Do Oil Companies have an Environmental Conscience?

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Sobering Results in the First Environmental-Rating of the Oil and Gas Industry

The first Environmental-Rating of thirteen international oil and gas companies did not produce a clear environmental leader. All of the companies rated were found to be in the bottom third of the rating scale that ranges from A+ to D-. A group of four companies leads the ranking list with a C in the Environmental-Rating. These are the Australian company Woodside Petroleum, the two British companies BG (formerly British Gas) and Enterprise Oil, and the French company Elf Aquitaine. BP Amoco and Royal Dutch/Shell performed rather poorly with a D+ respectively.

Lessons from Brent Spar

The oil and gas industry is quickly associated with major tanker accidents and oil spills that have repeatedly attracted extensive negative publicity in the past. However, these incidents distract from the fact that the industry‘s daily exploration, production and refining activities often involve even more damaging environmental impacts. For example, industry experts estimate that approximately seven million cubic meters of highly toxic drilling muds and cuttings have accumulated on the North Sea seabed. This is the equivalent of the volume of household waste produced by a city the size of Cologne in ten years.

The oil and gas industry‘s approach to such kinds of problems has traditionally been defensive. However, there are signs that there has been a shift towards a more open attitude. To quote Royal Dutch/Shell: „We have learned that we must change the ways we identify and address issues, and interact with the societies we serve. Our experience in dealing with the Brent Spar has taught us the value of dialogue with our critics and other interested parties.“ Evidence for this new openness to dialogue can be seen in high participation in the Environmental-Rating process. The only company that refused to have its environmental activities evaluated externally was the French company Total. The result is that the company will now be listed on ökom‘s „Black List“ that is published on the internet (www.oekom.de).

Small Steps Towards a Greener Future

The oil and gas industry‘s progress in implementing Environmental Management Systems is commendable. The survey showed that a large number of the participating companies‘ facilities are certified to an environmental standard such as EMAS or ISO 14001 or that certification is planned in the near future. However, the industry still faces a number of major challenges in designing its products and production processes in an environmentally friendlier manner. Devising environmentally sound strategies for the disposal of permanently shutdown oil and gas platforms is just as important as reducing the impacts of daily operations such as the flaring of gas. In addition, regulatory pressures are forcing the industry to reduce the concentration of pollutants in the refined fuels.

From oil to solar?

Interestingly enough, nearly all of the oil and gas companies in the survey are investing in the renewable energies market. For example, BP Amoco is planning to invest $15-20 million annually into solar energy to arrive at approximately $1 billion in turnover in this sector by 2010. Deutsche Shell AG is currently building a large solar cell plant and plans to offer „green electricity“ from June ‘99 onwards. The British/Dutch company Royal Dutch/Shell is investing $500 million in this area. According to Theresa Glasmacher, the environmental analyst responsible for the Ratings, it remains to be seen, however, whether these developments are precursors of an overall shift to a sustainable energy base as demanded at the international climate change conferences, or whether the underlying purpose is the quest for positive publicity.

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