 Oil
and Gas
Introduction
The Oil & Gas sector delivers a range of products to end-users,
including fuel, electricity and derivatives of oil like plastics
and lubricants. Oil and gas companies, through their products, contribute
to the well-being and quality of life of society. Oil and gas production
and consumption will grow over the next few decades, with continued
risk of damage to biodiversity.
As the link between biodiversity and business investment is better
understood, the threshold for acceptable practice is raised and
the sector as a whole is expected to perform better.
Oil and gas exploration and production can have a wide range of
negative impacts on species and ecosystems such as soil, air and
water contamination, habitat fragmentation, deforestation and erosion.
For more detailed information on these impacts click
here.
Uses of and Impacts on Biodiversity
The industry is split between upstream (exploration and production)
and downstream (marketing and distribution) activities. Biodiversity
is primarily considered a business risk issue in terms of upstream
activities (seismic studies, drilling, construction, production,
maintenance and transportation) but in fact is affected by the whole
life-cycle of the industry:
Direct Impacts
Firstly, at the stage of exploration, oil & gas companies may
bring destruction to natural habitats through prospective drilling
activities.
Secondly, at the stage of production, oil & gas companies may
destroy the integrity of site level ecosystems, and cause pollution
in the surrounding area.
Thirdly, transportation of products, by land and sea, may generate
risks of pollution. Natural gas is highly flammable and leaks may
pose a major safety risk. Oil spills are known to be extensively
destructive; ingested oil can be toxic to animals resulting in their
death; a layer of oilon the sea surface blocks out light reducing
plant biomass, consequently creating a knock on effect up the food
chain as there is less food for fish and other animals.
Fourthly, the by-products of fuel use through burning contributes
to climate change, while the burning of plastics will produce toxic
pollution.
Indirect impacts
Increased economic and social activities in an area once unused
can result in immigration and spontaneous settlement, leading to
land conversion for agriculture and building of infrastructure.
Settlement and land conversion will alter the natural biodiversity
of that area.
Many of the direct primary impacts of an oil or gas project can
be reduced (if not fully overcome) through careful management and
technology. Some of the secondary impacts present a larger challenge
to industry and to society as a whole.
Sustainable Development
Sustainable development requires balancing both social and environmental
concerns. Oil companies that recognise their corporate social responsibility
face a challenge in maximising social developments while minimising
environmental impacts.
The environmental challenges for oil and gas companies are especially
acute because production often occurs in areas of high biodiversity.
At the same time the development dilemma is in achieving economic
growth while respecting the land, resources, knowledge and economic
rights of indigenous people.
Protected areas
It is difficult to declare the best approach of the
oil & gas industry to protected areas; every protected area
is composed of specific socio-economic, political and biodiversity
interactions within a local context. The dilemma for companies interested
in operating in or across such areas is in determining what impact
they would have and whether it is acceptable or desirable for current
and future stakeholders.
Every oil and gas investment should be carefully
managed for sustainable development on a case-by-case basis. Some
companies have recently stated their willingness to operate, but
not explore for oil, in designated protected areas.
What You Can Do
Identify legal risks
Legal compliance incorporates biodiversity; the EU Liabilities
Directive contains reference to biodiversity liabilities while the
UK Operating and Financial Review will have stronger implications
for resource intensive industries. For more information about UK
oil & gaslegislation, see UKOOA.
Respond to external guidelines on biodiversity
The Energy and
Biodiversity Initiative clearly lays out the specific linkages
between oil & gas sector and biodiversity with publications
that offer guidance, enhance dialogue and provide resources on biodiversity
specific issues. It represents an effective cross-sector collaboration
that is systematic in its approach and therefore easy to operationalise.
Smaller players in the oil & gas sector should refer to this
resource for an example of best practice guidance.
Integrate biodiversity within your Environmental Management
Systems
Through engaging with consultants and stakeholders, integrate biodiversity
within your policy implementation. ISO14001 and existing best practice
guidelines on health, society and environment can be combined to
maximise good management of biodiversity. Development and implementation
of site Biodiversity Action Plans, specific to each location, is
an appropriate way of contextualising the implementation of policy.
See Site
and Company BAP pages.
Become a member of industry initiatives
The International
Petroleum Industry Environmental Conservation Association (IPIECA)
represents the Oil & Gas industry at the United Nations.
It’s biodiversity working group aims to provide a window on
how the Convention on Biological Diversity should influence business
policy, encourage information exchange and raise awareness. It is
a useful reference for what other companies are doing, and also
provides a forum through which to raise social, environmental and
economic issues and perspectives.
Benefits
Business Value
ISIS Asset Management (now F&C Asset Management) published
“Are extractive companies compatible with biodiversity?”
in September 2004 ,which states that:
“Companies which manage biodiversity well, and have a reputation
for doing so, may…find that access to land and permits are
easier, and that project planning phases are reduced in length.
Although such opportunities are still in the early stages of being
identified, quite apart from the question of costing them, a feature
of good practice companies was the publicly stated belief that
good biodiversity management is about creating opportunities and
not solely risk management.” (p.15)
The growing interest of Socially Responsible Investors in biodiversity
is indicative that it will become a more mainstream issue for
companies to consider as part of their approach to CSR.
Case Studies
By recognising the global threat to biodiversity that they present,
leading companies are already taking moves to manage and mitigate
negative impacts as well as adapt their business portfolio accordingly.
BP and Shell recognise the opportunity represented by alternative
sources of energy and have re-branded themselves as Energy companies.
Lord Browne of BP says that oil & gas will dominate for the
next 30 – 50 years but notes that the appropriate energy mix
is changing. BP is heavily invested in researching hydrogen energy
and both companies are looking at all forms of renewable sources.
The need to balance environmental impacts with economic and social
benefits is exemplified through specific case-studies available
on the Ipieca website.
In achieving this balance, different technologies, management systems,
and operational practices are needed in different circumstances.
Resources
Useful websites
www.ipieca.org
www.worldenergy.org/wec-geis/edc
www.theebi.org
www.ukooa.org
www.wbcsd.org
www.iucn.org
Publications
Are
extractive industries compatible with biodiversity. F&C Asset
Management Survey of Extractive Industry (February 2004.)
Biodiversity:
towards best practice for extractive and utility companies,
Insight Investment (London, 2004)
Integrating
Biodiversity Conservation into Oil and Gas Development, Energy
and Biodiversity Initiative (Washington 2003)
Photo credits: Adam Surgenor - rainforest flower, Stephen Westcott
- Grey Seal
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