SPE 86617

Benefits of Locality Management in the Context of Hydrocarbon Development:

A Journey Towards Sustainable Development in the Gulf of Paria, Venezuela
Fernando D. Rodriguez, SPE/ConocoPhillips Inc., Francis Rivera/ConocoPhillips Venezuela;
Agnieszka D. Rawa/Ecology and Environment, Inc.

Copyright 2004, Society of Petroleum Engineers Inc.

This paper was prepared for presentation at The Seventh SPE International Conference on
Health, Safety, and Environment in Oil and Gas Exploration and Production held in Calgary,
Alberta, Canada, 2931 March 2004.
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Abstract
ConocoPhillips has partnered with Corporacion Venezolana
de Petroleo (CVP), Eni Venezuela B.V and OPIC Karimun
Corporation to develop hydrocarbon reserves in the Gulf of
Paria West (GOPW), in northeastern Venezuela. First oil is
expected in 2006 with an estimated initial production of
55,000 barrels of oil per day. Located at the convergence of
the Caribbean Sea and Orinoco River system, the Gulf of Paria
(GOP) is a socio-economically complex, ecologically
sensitive,
and
internationally
significant
region.
ConocoPhillips has developed an innovative Locality
Management Strategy (LMS) to minimize the risks of
development and maximize potential benefits of hydrocarbon
development. The LMS integrates environmental, social, and
economic programs with input obtained from a continuing
dialogue with local, national and international stakeholders.
This paper will highlight the benefits of implementing a
sustainable development strategy throughout all phases of
hydrocarbon development in sensitive environments.
To date the LMS has enabled ConocoPhillips to anticipate
project sensitivities and proactively work with stakeholders
while also meeting Company business. Partners have been
identified to leverage socioeconomic, environmental and
operational programs in the region. Since 2000 and in
partnership with non-government organizations, more than
6,000 man-hours have been invested in building human
capacity in communities closest to the projects.
In
collaboration with international and national organizations, a
local biodiversity conservation plan is being developed, and
through skill development, training and employment
opportunitiesthe company is encouraging the creation of a
community organization that will maximize benefits from

certain aspects of operations.

Based on continuous
stakeholder consultation, the LMS continues to evolve and
provide opportunities to leverage project benefits to the local,
national and international project stakeholders.
Background and Introduction
ConocoPhillips has partnered with Corporacin Venezolana
de Petrleo (CVP), Eni Venezuela B.V. and OPIC Karimun
Corporation to develop hydrocarbon resources in the Gulf of
Paria West (GOPW), in northeastern Venezuela. Located at
the convergence of the Caribbean Sea and the Orinoco River
system, the Gulf of Paria is a socioeconomically complex,
ecologically sensitive, and internationally significant region.
Consequently, ConocoPhillips and its partners decided to
implement an innovative and proactive approach to
development in the region.
This paper summarizes
ConocoPhillips proposed development in the GOP and the
environmental and socioeconomic context in which it is being
proposed. Key elements of the LMS and initial perceived
benefits/achievements to date are highlighted.
Hydrocarbon Developments in the GOP. ConocoPhillips
and its investment partners have considerable interests in the
GOP Region. In 1998, the Consortium discovered large
hydrocarbon (oil and gas) reserves in the Gulf of Paria West
(GOPW) Block. Testing and evaluation completed between
1998 and 2002 confirmed that the Corocoro Field includes
several oil and gas production zones, and in April 2003 the
Venezuelan government officially approved the project.
State-owned Corporacin Venezolana de Petrleos
(CVP)/Petrleos de Venezuela, S.A (PDVSA) has since
exercised its right to become an investment partner with a 35
percent participation. ConocoPhillips, with a 32.5 percent
investment, remains the project Operator, while Italys Eni
Venezuela B.V. and Taiwans OPIC Karimun Corporation
retain 26 percent and 6.5 percent of the project, respectively.
The Corocoro Oil Development Project will be
implemented in two phases. Construction of Phase I facilities
began in 2003, and this phase will produce an estimated
55,000 barrels per day (BPD). The project facilities will
include a wellhead platform and a central production facility
(CPF). A 22-kilometer pipeline will carry crude from the
production facilities to a 1.3-million barrel, double-hulled,

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floating storage and off-take (FSO) located in deeper waters.

Customer tankers will load crude from the FSO.
ConocoPhillips is also planning to conduct additional oil
exploration (Phase II Exploration) in the GOP area; evaluate
development of gas reserves; and consider other business
investments in the GOP Region, such as:

Agreements with other operators in the GOP region to use

current or planned infrastructure;

Partnerships to develop oil/gas; and

Acquisition, development, operation and/or investment in

other adjacent areas.

The GOP Region. The GOP is a body of water surrounded

by Venezuelan coastline and an area that is both
environmentally and socioeconomically sensitive.
The
regions key characteristics include a diverse population
(including indigenous Warao communities in the southern part
of the GOP), low socioeconomic indicators, inadequate
infrastructure, high levels of biodiversity and a dependence of
the local communities on natural resources for subsistence.
The economy of the GOP region is based predominantly on
catching and processing fish.
The GOP is surrounded by several protected areas,
national parks and forest reserves (Figure 1). Ecologically, it
is an area of national and international importance and
visibility due to the hundreds of aquatic and terrestrial species
found there, including migratory bird species. The GOP has
been classified as a priority marine area for conservation due
to the large number of marine species that it harbors within its
comparatively small area.
Since the 1930s, the GOP has experienced sporadic oil
development and production activities.
Currently, only
Perenco and ConocoPhillips Venezuela are active in the
southern part of the GOP region.
Elements of the Locality Management Strategy
ConocoPhillips and its partners developed the Locality
Management Strategy (LMS) to manage the risks of
development while maximizing the benefits of the planned
development to the nearby communities. Based in part on
dialogues with stakeholders, the LMS is a flexible, sustainable
development strategy that puts top priority on local focus
(for which it gained its name) and seeks to add cohesion and
value to the programs that ConocoPhillips and its partners are
implementing in the context of hydrocarbon development.
ConocoPhillips developed the first version of the LMS in
2000; it has since been updated and improved based on
lessons learned from implementation.
ConocoPhillips Vision for the GOP. One of the critical
elements of the LMS is the vision that stands behind it.
ConocoPhillips envisions being a catalyst for positive change
in the GOP. The Company intends to work in partnership

with others to integrate environmental realities and

socioeconomic concerns of the GOP communities and other
national and international stakeholders into project goals. The
strategy that ConocoPhillips and its partners are pursuing
seeks to integrate best available practices to protect the
environment with capacity building to help create healthier,
stronger and more prosperous communities.
Foundations of the Locality Management Strategy. The
LMS is based on ConocoPhillips Values and Policies; the
Companys vision for sustainable development in the GOP; its
experience operating in sensitive environments worldwide;
issues recognized by the industry as relevant to sustainable
development; and the results of a continuing process of
comprehensive local, national and international stakeholder
consultation (Figure 3). Implementation of the LMS is guided
by the following principles established by the Company to
help achieve sustainable growth in the GOP:
1.
2.
3.
4.
5.

Local focus;
Commitment of resources;
Comprehensive stakeholder consultation and engagement;
Maximum local content;
Minimum environmental footprint and impact on
biodiversity;
6. Implementation of management systems and codes of
conduct;
7. Emphasis on long-term solutions;
8. Partnerships with NGOs to leverage project benefits;
9. Increased total benefits and improved community health;
and
10. Transparent tracking through performance indicators.
Threats and Opportunities Assessment. Another critical
element of the LMS is its reliance on the local and regionspecific conditions in order to minimize any inherent or
perceived risks and leverage benefits to all stakeholders.
ConocoPhillips systematically evaluates the potential
risks and possible benefits of developing hydrocarbon
resources in the GOP region. Development risks and
opportunities are identified by analyzing the environmental
and socioeconomic characteristics of the GOP, incorporating
the results of local, national, and international stakeholder
consultation, and by using several issue identification and
decision risk and analysis (DR&A) tools developed by the
Company. Risk and opportunities were identified in the
following areas:
Socioeconomic
Divergent or unrealistic stakeholder expectations,
Excessive dependence of community on Operator,
Technology transfer,
Secondary impacts of development,
Integrity of Warao culture,
Effects on fisheries,
Media communication,
Revenue management practices,
Employment,
Institutional changes,

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Capacity building, and

Leveraging benefits through partnering.

Environmental
Oil spills,
Waste generation, handling and disposal,
Effects on biodiversity,
Activities of other operators,
Natural conditions in the GOP region,
Best available technologies and practices,
Implementation of project-specific standards
Increasing GOP data, and
Environmental education.

engagement process. Initial benefits are evidenced by the

issues that were proactively identified and resolved
collaborativelythereby avoiding potentially costly project
concerns in the futureand the partnerships that have been
formed to date.

Operational
Security,
Employee and Contractor conduct,
Health,
Safety, and
Sustainable development implementation.

Stakeholder Consultation and Engagement. Several local,

regional, and national workshops, meetings and other
community outreach programs were completed between 1998
and 2003 to promote dialogue with stakeholders who might be
affected by the project. For example, meetings with the
following primary stakeholders have been conducted:
residents of Pedernales, Capure, Isla Misteriosa, Giria and
Irapa; the Warao community; fishermen associations; labor
unions; county, state (Sucre State and Delta Amacuro State)
and national governments; the National Indigenous Council
(CONIVE); Port of Sucre; Trade Associations and Chambers
of Commerce; the Venezuelan Ministry of Environment; and
numerous NGOs, including Fundacin la Salle, CESAP, Fe y
Alegria, Fudena, Provita, SOCSAL, and Tierra Viva.

These risks and opportunities are being addressed through

various programs consistent with the established LMS
principles.

Through consultation, some of the following concerns or

expectations relative ConocoPhillips and its partners
activities in the GOP were identified:

Commitment to LMS. As shown on Figure 2, the LMS is

envisioned, managed and implemented in coordination with
ConocoPhillips partners. LMS implementation is guided by a
Steering Committee composed of upper management
representatives of several Corporate departments. In general,
LMS implementation is a line responsibility integrating all
departments that participate in ConocoPhillips operations in
the GOP.

LMS Review and Improvement Process. As shown on

Figure 3, ConocoPhillips continues to learn from its
experience operating in the GOP and integrates input obtained
from the stakeholder engagement process. The Company
regularly reviews the effectiveness of project goals, integrates
new information and adjusts social investment plans and
environmental programs to balance the diverse expectations
and needs of the community with Company operations. The
review process is completed during meetings with key
members of the LMS Management and Implementation team.
During these meetings, programs are evaluated for their
consistency with LMS principles and the risks and
opportunities that they were designed to address.
ConocoPhillips has also developed a self-assessment tool to
promote consistent application of LMS principles for current
and future GOP operations.
This tool will foster
accountability, facilitate sharing of information among
managers and establish a transparent process of improvement.
LMS Implementation to Date
Implementation of the LMS to date has been guided by
ConocoPhillips and its partners investment goals, the risks
and opportunities of development, as well as input obtained
during the comprehensive project stakeholder consultation and

The impact of a potential oil spill. Communities, and in

particular fishermen, have asked ConocoPhillips how it
will protect their resources in case of emergencies such as
oil spill;
The potential effect of waste generated by operations.
Stakeholders worry that the aquatic environment on
which they depend may be affected by the products and
wastes that development might bring to the region;
Direct benefit from development. ConocoPhillips has
been asked whether benefits will be tangible to people
living in the GOP;
Employment opportunities. Communities wish to know
how many jobs will be created and who will be employed
by operations;
Fishing activities. Fishermen have asked ConocoPhillips
for support in strengthening their associations; ensuring
the sustainability of their catch and remaining informed of
project schedule;
Education. Communities have asked for help to improve
their schools and the quality of their education;
Training. Women and other members of the community
have asked for training so that they can also contribute to
generating income;
Institutional strengthening.
Stakeholders have
requested ConocoPhillips to assist in the establishment of
communication mechanisms between the government and
community;
Duplication of Efforts. To avoid duplication of efforts,
stakeholders have advised us to foster synergy amongst
the organizations that ConocoPhillips involves in the
GOP;
Synergy with other GOP Operators.
National
stakeholders have also asked us to what degree we will be
coordinating with other oil companies in the area;
Ensure continuity of programs.
Non-government

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organizations as well as national government institutions

have requested that ConocoPhillips ensure the continuity
of programs that it establishes; and
Goods and Services. Potential contractors or industry
associations have requested to be informed regarding
ConocoPhillips needs and implementation schedule.

On an international level, ConocoPhillips has sought

feedback to fine tune strategies for sustainable development
and to provide expert organizations with an opportunity to
contribute to programs that address the implementation of best
management practices and standards, biodiversity and
community development. Stakeholders consulted to date have
included the World Bank Group and the International Finance
Corporation, The Overseas Private Investment Corporation
(OPIC), the United States Export/Import Bank, the InterAmerican Foundation (IAF), the World Wildlife Fund,
Conservation International, the Smithsonian Institution, The
Nature Conservancy, the United Nations Development
Program (UNDP), Global Environmental Facility (GEF)
and others.
Similarly on an international level, some of the following
concerns and expectations were identified:

Oil Spill. International stakeholders expressed a concern

over the potential impact of spills due to the storage of oil
in a floating storage off-take and the uncertainty relative
to best management practices of customer tankers that
would load from it;
Flaring.
Stakeholders
also
inquired
about
ConocoPhillips plans for associated gas production and
noted the potential impact of heat radiation from flaring
on migratory birds, mangroves, and aesthetics of the GOP
region;
Socio-economic
sustainability.
International
stakeholders recommended that ConocoPhillips place
significant effort in the Warao communities and the
potential for population migration that might result from
increase oil activity in the region;
Biodiversity. Stakeholders placed learning about and
preserving the GOP's biodiversity as a key
recommendation. Opportunities for collaboration to
assess, monitor and protect biodiversity were numerous
among those consulted;
Public participation and disclosure. Organizations
inquired about ConocoPhillips plans to continue
consultation and disclose project information; and
Partnerships and Collaborations. Among the
international stakeholders consulted to date several
opportunities to leverage ConocoPhillips efforts through
partnerships on both socioeconomic and environmental
(biodiversity) programs have been identified.

Socioeconomic Programs. ConocoPhillips has completed

numerous programs as part of its socioeconomic investment
plan in the GOP. These programs have focused on local
capacity building in collaboration with reputable NGOs,
including CESAP IRFA Fe y Alegria, SOCSAL, Tierra Viva
and government organizations such as INCE. ConocoPhillips
has invested more than 6,000 hours developing skills in the
GOP community since 2000. The Company has emphasized
programs aimed at training local fishermen in various skills,
including food preservation, and has provided basic bilingual
education to the Warao community. By participating in the
Delmos Agreement, ConocoPhillips has also aimed to assist in
the improvement of overall health indicators in the GOP
through increased access to better quality potable water.
Environmental Programs.
To date, ConocoPhillips
environmental programs have focused on establishing updated
and comprehensive baseline information, including data on
marine biodiversity for the project area. These baseline
studies are designed to supplement information on the regions
rich, intricately interconnected ecology, water and sediment
quality, fisheries, and coastal vegetation. As part of the
LMSs goal to minimize environmental impacts, programs
have also included analysis and adoption of project-specific
standards; the development of an Oil Spill Contingency and
Response Plan; and the incorporation of technologies and
policies to reduce impacts (e.g., use of double-hulled FSO,
adoption of a no flare policy and a zero pollution policy
with respect to the discharge of drill cuttings and muds).
Operational Programs. ConocoPhillips has implemented
programs associated with its direct project development
activities but that are aimed at the communities in the GOP.
To date, these programs have focused on identifying local
skills and capabilities in order to assess the potential for using
local labor during the project. Training of local workers in the
skills they need to assist the Companys activities, including
assisting in emergency response, was also successfully
completed.
Partnerships and Collaborations. ConocoPhillips has
already forged several partnerships to pave the way towards
sustainable development goals in the GOP, including:

Conservation and Sustainable Use of the Biological

Diversity of the Biosphere Reserves of the Orinoco
Delta Venezuelan Ministry of the Environment and
National Resources (MARN) and United Nations
Development Program (UNDP), and partially funded by
GEF;
Delmos Agreement PDVSA and Perenco;
Initial Biodiversity Action Plan Conservation
International;
Bird Baseline Study Audubon Venezuela and the
Smithsonian Institution;
Community Development Inter-American Foundation;
and
Population, Energy and Environmental Program involving
Sub-Andean governments, industry and indigenous group
representatives World Bank.

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LMS Action Plan 2003-2005

As ConocoPhillips proceeds with its plan to develop
hydrocarbon resources in the GOPand begins activities in
2003the LMS will focus socioeconomic, environmental and
operational programs on issues that have been determined to
be most critical to achieving sustainable development in the
region. As shown on Figure 4, the LMS structure promotes
cohesion among all the programs that are completed and
planned in the GOP and ensures that these programs will
continue to address key risks and opportunities in the region.
Stakeholder Engagement and Consultation. ConocoPhillips
will continue its dialogue with local, regional and international
stakeholders identified to date. The Company will also seek
input from additional national and international stakeholders
to further address the expectations of a broad range of GOP
stakeholders.
Socioeconomic Programs. Socioeconomic programs will
focus on sustainable growth of local communities and
preservation of Warao culture and health. With the help of an
NGO, ConocoPhillips will evaluate the possibility of
establishing a GOP community foundation that could become
a counterpart and a partner in promoting growth. Community
programs will seek to build capacity through training, skill
development and educationwith particular emphasis on
supporting sustainable growth of the fishing industry.
Intercultural programs will promote an appreciation of Warao
traditions, crafts and culture, while health programs will center
on improving the quality and distribution of potable water.
Environmental Programs. With the help of national and
international NGOs and organizations such as Audubon
Venezuela, Fundacin La Salle, Conservation International
and the Smithsonian Institution, ConocoPhillips will complete
programs to better understand and preserve marine
biodiversity in the GOP. Furthermore, the Company will
evaluate the feasibility of establishing a biodiversity and
sustainability center that would involve the communities as
well as relevant national and international stakeholdersand
would help to disseminate to the scientific community the
valuable information on biodiversity it has helped to generate.
As the Company approaches the date of first oil production,
continued emphasis will be placed on environmental
protection, development of key performance indicators,
accident prevention and avoidance of impacts on the resources
of the region.
Operational Programs. ConocoPhillips will continue to
complete operational programs that are specifically aimed at
communities. For example, a more detailed labor assessment
and skill inventory among local workers will be completed as
the company increases its activities. Training and skill
development programs will be completed in order to prepare
these workers for employment. Select members of the
community will also be trained to aid in the event of an
emergency such as an oil spill.
Partnerships and Collaborations. ConocoPhillips will
maintain the partnerships that it has established to date. To

further leverage its efforts, the organization will also identify

new partners on its challenging road toward sustainable
development in the GOP.
Conclusion
The LMS is an innovative approach to hydrocarbon
development in sensitive regions.
This sustainable
development strategy focuses on local risks and opportunities
from local, national and international perspectives and
integrates socioeconomic and environmental considerations
into the life cycle of ConocoPhillips and its partners
activities in the GOP. The LMS will be updated and adjusted
to incorporate lessons learned from experience, and input
obtained from an ongoing dialogue to be maintained with our
stakeholders. Implementation of the LMS will continue to be
a team effort that brings new, diverse and innovative strategies
to the challenges of achieving a strong socioeconomic and
environmental performance in our GOP operations.
To date, the LMS has successfully uncovered actual and
perceived project concerns early during the planning phase of
GOP activities, thereby addressing risks and leveraging
opportunities. As evidence by several successfully completed
programs, the LMS has also helped the Company to
understand and respond effectively to diverse and evolving
expectations of stakeholders. Furthermore, the LMS continues
to add cohesion and perspective to the variety of
environmental, socioeconomic and operational programs that
are being implemented, providing a road map on the journey
toward sustainable development in the GOP.
Acknowledgements
The authors of this paper would like to thank Corporacion
Venezolana de Petroleo (CVP), Eni Venezuela B.V and OPIC
Karimun Corporation for supporting the innovative
application of untested sustainable development strategies in
the Gulf of Paria. We also wish to thank the entire
ConocoPhillips organization in Venezuela, without whose
creativity and dedication this work would not have been
possible. We wish to thank the GOP communities for their
trust and support of our activities in the Gulf of Paria. Last
but not least, we wish to thank those Government Institutions,
Non-Government Organizations, and other stakeholders for
their continue receptivity, feedback and input.
References
The Gulf of Paria Locality Management Strategy. A
Framework for Addressing the Social, Economic and
Environmental Issues of the GOPW Project. Caracas, June
2000. Conoco Venezuela.

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Figure 1 Location of Current ConocoPhillips Activities in the Gulf of Paria

Figure 2 LMS Management and Implementation Team

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Figure 3. Foundations of the LMS

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Figure 4. Past and Future LMS Programs