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Consultation vs.

Confrontation: Building Participative Partnerships with Communities and Stakeholders for the Development of Petroleum Resources near Urban Centres.
James G. Shaw, Nexen Inc., Canada Abstract:
Most organisations tend to characterise the sensitive environment as that of the biophysical domain. In the case of sour gas1 exploration and development bordering a major urban centre, the City of Calgary, Canada, the sensitivities Nexen Inc. faced were in the social, political, and economic impact of a rapidly encroaching urban and rural population. Since the early 1990s Nexen has continued its leadership role in establishing meaningful consultation in the face of unprecedented confrontation. Efforts have extended far beyond local regulatory requirements and are producing consistent win/win relationships. As Nexens drilling and production on Calgarys urban fringe evolved over a decade ago, so did the Communitys concern for the potential of hazards and perceived health and safety risks often associated with sour gas development activities. With escalating opposition and growing community tension around increased sour gas extraction operations, the communities in NE Calgary became progressively more frustrated. Their relationship with the Company was pushed to the near-breaking point. Recognising that a cumbersome regulatory process for adjudicating development would further deteriorate this already fragile relationship, Nexen developed and successfully implemented a voluntary process for public consultation and engagement that embodied the principles of Open, Honest and Transparent Communication. These principles are embodied in the International Code of Ethics for Canadian Business and this remains today, key to many of the successes that Nexen has enjoyed through effective and engaging consultation. As Nexen looks to the future of public involvement, we are guided by our vision of being leaders in public consultation; encouraging community and industry to see the mutual advantage that comes from meaningful, collaborative relationships.

Introduction:
This paper explores the basic principles and supporting strategies for effective participative community consultation, which build upon the many opportunities, pitfalls, challenges, and successes that Nexen Inc. has experienced in this challenging sensitive operating environment over the past 40 years.

Bringing Value to the Surface:


In the 1970s the energy crisis brought North America to realise the urgent need for expanded resource exploration. In the 1980s, protection of the environment took centre stage and a more tempered approach to resource development was appropriate in the shadow of events that included Bhopal and the Exxon Valdez. In the 1990s climate change, biodiversity and global warming emerged as the issues of the day. Today, as we begin a journey into a new millennium that is sure to change the way we use and produce energy, human issues have become the challenge for which there is no simple or scientific solution. The human element, often ignored in the pursuit to satisfy our growing appetite for energy, is now at the forefront. The need for and the concept behind public consultation are not new. In fact we have been aware of public opinion and used it to lever opportunities and expedience in exploration for many years. High oil and gas prices have in the past been the catalyst for increased exploration. Consumers have, until recently been willing to tolerate considerable disruption and inconvenience if it were thought to support the achievement of affordable and accessible energy.

sour gas is defined as natural gas containing greater than one percent hydrogen sulphide (H2S)

Our History:
The Western Canadian Sedimentary Basin with its vast reserves spread throughout the provinces of British Columbia, Alberta and Saskatchewan is to many the centre of oil and gas exploration and production in Canada. Approximately 35 per cent of the natural gas production in Alberta is impacted by hydrogen sulphide and considered sour. Urban sprawl and the nature of our geological richness have meant that some of this valued energy resource is located directly adjacent to urban regions of the province, such is the case with Calgary. Nexen Inc. (formerly Canadian Occidental Petroleum Ltd.) has been operating a sour gas field with a hydrogen sulphide (H2S) content of up to 37 per cent, northeast of the city since the early 1960s. Prior to the 1990s, the company's presence in this region was largely unnoticed by the general public. However, by the 1980s the city had sprawled north and eastward and was now encroaching upon the company's field facilities. To further complicate the issue of encroachment, a shift by the public occurred that reflected an escalating fear of the perceived health and safety risks associated with sour gas development. This attitude was fuelled by a high degree of public concern largely created by a lack of quality information about the associated risks of sour gas development. Despite the exemplary safety record of the company, the outrage felt by the public over what they perceived to be a new and risky intrusion on their lives was unexpectedly high. Initially the company had difficulty appreciating these concerns in light of the fact we were first to occupy the area and that regardless, our operations had been scientifically shown to be safe. The end result was extreme frustration and a mutual loss of respect between the company and the residents. When the community became aware that the company had decided to seek regulatory approval and drill additional sour gas wells into this field, the relationship was pushed to the breaking point.

Opposition meets Opportunity:


In 1991 it became obvious to the Company that to proceed with the formal regulatory approval process, which would involve a public hearing, would likely result in a further deterioration of relations between the residents and the Company. Regardless of the outcome, in such a scenario there would be no winner. Accordingly, the Company approached the Alberta energy regulator, the Energy Resources Conservation Board (now known as the Alberta Energy and Utilities Board - AEUB); to ascertain whether there might be an alternative mechanism to seek resolution of the issues. The Company and the AEUB agreed that a voluntary public consultation mechanism, outside that of the formal regulatory process, should be attempted. It was clear that it would be futile for the Company to launch such a mechanism on its own because of the lack of credibility with the community. The AEUB, as a credible and respected regulator in the province, agreed to champion the implementation of the process. A meeting was convened by the AEUB shortly thereafter, and was attended by highly sceptical and even hostile representatives from the various communities in northeast Calgary and the surrounding rural area. City officials, provincial government agencies and the Company were represented as well. The residents were asked to participate in a mediation-based, open consultation forum that was to review the company's development proposal. Nexen was requested to address the concerns raised by the community and to reimburse participants for reasonable costs associated with the process. An independent and neutral third-party facilitator was agreed upon and appointed after being deemed acceptable by the community and the Company. The residents' expectations at the outset were best expressed by one of the key community stakeholders, who later stated I expect we'll have a bunch of meetings, be told how safe everything is, and then they will go ahead and do whatever they intended to do in the first place. However, over the next few months as the group known as the North-East Calgary Application Advisory Committee (NCACC) continued to meet on a regular basis, there was a gradual emergence of mutual respect and trust as the participants began to get to know one another. In addition, it soon became
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recognised that there existed the opportunity to accomplish something positive by working together. Residents and the Company soon acknowledged the sincerity of the people involved. According to the community 'The turning point was when we started to ask probing questions and demanding answers which were dependent upon having access to normally confidential information. The Nexen people were the first to support us and agreed to full disclosure. The journey to building trust had begun. In the months that followed, most all of the community issues were addressed and consensus reached on their resolution. The report eventually filed with government concluded that the residents would not object to the drilling of additional wells subject to implementation of a number of recommendations. Important to the resolution was the need to include enforcement of the most stringent technological standards available, timing considerations for continued development, emergency ignition practices, further public communication mechanisms, and residential and industrial set-back considerations. What was originally perceived by many to be impossible, only one year earlier, was ultimately achieved, -a win/win benefit for all. In the end, the success of the group was not measured by who got their own way, but rather in terms of shared pride in our conclusions and in the consensus process used in arriving at those conclusions. Stated Community Representative: Brian Holmes.

Process:
Key elements in the success of this consultative process were in identifying a credible, strong yet neutral, facilitator, and the immediate establishment of terms of reference that governed the process. It was critical that the participants in the process represented the widest spectrum of views on the issues. In addition, it was extremely important that the participants identify the issues of concern - do not assume beforehand that you know or understand the issues. Accordingly, a management process was clearly defined that tracked issues and progress made in achieving resolution of those issues. Once the issues of the sour gas operations were clearly defined, they were consolidated into four key work areas: Public safety; Orderly and economic development of the reserves; Land use conflicts; and Communications. Sub-committees of the main or plenary forum were established for these areas and each chaired by a member of the public. At the sub-committee level, each of the issues was examined in detail, resolution sought for any outstanding areas of disagreement and then consensus pursued before the plenary group. Government, Nexen and outside consultants provided technical expertise when needed. Interestingly, the residents concluded that the use of outside parties was not required.

Learnings:
Building upon these experiences and others that we now define within our framework of Corporate Social Responsibility, Nexen undertook to work with industry and government in the development of The International Code of Ethics for Canadian Business. Key principles embodied in the Code have helped Nexen to develop a policy framework that incorporates the following in its consultation approach: Local communities need to be involved in the decision-making for issues that effect them; Public consultation and community engagement adds value and contributes towards a stable operating environment; Consultation is the preferred mechanism to resolving issues with stakeholders; Open, honest and transparent relationships are critical to our success; Provide meaningful and transparent consultation with all stakeholders and attempt to integrate activities with local communities; At the end of the day, it is the public that must decide what constitutes an acceptable level of risk to their lives. The company's role in this process is to help facilitate that decision. Our experience with this process has also led to the development of a set of prerequisites for successful public consultation:
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There must be a genuine willingness on the part of all parties to engage in the consultation process; There needs be some flexibility in the positions of all parties; All parties must be willing to engage in straight talk; There must be a champion to initiate and drive the process; There needs to be an informed, yet neutral, third-party facilitator.

In addition, the Company discovered that it is not just the scientific determination of the risk that is critical to resolving issues of concern in the community. Of equal importance is the ability to communicate that risk effectively, and to acknowledge that any perceived risk is as valid an issue as any scientifically proven risk. Clearly, perception is regarded as the editor of reality.

The Path Forward:


The tremendous satisfaction and relief that emerged among the participants in the NCACC process influenced how we currently conduct our activities with respect to public consultation and community engagement. Public consultation has evolved in the Alberta oil and gas industry to where we now have established guidelines to assist companies in planning their community engagement process with the view to a win-win result. Developed in the 1990s with direct input from Nexen, the Guide for Effective Public Involvement was developed by member companies of the Canadian Association of Petroleum Producers (CAPP). The five-step process is an effective tool in assisting energy exploration and development companies better understand many of the above ground and community issues that are often not considered during the initial phases of project development. These guidelines provide a resource in fulfilling the regulatory requirements and minimum standards for consultation and notification required by law. The AEUBs Guide 56 document outlines these requirements and is a mandatory process for any energy development application. As the needs and opportunities in community consultation grew, so did Nexen, in June 2000 to better reflect our broader mandate, Nexens EH&S department evolved to Safety, Environment and Social Responsibility (SESR) and additional expertise in public consultation and community affairs were added to meet the expanding opportunities and responsibilities in this growing field. We firmly believe that community consultation is founded on building awareness, trust, accountability and commitment in the communities where we operate. Community consultation actively seeks to involve the public and community in the processes and decisions that may impact their lives and livelihood. We believe that communities have the legitimate right to know about planned and ongoing activities and to participate in the decision-making process for those issues that affect them. Nexen believes that in identifying shared concerns, we are better able to find shared solutions and opportunities.

Synergy Groups: Foundations in the Community


Building on the success and experience of past programs, Nexen recently undertook a key role in the formation of a new community consultation organisation that oversees an area in excess of 2700 square kilometres with hundreds of sour gas resources and a variety of operating companies. The organisation, The Airdrie and Area Public and Petroleum Producers Awareness Alliance (APPA), is a community-based society that seeks to provide: A collaborative forum where community and industry can discuss and address areas of mutual concern in an open, constructive, and non-threatening environment; Challenge the petroleum industry to find new ways to explore, develop and produce hydrocarbon resources in a safe, efficient and environmentally friendly manner; Develop and encourage best practices for petroleum operations; Demonstrate how industry and community can work together collaboratively, and; Optimise communication with the community and affected stakeholders to recognise opportunities and reduce impacts. Nexen saw tremendous value in working to develop a community and industry communication and awareness forum in the rural and urban fringe of Calgary given the continued development of petroleum and sour gas resources in the area. This multi-stakeholder group looks to communicate, address and
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resolve public concerns about petroleum activities and energy development. The group has become a vehicle for both community and industry to communicate in a positive and responsible manner. APPA is a community based registered society, which works to provide a forum where community and the petroleum industry can address areas of mutual concern, identify synergies that minimise our footprint on the community, and develop Best Practices that ensure consistency in our approach to areas of concern. Four committees, similar to the NCACC process established by Nexen in the early 1990s carry out APPAs work. The committees (Communications, Safety & Health, Environment, and Operations Integration) meet every other month and are co-chaired by the community and the petroleum and energy industry. A General or Plenary Meeting occurs approximately every two months following the subcommittee meetings. These meetings are widely advertised so that the general public can participate. In May 2001 Nexen facilitated the distribution of nearly five thousand information brochures to residents in the rural areas northeast of Calgary and organised the first multi-industry Open House event for the new group. The open house and information session sought to facilitate communication of planned and ongoing activities as well as to provide a forum for education on current events and undertakings in the petroleum industry. Regulators and other key stakeholders and community interest groups were also invited to participate. Feedback mechanisms and interviews from attendees are incorporated into the performance and communications process. Nexen is currently developing a community web-site and web-based database for tracking information and recording member company performance in the APPA area.

Advisory Committee on Public Safety and Sour Gas


In January 2000 the AEUB formed an Advisory Committee (Committee) on Public Safety and Sour Gas to review the regulatory system for sour gas as it relates to public health and safety. The Committee included direct representation from Nexen as Dr. Randall Gossen, Division V.P. SESR, participated in the process with other major stakeholders representing industry and non-industry interests. The committee conducted an extensive outreach program and received considerable input from interest groups, NGOs and in particular community members living in or near sour gas development areas or involved with sour gas in some other manner. Through public consultation and analysis, this multi-stakeholder committee evaluated existing sour gas policies, standards and regulations. On the basis of the input received, the Committee undertook to review the existing sour gas regulatory system. In October 2000, it issued an interim Directions document that identified those issues related to the sour gas regulatory system that it believed to be of greatest importance. It also identified the direction it was moving in with respect to recommendations to address each of these issues. The Committee then conducted a second outreach program and received additional input by way of reaction to its Directions report. It used that input to finalise its findings and recommendations. Alberta currently has an extensive and comprehensive oil and gas regulatory and enforcement system. The Committee presented the view that the AEUB and industry overall are endeavouring to ensure that sour gas operations minimise any negative impacts on the public. While the Committee was aware that progress had been made, most notably in initiatives like the Appropriate Dispute Resolution process and increased public consultation requirements, the Committee believed that further improvements must be made. On the basis of all the information received throughout the consultation process, the Committee developed 87 detailed recommendations directed towards: A better public understanding of sour gas; Improving the sour gas regulatory system; Reducing the impacts of sour gas on public health and safety, and, most importantly; Improving the consultation that takes place with the public on all sour gas matters. Nexen is proud to have been selected to participate in this provincial multi-stakeholder review and recommendations process and remains committed to leadership in public participation. Nexen continues to support the regulatory implementation team through the CAPP sour gas technical advisory group. The team meets semi-monthly to provide the AEUB with input and feedback from industry stakeholders.
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Our Future: Responsible Care


Taking community involvement and awareness to the next step in its evolution, Nexen Canada Ltd. began a journey nearly two years ago that no other upstream oil and gas operation has ever embarked upon. Nexen, working with the Canadian Chemical Producers Association (CCPA) has undertaken the Responsible Care initiative. Responsible Care: A Total Commitment is a comprehensive health, safety, environment and community issues management system established in 1985 by the CCPA to address public concerns about the manufacture, distribution and use of chemicals. The issues addressed by the development of Responsible Care are not unlike what the oil and gas industry faces today. Nexen Chemicals and Responsible Care have become synonymous in our companys chemical operations for more than a decade, and Nexen Chemicals has been a leader in Responsible Care implementation since 1991. Levering off this experience and seeing the value added opportunities; Nexens Oil and Gas Divisions and Canadian Nexen in Yemen have also begun the process of implementing this highly effective management system in their operations. Nexen Canada Ltd. began the process of Responsible Care supporting systems development at the Balzac Complex sour gas processing facility near Calgary in late 2000 and substantial progress was made during 2001. The Canadian Chemical Producers Association will conduct a Round 1 or In Place verification audit of the Balzac Complex in mid-2002. When this audit is successfully completed, it is anticipated that the Balzac Complex will become the first upstream oil and gas operation in the world to become a Responsible Care partner. Doing the right thing, and being seen as doing the right thing is fundamental of the Responsible Care ethic. The codes of practice that make up Responsible Care have the underlying theme that addresses the protection of people and the environment through the responsible management ofproducts, processes, and operations. Like the Guiding Principles, the codes reflect an ethic, an attitude, and even a way of thinking about the way we conduct our business and our role in society. In meeting the intent of Responsible Care we must be sensitive to concerns of the community and respond to them. We must develop and employ processes of regular communication and establish outreach programs to ensure that we are providing accurate and timely information. At Nexen we believe that the Responsible Care ethic is the next step in the future of community involvement and public consultation for our industry. Meeting the communitys needs for communication and involvement and addressing the issues of our human environment will be the measure of our success as we look to access resources in the ever increasing sensitivities of our environment.

Conclusion:
Nexen continues to play an active and significant role in the evolution and development of public consultation in the Canadian upstream oil and gas industry. We continue to learn from our own experiences and that of others, and contribute to the ongoing improvement of public consultation and community engagement, in Canada and Internationally. Nexen has received recognition for its contributions in this area from many prestigious organisations, including The Global Compact; IPIECA; The Dow Jones Sustainability Index; The International Association for Public Participation; and the Canadian Association of Petroleum Producers. The greatest recognition achievable though is the acknowledgement from community members when they address Nexen as a good corporate citizen and a welcome community member.

Acknowledgements:
Special thanks to Dr. Randall Gossen - V.P. SESR Nexen Inc., Mr. Garry Mann Manager SESR Nexen Inc., and Mr. Brian McAusland Manager Balzac Complex & Chairman of APPA. It is the shared vision, leadership and energy of these persons that help to make Nexens Community Affairs and Public Consultation initiatives a reality and a model for industry.

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1. Responsible Care: A Total Commitment is a registered trademark of Canadian Chemical Producers Association (www.ccpa.ca); 2. Canadian Association of Petroleum Producers, Guide to Effective Public Involvement (www.capp.ca); 3. Alberta Energy and Utilities Board (www.eub.gov.ab.ca); 4. Advisory Committee on Public Safety and Sour Gas (www.publicsafetyandsourgas.org); 5. Airdrie & Area Public & Petroleum Producers Awareness Alliance; 6. International Association for Public Participation (www.iap2.com).

References:

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