Need for Sustainable Development

Critically analyse alternative means available to ensure the sustainable development of oil and gas industries.

Evaluate and contrast actions by consumers and governments to strengthen measures for sustainable development of oil and gas industries.

The global energy market revolves around oil and gas exploration and has been an essential means to ensure economic growth and social development all across the world. Oil and gas fulfills the energy requirement of the people and it is predicted by International Energy Agency (IEA) that it is going to meet more than 48 % of the total energy demand of the world by the year 2035. (Barrow (2006)) Owing to the increase in the world’s population and improvement in the standard of living ,the demand for oil and gas is increasing by leaps and bounds which leads to its continuous exploration putting a huge challenge in the path of  sustainable development of resources  and minimizing its impact on the environment. The activities performed in oil and gas sector are prone to high risk and has detrimental impact on environment. Today the petroleum industry has been modernized  and is fetching the even increasing revenue and is helping the society to grow but like many other natural resources oil and gas reserves are also vulnerable to exhaustion but also there is a  demand from the industry to turn towards sustainability  and also the requirement of adherence  to the legal and regulatory framework to achieve the right balance between the industrial advancements and achievement of ethical standards and corporate governance. (Barrow (2002))

Oil and gas industry in today’s time is facing a huge challenge to adopt strategies for sustainable development due to the rising demand of the fuel as they are playing eminent role in providing safe, emission free fuel at the reasonable cost. United Nations has launched a program by the name of “Sustainable energy for everyone” to ensure the global access to safe energy sources, increasing the market share of renewable energy and advancement in the technology for harnessing the fuel efficiently. (Welford (2000))The three objectives which UN has laid down can be achieved by oil and gas companies and companies can look forward to increasing their market share in the renewable sources of energy by the adoption of advanced, innovative eco- friendly technology for the generation of bio fuels rather than relying upon only the oil and gas productions.

One step taken by the oil and gas industry which has led to the achievement of one of the goals of UN is the reduction in the gas flare which posed a major problem contributing more than 1% of the emission of greenhouse gas. Research has shown that gas flaring has been reduced to more than 20 % to around 130 billion cubic meters from 172 within 5 years from 2005 to 2010.Firms in oil and gas industry has been reported to take steps to ensure sustainability for the social and environmental stability .Many oil majors have become members of  oil and gas industry association for social and environmental issues (IPIECA) to establish framework of sustainability  ,adhering to the guidelines  and provide reports on  the impact of  firm’s operations on the environment, health and society.(Shell Global2014).Also these firms are providing information to the agency on their performance in relation to the environment and society. (higgins (2014))Oil and gas industry is supplying the major proportion of energy resource that is needed to fuel the economic and social development and will continue to do so   along with extending their efforts to manage their operations in a safe and efficient manner there by reducing the greenhouse emissions and striking the right balance between the economic prosperity, social development at the same time fulfilling the social and environmental responsibility.

Alternative ways to ensure sustainability of oil and gas

Measures adopted by the Government and others agencies for realization of sustainability goal

Firms need to devise ways to provide the fossil fuels as well as the alternative sources to energy to meet the ever increasing demand of the society in an ethical and sustainable ways.

Managing their operations in a safe manner minimizing its impact on the environment

Contributing towards the development of framework for sustainable development and its adherence as a part of ethical and social responsibility(ScienceDirect (2000))

Adopting efforts to increase the value of the resources, minimizing its environmental impacts and finding ways for the development of alternative sources of energy by diversifying their existing product line.(Mitchell (2012))

Providing support to the oil exploration projects in the other developing countries of the world.

Utilizing the hybridized system technology for the development of alternative sources of fuel and also providing support to the projects on the development of alternative sources of energy and its utilization. Various organizations have come up like Sustainability Accounting Standard Board (SASB) to advice the firms on the standards and the board has set the benchmark and provides expert feedback on the corporate governance and providing range of investment options for the development of alternative sources of energy. (dunlap (2014))

According to the sustainability accounting standard board, there are problems which have become a major environmental concern these days like global warming, scarcity of natural resources including clean drinking water. Also authorities are concerned about the environmental impact of the extraction processes of the oil and gas and its utilization and thus board is trying to put before the industry the material sustainability problem and thus investors should look into more holistic performance of the oil and gas exploration firms rather than performance confined to few attributes like production, valuation. Competitiveness of the oil and gas exploration will now be driven by the factors like carbon emission, corporate governance and the success of the companies in mitigating the impact of the exploration processes on nature. From the past few years concern over the ecological impact of the exploration processes have grown manifold and companies are making huge investments to discover commercially viable oil and gas fields.

More than 65 % of the oil and gas producing companies are the members of OPEC which stands for organization of the petroleum exporting companies , however the share of the OPEC firms have been declining over the past few years and have reached below 40%.

Companies have started utilizing the advanced technologies for the navigation of the risks involved while exploring the new oil fields and also adhere to the regulatory framework and have to comply by the government norms to manage the key issues of the industry, the major issues these days are the concern for global warming, ecological conservation, protection of natural resources, wildlife etc. Companies are asked to report their performance in these areas too and the new concept of sustainability reporting has come up where they provide information about the steps taken by them towards the management of each sustainability issue.( ConocoPhillips.2013).

Measures adopted by the Government and other agencies for realization of sustainability goal

Firms are utilizing advanced systems like ERP software’s for the measurement, management and reporting of the vital information in the form of sustainability reports which can be accessed by the stakeholders anytime. Oil and gas industry is trying  to find out the ways to align the industrial development with the ecological protection in an effort to achieve sustainability although filling the people’s demand and at the same time trying to mitigate the environmental impacts of the exploration poses enough challenges before these companies as the promotion of sustainable development is one step ahead than simply adhering to the legal and obligatory norms devised by the governments of different nations and the concerned authorities. Owing to the problems that are associated with the oil and natural gas exploration there is a complicated legal and regulatory framework under which oil producing firms are operating it for example EPA is one such regulatory agency that provides the guidelines and regulations and controls the environmental impacts of the oil exploration processes. Different states where the companies are situated all across the globe have their own regulatory agencies that provide the rules and regulations which the firms must adhere to for the protection of environment thereby achieving ecological sustainability. In United Kingdom in the year 1995, regulations on off shore installations were introduced which provide provisions for the workers on health and safety norms to be adhered to and sets out the objectives of achieving the highest standards of safety and the statuary guidelines which the oil and gas firms must follow.

Many national legislations have also been put on the oil and gas firms which regulate the activities of the exploratory nature   at each and every step and also laid down the goals of addressing the influence of the off shore exploration on the environment and thus controlling and monitoring of each step from exploration to the dismantling. Companies also need to sign the regional agreements where they are operating in thereby  protecting the rights of the locals and adopting steps towards the conservation of bio diversity and demonstrating high level of legal and ethical standards. There are certain voids in the legal framework at the international level which has led to the development of regional agreements which can be signed easily and implemented in a better way .(Rochette et al, 2014)

Environmental sustainability aims to at achieving the development of human society along with the judicious utilization of the natural resources ensuring their supply generation after generation. The oil and gas firms can adopt environmental friendly, safe systems for oil drilling and dismantling which is not only safe from the environment point of view but also minimizes the risks of oil spills, greenhouse gas emissions and many other problems(Jad Mouawad.2010).Also the governments of various countries can adopt measures towards the adoption of equitable distribution of resources from the oil and gas fields that is one step towards solving the problem of inequality in the society driven by the exploitation of natural resources by few hands. Full disclosure of the company’s accounts and accessibility of the records of companies achievements in all terms to the stakeholders adds to the transparency leading to the maintenance of effective monitoring systems and balances .There is a requirement of effective management strategies that need to be practiced at all the levels towards the establishment of sustainable ways of achieving the oil and gas production and utilization.

Steps taken by companies and Governments

Conclusion

We cannot deny the fact that oil and gas industry is the core of the world’s energy market  and the robust population growth and improvement is the standard of living has led to the increased demand of the fuels but at the same time oil and gas production firms are facing challenges  to stay competitive and attain growth as most of them are under the stiff scrutiny of their concerned governments and they also have to abide by the legislative procedures and regulations for striking the right balance between the social ,economic development and environmental protection. The realization of the strategies for the production and utilization of the alternative sources of energy are still far away and oil and gas companies plays a crucial role in taking sustainable energy production initiatives. Firms can develop innovative, eco-friendly technologies to reduce their cost of operations and can also diversify their product range towards non- conventional energy resources. Companies can also improve their environmental performance by adopting innovative strategies and technologies that emphasize on the production of fuel through sustainable ways which will help it in highlighting its contribution towards fulfilling environmental and social responsibility.(IMF, Country Report ,March 2011).Within past few years oil and gas majors has achieved significant success in the improvement of their production processes and subsequent reduction in gas flaring. Gas flaring being one of the major problem and its reduction  is one of the objective of UN sustainable energy for all initiative  as it contributes towards more than 1 % of the greenhouse gas emissions. Now the greenhouse gas emissions have been reduced to the extent of more than 20% in between the years 2005 to 2010.In order to fuel the industry growth and development and at the same time meet the challenges of sustainability it is essential that firms invest heavily on  the development of innovative technologies based on sustainable development of resources  that increases the efficiency of the core processes and at the same time helps in managing the operations in a safe manner ,mitigating the environmental  impact of the oil and gas production.

Barrow, C (2002), Environmental Management, Routledge.

Barrow, C (2006), Environmental Management for Sustainable Development, Taylor & Francis, 2006.

dunlap, R (2014), Sustainable Energy – Page xiiix, Timonthy Anderson.

higgins, K (2014), Economic Growth and Sustainability:, Elsevier Inc.

Mitchell, J (2012), What Next for the Oil and Gas Industry?, Unknown Publisher, 2012.

ScienceDirect, E (2000), Energy policy[ – Page 139, McGraw Hill.

Welford, R (2000), Corporate environmental management 3:, Earthscan, 2000.