Evaluation and Implementation of Sustainability within the Stages of Oil and Gas Production

Sustainability can be defined as the process of change in which the alignment of technological development, the direction of investment, the exploitation of resources and the institutional change are all in synchronization (Epstein, 2018). Sustainability increases the current and future potential for meeting the aspirations and needs of the humans. Sustainable development is the organizing principle for sustainability (Carley & Christie, 2017). It includes the interconnected domains such as social, economic and environment. 

(Source: Carley & Christie, 2017)

The term sustainable development was introduced in the year 1987 in the Brundtland Report for the World Commission on Environment and Development. The World Commission on Environment and Development defined the term sustainability as fulfilling the wants of the existing generation without making any compromises with the capability of the upcoming generations to fulfill their needs (Elliott, 2012).

It has become difficult for the oil and gas industries for continuing with the current strategies in the future if the implementation of sustainable approaches is not made fully.  The main reasons behind it is the finite sources of fossil fuels, continuous changes in regulations, environmental issues such as global warming and climate change and various other factors and challenges.

As a consultant, this report has been prepared for analyzing the sustainable factors that oil and gas companies require to plan for and implement for the purpose of protecting their own businesses and the natural environment. Furthermore, this report provides the management and accommodation of the future changes by the oil and gas companies in international, national and local laws and regulations, particularly those dealing with sustainability and environment.

The oil and gas industry is very complex and large and equally essential for the present economy. The society cannot run in a smooth manner without oil and gas. The products such as oil and gas are in high demand for retail, commerce and domestic purposes. Upstream, midstream and downstream are the stages of oil and gas production.

Upstream Sector- the upstream sector is also famous for its examination and production sector. In this sector, the activities related to recovering, searching and production of the crude oil and natural gas from underwater fields or underground are included. The oil and gas industry is in continuous search for skilled and hardworking workers for the purpose of keeping up with the changes in technology.  The main activities in this sector include exploration and production. The exploration activities include the drilling of exploratory wells, searching for underwater or underground natural gas and crude oil fields, exploring possible sites through the use of geological and geophysical surveys and obtaining leases and permissions from the land owners for drilling. On the other hand, the production activities include storing oil and gas for short term, extensive labor and time for drilling oil and gas and finishing off the well (Hak, Janouskova & Moldan, 2016).

Upstream Sector

This stage requires the implementation of sustainability for the purpose of facilitating sustainable development. It should take into account the sustainable development goals (SDG). The SDGs to be taken into account in this stage are life below water, no poverty and zero hunger. The countries which are rich in natural resources like fossil fuels also suffers from high corruption levels, weak institutions, jeopardizing economic growth, poverty alleviation and inequality reduction (Silvestre & Gimenes, 2017). The oil and gas industry has an essential role to be played in addressing the social, environmental and health challenges which can significantly impact poverty reduction.  Also, the fluctuations in the crude oil prices impact the costs related to food production and can also impact the agriculture based livelihoods by competing for water and land usage. Furthermore, the oil and gas industry needs to protect the life below water as there is a risk of disruption or damage to the marine habitants due to pollution, noise or spills. The implementation of sustainability will require the adoption of good practices for the purpose of operating offshore and enhancing the conservation efforts (Hubbard, 2011).

(Source: Post, Rahman & McQuillen, 2015)

Midstream Sector- the midstream sector is responsible for connecting the upstream and downstream sector. In this sector, the use of transportation systems and pipelines is made for the purpose of moving the crude oil from the sites of production to the refineries and conduct the delivery of various refined products to the downstream distributors. The main activities of the midstream sector include marketing of the wholesale products and transportation (rail, pipeline, barge, truck or oil tanker). Some elements of the upstream and downstream sectors are also included in the midstream operations. For example, the storage function of upstream or transportation function of the downstream sector are also include in the midstream sector (Slawinski & Bansal, 2015).

The implementation of sustainability in this sector should be in area of creating sustainable cities and communities. When the crude oil will be transported, it has a harmful impact on the residents of the cities. Majority of the population of the world resides in the urban areas. This figure is further expected to grow in the near future. The sustainable development agenda will be met only when changing patterns of energy use will be adapted access to energy is granted. There are a number of opportunities present for more integrated infrastructure, efficient resident and municipal energy usage along with the development of public transportation systems. Inputs to long- term planning for sustainable urban development can be provided by oil and gas companies. This will involve the identification of opportunities for the purpose of improving the manner of generation and utilization of energy, usage of infrastructure, reduction of waste and their carbon footprint. Clean and efficient power generation can be ensured by the companies by way of increasing the provision for natural gas, improving energy efficiency and using CCS technology (Le Blanc, 2015).   

Midstream Sector

Downstream Sector- refining of the raw natural gases and crude oil are included in the downstream sector of the oil and gas industry. Such raw natural gases and crude oil are those which were obtained in the upstream sector. Facilities like natural gas distribution companies, oil refineries, retail outlets, petrochemical plants, etc. are also involved in this sector. Products such as liquefied petroleum gas (LPG), petroleum coke, synthetic rubber, diesel oil, asphalt, fertilizers pesticides, rubbers, antifreeze, gasoline,jet fuel, etc. are derived from the refining of crude oil (Wan Ahmad, de Brito & Tavasszy, 2016). In other words, the main activities included in this sector are transportation to retail facilities, refining and marketing of finished products.

This stage requires the implementation of sustainability in the area of responsible production and consumption. The anticipated growth in demand will be matched only when the resource efficiency will be improved in production. Responsible consumption is also an important issue for this industry. Sustainability challenges can be solved by the companies by ensuring the mitigation of impacts and improvement of operational efficiency along with supporting energy efficiency with the help of number of methods (Shvarts, Pakhalov & Knizhnikov, 2016).      

On 25^th September 2015, 2030 Agenda for Sustainable Development was adopted by the United Nations General Assembly which aimed the full implementation of sustainable development in the oil and gas sector. 17 sustainable development goals were developed which aimed the addressing of social, economic and environmental challenges of the world. The operations of oil and gas industry have both positive and negative impact on the various areas covered by sustainable development goals including ecosystems, communities and economies (Post, Rahman & McQuillen, 2015). There is a big contribution of this industry on the sustainable development in a number of ways including the generation of direct and indirect jobs, enabling social development and economic activity through supply of access to energy, contribution of substantial tax along with different type of revenues to the government, enabling advanced technologies development, investment in long- term economic and social success of communities in the areas of their operation, management of the impact of its operations by making emphasis on human rights, environmental protection, and health and safety. Therefore, sustainable development in the global oil and gas industry will assist in addressing the social and environmental issues. The impact on the environment will be visible when the future development will be able to meet their needs without making any compromises (Raut, Narkhede & Gardas, 2017). 

Downstream Sector

The overall sustainable development in this sector will lead to mitigation of the adverse impact of the oil and gas production and development. The challenges such as climate change, linked impact on the communities and environmental footprint on biodiversity will be met through sustainable development (Matos & Hall, 2007).

Full implementation of sustainable development will ultimately end poverty in all its form all across the world. There are millions of people who live in priority who even struggle for the fulfillment of their basic needs. When poverty will be addressed, other issues such as health, food security, education, environment, safety and access to reliable, affordable, modern and sustainable energy sources will also be addressed. Furthermore, the industry is also capable of addressing a number of challenges related to the environment, society and health which can significantly impact the poverty reduction (Roca & Searcy, 2012). 

When sustainable development will be ensured in the oil and gas industry, its harmful impacts such as pollution will be minimized which is caused by the oil and gas activities. Gas emissions, wastewaters, aerosols and solid waste which are generated during the process of refining, drilling and transportation will also be minimized leading to positive impact on the environment. This will further control other harmful effects such acid rain, greenhouse effect, water contamination and drop in water quality.

The implementation of sustainable development will have a positive impact on the oil and gas sector. Poverty and hunger will be ended and the industry will get hardworking workers who are ready to make their best possible efforts for the achievement of the targets of their companies. Furthermore, energy efficiency will be improved in the areas of operation and production. Also, the share of natural gas will be increased in the energy mix along with the improvement in access to energy services with the help of shared infrastructure (Waas, et.al., 2014). In this way, access to reliable, affordable and modern energy will also be ensured for all the people. Through the reduction of inequalities among and within countries, local governance will be improved and the revenue management will be enhanced.  When this practice will be integrated into the core business of oil and gas companies, they will be able to ensure transparent and full tax payments, assess the impacts of inequalities in project planning, mitigation of the climate change impacts, providing access to energy and setting expectations and communications with the communities in the localities (La Macchia, Hall, Wasserman & Zotes, 2017).

Critical Reflection on Managing and Accommodating Future Changes

Sustainability in the oil and gas sector will make human settlements and cities, resilient, safe, inclusive and sustainable. In this way, the industry will be capable of protecting ad safeguarding the natural and cultural heritage of the world. Also, it will be able to address the risks associated with the operations in the urban environment. Sustainable and inclusive urbanization will be supported in the communities which are situated near the areas of operations. When the industry will take urgent action for the purpose of combating climate change along with its impacts, it will be able to plan strategically for a future where the industry makes zero emissions. Also, the industry will be able to assess carbon resiliency itself. Furthermore, the emissions within the oil and gas industry will be mitigated (George, Siti-Nabiha, Jalaludin & Abdalla, 2016).   

The global population is increasing at a rapid pace. Therefore, the application of sustainable methods in the oil and gas companies becomes a difficult job and they face challenges in the operational and geographic context during and after the implementation.

Carbon Emission- high greenhouse gas emissions are made by the oil and gas companies in comparison with other sectors. The production of oil and gas involves flaring, venting and accidental release of natural gas (methane). It has been argued that methane has the capacity of contributing towards global warming 25 times more in comparison with CO?. The extensive use of a number of compressors and engines in also involved in the process of drilling and production that result in emitting large quantities of greenhouse gas emissions. The oil and gas companies face immense pressure for the reduction of such emissions (Comyns & Figge, 2015).

(Source: Comyns & Figge, 2015)

Biodiversity and Land use pattern- the value of the NGOs, industries and governments is being quantified by them along with the formulation of regulations for the purpose.  The oil and gas industry is being affected by the cross- industry impacts such as lost tourism, damages to fisheries or devaluation of the value of property (Zyrin & Ilinova, 2016).  Also, there are chances that compensation will be demanded by the traditional land users and owners in the surrounding terrain. With the decline of populations of threatened species and natural resources, the oil and gas industry is burdened to pay for the costs relating to the protection of biodiversity or compensation for the destruction. The decline is considered to be the result of overconsumption done by the growing population or poor land management. The large quantities of oil spills are infamous as a result of the devastating effect caused by it on the wildlife. The reputation of oil and gas companies has also been tarnished due to the images of oil spills and their effect on the natural inhabitants. Operations such as ultra- deep and offshore wells, hydraulic and shale gas fracturing, oil sands and coal seam gas bring with them a challenge to land use and biodiversity (Domnikov, Chebotareva, Khomenko & Khodorovsky, 2015).

Conclusion

Health and Safety- high probability of health and safety incidents is witnessed in offshore and onshore operations that are expected to have distressing consequences. The oil and gas sector suffers from significant health and safety challenges. Therefore, the oil and gas companies are required to enter into health and safety management while ensuring the integrity of pipelines, wells, rigs and installations are made with minimum risk of fires, well blowups and mishaps which can cause injuries and fatalities. In other words, the oil and gas companies suffer from the challenge of ensuring incident- free and safe operations which is also a key to efficiency and strong productivity. The occurrence of large disasters is not common but still significant resources are required for the purpose of building up emergency and prevention response capacity. Failure in the adequate management of such risks can not only result in injuries or death of the workers but can also result in legal penalties (Junior, Galleli, Gallardo-Vazquez, Sanchez- Hernandez, 2017).

With regard to the oil and gas industry, geographical challenges have a little to do with the earth bodies, region or landscape suitable for oil exploration. However, the industry suffers from imminent corruption.  Where the flow of investments is allowed by the government of the region from foreign companies, the economic well- being of the country is ensured (Frank, Dalle Molle, Gerstlberger, Bernardi & Pedrini, 2016).

Corruption in Oil and Gas Industry- the hunt for oil sources is often conducted in areas facing violence, political instability and corrupt business practices. Strong opportunities for growth are offered by such regions. However, the stock prices for the company can suffer from devaluation due to the discomfort felt by the investors due to the regional political instability. This is due to the fact that turbulent situations can result in spill over and disrupt operations. Payouts can be demanded by the political regimes which are considered to be illegal in a number of countries. There is increasing number of fines due to the violation of these laws (Omer, 2008). The oil and gas industry lacks transparency. There is secrecy in terms of publishing of revenues and payments made to the government for exploitation of resources. Unlawful benefits are reaped by the industry insiders and politicians. Majority of the oil and gas companies are sate owned. Also, the emerging markets are governmental which leads to having touch points with the government. This further leads to the practice of demanding bribes. Identities of the equity holders and subsidiaries are also protected by the oil and gas companies which make it easy for the corruption leaders to effectively hide the stolen funds. Therefore, it becomes a challenge for the oil and gas sector to hold the government accountable for these acts without any published information and proof of hidden taxes and royalties (Frynas, 2005).      

(Source: Berkowitz, Bucheli & Dumez, 2017)

The present research in the oil and gas sector includes the findings that the oil and gas industry has the potential and capability of contributing to all the 17 sustainable development goals. This can be done by way of enhancing their positive contributions or by mitigating or avoiding negative impacts. Also, the oil and gas production have the capability to foster social and economic development by way of providing access to reasonable opportunities, energy for business, employment, skill development, improved infrastructure and increased fiscal revenues (Dickinson, Gill, Purushothaman & Scharl, 2008). The research also provides that the nature and scope of usual oil and gas activities point towards some sustainable development goals where there are opportunities to make effective contribution. Also, the researches assisted in discovering that the oil and gas companies have the chances from obtaining benefits through collaborating with the stakeholders. This, in turn, will result in broadening their impact and enhancing their capability of leveraging additional resources in order to achieve the SDGs. Moreover, there are a number of chances for the oil and gas companies with the help of which sustainable development goals can be integrated into their core activities (Berkowitz, Bucheli & Dumez, 2017).      

There are a number of future developments possible within the oil and gas industry. On the basis of the targets of the sustainable development goals, it is possible that the adaptive and resilience capacity to natural disasters and climate related hazards will be strengthened in all the countries. Also, it is expected that climate change measures will be integrated into the policies, national strategies, and planning. Also, sustainability will be ensured in the future through improvement in education, awareness- raising and human and institutional capacity on climate change adaptation, impact reduction, mitigation, and early warning (Moran, Wackernagel, Kitzes, Goldfinger & Boutaud, 2008). Commitment will also be implemented which will be undertaken by parties to United Nations Framework Convention on Climate Change to the objective of mobilizing $ 100 billion on annual basis by the year 2020 from every source. This will be done for the purpose of addressing the requirements of the unindustrialized countries in the matter of transparency and significant mitigation activities on operation of Green Climate Fund. Also, mechanisms for raising capability will be promoted for the operative management and climate change- related planning in less developed countries including focus on marginalized communities, youth and women (Ahmad, Rezaei, Sadaghiani & Tavasszy, 2017).

The role of oil and gas industry in sustainability and the achievement of sustainable development is very essential. The industry is about to face challenges for the purpose of maintaining the balance between the three pillars of sustainable development. Sustainable development will require economic supply of energy for maintain its social and economic pillars. Oil and gas is considered to be the biggest component of this energy till the time alternative sources of energy become widespread and economical. During the time when this transition took place, an important role was played by the oil and gas industry for the purpose of ensuring the safe management of its operations and in effective reduction of emissions, discharges and the ecological impact while offering energy at an affordable cost (Mikkelsen & Langhelle, 2008).

The main objective of sustainable development and sustainability is to ensure that a balance is achieved in the social progress, environmental responsibility and economic development of the world. The achievement becomes impossible when there are a number of countries who are unable to access energy for the development, maintenance and improvement of societal progress and quality of life. A continuing role is required to be played by petroleum and petroleum products for the purpose of extending modern quality- of- life advantages and to an increasing share of the population of the world (Alazzani & Wan- Hussin, 2013).

Furthermore, in future, the developments expected include providing capital, technology, organization and trained personnel for meeting the requirements of the society for oil and gas economically and safely till the time alternative sources of energy are available. Also, high ethical standard are predicted to be demonstrated within the industry. It will also make sure that the operations of the industry have the least possible impact on the environment. The developments will also include contribution to the policy development by constructively working with every part of civil society. Moreover, social objectives of the communities in the area of operation will be supported. Along with improvement in these roles, a shift to a more sustainable future would mean the consideration of certain areas by the petroleum engineers (Abdulrahman, Huisingh & Hafkamp, 2015). These areas include being aware regarding the broadness of the issues. Local development of resources related to petroleum energy will also be supported in the developing countries. The use of oil and gas will be aimed to be extended by finding a number of ways along with supporting creatively hybridized systems for the purpose of facilitating market entry of new energy resources. The value of the production of precious oil and gas will be increased along with mitigation of environmental impacts and finding out ways for the optimized use of petroleum (Abdalla & Ak, 2015).    

Conclusion

Therefore, it can be concluded that sustainability is process of variation in which the orientation of technological development, the track of investment, the exploitation of resources and the institutional change are all in synchronization and increase the present and future probability for meeting the aspirations and needs of the humans. On the other hand, sustainable development is the organizing principle for sustainability. This report focused on the evaluation and implementation of sustainability within the stages of oil and gas production. Furthermore, the impact of full application of sustainable development on oil and gas sector and the environment have been discussed in this report. The overall sustainable development in this sector will lead to mitigation of the adverse impact of the oil and gas production and development. Moreover, this report also highlights the challenges faced by oil and gas companies while applying sustainable methods in their operations.  The implementation of sustainable methods in the oil and gas companies is a difficult job and they face challenges in the operational and geographic context. The challenges are related to carbon emissions, biodiversity and land use pattern, health and safety and corruption in oil and gas industry. At the end, possible future development and present research in sustainability and sustainable development within industry has been discussed in this report. The present research in the oil and gas sector includes the findings that the oil and gas industry has the potential and capability of contributing to all the 17 sustainable development goals (SDGs). On the basis of the targets of the SDGs, it is possible that the adaptive and resilience capacity to natural disasters and climate related hazards will be strengthened in all the countries.

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