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Oil and gas companies still lack in environmental risk management

GLOBAL - Oil and gas companies fail to future-proof themselves as companies, particularly when it comes to risk management of their operations, according to German sustainability rating agency oekom research.

Controlling environmental risks was one of the sustainability challenges facing the oil industry, as it tapped into increasingly difficult-to-access reserves in the Arctic, the deep sea or the protected areas in Alaska in order to meet demand, the agency said.

However, it added that the technologies to enable the industry to manage the associated risks were often lacking.

Kristina Rüter, analyst in charge of the sector at oekom research, said: “Companies are under huge pressure from shareholders to find enough new reserves to replace depleted oil and gas reserves as quickly as possible. Opening up these new reserves often leads to serious environmental pollution.”

Oekom said that one of the problems facing the industry was that in case of an underwater oil well breach - as was the case with the Deepwater Horizon breach in 2010 - no technology exists to quickly control any leak.

The agency said that Greenpeace was currently targeting Shell’s exploration of the Arctic as one such risk factor, but said that its research showed the Dutch company to be representative of numerous companies in the industry.

Besides extraction, other stages in the value chain fraught with environmental risk include refining and transportation in tankers or via pipelines, it said.

Additionally, the energy output to produce and process oil and gas was steadily increasing, with significant differences between individual companies, according to sector analysis.

While Norway’s Statoil, for example, emitted just 22.9kg of CO2 per tonne of crude oil produced, the figure for Royal Dutch Shell was 63.0 kg and for ConocoPhillips rose as high as 103.0kg.

Besides the varying natural environmental factors, other reasons for these differences included the technology used and the efficiency with which plants were operated. From the climate protection point of view, greenhouse gas emissions from the extraction of oil from tar sands, up to 400 kg per tonne, and the production of fuels by coal liquefaction, up to 3,000 kg, are “dramatically high” levels.

Oekom said that company efforts regarding climate protection were “half-hearted”, with only three companies - Hess Corp, Statoil and Total - agreeing specific reduction targets.

Rüterargued that there was a need for the impetus for targets to come from policy-makers.

“Past experience has shown that voluntary initiatives by the sector do not produce the necessary trend reversal.

“Possible measures include, for example, abolishing subsidies and tax breaks for the sector and introducing stricter environmental regulations for activities in sensitive natural environments.”

Of the nearly 150 companies surveyed, only nine were awarded ‘Prime’ status - granted to companies who fulfill the minimum sustainability management standards.

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