Understanding sustainability in oil and gas

By John Royall, President & CEO, Gulf Energy Information

Sustainability in oil and gas is becoming increasingly important to the long-term viability of the industry. In fact, I believe it is becoming the most important issue for the global oil and gas industry—more about this later. To better understand what Sustainability in oil and gas means, what companies are doing, and what the most important issues are within Sustainability, we will first look at a survey that Gulf Energy Information conducted over its audiences in the upstream, midstream and downstream sectors.

Trends Among Companies

The survey found that just 49% of all companies canvassed had a Sustainability initiative. Another 22% were currently working on an initiative, and the other approximately 29% of respondents said their companies had no initiative and were not working on one.

We asked respondents if they viewed their own companies as leaders in Sustainability. Sadly, only 40% viewed their companies as leaders in Sustainability. In a later article, we will give the results of those companies named as Sustainability leaders.

For those companies with a corporate initiative, we asked whether their firms viewed Sustainability as a Competitive Advantage, as necessary because of Social Pressure, or as necessary because of investor pressure. A strong majority, 65%, said their companies viewed Sustainability initiatives as a Competitive Advantage.

 

Areas That Need Improvement                                                                                    

The survey asked in which areas the industry—irrespective of upstream, midstream or downstream—needed to improve.  The chart below shows the areas where the industry can show improvement, according to respondents.

Defining Sustainability in Oil and Gas

Technically, oil and gas are not sustainable as they are not renewable resources. In theory, one day, all the oil and gas could be used up.  Practically, we can use the term Sustainability with oil and gas, because they are abundant resources and will be around for a long, long time.

The term Sustainable in oil and gas has a very broad meaning.  Anecdotally, I have heard the term applied to the environment, safety, governance, social impact, and diversity. So, we asked our audience to tell us how they and their companies define Sustainability.

Answers varied, but most respondents included these elements: environmental impact and social impact.

The one answer that summed up best the definitions offered is as follows:

"Maximize cleaner oil and gas production and products, while minimizing impact on external environment and society."

Why I believe Sustainability is the Most Important Issue for our industry

A couple of weeks ago, I gave a presentation to the Women’s Global Leadership Conference on Sustainability. There were 1,000+ women—mid-level to upper-level management—in attendance. They represented all aspects of the industry. Based on the response to my presentation and the number of responses we got to the information, I would say it was a very prominent topic for those in attendance.

I started off the presentation with pictures of our recent vacation to Ireland. When my wife, Patty, and I were in Ireland this summer, the government announced its Climate Action Plan, which called for the total elimination of hydrocarbons by 2040. And that elimination extended to transportation, heating, cooling, power generation, and the agricultural sector—not only farm equipment but cattle and sheep.

I came across this interesting paragraph in an article explaining why cattle and sheep must be eliminated from the green hills of Ireland:

A sheep will emit nine farts a day, on average, with a methane emission of .02 g per fart. Over the course of the year, the average sheep will emit 1.4 cm of methane gas. In Ireland, there are approximately 4 million sheep, with the Irish Department of Agriculture's census estimating lower and the Irish Farm Journal estimating higher. 

You get the idea.

There is such a need to eliminate all hydrocarbons, according to the Irish government, that even those emitted by livestock must be addressed.  As we drove around Ireland, we heard impassioned arguments about how the Irish people must drastically alter their lifestyle for the sake of the environment.

Thank God, there were rational arguments on the other side coming through the radio. The use of fossil fuels is necessary for a modern and affluent society, and severe restrictions like those advocated by the Climate Action Plan would fall most severely on the poor and lower-income people. 

A better way forward is to make the argument for hydrocarbons, for a modern and affluent society. At the same time, our industry must do more to improve in the areas mentioned in the survey, specifically:

I would add to this list the need for cleaner fuels, for aviation, marine and land transport. 

Gulf Energy Information will be reporting on what companies are doing to further Sustainability in oil and gas through this regular blog, news articles, and an annual conference.

To find out more, and to receive information on the subject, please write to Sustainability@GulfEnergyInfo.com.

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