Future Energy

Is it Time for Fair Trade Oil?

Source: tropical-rainforest-animals.com

Oil is oil is oil and it is well nigh impossible to separate it once it's in the pipeline.  But that was then and this is now.  Two stories I came across today suggest that there are some out there that are working hard to differentiate between oil sources, as difficult as that sounds.

First, according to the Globe & Mail, Canada's federal government seems to be picking a fight with the European Union as the EU pushes European fuel suppliers to reduce the carbon footprint of supplied fuels over the next decade (see Oil sands row threatens EU trade deal, sources say, February 22, 2011). 

"Canada has threatened to scrap a trade deal with the European Union if the EU persists with plans that would block imports of Canada’s highly polluting tar sands, according to EU documents and sources .....The Commission had initially proposed that tar sands be ascribed a greenhouse gas value of 107 grams per megajoule of fuel, making it clear to buyers that it had far greater impact than average crude oil at 87.1 grams. The latest EU research, published this month, backs that up."

I'm not quite clear on why Canada would pick a fight over a product that the EU does not, and is unlikely to, import from Canada.  However, what interested me was the "certifying" of different oil sources ... an interesting precedence (and perhaps a reason for the disagreement).

Much more interesting was an article in GOOD magazine's Issue 022, The Energy Issue.  On a safari through the range of energy issues facing the U.S. today, GOOD slipped a short mention of David Poritz's Gaia Certification Ltd. and its efforts to establish a certification standard for oil sources.  According to GOOD, Poritz's goal is "Fair Trade" in fuels, that allows consumers to pick the the level of environmental performance that they are willing to pay for.  His model is the Forest Stewardship Council, which oversees standards for certifying woodlands and forest product producers.  You may have noticed companies like Home Depot selling FSC lumber or Staples selling FSC paper.

A quick look at the website suggests Gaia Certification is just getting started, and choosing to do so in Ecuador (where Chevron has become embroiled in lawsuits and accusations of systemic oil spills and pollution).  Drawing on participation from industry, NGO's, government and indigenous communities, Gaia is on the verge of issuing its first set of certification standards, which will serve as the basis for rating the practices of individual countries.

A summary of what Gaia is trying to achieve:

"The mission of Gaia Certification Ltd. is to create a market-driven process that will reward and distinguish world-class oil and gas producers for outstanding social and environmental performance through the active engagement of consumers, civil society, NGOs and the oil industry."

And Poritz is quoted by GOOD, outlining the value proposition for energy marketers as the world makes the transition to low-carbon fuels:

"There’s real market value here for energy producers, ...... It takes time to move to all renewables. We’re in transition, and that transition has to feel good."

It could be the start of something interesting - a first step towards extended product responsibility for the oil industry.  Forget Regular, Premium and Super, imagine going to your local boutique gasoline bar and having a choice of Fort McMurray Mild, Colorado Medium or, for the more discriminating the really good imported stuff, Ecuadorean Dark.

 

 

Safety Culture!

Source: Wata-Malaysian Oil & Gas Engineer

In the course of a recent conversation with one of my clients' senior leaders, the discussion turned to ExxonMobil and that company's consistantly strong financial performance, due in large part to its rigorous approach to risk management.  ExxonMobil consistantly places number one on lists such as Platt's Top 250, which ranks energy companies on their financial performance, and the company has long been thought by many financial analysts to be the most "sustainable" oil and gas company.  While I may disagree (strongly) with ExxonMobil's past position and role on issues such as climate change its hard not to be impressed with the discipline the company appears to bring to its operations.

My discussion of ExxonMobil ended with reference to a statement given by Rex Tillerson, Chairman and CEO of ExxonMobil to the U.S. National Commission on the BP Deepwater Oil Spill and Offshore Drilling back on November 9th, 2010, in which Tillerson outlines ExxonMobil's approach to safety, operational integrity and risk management.  Specifically, Tillerson talks about the development of the company's Operational Integrity Management System (OIMS) and, perhaps more importantly, the development of ExxonMobil's safety culture.  Noteably, Tillerson makes the point that a successful approach to safety demands that a corporate commitmnent to safety should be a value, not a priority.  

Whats the difference you might ask?  In Tillerson's view, it appears to be that a value becomes part of the culture - it goes beyond the written rules, standards and procedures and influences the unwritten standards and norms that shape employees and leaders mindsets, attitudes and behaivours.  

Companies must develop a culture in which the value of safety is embedded in every level of the workforce, reinforced at every turn and upheld above all other considerations.

Interestingly, he attributes ExxonMobil's journey along the path to a sustainable safety culture to the Exxon Valdez oil spill disaster (and seems the reinforce the notion that sometimes it takes a disaster to build consensus for change).  ExxonMobil's safety objective is "Nobody Gets Hurt".  Commenting on the transformation of the company's culture to achieve that objective, he clearly defines the end game:

When an organization reaches the point where everyone owns the system and believes in it, only then at that point, the culture of safety and operational integrity has been established that can be sustained - when it enters the hearts and minds of the people of the organization and becomes a part of who we are.

The statement to the Commission provides an excellent overview of the framework that has been constructed within ExxonMobil to support a safety culture.  In particular, he outlines many of the elements of the company's OIMS.  Summing up, Tillerson outlines three key considerations with respect to safety culture:

1. A culture of safety is born within an organization.  You can't buy a culture - you have to make it yourself.
2. Creating a strong, sustainable safety culture is a long process.
3. Leadership by example and thoughtful, honest and objective self-assessment are essential.

While the safety literature is replete with lists of what is required to achieve a high performance safety culture, Tillerson's list is jargon free and as good as any.  Notably, his remarks also give strong weight to the role of OIMS - that is the system and tools that give substance to what might otherwise be empty rhetoric.  This is an improvement over some of the safety literature which seems to think leadership is enough (like much management literature these days), discounting the role of rigorous management systems.  In my view, both the systems and the leadership/culture are essential - one reinforcing the other.  A strong culture without workable tools to operationalize concern for safety won't produce a result.  And neither will tools without the culture demanding their use.

What got me interested in Tillerson's statement originally, was what it suggested for developing a "culture" around other performance imperitives - such as sustainability.  But thats a conversation for another post. 

 

How Real are Sustainability Ratings?

Its old news now, but the iconic Dow Jones Sustainability Index released the results of its latest annual review in September, and not without some controversy.

As has happened every year since the creation of the index in 1999, Dow Jones and SAM have identified those that made the grade and had been added to the list and those that had failed and were being dropped from the indexes.  Earlier in 2010, BP was dropped from the indexes in response to the Deepwater Horizon oil spill and prior incidents such as the explosion and worker deaths at the company's Texas City refinery in 2005 and failures on the Trans-Alaska pipeline in 2006.  So far not so controversial.

However, puzzlingly, to replace BP, in September DJSI chose to add Haliburton to the list.  That is the same Haliburton that was BP's partner on the Deepwater Horizon drill rig.  With responsibilities still being sorted out for the oil spill disaster the decision certainly called into question DJSI's sustainability credentials.

For example, John Collins Rudholf, writing in NYTimes Green blog .....

"Halliburton was chosen after a “thorough analysis of corporate economic, environmental and social performance, assessing issues such as corporate governance, risk management, branding, climate change mitigation, supply chain standards and labor practices,” Dow Jones said in a statement."

"Some market observers found the selection puzzling, however. Halliburton, after all, was deeply involved in the BP drilling operation that ultimately caused an estimated 4.4 million barrels of oil to spill into the Gulf of Mexico. The company remains under investigation by the Justice Department for its role in the disaster, and could still face civil or even criminal sanctions."

Writing at Social Funds website, Robert Kropp went even further, questioning how DJSI came to include a variety of companies with questionable public histories ......

"The largest companies deleted were Toyota, Royal Dutch Shell and UniCredit. Toyota, of course, has received considerable media attention this year because of multiple product quality defects in its automobiles, while Shell -- currently listed as the world's second-largest corporation in Fortune Magazines Global 500 -- is responsible, along with ExxonMobil, for much of the estimated 546 million barrels of oil that have spilled in the Niger Delta over the last 50 years.

The question of why companies with such poor environmental records would be included in a sustainability index in the first place was highlighted earlier this year, when BP was removed from the DJSI World following the Gulf of Mexico oil spill. Index rules allow for elimination of companies from the DJSI following extraordinary events."

The DJSI seem to be relatively transparent, providing relatively detailed descriptions of their methadologies.  They follow a best-in-class approach and include sustainability leaders from each industry on a global and regional level respectively. The annual review of the DJSI family is based on a thorough analysis of corporate economic, environmental and social performance, assessing issues such as corporate governance, risk management, branding, climate change mitigation,supply chain standards and labor practices. It accounts for general as well as industry specific sustainability criteria for each of the 57 sectors defined according to the Industry Classification Benchmark (ICB).

 

Dimension	Criteria	Weighting (%)
Economic	Codes of Conduct / Compliance / Corruption & Bribery	6.0
	Corporate Governance	6.0
	Risk & Crisis Management	6.0
	Industry Specific Criteria	Depends on industry
Environment	Environmental Reporting*	3.0
	Industry Specific Criteria	Depends on industry
Social	Corporate Citizenship/ Philanthropy	3.0
	Labour Practice Indicators	5.0
	Human Capital Development	5.5
	Social Reporting*	3.0
	Talent Attraction & Retention	5.5
	Industry Specific Criteria	Depends on industry

 However, as Halliburton's inclusion demonstrates some of the decisions are at best counter-intuitive and may even suggest a lack of real rigor - perhaps even lack of understanding about what "sustainability" entails.

 

Burtynsky's View: The Spill in the Gulf

The current edition of Canadian Art has an article highlighting Edward Burtynsky's most recent photo collection, aerial photos of the BP Deepwater Horizon disaster in the Gulf of Mexico.  For those who remember Burtynsky's earlier collection - Oil - released late last year, the contrast between the almost striking beauty of the photos and the shock of the situation they portray will be familiar. 

While Canadian Art has included some of the photos from the collection in their article, I couldn't resist copying some of the more interesting images in a larger format than you can get at the magazine's website.  My respects to one of Burtynsky's dealers, Nicholas Metevier Gallery in Toronto, for posting at least some of the images on their website.

  

"For 30 years, Burtynsky has made it his practice to record, in large colour prints, the human imprint on the natural world, photographing mines and quarries and railway cuts and, more recently, the impact of oil extraction and use around the world, from the freeways of Los Angeles to the shipbreaking deltas of Bangladesh and the oil fields of Alberta and Azerbaijan."

  

    

"Some of Burtynsky’s pictures from this day are aesthetic marvels, and I find myself thinking about the craggy lines of Clyfford Still, or Kandinsky’s nervous whiplash gestures and lustrous chromatic variations. You can’t help it; aesthetic pleasure is impossible to forestall, the context notwithstanding."

               

 

"The blue of the ocean, like Kandinsky’s, has a souped-up, unreal quality, like lapis lazuli, and a pilot would later tell us that this new colour showed up just a week ago, when the spraying of chemical dispersants, principally Corexit 9527 and 9500, commenced full-bore. The toxic qualities of Corexit has led to its banning in Britain, but here it’s full-tilt boogie. In Burtynsky’s pictures, the ocean looks like Sani-Flush."

                 

   

"How was this different from what I had imagined, watching the TV news in Toronto, researching online and flipping through magazines on the flights south? First, it was clear that the spill’s impact on shore life had not, in late June, even begun to be felt. Virtually all the oil still hung offshore. Did people understand what was coming? How could they?

Second, the dispersant seemed to have moved the oil deeper underwater, where the skimmers and booms could no longer intercept it ....."

     

    

Three Polls for Sustainability

Source: Signal Environmental

It was a busy summer and some things, like this blog, just couldn't keep up.  But that's not to say I didn't come across lots  I'd like to look back at as I try to get back in the habit of posting again.  Take the three polls I came across in early August (that's when I came across them, not necessarily when they were made public).

Back in June, Pembina Institute released a survey of 5,000 "thought leaders" (whatever the heck a thought leader is - I'm not sure that academics and government middle managers are leading many in their thinking these days).  The survey was conducted by McAllister Opinion Research and was released in advance of the G8/G20 meetings in Huntsville and Toronto, respectively.  Needless to say, with the uproar over fake lakes, $1 billion in security costs and riots in T.O., this survey sank without a trace. 

In the words of the press release ......

"The federal government is out of step with leading thinkers on issues related to sustainability, energy and climate change, according to the results of a groundbreaking survey of more than 5,000 experts and government officials  ....  These results clearly illustrate that leaders within government, academia and the private sector understand the energy and sustainability challenges Canada faces, and have a high level of agreement on how best to tackle them  ....  What Canada still lacks is the political commitment to take sufficient action."

Whats most interesting for me is that 59% of the respondents work in government (and most are in Canada), suggesting a profound disconnect between the Harper government and its civil servants on energy policy, climate change and sustainability.

Shifting direction (but just a bit), Gibbs and Soell, a New York based public affairs firm released their 2010 Sense and Sustainability Study, looking at how 2,600 U.S. consumers and 300 Fortune 1000 executives view the corporate pursuit of sustainability.   Scepticism is the key word Gibbs and Soell use to describe their own study.

Again in the words of the press release ...

Corporate America has embarked on its journey toward sustainability, but still draws public skepticism. Only 29% of executives and 16% of consumers believe that a majority of businesses (“most,” “almost all,” or “all”) are committed to “going green” – defined as “improving the health of the environment by implementing more sustainable business practices, and/or offering environmentally friendly products or services.” Many executives (54%) and consumers (48%) believe only “some” businesses are committed to “going green.”

However, I don't know if I would really define the response as sceptical.  If anything, it may be incredibly optimistic for 29% of executives to believe that "most", "almost all" or "all" U.S. companies are going green.  While the press release says that "Corporate America has embarked on its journey toward sustainability ...", as someone that makes a living helping companies down this particular road I would suggest that the majority of companies display the symptoms (e.g. publishing sustainability reports) but provide only tepid support beyond what the regulations require.

Finally, the last poll, conducted by Harris Poll for the Financial Times, looked at U.S. and European support for greater regulation of oil companies in the aftermath of the BP-Deepwater Horizon disaster.  The poll, released August 12^th, found that support for more regulation ranged from 73% of Britons to 91% of the French (U.S. respondents were in between with 77% of those spoken to favoring more regulatory constraints).

"The findings underline the challenge facing the industry after the accident on April 20 when the Macondo well ruptured, killing 11 workers and spewing 4.9m barrels of oil into the sea. Although the Obama Administration's moratorium on deep-water drilling in the gulf, imposed after the spill, should be lifted earlier than it's November 30th expiry date, the industry is already bracing itself for further regulation and higher costs"

So what does it all mean?

At a minimum, I would say there is a disconnect between industry claims to be "going green", becoming sustainable, etc. and the public that is on the receiving end of the message.  It also shows what bad performance on the part of one or two companies can do to the whole sector, and even all industry.  Looking at Canada and the Pembina/McAllister survey that disconnect extends to include a government and the thought leaders that are in many cases employed by it. 

Its been a tough summer for corporate reputations in the energy sector so it would be interesting to look at similar polls again in six months.

Too Many Oil Spills

Source: solveclimate.com

In April (through July), it was BP's Macondo well in the Gulf of Mexico.  Last week, Enbridge's pipeline failed releasing one million gallons of crude into the Kalamazoo River in Michigan.  And in his blog at Solveclimate.com, David Sassoon provides a photolog of the Chinese oil spill at the Yellow Sea port-city of Dalian (see Bare Hands Clean-Up of a Horrible Oil Spill, July 29^th).

These are certainly spills that have captured the horror of press and public across much of the world.  However, a recent report by the Wildlife Federation of America makes the case that as devastating as this small number of spills might be, they are only the tip of the ice-berg.  Bradford Plumer writing in the Vine Blog (The New Republic) (see Oil Spills Everywhere, July 29^th) identified the report - Assault on America: A Decade of Petroleum Company Disaster, Pollution and Profit in which the National Wildlife Federation takes a strong stand.  In fact stronger than I would have expected from this type of NGO.

Major oil spills are really only a small part of the real story. From 2000 to 2010, the oil and gas industry accounted for hundreds of deaths, explosions, fires, seeps, and spills as well as habitat and wildlife destruction in the United States. These disasters demonstrate a pattern of feeding the addiction to oil leaving in their wake sacrifice zones that affect communities, local economies, and our landscapes.

The report provides a Map detailing thousands of petroleum company accidents, spills and other incidents (explosions, fires, etc.) in the U.S. between 2000 and 2010.  The report also highlights five or six of the more significant incidents each year. 

Finally, NWF provides a list of recommendations for ending the industry's history of spills, including:

• eliminate the cap on liability for damages caused by oil and gas disasters
• remove exemptions from the Clean Water and Safe Drinking Water Acts for oil and gas development
• implement new monitoring measures
• reform royalty structures for oil and gas leases on federal land
• pass comprehensive climate legislation in the U.S.

(In all NWF provides 13 recommendations.)

Working in the oil and gas industry obviously leaves me somewhat conflicted when I look at a report like this.  On the one hand there is no question that the incidents are unacceptable - in this regard, NWF does a good job of bringing them all together in a way that helps the industry to begin looking at the systemic causes.

On the other hand, an industry as all encompassing as the oil and gas sector and working as it does in some of the most inhospitable environments on earth will have incidents.  We and our economy are dependent on petroleum products; these incidents are the price of such dependency.  (To be fair to the NWF, many of their recommendations relate to decreasing the addiction.)

No doubt the long term answer is to reduce use of petroleum.

However, in the the short term there are several answers:

• Effective regulation that recognizes and acts on the key risks facing the industry.
• Better identification of the risks by the companies developing petroleum.
• Much better design and implementation of risk management systems to ensure that qualified people work safely to develop a volatile resource.
• Real senior management oversight of how their companies are managing the social, safety and environmental risks associated with their activities.

My understanding of NWF is that it is a relative moderate among the NGO's calling for the oil and gas sector to change.  And if they are concerned enough to use the language that appears in this report, its well worth paying attention to what they are saying and what they are trying to say.  So to close, over to NWF:

The total cost of the status quo —– in lives lost and health risks as well as social and environmental degradation —– is far too high. The sooner we move in the direction of meeting our energy needs through cleaner, safer sources.

The negative consequences for our health, our land, our climate and our children’s future are too great to continue to depend on oil to power our economy. Now is the time to put enact laws that favor and encourage safe and clean energy development and remove federal subsidies and tax advantages for oil and gas development. Now is the time to increase mitigation fees. Now is the time to create an oil and gas disaster fund paid for by industry. Now is the time to draw lines around environmentally sensitive areas that are made permanently off limits to oil and gas development.

And now is the time to cap global warming pollution from all oil and gas production —– including every aspect of the uncontrolled extraction and refining processes where methane, carbon dioxide, and other global warming gases are released into the air every day.

The BP Deepwater Horizon spill is truly a tragedy of our time. It should be used to take a closer and more comprehensive look at the full and continuing costs that the oil and gas industry continues to impose on society with its pollution, environmental degradation, habitat destruction, wildlife loss, worker and community endangerment, health effects consequences, and loss of life.

More lessons in risk management from the Deepwater Horizon

Source: Treehugger

The NY Times has put together a detailed look at the issues and failures behind the Deepwater Horizon disaster (see In Gulf, It Was Unclear Who Was in Charge of Rig).  In Saturday's NY Times, Ian Urbina catalogues two kinds of failures: system failures for which BP and its partners were responsible and failures on the part of the regulatory framework that governs (or not) offshore oil and gas development in the Gulf of Mexico.  I want to focus on the risk management failures he identifies in this article.

Several weeks ago, I looked at the news reports to that time and argued that the Deepwater Horizon disaster provided some valuable lessons for managing the risks inherent in complex undertakings like drilling for deep water oil and gas deposits.  As noted in that post, I think Thomas Homer-Dixon's Ingenuity Gap provides an excellent basis for understanding how the problems we face, such as this blowout, can outrun our ability to deal with them.  Echoing these arguments, the article quotes Tad Patzek of the University of Texas, Austin, who concludes that:

"It's a very complex operation in which the human element has not been aligned with the complexity of the system."

And Mr. Urbina goes on to identify four ways in which BP and its partners failed to adequately manage the system's complexity:

• Who was in charge?

Federal investigators heard conflicting answers as to who was in charge of the rig and its activities in the days and hours leading up to the explosion.  There was an inherent conflict in the relationship between BP and the drill rig owner, Transocean (and likely Haliburton as well), with BP responsible for paying a daily leasing fee for the rig.  Time was a cost for BP and a source of revenue for the contractors. 

In Mr. Urbina's words:  "Amid this tangle of overlapping authority and competing interests, no one was solely responsible for ensuring the rig's safety, and communication was a constant challenge."

A related issue was the apparent confusion over delegation of responsibilities once something went wrong.  The rig captain was upset that one employee pressed a distress button without authorization and another failing to contact shore for help.

• Failure to Plan for Identified Risks.

BP asked for and received permission to exempt the project from the regulatory requirement for a rigorous environmental review.  Even once risk assessments had identified a "worst case" blowout as one that might produce 250,000 barrels of oil per day (The blowout is currently spewing out 12,000 to 19,000 barrels per day - or possibly more.  It is hard to imagine the devastation the worst case would have led to.)  there was no response plan to address that level of risk nor did the company have on hand the equipment that it had indicated would be used to respond to a blowout.

NY Times notes that the rig's spill response plan included a web link for a contractor that directed users to an Asian shopping website, suggesting that it was out of date and/or had not been adequately checked.

• Ignoring own risk management policies and designs.

BP engineers had to get company permission to use equipment, including casings, that deviated from it's own design and safety policies.  BP elected to proceed with well casings that had a greater risk of collapsing and used cement in a way that did not meet Halliburton's "best practices". 

The Minerals Management Service (federal regulator) had "highly encouraged" (but did not require) companies to have backup systems to trigger blowout preventers in case of emergency - BP did not have them.

• Not responding to failures and indicators that something was wrong.

Well before the blowout and explosion April 20th, the rig was experiencing "kicks" (kicks, or pulses of gas or pressured liquids into the well bore, if not controlled become blowouts), the blowout preventer was found to be leaking fluids at least three times, despite noticing cementing problems in the well bore, BP skipped a quality test of the casing, tests before the blowout indicated abnormal buildup in pressure, .... A picture of persistence in the face of any and all indicators that something was wrong.

                              

Complexity demands rigorous management systems if it is going to be managed successfully.

In the introduction to its 2009 Sustainability Report (Safety section), BP indicates that it follows a "systematic approach":

"BP constantly seeks to improve its safety performance through the procedures, processes and training programs that we implement in pursuit of our goal of ‘no accidents, no harm to people and no damage to the environment’  ......We are carrying forward our efforts on process safety, which is an integral part of our operating management system (OMS) and ingrained within our capability programs."

The evidence presented by Mr. Urbina suggests that while the systems exist on paper, BP is having difficulty implementing them in its U.S. operations.  

So to reiterate what I wrote several weeks ago, the lessons (for risk management) coming out of the Deepwater Horizon disaster seem to be:

• have adequate systems in place ( but this isn't enough);

To be fair, its hard to find a major company in the oil and gas business that hasn't gone to the effort of developing risk management systems for safety, process safety, environment, and other key risks inherent in their businesses.  Similarly they all have crisis management, emergency response, pandemic and other disaster response plans on the books.

• make sure they are up to date;

However, its the implementation where many management systems start to come unglued.  Its not enough put the binders on the shelf or the plans on an intranet site.  If systems and plans are up to date, they don't have links to Asian shopping sites.

• make sure they are understood and used by everyone involved; and

Its hard work to communicate and train employees regularly to ensure they understand and can use the systems and plans in their everyday activities.  Its even harder to make sure that they continue to be used when time or cost concerns intervene - everybody loves a good shortcut.

• make sure the performance and process data that is used in decision making is the right data and that it is not ignored in response to the pressures of the moment.

Its important to take the time before a project begins to understand what indicators/ measures might help us understand the process we are managing.  And then its even more important to pay attention to those indicators once they arise.  What's the point of constructing systems and plans to manage complexity if we ignore the indicators that tell us something about the complex environment we are trying to manage? 

Perhaps a more succinct way of putting all of this is to follow the old Boy Scout motto: Be Prepared.

 

Backtracking: More Grizzly Bears and Access Management

 

Source: Alberta Wilderness Association

I just spent some time helping my father-in-law clean up an overflowing stack of mail, magazines and much other paper, and came across an old article relating to access management and grizzly bears, the subject of a post May 2^nd.  A year ago, Westworld Alberta magazine included an article by Jeff Gailus, (see Bear-ly With Us, April 2009) the author interviewed by the CBC's Anna Maria Tremonte April 29^th, about efforts to save Alberta's grizzly bears. 

Mr. Gailus sounds a bit more upbeat in the article than he did on the radio two weeks ago. However, he once again highlighted the role of high road densities and public use of those roads in the bears' Alberta demise.  Its a good article and it does explain the connections between roads and bear recovery in a bit more detail than was possible in the CBC interview.

Interestingly, the article quotes Chris Servheen, the U.S. Fish & Wildlife Service's Grizzly Bear Recovery Coordinator, on managing access without removing roads.

"That's a Holy Grail question ... in the U.S. we have what's called the Knucklehead Factor: it's always five to 10 per cent of the people who cause all the problems.  We don't even count gated roads as closed because we can't get people to obey the closures.  So if the Knucklehead Factor exists in Alberta, you can't reduce access without closing roads."

After my post two weeks ago I got a message from a friend reminding me of the position taken by then Petro-Canada, now Suncor, at the ERCB hearings for a natural gas pipeline/wells proposed south of Alberta's Kananaskis - the "Sullivan project":

"One thing that I noticed in the ... commentary and response from Jeff Gailus  was that there was no mention of open access vs controlled access - simply access.  In [the] ERCB Hearing re: Sullivan - this distinction was made and had to be re-inforced on the premise that not all access is created equal.... and that properly controlled access isn't much different than no access."

Petro-Canada's position is consistent with my conclusions in work I did during 2008-2009 regarding access management (the reports are here) for the Foothills Research Institute.  Its difficult and it requires a well coordinated strategy (rather than just a gate) but access can be controlled once it has been created.  The insurmountable hurdle appears to be the will and the resources to create an effective strategy - so Shell Canada has been able to make a success of managing access in the Waterton region of south-west Alberta and Petro-Canada/Suncor may be able to do so as part of the proposed project development for Sullivan.  Governments though, in both the U.S. and Canada, have a harder time saying no to the Knuckleheads. 

So, perhaps it is better not to create the access in the first place if that's an option.

FYI, Jeff Gailus was kind enough to add some comments to my original post that you might find interesting.

BP's Deepwater Horizon: Lessons for Risk Management

Reading the stories emerging from BP's Deepwater Horizon disaster in the Gulf of Mexico over the past several weeks reminds me of arguments made by Thomas Homer-Dixon in his book The Ingenuity Gap. One of my key take-aways from this book was that the emergence of increasingly complex problems facing society today demand new ways of approaching and solving them.

Certainly the quest for offshore oil and gas has to be considered very complex and getting more so every day as the oil companies push into ever deeper water and ever deeper reserves.

Fortunately, the past two decades have seen the development and adoption of a variety of risk management systems and risk assessment tools that are intended to help us manage the complexity that is inherent in industries such as energy and oil and gas.  Systems such as the ISO 14001 environmental management system, the OHSAS 18001 occupational health and safety management system and the ISO 9001 quality management system all exist to help managers understand the risks they face, develop solutions to address them and monitor performance to ensure they have actually dealt with the risks as intended.  An even broader array of tools exist to identify and assess risks - two I am familiar with are the Hazard and Operability (HAZOP) process and the Bow-Tie diagram.

Unfortunately, early evidence surfacing from the U.S. congressional investigations and news reports suggests that on the Deepwater Horizon, BP and its partners may not have made adequate use of the management systems and tools available to them.

A report in Reuters today (see On Doomed Rig, Lapses Sparked Catastrophe, May 14) highlights three failures on the platform:

• Timing of removal of drilling mud from the drill bore despite data that suggests it was unwise to do so.

BP and Transocean made a decision late on April 20 to begin removing mud from within the drill pipe despite pressure tests from within the well that a BP official described as "not satisfactory" and "inconclusive," Waxman said on Wednesday.

Drilling mud is a mixture of synthetic ingredients that is pumped into the well to exert downward hydrostatic pressure and prevent a column of oil and gas from rushing up the pipe.

Earlier in the day, well pressure tests showed an imbalance between the drill pipe and kill and choke lines running from the drill deck to the blowout preventer. The pressure in the drill pipe was 1,400 pounds per square inch (PSI), while the choke and kill lines read zero PSI, Waxman said.

"They knew there was something wrong because the pressure in the kill and choke lines was not correct," Nagarajaiah said. "That should have alerted them."

But according to Waxman, workers performed additional tests and at 8 p.m. CDT (0100 GMT) "company officials determined that the additional results justified ending the test and proceeding with well operations."

"I'm a little shocked that they proceeded at that point," said Philip Johnson, a petroleum engineering professor at the University of Alabama.

"It sounds like they never got an adequate low pressure test and someone decided to go ahead and displace the mud," Johnson said. "That sounds like a pretty serious mistake."

• Failure of emergency power supplies to blow-out preventers.

Once the well exploded in a green flash, rig workers tried to activate the blowout preventer on the ocean floor, designed as a fail-safe to choke off the well.

But officials from Cameron International Corp, which manufactured the device, told committee staff that a key hydraulic system meant to supply emergency power was disabled.

• Having the wrong equipment in place to cut of well flow.

And another key device component designed to clamp down around the drill pipe and seal any leak -- known as a variable bore ram -- had been replaced by a useless test ram, according to Representative Bart Stupak, chairman of the Energy and Commerce Committee's investigations subcommittee.

With oil gushing into the sea, BP sent remote robots to the ocean floor to attempt to activate the ram. "An entire day's worth of precious time had been spent engaging rams that closed the wrong way," Stupak said.

In an analysis posted at Environment 360 earlier this week (see The Gulf Oil Spill, An Accident Waiting to Happen, May 10), John McQuaid outlines two systemic failures:

• An industry aversion to examining "worst-case scenarios", i.e. to fully understanding the risks they were facing.

Energy companies have aggressively lobbied to avoid formally analyzing worst-case scenarios since the Carter administration first required them in instances where there was uncertainty about the risk of disaster.

“They thought it would lead to irrational public resistance to projects,” Doremus said. “But to me this Deepwater Horizon thing is an example where a worst-case analysis would have been useful. If they had done a worst case analysis they’d have to consider, well, ‘What if our blowout preventer didn’t work? And what if it happened during a bout of bad weather when the spill might reach the shore?’” Instead, BP officials admitted they were stunned by the disaster, and they and the government have largely improvised their response.

• Industry unwillingness to put in place backup devices for triggering blowout preventers, despite a regulatory "suggestion" to do so.

Based on experience with malfunctioning blowout preventers, for instance, the MMS did suggest that energy companies install backup devices for triggering them. But it was only a suggestion, not a requirement, and U.S. drilling operators have declined to do so.

Mr. McQuaid goes on to draw links between the Deepwater Horizon disaster and BP's Texas City Refinery explosion and fire, which killed 15 and injured 170 in March 2005.  BP commissioned former Secretary of State James Baker to lead an investigation panel into the Texas City disaster, the results of which were published in what is widely known as the Baker Report.  Among the findings were suggestions that the company had failed to adequately manage the safety of its process because its focus was too narrow - measuring worker safety incidents rather than looking closely at the industrial processes in the refinery.

"BP primarily used injury rates to measure process safety performance at its U.S. refineries ... BP's reliance on injury rates significantly hindered its perception of process risk."

Essentially saying the company failed to monitor the safety of its refining processes. Sounds a bit like comments made in the Reuters article on Deepwater Horizon.

Complex operating environments like those that are present in the oil and gas sector demand well though-out risk management systems that are kept up to date and are used by everyone present.  While its still too early to say what contributed to the Deepwater Horizon disaster, some of the evidence certainly suggests that operators didn't make full use of the data being provided by risk control equipment - and thus not fully using the safety and environmental management systems that were undoubtedly in place.

So if there are lessons to be drawn from the disaster at this early stage I would suggest that they are:

• have adequate systems in place ( but this isn't enough);
• make sure they are up to date;
• make sure they are understood and used by everyone involved; and
• make sure the performance and process data that is used in decision making is the right data and that it is not ignored in response to the pressures of the moment.

Note: Previously posted at Eos Consulting blog

Green Oil?

Source: Fast Company

Newsweek recently ranked 500 U.S. companies on their environmental credentials (see The Greenest Big Companies in America, September 28th).  Only one oil and gas company, Marathon Oil, is included in the top 100 companies and it was number 100. 

After Marathon, you would have to travel down the list to the 154^th spot to find the next oil and gas company, Baker Hughes, an oil and gas service company.  Notably, the coal fired utilities grabbed 13 of the bottom 20 spots in the ranking - NRG Energy ranked 499^th.  Clean coal anyone?

Newsweek relied on three partners to construct the ranking, including:

• Trucost - calculated environmental impact scores;
• KLD Research & Analytics - calculated green policy scores;
• Corporate Register.com - conducted a reputational survey.

The overall scores combined all three of these components and from the limited information on the methodology each partner followed, the scoring looks to be fair.

Back in February 2008, Fast Company magazine went through a similar exercise and ranked the sustainability of the world's 10 largest oil and gas companies (see Fast Company Looks At Oil, February 4, 2008).  In a subsequent post I put together a table comparing Fast Company's rankings with those from the Dow Jones Sustainability Index and the Global 100 Most Sustainable Companies.  I've updated here to include the Newsweek rankings.  Not a lot of overlap.

Companies	Newsweek	Global 100	DJSI	Fast Company
BG Group		√	√
BP			√	1
Royal Dutch Shell		√	√	2
Chevron	√ (371)			3
Marathon Oil	√ (100)			4
ConocoPhillips	√ (238)			5
Total			√	6
ExxonMobil	√ (395)			7
Encana			√
Eni S.p.A.				9
Neste Oil OYJ		√	√
Nexen		√	√
Petroleo Brasileiro			√
Repsol			√	8
Saipem		√
Sasol			√
StatoilHydro		√	√
Suncor			√
TransCanada		√
Valero Energy	√ (332)			10
Woodside Petroleum			√