Sustainability Challenges in Gas and Oil Industry

Executive Summary

This research aims at discussing the sustainability challenges in oil and gas industry and discusses problems, risk, and solutions related to this specific industry. The whole world is still depending upon these basic fossil fuels which are oil and gas.  By 2017 the demand has reached more than 4 trillion cubic meters and with such a big scale of production of oil and gas comes with very serious tragedies and risks. The aim is to control the destruction and contamination caused by big firms while production of oil and gas using different methods and newly available technology. Between oil and gas, oil spills are the biggest risk to the environment. The reason behind this is most of the oil wells are located under the deep oceans. Leakage of oil under such a high pressure even for half an hour can create serious harm to the environment and organisms surrounding it. Big companies such as BP, Exxon are facing huge risks while providing an adequate supply of energy. Oil spills such as Exxon Valdez cause a huge impact on environment killing thousands of sea lives, birds, and more than 200 species. On another hand, BP also once faced a huge oil spill destroying the Gulf of Mexico and destroying the livelihood of thousands of people who lived nearby. Most of the damage is done by an oil extracting process called fracking. Fracking or hydraulic fracturing happens when chemicals, sand or water are pumped into shale rock in order to make the natural gas rise to the ocean surface. To prevent such accidents a lot of measures can be taken. Monitoring the process of extracting closely all of the time can reduce risk to a great level. To even cut the risk further remote access management can now be performed by the help of cloud technology. At extraction locations of oil and gas sensors can be installed which are connected to the internet and in case something goes wrong with any equipment sensors can send remote notifications to distant servers so operators can know what’s going own from a distant location while keeping a safe distance. Cloud technologies if applied at such industries can predict in advance of when an incident is going to happen so business has time to prevent it or reduce its impact. Fracking which is very dangerous for the environment should be banned as many countries have already done so to protect their environments. This research paper shows that how companies are greedy and do not manage their risk properly. Companies should have strict rules for extraction of oil and gas. Governments should also pass new laws in favour of environment such a banning fracking and checking companies regularly for their risk management strategies. New technologies like cloud and installation of advanced sensors should be applied to control damage to environments and preventions of disasters. Process like fracking should be banned for sake of environment.
 

 

 

Introduction

Oil and gas industry is an industry with very high risk. As more pressure is being put on these industries the more they are increasing their oil and gas production which is resulting in a very high risk of an accident. Oil and gas are drilled from the depth of oceans, therefore, the equipment that these industries use can get damage because of such a high pressure of water above it. Leakage of oil or gas under ocean even for half an hour can cause a lot of damaging to its surrounding environment. Leakage of gas while extraction increase the temperature of air which at end of cycle is melting the polar ice caps at a rapid rate.  The accidents such as Exxon Valdez and BP oil spill has caused a lot of damage to the environment, killing millions of living organisms and destroying people lever hoods. In our research, it has been found that many companies do not take care of the environment and instead they care about their image. The majority of oil spills that are caused could have been prevented and the damage of these oil spills could have been controlled but the firms did not have any proper equipment or training for it. In this article, we are going to discuss how technology can be used to reduction and prevention of accidents. Technologies such as ‘cloud’ can help to reduce risk at a great level. We also compared how different firms face different risk in oil and gas industries and how ethical leadership can help to maintain and reduction of risk.

How does managing ethical risk in the oil and gas industry relate to reducing accidents?

(Ferrell, 2015). In oil and gas industry the accidents are very highly censured. The ecological danger linked to oil and gas industry accidents are a main risk. Water contamination and release of air pollutants into the atmosphere are caused by oil and gas drilling processes. This results in global heating with also result in reducing of the ozone layer. The less the accident like leaking of gases happen in this industry the less we will contribute towards polar ice cap melting, flooding and other environmental damages. Oil spills are the biggest risk for environment between oil and gas. The motive for this is because most of the oil wells are situated under oceans, because corporations have to drill oil from underneath ocean and any escape in that procedure has the possibility to create serious harm in a very small number of hours. To decrease ethical risks related with leakages oil and gas industry approved a lot of security plans. One of the biggest oil spill known as “Exxon Valdez” showed that how big companies are not ready for upcoming disasters and how their response was very slow when in need. They did not have proper gear and time to fight with oil spill which resulted in the spread of oil slick over 2600 miles of coastline and sea. This all could have been prevented if they would have spent money for proper equipment and training, however, they ended up paying billions of dollars for cleaning the oil spill.

To automatically close wells in case of a tragedy a remote-control switch to close wells can be fitted. The shaft needs to be correctly cemented because correctly cemented shafts act as a robust deterrent against water pollution. Fracking can result in death or for thoughtful sickness for animals and humans for years, therefore, Fracking should be banned all over the world. Countries like France have already banned fracking and so others should be. Methane gas is released when the process of Fracking is done and methane results in trapping radiation 20 times more than other gases out in the atmosphere. This is a very big step towards managing ethical risk. The culture adopted by big cooperation must be stopped. for showing management to avoid misbehavior that could create a coincidence, workers need to be educated. One of the significant health and safety practice is Monitoring possibly explosive surroundings for the presence of combustible vapors which should be reinforced by the use of precise measuring gear. The onsite personnel is accountable for all gear checks. This meant placing a human being into a potentially dangerous environment.

Dangerous structure for the Oil & Gas Business is often situated in distant environments due to the nature of fossil fuel position and removal, mostly in the middle of dangerously hot and cold or in the ocean. The temperature at very deep of ocean can also freeze equipment and also seawater can also impact performance. Monitoring possessions in aggressive surroundings are crucial for risk reduction, but these punishing circumstances can mean upkeep is a dangerous task. The remote asset management now can be performed by cloud technology and available of internet connectivity.

Continuous monitoring and storing of data on distant servers anyplace in the world in real time is now maintained by cloud infrastructure. Now the monitoring equipment is stored on central servers for transmitting information rather than to be monitored from equipment that is physically on an oil and gas site. The gas and oil businesses will be warned – or will be already beforehand – if an equipment is not working correctly. Data such as continuous emission monitoring system (CEMS), is nourished real time into the software and then companies can record, collect and report data remotely. The oil and gas manufacturing is modifying risk and dropping the threat of a large-scale oil and gas tragedy by applying linked technologies. To reduce the number of personnel having to maintain equipment in dangerous environments oil and gas companies can remotely manage assets through cloud technology.  Cloud technologies help in a way that it can tell companies about an upcoming accident even before it happens which greatly reduces risk to environment and workers working there. Managing risk using such technologies in oil and gas industry can be the difference between a well-managed oil rig and a large-scale disaster. (LANA GINNS, 2017)

 

Compare the risks that BP, Exxon and the fracking industry continue to face in providing an adequate supply of energy?

Although there is a wide range of adverse impact of drilling for oil and gas on the economic and environmental conditions, dependent on the world on these commodities cannot be denied. The demand for crude oil is 90 million per day, which has created significant challenges. With the increasing demand, that is outstripping supply, alternative energy resources have been investigated (Kelland, 2014). Oil and gas industry is no free from risks, safety being the greatest element of concern. It has already been stated that oil and gas industry has environmental risks associated with it such as water pollution and the release of air contaminants affecting the environment adversely. These harmful gases result in global warming and are likely to contribute to polar ice melting and other such damages to the environment. Oil spills are the major disaster caused by oil and gas industry as many of the oil reserves are located beneath the ocean. Owing to these risks, oil and gas industry has adopted safety procedures and process so as to diminish the negative impact on the environment caused by using drilling rigs in extracting the oil.  oilspillsHowever, gaps in ethical practices have led to a major impact on the environment.

The Exxon Valdez occurred on March 24th, 1989, causing rapid spilling during the next few days that killed thousands of sea lives, birds of about 200 species or more that includes one-fifth of the world’s trumpeter’s swans and other wildlife (Peterson, et al., 2003). This oil spill further closed the fishing season for a number of years that derives annual sales of 100 million dollars from the abundant fish species and oil covered the coastline. Exxon was not ready with adequate chemical dispersants and containment booms to test the effectiveness of the dispersants. Delayed disaster management and inadequate communication have resulted from the spill spread to cover 2600 miles of the sea and coastal area (Piatt, et al., 1990).

 

The BP oil spill had wide-ranging repercussions not only for the BP but for the entire industry. This incident took three months to contain oil leaking into the Gulf resulting the beaches into black and people who were dependent on the Gulf of Mexico lost a major part of their livelihood. By the time the leak was sealed, more than six hundred and forty miles across the coastline were affected by oil and an enormous amount of oil was present beneath the water level (Hoffman & Devereaux Jennings, 2011). Immense loss of wildlife in the Gulf has been witnessed resulting in patenting threat to coral reefs and other marine lives according to scientists. To make natural gas rise to ocean surface water, sand and chemicals are inserted into a shale rock and this process is called fracking. Near the drilling sites where fracking process takes place it releases several chemicals and a gas known as methane. Fracking has grabbed media attention recently. It has been estimated that this reserve that has been conducted with the use of fracking will remain for about 100 years. Gas drilling has been increased by 45% in a year with the adoption of new hydraulic fracking techniques. It has again been argued that fracking causes small seismic shifts in a specific area, which may result in greater amount of chemicals usage. Some of the substances are harmless, others are benzene, hydrochloric acid, and diesel, which contain carcinogenic elements (McDermott-Levy, et al., 2013). Although proponents of these techniques have pointed that with the adoption of proper procedures environment risks associated with tracking can be eliminated, risks of this method cannot be ignored, particularly to the communities located near fracking (Kovats, et al., 2014).

Proponents have opined that properly sealing of well shafts can be effective in addressing water contamination. It has been found from studies that hydraulic fracturing mud is toxic and radioactive. An individual who would climb to cleaning the vats has claimed that he had suffered from breathing trouble, migraine, inflammation and a number of hospital admissions thus fracture has a close association with health and safety issue. The individuals further claimed from suffering from nose bleeds, headaches, cirrhosis of liver and fatigue (Lloyd-Smith & Senjen, 2011). Fracking also has reduced the land prices since people living near to fractures could not sell their houses. However, the fracking complaints are not as harmful as the Exxon and Valdez.

 

 

How can ethical leadership help oil and gas industry to manage risk?

Ethical leadership means a leadership inspired by ethical beliefs and values. An ethical leader is made of values like care, integrity, respect and care. Oil and gas industry involves a lot of risks as we can see from the case studies of Exxon Valdez disaster and Deepwater Horizon oil spill. One of the main risk associated with the industry is safety.  The risk to the environment is very high too. To provide an ethical leadership these are few practices which need to be followed in an organization. The culture of responsibility and transparency, environmental risk management, safety management and quality management.

Ethical leadership can help establish a culture of responsibility and transparency. The incident involving Exxon Valdez was missing this important feature. Exxon Valdez’s captain Joseph Hazelwood was not on command when the incident happened. In fact, it was someone was not even holding a license to vessel through. Captain Hazelwood was well above the permitted alcohol consumption level. Even though Captain Hazelwood had alcohol-related problem in past yet Exxon officials made him the in charge of the largest tanker Exxon Valdez. These could have been avoided if the management and the captain were responsible and transparent. Ethical leadership can be real effective in preventing this kind of unethical and irresponsible behavior.

Environment risk management is another crucial factor of ethical leadership. Environmental risk is the biggest concern of oil and gas industry. Most of the companies were not so serious about the environmental risks till recent. Oil and gas companies compromise with the risk management all the time. Organizations are not worried about the big amount of greenhouse gas which is released into the atmosphere by them. Oil companies are also being accused of polluting the water. Ethical leadership in the companies can help in the making of an effective environmental risk management.

Safety management and quality management is an equally important to factor of a successful ethical leadership. Deepwater Horizon oil spill is a perfect example of bad safety and quality management. Safety systems placed on the ocean rig were not safe as per the industry standards. For example, rig was not having a remote control shut off switch which is very crucial in a major spill. According to the investigation, BP’s disaster management plan was full of inaccuracies and poor. All the evidence suggest that Deepwater Horizon rig was anything but a high-reliability organization. (Meigs, 2017)Lack of ethical leadership in BP cost 15 human lives as well as environmental catastrophe.

 

Conclusion

In the above discussion, it has been found that different companies in oil and gas industry have not been able to take necessary safety measures in order to protect employees. The mishaps that have occurred in Exxon Valdez disaster could have made companies aware of potential risks associated with offshore drilling that such occurrences may pose on the environment including sea life, communities, and wildlife. Companies in this specific industry also must have the mandate of implementing every safety policies necessary to protect the environment. BP again has assumed that such occurrences would not happen to them as they had adopted safety measures in the firm. Alike the Exxon Valdez, BP also has been inadequate in implementing specific safeguarding practices that might have prevented or diminished the scope of the environmental mishap.

Oil and gas industry has been found to practice the corporate culture of taking risks in performing their business that needs to be stopped so that they can maintain their reputation. All the employees in this specific industry need to be equipped with effective ethical practices and compliance programs guided by ethical leadership. Employees again need to be made aware that they must avoid practices that are potential to cause harm and create accidents. It is true that oil and gas industry has certain risks, however, the firms need developing improved safety measures and strategic plans to avoid the disaster that has long-term adverse impacts. Companies should take use of new technologies such as cloud and monitoring of equipment from a distant location using sensors to minimize the risk of an accident. Fracking should also be banned for sake of our environment. Companies that have adopted hydraulic fractures need taking guidance from predecessors about taking effective measures in prioritizing environmental and safety measures first during the process of drilling. Thus, providing leadership in sustainability and safety is the new responsibility on this industry. With their ability to remain socially responsible and engagement of stakeholders, oil and gas industry will be able to achieve their reputation.

 

 

 

References

LANA GINNS  (2017). How managing risk in the oil and gas industry can prevent a large-scale disaster | Energy Digital. [online] Available at: http://www.energydigital.com/node/12850

Ferrell, O. (2015). Business Ethics: Ethical Decision Making & Cases. [online] Google Books. Available at: https://books.google.com.au/books?id=zr-iAgAAQBAJ&pg=PA424&lpg=PA424&dq=despite+many+controversies+surrounding+the+economic+and+environment&source=bl&ots=vhME1MCJJX&sig=lL0-N5HvAXEH57pnnnj8K-qjNvI&hl=en&sa=X&ved=0ahUKEwj9uf22sf3TAhXCTbwKHU_qDU0Q6AEIJzAA#v=onepage&q=despite%20many%20controversies%20surrounding%20the%20economic%20and%20environment&f=false

 

Hoffman, A. & Devereaux Jennings, P., 2011. The BP oil spill as a cultural anomaly? Institutional context, conflict, and change. Journal of Management Inquiry,, 20(2), pp. 100-112.

Kelland, M., 2014. Production chemicals for the oil and gas industry.. s.l.:CRC press.

Kovats, S. et al., 2014. The health implications of fracking. The Lancet,, 383(9919), p. 757.

Lloyd-Smith, M. & Senjen, R., 2011. Hydraulic fracturing in coal seam gas mining: the risks to our health, communities, environment and climate.. s.l.:Briefing paper, National Toxics Network.

McDermott-Levy, R., Kaktins, N. & attler, B., 2013. Fracking, the environment, and health.. AJN The American Journal of Nursing,, 113(6), pp. 45-51.

Peterson, C. et al., 2003. ong-term ecosystem response to the Exxon Valdez oil spill. Science,, 302(5653), pp. 2082-2086.

Piatt, J. et al., 1990. Immediate impact of the’Exxon Valdez’oil spill on marine birds. The Auk, pp. 387-397.

Zoback, M., Kitasei, S. & Copithorne, B., 2010. Addressing the environmental risks from shale gas development. Washington: DC: Worldwatch Institute..

Meigs, J 2017, Blame BP for Deepwater Horizon. But Direct Your Outrage to the Actual Mistake, Slate [online],  viewed 31  may 2017 < http://www.slate.com/articles/health_and_science/science/2016/09/bp_is_to_blame_for_deepwater_horizon_but_its_mistake_was_actually_years.html

 

 

 

 

 

 

 

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