Sustainability

Regenerative Practices Matter

Is it possible for an extractive industry like oil and gas to not only improve efficiency and reduce negative impacts, but also leave operations sites and surrounding areas in a better state than they were found? Much of the public debate revolves around climate change, but measures of ecosystem resilience are dropping precipitously. Why should we care?

Doughnut economics.
Fig. 2—Doughnut economics.
Source: Kate Raworth (2017).

Is it possible for an extractive industry like oil and gas to not only improve efficiency and reduce negative impacts, but also leave operations sites and surrounding areas in a better state than they were found? Could we as professionals think differently about our role, and with some mindset shifts and simple insights leave a legacy of healthier ecosystems? Much of the public debate revolves around climate change, but biodiversity, air and water quality, and other measures of ecosystem resilience are dropping precipitously. Why should we care?

In part, because $44 trillion of economic value generation is dependent on nature—half the world’s gross domestic product (World Economic Forum 2020). Our world’s economy is much more dependent on nature than many realize. What can we do to ensure the bedrock of our economy and our lifestyle remains healthy and resilient?

Regenerative approaches are a combination of multiple strategies executed over varying timeframes: geologic, environmental, societal, and commercial (Fig. 1). While many companies have efforts underway, scaling up and integrating these activities into viable enterprisewide strategies has proven challenging. Transcending disciplinary silos to achieve strategic integration and coordination is the key to optimizing benefits.

regenerative practice landscape.
Fig. 1—The regenerative practice landscape.
Source: SPE 201766.

We are natural resources engineers. We have at our disposal a rich set of economically viable, proven technologies to create restorative impacts. Just as we intelligently tap into and exploit natural resources for our core business, we can learn from nature to boost natural systems back to health and vitality. From a risk perspective, our social license to operate is on the line. From an opportunity perspective, competitive differentiation is possible. Superior industrial services can be achieved by nature. Preservation and augmentation of watersheds to avoid building water treatment plants is one tangible example. Simple design changes like positioning lease roads and locations to dump removed soil could avoid erosion and instead create water-retention ponds that recharge aquifers and provide habitat. If the focus of your company is only on risk management or mitigation, the opportunity to leverage the positive-impact side of the equation is probably being ignored. It is possible to both reduce harm and create positive impacts in tandem.

What Is Regenerative Practice?

Nature-based and circular-economy mechanisms that close material loops can boost profitability. For example, waste streams may represent inexpensive feedstocks for new products. Our industry has learned through experience the central importance of effective stakeholder engagement and of balancing operations with the creation of social benefits for communities impacted by our operations. When we get this right, it can generate goodwill and stronger communities.

The markets are strongly favoring companies with robust environment, social, and governance (ESG) performance. Total assets under management by ESG funds swelled to nearly $1.7 trillion in Q1 2021, doubling from only 2 years ago (Reuters 2021). Poor ESG performance can increase costs of capital and invite activist investor interventions. Fiscal scrutiny is very often a catalyst for change. By augmenting conventional operations with regenerative strategies, ESG performance can be enhanced, and new business models and commercial opportunities may emerge.

United Nations Sustainable Development Goals (SDGs)

While the SDGs are a set of intergovernmental agreements, industry has a major role in helping to achieve these goals. The document IPIECA Sustainable Development Goals: Roadmap translates the SDGs into oil and gas industry opportunities to boost performance. The atlas is broken up into good practices and resources and can help individuals and companies integrate activities into business practice.

Approaches for Operations

Regenerative practice is conducted through a suite of approaches including financial, value-chain, nature-inspired, and efficiency mechanisms. No one approach is sufficient, as these approaches work best in a coordinated, integrated system. These approaches only work with the participation and execution by multiple enterprise-level departments such as operations, finance, health, safety, and environment, and public affairs. Sole reliance on operations will be ineffective; however, operations does have a central role to play.

Circular Economy/Closed-Loop Mechanisms

One of the most effective regenerative mechanisms is closing loops in your value chain, keeping products and materials in use at their highest possible value. In a circular economy, waste is minimized. For example, one insidious form of waste is vented methane. This both erodes profitability and has more than 80 times the global warming potential of CO2 over a 20‑year period (Myhre et al. 2013). Simple and profitable options abound to eliminate methane emissions such as electrification of field equipment, elimination of high-bleed pneumatic valves, better leak detection, and improved equipment reliability. At COP 26, more than 100 countries signed the Global Methane Pledge, which is now being translated into policy and regulations.

Circularity is reinforced by material and energy flows from one activity or process into another. All outputs of one system are inputs into another system. Modern society only reuses about 10% of the 92 gigatons/year of the total materials extracted from the earth.

Humanity is on pace to triple material extraction in the coming 30 years and triple waste production by 2100. The next billionaires will be innovators who figure out how to transform these prodigious waste flows into profits. The circular economy is not just a moral imperative, it’s a huge business opportunity.

Take for an example a building ready for demolition and waste disposal, entailing substantial cost and a large influx of material to landfill. The residual value of a building’s materials equates to around 18% of its original construction cost. Indeed, “We must reimagine buildings as ‘urban mines’” (The Guardian 2020).

There are examples of oil and gas infrastructure being reused or retrofitted to create a new business opportunity, such as the Malaysian oil platform that has been converted into a resort and scuba diving tourist destination (New York Post 2016). In the US Gulf of Mexico, the Rigs to Reef program has enabled end-of-life platform substructures that become covered in coral and host teeming biodiversity to be relocated to provide long-term habitat for fish, creating a vibrant sport-fishing industry.

An example at the core of our downstream and chemicals value chain is where we obtain feedstock for our processes. Non-recyclable plastics and polystyrene can be transformed into feedstock for refineries to create new plastic products. This chemical recycling market is an increasingly active space with chemical depolymerization comprising some 56% of activity (Kamczyc 2021). This keeps plastics out of landfills, oceans, and waterways while producing profitable products.

There are two things to keep in mind when making technical, process, or purchasing decisions:

1. The choices and decisions you make affect the entire life cycle (including social dimensions).

2. New value chains will be developed to accommodate different disassembly processes that go into reuse or conversion.

Taken together, by paying attention to the following five actions, operations can begin to generate profitability from a formerly cost-only process and provide regenerative activity to benefit all living things. Start by making changes within your own company value chain.

1. Reduce waste (especially emissions, waste byproducts, and heat).

2. Redesign processes for reuse of waste byproducts such as heat (co-generation) or produced water.

3. Remanufacture and refurbish assets such as platforms and equipment for use in other commercial applications.

4. Recycle byproducts such as solvents. Redistribution markets exist to turn these costs into money makers.

5. Replace material and supply specifications with low-carbon alternatives.

Process reengineering or redesign is a convenient time to implement such activities. Operations can be an influential advisor/partner in three key areas to be aligned with company strategy (Project Drawdown 2021):

1. Identifying partnerships where operations and procurement/supply chain professionals align and buy from climate-aligned manufacturers and suppliers

2. Requiring and adopting science-based targets throughout the value chain, which requires transparent, verifiable measuring and reporting from all parties

3. Prioritizing circularity and low-carbon materials and processes that further reduce carbon content.

Why Do This?

The Earth’s carrying capacity is the planet’s ability to support all of nature’s cycles. Human activities began to surpass planetary carrying capacity in the early 1970s. “Earth Overshoot Day” marks the date when humanity’s demand for ecological resources and services in a given year exceeds what Earth can regenerate in that year. We maintain this deficit by liquidating stocks of ecological resources and accumulating waste, primarily carbon dioxide in the atmosphere. In 2021, Earth Overshoot Day fell on 29 July, which means every remaining day of the past year, humanity was making a withdrawal from future generations. The economic doughnut model is a graphic representation of this overshoot (Fig. 2 above).

What we do collectively as companies, industries, and sectors creates a real impact. The emphasis on individual action has been misplaced almost all our lives (Dunaway 2017). (To get Earth’s systems back into viable balance, all activities need to contribute to and sustain regeneration. Just as in investment strategies, one manages growth and hedges against risk. Regenerative practices are the hedge to facilitate financial, societal, and environmental benefit. No one objective is sacrificed for another; rather, balance is maintained.

Will the oil and gas industry incorporate regenerative practice into the way we do business? The promise of new markets and revenue streams holds powerful allure. It is up to each one of us to ensure that the industry lands on the right side of history. Our future absolutely depends on it.

This article, based on SPE 201766, “Regenerative Practice for Oil and Gas,” is a collaboration among the SPE HSE&S, PF&C, and DSEA disciplines through the transversal Gaia Measuring What Matters Pathway. The authors would like to thank the sponsors, all members of SPE: Johanna Dunlop and Silviu Livescu; co-editors Alex Moody-Stuart and David Shackleton; and contributions from Aimé Fournier and David Shackleton.

For Further Reading

Half of World’s GDP Moderately or Highly Dependent on Nature, Says New Report. 2020. A. Russo, World Economic Forum.

Sustainable Fund Assets Hit Record $1.7 Trln in 2020: Morningstar. 2021. S. Jessep and E. Howcroft, Reuters.

Retooling the Work Force for a Green Economy|Green Jobs. 2009. C. Guillot, Area Development.

Anthropogenic and Natural Radiative Forcing. G. Myhre, D. Shindell, et al. In “Climate Change 2013: The Physical Science Basis. Contribution of Working Group I to the Fifth Assessment Report of the Intergovernmental Panel on Climate Change.”

Creating System Value. 2019. M. Hall. How the Date of Earth Overshoot Day 2021 Was Calculated.

An Updated Conceptualisation of Corporate Sustainability: Five Resources Sustainability. S. Ivory and S.B Brooks, BAM2018 Proceedings. 2018 British Academy of Management Annual Conference.

A Closer Look at ICIS’ New Chemical Recycling Database. 2021. A. Kamczyc, Recycling Today.

Mapping the Oil and Gas Industry to the Sustainable Development Goals: An Atlas. 2017. IPIECA.

You Can Now Sleep on This Malaysian Oil Rig. 2016. Z. Kussin, New York Post.

Project Drawdown. 2021.

Doughnut Economics: Seven Ways To Think Like a 21st-Century Economist. 2018. K. Raworth, Random House/Penguin Books.

SPE Sustainable Development Technical Section

SPE Gaia Sustainability Program

Josh Etkind is global deepwater digital transformation manager at Shell. He is an accomplished transformative leader of geographically diverse teams with 21 years of industry experience. Etkind spent the first 4 years of his career with Schlumberger Integrated Project Management in subsurface and wells project roles, and the last 17 years at Shell in reservoir engineering, wells, planning, decommissioning, and NG R&D global leadership roles.

An SPE Distinguished Member, Etkind has held numerous SPE leadership roles at the section, regional, and international level. He is currently the chairperson of the SPE Sustainable Development Technical Section and president of the SPE Gaia Sustainability Program. He collaborated to create the SPE Young Professionals International Programs, created and served as a section editor of The Way Ahead magazine, served as chairperson of the Young Professionals Coordinating Committee, and helped to set up and run the Ambassador Lecturer Program. He served as an at-large director on the SPE International Board of Directors from 2007 to 2010 and chaired the Print and Electronic Media Board Committee. At that time, he was the youngest member of the board in SPE’s history. He was later a member of the Business Management and Leadership Committee and the SPE ATCE Startup Village organizing committee. In recognition of his service, Etkind has been awarded the 2004 SPE Young Professional Outstanding Service Award, the 2010 American Petroleum Institute Meritorious Service Award, the 2012 Regional Service Award, the 2013 SPE Distinguished Service Award, and the 2021 SPE Public Service Award. Etkind is a certified sustainability practitioner, a graduate of the University of Cambridge Business & Sustainability Program, and a Fellow of Loyola Institute of Environmental Communications. He holds a BSc in petroleum engineering from Texas Tech University.

Flora Moon is the practice director for sustainability at Expressworks, a change management consultancy with a global footprint. She helps clients navigate systemic and cultural change. Her primary interest is in moving industries, large companies, and communities to be more sustainable and to demonstrate care for the planet and all living things.

She retired after 13 years of working with Chevron as a client in 2021 to devote time to addressing climate change and sustainability at the societal and industry level. While at Chevron she supported major capital projects as well as upstream, enterprise, and research projects. She has been active in SPE’s sustainability efforts since 2015, and has served on the SPE SDTS steering committee in various capacities including as a co-designer of the Gaia Sustainability Program. Moon has published research covering maturity models and regenerative practice in oil and gas, and has participated in industry panel sessions and activities including engagement with young professionals and student SPE sections. She received the Gulf Coast Sustainability award in 2020.

Moon has been engaged in creating sustainability community capability and capacity since the early 2000s. Her ongoing work with the Fifth Ward Enrichment Program, which enlarged a curriculum directed at disadvantaged inner-city youth to include awareness and action for the environment, and serving on the resilience committee for the City of Houston are examples of local activities. She is the co-creator of a private investment strategy based on the Dow Jones Sustainability Index for Merrill/Bank of America. This strategy demonstrates how a major financial institution can learn to create commercial offerings that incent investment in companies that demonstrate sustainability before the advent of ESG.

She is a certified sustainability professional and is certified in neuro-leadership coaching. She holds an MBA from San Francisco Institute of Architecture and a BA in philosophy from the University of Illinois.