In recent years, sustainability has emerged as perhaps the most critical imperative of this century. As our lives are being altered by advancing technology in ways that we never imagined just a few short years ago, our awareness and understanding of the complexities in utilization of the nature and the impact of the footprint that we leave behind must lead us to a fundamental shift in the way we manage our individual and professional lives.
The petroleum industry in concert with the rest of the world is finding that sustainability presents both risks and opportunities for its business, thus the need for incorporating sustainability as a business imperative and not a moral sacrifice.
Within the next 30 minutes as you are reading this article, our planet will be travelling roughly 40,000 miles in space around the sun, more than 8,000 babies will be born on this planet, and our oil and natural gas industry will supply nearly 2 million bbl of oil in response to the increasing demand for energy. The important question is how we can keep up with the many new and unique challenges posed by this fast-paced change.
The oil and gas industry faces a very challenging future. Energy demand continues to grow, while our mature fields are declining. Out of the 1.2 trillion bbl of proved oil reserves, roughly two-thirds are extremely challenging to develop and produce due to a variety of complicating problems such as depth and tight and thin formations; development and application of leading-edge technologies; and a multitude of environmental considerations and regulatory issues. Our task is to extend the life of the industry by improving the success of finding new discoveries in frontier and remote basins, increasing the ultimate recovery from existing fields, as well as the need to find ways to tap into unconventional resources. At the same time, we must intensify our focus on sustainability, which calls for meeting humanity’s needs without harming future generations. How are we to accomplish this goal of meeting energy demand in a sustainable way? Technology has always been the enabler for our industry to meet demand for the last 150 years. But now more than ever, the need for quick development and rapid deployment of technologies in the field is paramount.
Shared Responsibility
Today we are concerned about these challenges and, more importantly, we are realizing that there is only a small window of opportunity for us to act. However, these are not a single industry challenge. Regardless of who we are, where we live, and what we do, we are sharing a ride on this beautiful planet in the vast dimensions of time and space. And because this is our only home, we all have to collaborate, share a responsibility to maintain its balance, and preserve it for us and the future. Through our synergies, we can then transform from the current incremental pace into a fundamental shift in the ways we incorporate sustainability into our operational framework.
At first glance, the notion of sustainability may seem intimidating. The petroleum industry, however, has been focusing on the concept or its components for a long time, but under different descriptive terms such as optimizing production, maximizing reserves, reducing cost, cutting waste, increasing efficiency, optimizing processes, minimizing footprint, maximizing safety, reducing environmental impact, and increasing corporate social responsibility. We have spent considerable efforts—heavy investments of time and capital or human resources—in achieving these goals. For our industry, the gap between what we have been doing and what we need to do is much narrower than what it is perceived to be.
The petroleum industry’s sustainability mindset, however, was more formalized after two critical events. The first was in 1988, when an explosion and fire destroyed an oil production platform in the North Sea killing 167 men and resulting in a loss of USD 3.4 billion. An ensuing report into the disaster made more than 100 recommendations about how safety should be improved. The second event was a mid-1990s decision to decommission and dispose of an oil storage platform in the deep waters of the North Sea. Although permitted by the British government, public and political opposition caused a reconsideration and resulted in a more innovative and sustainable approach of re-using much of the main structure in the construction of new harbor facilities near Stavanger, Norway.
Today, sustainability is an essential ingredient of our industry’s activities, a diverse concept of many elements that are embedded into the fabric of our daily operation. We practice it, and we create value by integrating sustainability into our strategies and business models. In pursuing better performance, we master sustainability. Yet, we may not have been too mindful of its true meaning in the past. It is only in recent years that the concept of sustainability has moved from the background into the limelight.
The petroleum industry ranks as one of the largest investors in low- and zero-carbon technologies, as well as in carbon capture and sequestration technologies. To create a sustainable future, from 2000 to 2014, the oil and gas industry invested roughly USD 90 billion in carbon emission technologies. This is more than the automotive, electric utility, and agriculture processor sectors combined (API 2015) and amounts to 30% of total US investment.
An API study (2012) showed that since the early 1990s, “the US oil and natural gas industry had invested more than USD 252 billion to improve performance of its products, facilities, and operations.” Almost 65% of that was directed toward clean air and water. This expenditure exceeds that of the federal government at USD 43 billion for the same period, and equals the rest of private industry combined. Today, 20% of all the investments in alternative energy technologies come from the petroleum industry.
NPC Study
Governments have also recognized sustainability as a key issue for future security. As the 2010 president of SPE, I served on the US National Petroleum Council (NPC) from 2009 to 2012. In September 2009, in a letter addressed to the NPC, US Secretary of Energy Steven Chu requested the NPC “to reassess the North American resources production supply chain and infrastructure potential, and the contribution that natural gas can make in a transition to a lower carbon fuel mix. Your study should describe the operating practices and technologies that will be used to minimize environmental impacts, and also describe the role of technology in expanding accessible resources. Of particular interest is the council’s advice on policy options that would allow prudent development of North American natural gas and oil resources consistent with government objectives of environmental protection, economic growth, and national security.”
After a 2-year study involving more than 400 experts from diverse backgrounds and organizations, of which about 60% were employed by organizations around the nation outside of natural gas and oil companies, the council prepared two major reports, titled “Future Transportation Fuels” and “Prudent Development of North American Natural Gas and Oil Resources” (2011). In the latter report, the council recommended the following five core strategies for governments and companies.
- Support prudent development and regulation of natural gas and oil resources through such measures as councils of excellence covering environmental, safety, and health practices, corporate and regulatory commitment to advancing environmental performance, engaging affected communities, reducing methane emissions, and structuring policies to support prudent development of and access to resources.
- Better reflect environmental impacts in markets and fuel/technology choices by recognizing that the US will find it difficult to reduce greenhouse gas emissions further without a mechanism for putting a price on greenhouse gas emissions that is economywide, market-based, predictable, transparent, and part of a global framework; keeping options open for carbon capture and sequestration; and developing information and methodologies on environmental footprints and full fuel cycle impacts.
- Enhance the efficient use of energy through policies that support continued progress to adopt cost-effective efficiency standards for buildings and appliances; remove the disincentives for utilities to deploy efficiency measures; and eliminate barriers to combined heat and power as a way to increase the efficiency of electricity production.
- Enhance the functioning of energy markets through policies and regulations that improve mechanisms for utilities to manage the impacts of price volatility; harmonize market rules and service arrangements between the wholesale natural gas and wholesale electric markets; and increase environmental regulatory certainty affecting investments and fuel choices in the power sector.
- Support the development of a skilled workforce through increased public and private financial support for educational and training activities.
Many companies have developed measures and key performance indicators to satisfy their corporate social responsibility, and to ensure that they remain sustainable in many aspects of their operations. While these are important, taken individually, such undertakings are too fragmented, and a more collective approach is needed. Since 2010, SPE has played a significant role by facilitating such opportunities. SPE’s Committee on Sustainability has provided a platform for discussions on sustainability through defining a role and strategy for SPE in addressing sustainability, encouraging a methodical approach for the petroleum industry, identifying needs and describing opportunities, and fully participating in global sustainability discussions as an enthusiastic participant and contributor.
SPE’s leadership in the area of sustainability is very much in line with its mission of capturing and disseminating technical information for the public benefit. It is also consistent with its core values of innovation and social responsibility. Such efforts will help members to realize that sustainability is just another way of thinking about what we have already been doing, and that is consideration of people, profit, and planet in every business decision that we make. In positioning SPE as a leading forum for collaboration on sustainability, it will be at the forefront of the related issues as a leader among various engineering disciplines, will significantly contribute to improving petroleum industry’s public image, and will be in an excellent position to influence the direction of global research and discussions.
Conclusion
Current incremental changes toward sustainability are not sufficient—we need a fundamental shift in the way we make business decisions. Sustainability must become the principle moral and business imperative in our lives. We must fully understand the complex interdependencies of nature, societal obligations, and the way we conduct our business.
Forward-looking companies see that increasing collaboration in the development and rapid implementation of sustainability technology solutions will require a new generation of professionals who are learners, able to inspire and motivate, and display leadership behaviors regardless of their position in the organization. The great American author, Eric Hoffer said “in times of change, the learners will inherit the earth, while the knowers will be beautifully equipped to deal with a world that no longer exists.” In our changing times, augmentation of our capabilities through learning sustainability is ever so more important.
The concept of prudent development of our natural gas and oil resources means development, operations, transport, and delivery systems must achieve an acceptable balance of economic growth, environmental stewardship and sustainability, energy security, and human health and safety.
We, in the petroleum industry, understand that integration of sustainability in our decisions is a business imperative, and not a moral sacrifice. We want to be an important and effective partner in this new world. We recognize the wisdom of the Native American proverb that says, “The frog does not drink up the pond in which it lives.” This is a simple, yet a compelling statement. It describes what sustainability is all about. It shows us the path forward in shaping our future.
References
- API. 2015. “Oil and Gas Industry’s $90 Billion Investments are a ‘Driving Force’ in Emissions Reduction,” Oil & Gas 360, 23 September.
- API. 2013. “Oil and Natural Gas Industry Spent $252 Billion Since 1990 On Environmental Protection,” Shale Industry News and Shale Information, 4 January.
- National Petroleum Council Committee on Resource Development. 2011. Report: Prudent Development: Realizing the Potential of North America’s Abundant Natural Gas and Oil Resources.
Behrooz Fattahi retired from Aera Energy, an affiliate of Royal Dutch Shell and ExxonMobil, in 2014 after a 37-year career in the oil and gas industry. His last position at Aera was as learning advisor, where he taught several internal company technical courses. Fattahi was president of SPE in 2010, and was president of the American Institute of Mining, Metallurgical, and Petroleum Engineers (AIME) in 2014. He holds PhDs in aerospace engineering and mechanical engineering from Iowa State.