Attaining Privilege to operate in the Arctic; Understanding the - - PowerPoint PPT Presentation
Shutterstock.com Attaining Privilege to operate in the Arctic; Understanding the environmental, social and political risks in a rapidly evolving system the Greenland example Insert then choose Picture select your
“Insert” then choose “Picture” – select your picture. Right click your picture and “Send to back”.
The world’s leading sustainability consultancy
The world’s leading sustainability consultancy
Jon Perry Partner, ERM UK
Shutterstock.com
The world’s leading sustainability consultancy
■ Greenland 101 ■ Exploration in Greenland ■ It’s not all about the permitting ■ Q&A
■ What is Privilege to Operate? ■ Why is all this important? ■ What are the lessons? ■ Q&A
Shutterstock.com
The world’s leading sustainability consultancy
Shutterstock.com
The world’s leading sustainability consultancy
4
■ 2,166,086 km²
(about the same size as Algeria, slightly more than three times the size of Texas)
■ Population 57,000
(about the same as Kettering)
■ 85% is covered by icecap with only 15% along the coast inhabitable ■ There are no roads between the towns
■ Greenlanders are an indigenous Inuit people, which make up 85% of the population ■ Kalaallisut, a traditional Inuit dialect, is the country’s official language, although Danish is also heavily used. Language and translation is an important issue.
Europe is 4.7 times as big as Greenland, with
as many people
Source: www.MapFight.com
The world’s leading sustainability consultancy
5
■ 85% of exports are from fish and shellfish ■ As well as fishing, around 10 % of the workforce is directly or indirectly involved in the hunting industry ■ Greenland receives an annual block grant of around € 470 M from the Danish State ■ Identifying alternative sources of income and foreign investment is considered vital for the economy ■ Social problems include high levels of unemployment and lack of suitable skills within the workforce
Source: J Perry
The world’s leading sustainability consultancy
6
■ Greenland was a colony of Denmark until 1953, when it became a constituency in the Danish Kingdom alongside the Faroe Islands ■ On May 1st, 1979, Greenland Home Rule was established. ■ In November 2008 Greenland voted that Self Rule should be introduced and this was accepted by the Danish parliament. ■ On the National day, June 21st 2009, the Greenland Self-Government replaced the Home Rule Government (now just “the Greenland Government”) ■ Greater jurisdiction including natural resources (but not the whole offshore area) – still a tricky balance
The world’s leading sustainability consultancy
7 1970s 1980s 1990s 2000s 2010s
The world’s leading sustainability consultancy
8
■ Frontier area, highly challenging ■ Emerging legislative regime ■ Lack of local resources (eg Govt) ■ Single authority (BMP), with broad powers ■ Considerable stakeholder scrutiny ■ Setting a high bar for the oil and gas industry, without constraining growth or discouraging E&P activity Which means… ■ Frequent amendments to the legislation and guidance ■ Vociferous and often conflicting stakeholder views; ■ Cherry-picking of standards to quickly build up a suitable legislative framework
Source: www.bmp.gl
The world’s leading sustainability consultancy
Shutterstock.com
The world’s leading sustainability consultancy
2009
10
2009 (Jun) Guidelines for preparing an EIA Report for Activities Related to Exploration, Development, Production and Transport of Hydrocarbons Offshore Greenland 2010 (Jun) Guidelines to Environmental Impact Assessment of Seismic Activities in Greenland Waters (NERI / BMP) 2011 (December) BMP Guidelines for application, execution and reporting of
2011 (Dec) Guidelines to environmental mitigation assessment of seismic activities in Greenland waters (DCE) 2011 (Jan) BMP Guidelines – for preparing an EIA report for activities related to hydrocarbon exploration and exploitation off shore Greenland 2011 (Apr) Guidelines for preparing an EIA report related to stratigraphic drilling offshore Greenland (BMP) 2011 (Apr) Guidelines for application, execution and reporting of offshore hydrocarbon exploration activities (excluding drilling) in Greenland (BMP) 2011 (Dec) Supplementary guidelines for EIAs concerning seismic surveys in Greenland 2012 (DCE) 2009 (Nov) Guidelines for Social Impact Assessments for mining projects in Greenland (BMP) 2011 (May) Greenland Bureau of Minerals and Petroleum Exploration Drilling Guidelines
Present
2013 onwards ‐ ?
The world’s leading sustainability consultancy
11
Project description - then:
Assessment OR
Assessment Plus
Project description - then:
Assessment OR
Assessment Plus
Assessment
Assessment (NERI/DCE)
The world’s leading sustainability consultancy
12
The world’s leading sustainability consultancy
13
Despite its low population, there are numerous stakeholder groups within Greenland that need to be considered… As well as the people themselves… And a broad range of external stakeholders…
Greenlandt
The world’s leading sustainability consultancy
Shutterstock.com
The world’s leading sustainability consultancy
Shutterstock.com
The world’s leading sustainability consultancy
16
■ a term that reflects going beyond simply acquiring regulatory approval by taking full account of the views and concerns of stakeholders; ■ it is about involving people, but it also involves minimising major project risks due to delays, protests, legal disputes and media action; ■ the benefits of privilege to operate, as well as the potential risks of ignoring it, are increasing reflected in oil company rhetoric;
and not just from the supermajors; “Salyan oil & gas Limited (Azerbaijan), as a responsible corporate citizen, seeks
privilege to operate, through sustainable practices and initiatives” (www.salyanoilgas.com) “Being a safe, compliant and reliable operator is our highest priority at BP, and we understand that the privilege to operate depends on our ability to operate responsibly.” (bp.com)
The world’s leading sustainability consultancy
17
■ For all the reasons given previously, the Arctic, and in particular Greenland, is an area where industry needs to focus on more than just approvals ■ The unique social, political and environmental factors in this area combine to focus stakeholder attention and put pressure on all participants: Industry, Government, communities and NGOs ■ The technical, logistical and scheduling challenges in this area leave little room for manoeuvre ■ The permitting framework is complex, it is also evolving and the bar keeps getting moved – generally upwards
Shutterstock.com
The world’s leading sustainability consultancy
18
The world’s leading sustainability consultancy
19
■ Long project delays are attributed to sustainability issues (e.g. stakeholder, community, environment) far more than to either Commercial (eg cost or contract) or Technical issues
Goldman Sachs study
■ Non-technical risks have the potential to hold up a project for years, unlike many technical problems ■ Once it becomes a public issue, the required solution may be completely disproportionate to the actual harm to health, safety and the environment – it becomes an issue of perception more than of science ■ Failure to attain privilege to operate also shapes future legislation and the expectations of regulators
Shell boss defends Alaska project as ice halts drilling Shell has spent more than $4.5bn over four years preparing for work in the Chukchi and Beaufort seas, off the state's west and north coasts, but has faced legal action, post- Deepwater Horizon drilling bans and a very short summer weather window.
The world’s leading sustainability consultancy
20
“The businesses which will succeed will be those which take their responsibilities to the region’s communities and environment seriously, working with other stakeholders to manage the wide range of Arctic risks and ensuring that future development is sustainable.”
Richard Ward, CEO Lloyd’s Arctic Opening: Opportunity and Risk in the High North (2012)
Key Lessons: ■ Understanding Risks ■ Engagement and Disclosure ■ Environmental ■ The Corporate View
Shutterstock.com
The world’s leading sustainability consultancy
21
■ Identify the critical path items; bring together Technical and Non-Technical perspectives ■ What is the local understanding of the project? ■ What are the key stakeholder concerns? ■ What information needs to be acquired as early as possible (baseline, seasonal data, weather windows) ■ How do the views of local people compare with those of authorities, consultees, NGOs and pressure groups? ■ What are the potential conflicts and concerns and what project impacts could these have? ■ How will risk management be maintained across project phases?
Source: mnn.com
The world’s leading sustainability consultancy
22
■ Account for local practices when scheduling engagement (hunting, fishing, confirmation parties) ■ Always assume there will be delays and have a contingency ■ Use different methods for gathering social baseline data (eg self) ■ Understand the cultural differences (eg raising concerns in public) ■ Tailor disclosure methods to the audience (eg radio, graphics) ■ Avoid technical descriptions – it doesn’t translate (stakeholder feedback) ■ Be honest about the options and timelines; balance open disclosure against the risk of raising expectations ■ Understand the local dynamics, there will always be politics ■ Start early to build trust; lack of communication creates suspicion ■ Plan and engage collaboratively (as an industry) to avoid mixed messages and stakeholder fatigue
The world’s leading sustainability consultancy
23
The world’s leading sustainability consultancy
24
■ Consider up-front the full cost of potential delays, local opposition, reputational damage, legal challenges and try to balance preventative costs against remedial actions (monetising risk) ■ Identify ‘internal blockers’ (between teams, departments, businesses etc) and any embedded barriers to the necessary flow of information ■ Look at internal stage gates, what are the drivers and incentives at handover – are they based on securing approvals or the overall ‘health’
■ Proactively use the EIA / SIA / ESHIA as a process of internal engagement and alignment; these documents should not be the sole preserve of the EHS team
The world’s leading sustainability consultancy
25
Shutterstock.com
The world’s leading sustainability consultancy
Shutterstock.com