Striking a Balance Index

Next Section

Section A: Sustainable development for the UK offshore industry Roadmap 1990-2010 In developing this strategy, a roadmap has been produced to explain the key milestones and external events that have had most impact on the oil and gas industry and the most significant actions already taken. To this analysis of past events have been added milestones and key actions now planned for the future. The roadmap is intended to present a broad view of change over time and how the different strands of sustainable development are woven together. A copy of the Roadmap can be ordered from the Publications section. Origins of this Document The idea of developing a sectoral sustainable development strategy for the UK offshore oil and gas sector first emerged from the work of the Environment and Sustainable Development sub-group of the Oil and Gas Industry Task Force (OGITF). The Department of Environment, Transport and the Regions' (DETR) White Paper entitled 'A Better Quality of Life' was published at the same time (May 1999). The preparation of sustainable development strategies by industry sectors constitutes one strand of the government's overall strategy on sustainable development, "providing the framework for addressing the 'triple bottom line' - integrating action and setting priorities to improve business performance on economic, environmental and social aspects" [A Better Quality of Life, 1999]. UKOOA supported this initiative and committed itself to produce a sustainable development strategy for its sector during the course of 2000. There have been further relevant developments since then. In March 2000, the Prime Minister appointed the first UK Minister for Corporate Social Responsibility and in October established the Sustainable Development Commission, while a central theme of his keynote speech 'Richer and Greener' was "the constructive partnership between government, business, the green movement and the public". During the course of 2000, following wide consultation, the Department of Trade and Industry (DTI) produced its own sustainable development strategy, stating "we are committed to creating an innovative, highly competitive and resource efficient economy… in which innovation and enterprise are harnessed to develop commercially viable, internationally competitive solutions to environmental problems". [DTI Sustainable Development Strategy 2000] DTI's Business Impact Task Force was set up to bring together advice on corporate social responsibility issues from a business perspective, recommending practices likely to assist competitiveness. What is Sustainable Development? The term first came to prominence in the 1987 World Commission Report on Environment and Development (better known as the Brundtland Report after its chairwoman). The definition used was "development which meets the needs of the present without compromising the ability of future generations to meet their own needs" [Our Common Future (the Brundtland Report) 1987]. Since then the 'Triple Bottom Line' concept has come to the fore in sustainable development thinking, "the simultaneous pursuit of economic prosperity, environmental quality and social equity. Companies aiming for sustainability need to perform not against a single, financial bottom line but also against the triple bottom line" [Cannibals with Forks, Elkington, 1997]. UK Government definition of sustainable development Sustainable development is "The simple idea of ensuring a better quality of life for everyone, now and for generations to come"...it means meeting four objectives at the same time, in the UK and the world as a whole: Social progress which recognises the needs of everyone ...everyone should share in the benefits of increased prosperity and a clean and safe environment. We have to improve access to services, tackle social exclusion, and reduce the harm to health caused by poverty, poor housing, unemployment and pollution... Effective protection of the environment ...we must act to limit global environmental threats such as climate change, to protect human health and safety from hazard such as poor air quality and toxic chemicals, and to protect things which people value such as wildlife and landscapes... Prudent use of natural resources ...this does not mean denying oursejves the use of non-renewable resources like oil and gas, but we do need to make sure that we use them efficiently and that alternatives are developed to replace them in due course... Maintenance of high and stable levels of economic growth and employment ...so that everyone can share in high living standards and greater job opportunities. .;to achieve that we need a workforce that is equipped with the education and Skil!~for the 21.' century, we need businesses ready to invest and infrastructure to support them." Delivering Sustainable Development - Developing our Framework We have built on the government's definition and see four elements to sustainable development: Economic: this has two mutually reinforcing parts - sustaining the economic health of our industry (while recognising the finite life span of UKCS production) and supporting the UK economy. Social: our relationship with our current and future workforce, the communities in which we work and other stakeholders. Environmental: our relationship to the natural world and the impact of our operations. Stewardship: our use of natural resources and the legacy we leave. In spite of a degree of overlap with the previous heading, we believe that, as an extractive industry, we should address this issue separately. To these we have added: Delivery: this overarching category will drive further development of our strategy in the future, drawing on feedback from external engagement, ensuring delivery of our programme and goals, and communicating our progress. Figure 1 This image shows that the four strands of sustainability are closely interwoven and bound together by the commitment to delivery. Our Current Standard of Living is Dependent on Oil and Gas Oil and gas have underpinned the development of modern society. The many products derived from hydrocarbons have had a profound effect on the lives of practically everyone in the world today - whether as fuel, heat and power, or as plastics, paints, chemicals, medicines, clothing and other commonly used items. Indeed, modern life as we know it, would not be possible without them. Society has become largely dependent on reliable, affordable and readily available energy to fuel economies and sustain high standards of living in the developed world. Energy demand remains high and is forecast to rise, as developing countries seek to grow their economies and provide better living standards for their people. The social and economic benefits brought by oil and gas, and their social and environmental benefits over earlier dominant energy sources, provide a platform for growth and future long-term prosperity. But There are Fundamental Challenges in the Concept of Sustainable Development for UK Oil and Gas Operators In considering sustainable development, we have had to address a number of challenges: a) The non-renewable nature of oil and gas extraction. Ours is an extractive industry and our operations reduce the global stock of the natural resources of oil and gas - just as other extractive industries reduce the stock of coal or minerals. New energy sources are likely to come to the fore long before global supplies of oil and gas run out, but we cannot rely on this happening of its own accord. We accept the responsibility to contribute towards sustainability by extracting oil and gas in a way that yields maximum recovery from our discoveries. Extending recovery from producing fields using existing infrastructure is a good example of this. Figure 2 UK electricity generation: - gas the fuel of choice b) UKCS operations will have a finite life span - although much longer than the thirty years or so originally envisaged. Fifty years from now, it is likely that North Sea production will have ceased. We therefore see sustainability for our industry in terms of maximising the economic and social benefit from the resources available in the North Sea, while minimising the environmental impact resulting from their extraction. c) The environmental impact of current usage of our products. Serious questions are now being asked about the sustainability of hydrocarbon products and the need to find alternatives with lower potential environmental effects. Gas, a fuel with much less impact than coal, is already playing an increasing role. Gas is now the largest source of primary energy in the UK. Switching to gas from coal for power generation has put the UK well on its way to meeting the government's commitments under the Kyoto protocol. In addition, improvements in oil products and road vehicles have led to significant reductions in emissions. Clearly at some point in the future, we can expect a further transition to be made. Just as oil and gas replaced wood and coal as the dominant sources of energy during the course of the last century, so the half century ahead is likely to see a major shift towards new energy sources. Nevertheless, until these replacements become more technically and economically viable, both oil and gas will continue to be in demand by society for many years to come. Figure 3 Over 4,000 deaths were attributable to the Great London Smog of December 1952 The shift from wood and coal burning as primary sources of heat and power has had a transforming effect on air quality in London and other cities. The Role of Oil and Gas Companies in the Development of Alternatives Our primary concern, as UKCS operators, is to maximise the overall benefit from the UK's oil and gas reserves, in a manner which is both safe and minimises the environmental impact of our operations. Developing future energy technologies will increasingly offer business opportunities for new and existing companies alike. Many oil and gas companies are active in research and development of new energy sources and other non-hydrocarbon technologies that will eventually replace fossil fuels, and such activities are strongly supported by a range of existing or proposed government measures. Many companies are actively working towards this transition through research into Liquefied Petroleum Gas (LPG), Compressed Natural Gas (CNG), fuel cells and other technologies. Some companies have developed strategic alliances with motor manufacturers to advance this research. Renewable sources such as offshore wind or tidal and wave energy may need skills and engineering solutions (e.g. platform technology) similar to those used in oil and gas operations today, creating possible transitions from a mature industry to a developing one. There is a potential role for upstream companies to work with the other links in the 'hydrocarbon value chain' (chemicals, refining, transport, distribution, engine and generator design, for example) to address energy issues in a more integrated way. First steps are being taken at company level to investigate potential synergies. UK Oil and Gas Operators Within the Overall Oil and Gas Industry - Clarifying the Structure of the Industry This document represents the sustainable development strategy of UKOOA, whose members are the thirty two companies who carry out oil and gas exploration and production operations on the UK Continental Shelf (UKCS). The 'we ' of this strategy represents our common thinking and commitment, although not all UKOOA members participate in all initiatives. In addition to the goals in this document, many companies have their own individual goals and initiatives. Figure 4 The structure of the oil and gas industry and UKOOA   Exploration & Production (inc. Offshore Pipeline & Terminals) Transport Ships & Onshore Pipelines Refining & Marketing/Distribution of Oil & Gas Products Chemicals/ Plastics/Feedstock Pharmaceuticals/ Cosmetics/Consumer Products Integrated Oil & Gas Companies Independent Oil & Gas Companies   "Upstream"   "Downstream"     UKOOA represents these E&P activities on UKCS = other representative organisation This table shows the role that UKOOA member companies play within the upstream and downstream oil and gas businesses. There are exceptions to the above, but the table shows the generality of activities of integrated and independent companies. There is often confusion when the general term 'Oil and Gas Industry' is used, implying a monolithic, highly co-ordinated structure, which is far from the reality. About a half of UKOOA's member companies are subsidiaries of international corporations involved in refining and retailing of oil and gas products, as well as exploration and production. An even smaller number of companies is involved in the transport of oil and gas. Even for major integrated companies, the UKOOA member company is usually a separate business under separate management. The upstream oil and gas industry includes many large and small suppliers and contractors. In many cases - such as in our aim to maintain the competitiveness of UKCS operations - actions must be planned and undertaken jointly. Issues of this nature are discussed within the Industry Leadership Team (ILT) incorporating representatives from the wider upstream community, including trade unions. Many of these issues also involve working with government to ensure effective delivery. The forum in which this takes place is PILOT (formerly OGITF), the body set up in 2000 to implement the recommendations contained within the OGITF report "A Template for Change".