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Sustainability in the oil and gas industry

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The role of the oil and gas industry in sustainability is of utmost importance for the future of humankind. For over a century, O&G industry has provided the world with abundant, affordable, and reliable energy, which has been instrumental for the global economic growth, the development of technology and the improvement in health and the way of life that we all enjoy today. However, the lack of regulations and knowledge regarding the direct and indirect impacts on the environment and people have resulted in adverse consequences and severe damage to the planet.

The development we have achieved has come at a cost, and it is now imperative that we change our strategies and approaches for a more inclusive and sustainable ones.

With increasing awareness of the urgent need for sustainable strategies and practices, it is necessary to ensure that the industry adopts a more environmentally conscious approach that prioritises sustainability, minimising harm to the planet, recovering and enhancing the natural environment.

As the world moves towards a more sustainable future, the oil and gas industry can play a crucial role, as a leading sector that has the capacity, experience and technology to improve its environmental performance by: reducing air emissions, managing resources, energy and water efficiently, minimising waste, and recovering natural habitats. All of these working with safety, transparency and good governance, respecting human rights and enhancing peoples' lives.

So, applying the principle of sustainability in the Oil and Gas Industry is much more than reducing the Carbon footprint in their operations. It is to reduce costs and maximise profits by investing on digitalisation, Carbon Capture and Storage CCS and reducing environmental impacts on air (GHG emissions), water and soil. It is to get involved with communities, improving their lives with education and decent jobs. Sustainability means to address economic, social and environmental externalities, it is to invest in natural based solutions, such as reforestation and restoring landscapes and habitat lost during operations. With a concerted effort towards sustainable practices, we can ensure that future generations inherit a cleaner, healthier planet having the same opportunities that we had.[1]

Sustainability in the oil and gas industry can be defined as the practice of managing available resources, investments, and technologies to maintain and optimize operations with an emphasis on safety, reliability, efficiency, environmental, and social awareness. This approach considers the mutual connection between the economic, social, and environmental factors; seeking to strike a balance between the needs of industry, planet, and stakeholders. The oil and gas industry can improve sustainability through measures such as carbon capture and storage, improving efficiency, and reducing greenhouse gas emissions[2].

Sustainability and CO2 reduction[3]

Environmental sustainability

Environmental sustainability in the O&G industry is simply to minimise the environmental impacts on air, water, soil and ecosystems.

Implementing effective Environmental Management Systems (EMS)

It is to implement effective Environmental Management Systems (EMS) that ensure that the entire organisation is being more eco-efficient by using less water, energy and resources, protecting the natural environment and biodiversity that could be affected by the industry's operations.

It requires auditing, monitoring and verification of targets and continuous improvement.

Reduction of greenhouse gas emissions (air emissions)

We can all reduce our air emissions with a proper journey management that involves the selection of appropriate fleets, vehicles and fuel for operations, employees, contractor and suppliers. Applying simple standard practices of eco-driving it is possible to reduce even 10% of fuel with no investment.

Methane is the second largest polluter that is contributing to the global warming phenomenon and is 25 times more potent than carbon dioxide. The largest sources of methane are the oil and gas systems, the livestock enteric fermentation, and landfills[4]. Therefore, the oil and gas industry have a role in reducing methane emission by preventing methane leaks into the atmosphere. This can be achieved by using better equipment with an improved maintenance schedule and surveillance technology such as Internet of Things (IoT) sensors and drones to detect leaks. Flaring is also an issue that oil and gas companies implement to get rid of cheap gases which are uneconomical to produce in remote areas. This practice could be reduced by the optimization of separators and using the gases in enhanced oil recovery methods to increase oil retention while also storing the unwanted gases.

Using renewables resources

Furthermore, oil and gas operations tend to be self-sourcing in their energy consumption, which means they use oil and gas to supply their own energy, which opens a potential to diversify their energy use by implementing renewable energies in their operations[5].

Improving efficiency

Oil and gas operations can be energy demanding which places an importance in efficiency. This optimization in operations can be achieved by the adoption of advanced technologies such as the IoT sensors which monitor performance, detect leaks and equipment failures. Combining the use of IoT with machine learning and artificial intelligence technology is a critical aspect in finding potential sites of improvement in efficiency for oil and gas operations[6].

Carbon sequestration

Carbon sequestration in the oil and gas industry is a promising technology that seeks to help the reduction of carbon dioxide released into the atmosphere. Carbon dioxide can be captured from industrial processes by the use of amines. Furthermore, the captured gases could then be injected into an underground formation to be stored permanently. It can also be used in enhanced oil operation by injecting it into an oil reservoir to enhance the properties of the hydrocarbons to increase overall recovery while also storing carbon dioxide into the formation[7].

Water efficiency

Water efficiency includes water use minimisation, water recycling, water separation and treatment and minimisation of wastewater discharged.


Social sustainability

Workplace safety

Despite being one of the largest sectors in the global economy. The oil and gas industry is also infamous for its inherent hazards associated with workplace safety. This calls for strict standards and safety protocols to protect the workers. The standards vary depending on the sector of the oil and gas industry but most of the guidelines have a fire safety protocol, occupational safety, and process safety that must be always followed. There are also regulatory bodies that work to ensure that these standards are met and assist companies in meeting these standards[8]. Furthermore, the industry must always strive to improve their safety functions and have a proper way for employees to communicate any safety concerns to management.

Community engagement and stakeholder relations

The oil and gas industry operations can be damaging to their surroundings and the globe, despite their importance, which can cause backlash against these operations. Thus, this places an emphasis on oil and gas companies to recognize their potential impact on the various stakeholders and to address their concerns to avoid backlash that may limit future work and halt current operations. Therefore, a Thorough understanding of the impact on stakeholders is essential for oil and gas operations[9].

Spence[9] (2010) provides a list of potential stakeholders in the oil and gas operations:

  • The oil and gas company
  • Host community
  • Local and national government
  • Financial institutes
  • Investors
  • Regulatory authorities
  • NGOs
  • Academia
  • Media
  • Foreign governments

Maintaining a positive relationship with the stakeholders is essential for the sustainability of the oil and gas industry. However, it is extremely difficult for companies to please all the associated parties as they are numerous and some of them are not clear about their demands. Therefore, the company must be socially responsible in their approach to ensure that the stakeholders’ concerns, demands, and issues are satisfied[9].

To maintain a positive relationship, there are three key lessons that should be incorporated according to Spence[9] (2010):

  • Stakeholder engagement: Companies should establish a communication network for the stakeholders to listen to their complaints, issues, and concerns and properly address them.
  • Embracing extra-legal standards: Regional legal standards may not always be sufficient; thus, companies could turn to global standards to ensure that that they are not violating stakeholders.
  • Partnership Initiatives: The company could partner with a government entity or an NGO to try and develop proper standards that address issues which the legal system may overlook.

Economic sustainability

The oil and gas companies must ensure that during their operations, the stakeholder concerns are met while also turning in a profit. This is a challenge that oil companies face and companies must do their best to reach a balance between their needs, their stakeholders, and the environment. In addition, for the oil field to become more sustainable, it needs investment to be able to increase efficiency by employing better equipment and digitize their fields.

Diversification

Oil and gas companies are currently looking to diversify their income so that they become more sustainable economically as a company by moving away from oil and gas only and to energy companies. The companies could use their expertise in related fields such as geothermal, carbon capturing and sequestration, and hydrogen transport and storage. This will help these companies become more sustainable in the future and allows them to establish themselves away from hydrocarbons so that they can meet the net zero demands of the global institutions[10].

Stakeholder assistance

The stakeholders also have a say in the economic sustainability of companies by choosing to subsidize or increase investment for companies that follow certain operations. Governments have the power to subsidize companies that use carbon dioxide injection as to make it more economical for such operations which will help create innovations for carbon sequestration and increase the willingness of companies to conduct such operations. The local communities could allow certain companies in their neighborhood under strict conditions that they use the most efficient technology and try to incorporate carbon sequestration. This concept is known as the social license to operate which can be revoked despite support from other stakeholders[11]. Additionally, investors can also shape the oil and gas industry by following the Environmental, Social and Governance (ESG) initiative. The ESG is a set of guidelines that is followed by investors to assess the socioecological performance of a company before investing[12].

References:

  1. http://www.terra-dev.org/blog/the-role-of-oil-gas-in-sustainability
  2. Lee, Nicholas. May 2019 “Editorial Comment: Sustainability: The Latest Creation in Advancing Ideas.” Accessed March 27, 2023. https://www.hydrocarbonprocessing.com/magazine/2019/may-2019/columns/editorial-comment-sustainability-the-latest-creation-in-advancing-ideas.
  3. Dashti, A. 2023. "Sustainability and CO2 Reduction."
  4. EPA. 2022. “Importance of Methane.” Overviews and Factsheets. Importance of Methane. 2022. https://www.epa.gov/gmi/importance-methane.
  5. “Environmental Sustainability in the O&G Industry.” 2022. January 27, 2022. https://copas.org/environmental-sustainability-oil-gas-industry/.
  6. Uyanik, Ilyas, and Avinash Wesley. 2019. “Next Generation Gas Emission Monitoring System.” In Day 2 Tue, March 19, 2019, D021S008R002. Manama, Bahrain: SPE. https://doi.org/10.2118/195015-MS.
  7. Gupta, Subodh. 2023. “Carbon Sequestration: The Ignored Promise of the Non-Utilization of Carbon Route.” In Day 1 Wed, March 15, 2023, D011S007R002. Calgary, Alberta, Canada: SPE. https://doi.org/10.2118/212815-MS.
  8. “Health & Safety.” n.d. Accessed March 27, 2023. https://www.api.org/oil-and-natural-gas/health-and-safety.
  9. 9.0 9.1 9.2 9.3 Spence, David B. 2010. “Corporate Social Responsibility in the Oil and Gas Industry: The Importance of Reputational Risk.” Chicago-Kent Law Review 86 (1).
  10. Pott, Brent, 2021 “SAP BrandVoice: How The Oil And Gas Industry Is Building A Sustainable Future.” Forbes. Accessed March 27, 2023. https://www.forbes.com/sites/sap/2021/10/23/how-the-oil-and-gas-industry-is-building-a-sustainable-future/.
  11. Snashall, David, and Sabrina Genter. 2017. “How to Lose Social License to Operate: A Case Study of the NSW Coal Seam Gas Industry. What Happened and What Can Be Learned.” In Day 3 Thu, April 06, 2017, D041S011R002. Kuala Lumpur, Malaysia: SPE. https://doi.org/10.2118/185263-MS.
  12. Martin, Linda F., and Nicolai Massyn. 2023. “The Safety Professional’s Role in Environmental, Social & Governance Initiatives.” Professional Safety 68 (03): 22–26.