world by 2030. They established 17 sustainable development goals (SDGs) that address some of the world’s most pressing challenges, such as poverty, hunger, health, education, clean water, and affordable energy. According to the UN, these 17 SDGs are integrated and indivisible, and they balance the three dimensions of sustainable development: the economic, social, and environmental.
My focus during my term as SPE president is to highlight how the oil and gas industry contributes to all three of these main concepts. I believe this can be achieved by mapping some of these SDGs on what we do daily and explain how our industry is contributing broadly to the economy, society, and the environment.
The impact of oil and gas on the global economy is evident. According to BP’s World Energy Outlook for 2018, oil and gas supply around 53% of the world’s energy needs, especially in the transportation, chemicals, and manufacturing sectors. This percentage is not expected to change much through 2040, with the total volume of oil and gas demand expected to increase. Exporting countries and those supplying their own energy needs benefit from our industry through gross domestic product (GDP) and economic growth. But even importing countries see significant benefit from the oil and gas powering their economies.
Let us just imagine for a second what would happen to Japan, South Korea, China, and even Western Europe without oil and gas. The majority of the energy needs for these sectors currently, and for the long term, are met largely by oil and gas, without which their economies would be negatively affected and their lifestyle would diminish. These countries rely on the commodities we produce to grow their GDP, develop their societies, and improve the lifestyle of their citizens. With the abundance, mobility, and affordability of oil and gas, the world economy not only thrives but also fully supports continued growth, bringing more prosperity.
The social challenges facing the world, which can be seen in many of the UN SDGs, reflect issues our industry has been addressing since we first discovered resources in far-flung parts of the globe. When our industry discovers and develops hydrocarbon resources, we help countries to develop socially by creating local jobs, enhancing the local content, and building infrastructure such as roads, schools, hospitals, water wells, housing, and communities.
Most large companies across our industry have significant social engagement programs in the areas where they operate. Most are committed to doing the right things for their communities, not just the most cost-effective or easiest solution. Many of these companies voluntarily provide sustainability reports detailing how they respond to the challenges of the communities where they operate; these reports can typically be found on a company’s website. Our industry is making significant investments to address the social challenges facing our world.
Many SPE sections and university chapters around the world have impressive social responsibility programs. Our members are donating blood, planting trees, cleaning beaches, conducting back-to-school drives, and visiting orphanages. I expect to have the honor to visit many of them and participate in their social programs. The social consciousness of the people throughout our industry is impressive.
The environmental challenge is no different. There are significant initiatives across our industry to improve environmental performance. We start with the implementation of best-in-class environmental practices from the exploration phase and go through the development phases of drilling, production, management, monitoring, and ending with decommissioning. We recognize that the environmental impacts of our operations have far-reaching consequences and that improvement is always possible.
The International Association of Oil & Gas Producers (IOGP) is an excellent industry-supported initiative to document and share such knowledge and best-in-class practices among all oil and gas producers. Through this initiative, countries and companies starting their oil and gas activities can benefit from the experiences of others.
Carbon dioxide (CO2) and climate change concerns are our “Achilles heel” because many politicians and the public believe that fossil fuels are the only sources of CO2 to blame. Hence, our image is negatively presented, and our license to operate is being limited. I am proud to say that we are taking a leadership role in many areas to contribute to solutions. For more than a decade, the US Environmental Protection Agency and producers have worked together on a voluntary methane emission reduction program that has produced measurable reductions from upstream and pipeline operations.
A recent study published in Science, titled “Global Carbon Intensity of Crude Oil Production,” shows that some countries, such as Denmark, Saudi Arabia, Bahrain, Thailand, and Ghana, have very low carbon intensity—very low methane and CO2 emissions for getting oil out of the ground and delivered to the refinery. In addition to showing the efficiency of these countries, it highlights that among countries with higher carbon intensity, the No. 1 reason is gas flaring—something that can typically be reduced or eliminated economically as the gas is captured for use or sale. The World Bank Global Gas Flaring Reduction Partnership reported that global flaring of natural gas declined by 5% in 2017 even as oil production rose by 0.5%.
The International Energy Agency has confirmed the progress our industry has made in reduction of CO2 and methane emissions. Our industry has made a critical contribution to CO2 reduction through the substitution of clean-burning natural gas for coal and liquids in power generation, and to a lesser extent, in transportation.
Another great initiative that shows our industry is fully engaged to address the environmental challenge is the Oil and Gas Climate Initiative (oilandgasclimateinitiative.com). OGCI is a voluntary, CEO-led initiative taking practical actions on climate change. Its members leverage their collective strength to lower the carbon footprints of energy, industry, and transportation value chains via engagement, policies, investments (more than $1 billion), and technology deployment.
Our industry is indeed a key factor of the UN sustainability model, contributing to most of the 17 SDGs. What we need to do, as an industry, is develop tools and analytics to globally quantify the oil and gas industry’s contributions to these SDGs. IPIECA (the global oil and gas industry association for environmental and social issues) is developing a global reporting framework for sustainability reporting. When adopted by the oil and gas industry, it can be used by researchers and scientists to develop analytics to quantify the impact of our industry on the 17 SDGs. I am in discussion with energy research groups in several universities around the world to join this effort and help to develop advanced analytics/correlations that provide transparent reporting on industry sustainability performance. I believe we have a positive story to tell.
Despite all of the work our industry has done, there are still geographic areas where information is limited to show industry’s efforts to address the economic, social, and environmental challenge. I would like to encourage all oil and gas companies, universities, and research institutes around the world to document our successes and address the ongoing challenges in their geographical areas. I also urge members to join the SPE Sustainable Development Technical Section (currently more than 1,500 professionals) and to use SPE sustainability events and webinars to learn, share knowledge, and present the results of their studies.
I must end this article by saying that sustainability is not a new concept in SPE. Our board started discussing the concept of sustainability in 2010. The Sustainable Development Technical Section was created in 2015. As we developed our most recent strategic plan, we modified our vision for the future to include sustainability. SPE’s vision is to:
Advance the oil and gas community’s ability to meet the world’s energy demands in a safe, environmentally responsible, and sustainable manner.
I want to encourage members around the world to think about the many ways our industry contributes to a more sustainable world, to join the great effort undertaken by SPE and the industry to communicate our contributions, and to spread our positive stories in their communities to create an image of our industry that better reflects the value we create.
What Does Sustainability Mean for Oil and Gas?
Sami Alnuaim, 2019 SPE President
01 December 2018
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