SPE 86586
ESIA – More than a Tick in the Box?
Robert Finney, BP plc; Ben Witchalls, BP plc1; Gareth Davies, Aquatera Ltd; Liz Rogers, BP plc
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, 29–31 March 2004.
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Abstract
Integrated environmental and social assessment is increasingly
becoming part of national regulatory approval processes, to
estimate and manage the impacts of oilfield developments
upon the natural and human environment. Even at pre-project
stages, the Environmental and Social Impact Assessment
(ESIA) can form part of the company decision-making for
country entry. Effective integration of the ESIA process and
findings into the engineering design process can deliver
benefits in impact mitigation and environmental management
across all stages of the development. The ESIA should not
therefore be viewed simply as a regulatory ‘tick-in-the-box’.
The international community is demanding increasingly
rigorous environmental and social assessments of planned
developments by international operators and reputation can be
strongly influenced by the consistency and quality of the
assessment process and the extent to which ESIA
commitments are delivered. It is recognised by the
International Association of Oil & Gas Producers (OGP) that
sharing of experience through ‘lessons-learned’ would provide
a means to achieve consistency in delivery of high quality
environmental and social impact management.
The OGP ESIA in Projects Taskforce has been formed to
develop industry guidance, which will be applicable to
development projects in any geographical area. This will
facilitate the attainment of a consistently high standard by all
operators, to align themselves with international expectations.
The aim is both to add technical value and to facilitate
interactions with stakeholders and third parties. Given the
diversity of project specifics, company internal processes,
local environmental sensitivities etc., the approach must offer
a high degree of flexibility in its application. ‘Building-
1 2
Sponsored for a doctorate by BP plc; validated by Middlesex University, UK
blocks’ based on agreed ‘good practice’ to be assembled as
appropriate, are viewed to offer greater potential than a more
rigid process. In addition to direct application to oil and gas
developments, extrapolation to downstream projects is
possible.
Introduction
Impact assessment has now become widely established
throughout the world as a basic building block for
environmental stewardship. It was initially established to help
inform the planning process, with the view to improving
decision-making. However in recent years its activities have
been stretched, pulled and twisted in a variety of directions as
environmental regulations have become stricter and more
comprehensive, awareness of social justice has increased and
environmental management practices have become more
structured and effective. Tied into this, stakeholder
expectations are also becoming increasingly challenging. The
international community, International Agencies, financial
institutions and NGOs are demanding more and more rigorous
environmental and social assessments of planned
developments by international operators. As responsible
international developers of hydrocarbon reserves, the E&P
industry must meet the challenges of satisfying an increasing
world demand for clean and affordable energy whilst
complying with environmental regulatory requirements and
satisfying the increasingly demanding environmental and
social expectations of international and local communities.
These issues led to a number of stakeholders at the 2001 SPE
HSE Conference expressing the desire to improve the
decision-making process for ESIA’s in order to influence
project design. From this the idea behind the OGP initiative2
evolved. This paper reports on progress to date of this
initiative.
The Challenges
Within the international oil and gas community, there is much
variation in company requirements for project Environmental
and Social Impact Assessments (ESIAs), the extent of their
interface with and influence on project design and their
philosophy with respect to setting performance standards.
Variation is also evident in national regulatory requirements.
In some regions environmental guidance is fragmentary and
implementation inconsistent with the international forum.
Refer to Abstract on page 1 of this paper
2 SPE 86586
National environmental laws may exist but interpretation may
be ambiguous and enforcement weak or absent. Many of the
issues are exacerbated as oil and gas companies venture into
increasingly sensitive ecological, social and political
environments. In many instances, the national regulators look
to the International Oil Companies (IOCs) to use their
worldwide experience to establish ESIA processes which set
new standards in environmental impact assessment for that
country and to build capacity through transferring expertise to
its own national consultants.
Enlightened practice has always recognised the benefits of
impact assessment as an ongoing process within a project or
operation. However, the now widespread regulatory
requirements for an impact assessment report to accompany a
planning or permitting application have tended to skew
attention towards a compliance document. The preparation of
an integrated environmental and social assessment is therefore
often seen as a burdensome requirement of national regulatory
approval processes. This has led to a perception in recent years
that the impact assessment is purely a tick-in- the-box exercise
offering little benefit other than achieving a license to operate.
For this reason implementation of the impact assessment
process can be inconsistent.
There are a number of factors that contribute to the unique
situation that the industry finds itself in. Some of these are
technical and some behavioural:
Technical
• Oil and gas projects are often located in ecologically and
politically sensitive areas
• Oil and gas developments follow a number of incremental
steps over a long period of time leading to full production
– continuity
• There is considerable uncertainty at the start and during
the early stages of a development about whether the
venture will be successful or even financially viable
• The whole product cycle, from exploration to retail and
end-use, is often managed by one company.
Behavioural
• Environmental and social issues are often not given the
priority they deserve
• It is difficult to demonstrate the benefits of reduced
probability
• There has been a disconnect between industry and some
external stakeholders over many years
• Mostly negative stakeholder image of oil, with its links to
global issues such as pollution, climate change,
corruption, conflict and politics, leads to defensive
stakeholder engagement.
To achieve better efficiency and value for projects from the
ESIA we must first have a better understanding of the role it
can play and a clear vision of what it can achieve. We then
need to communicate this more effectively within our
organisations and ensure that its consequent management
systems are an integral part of the project design, delivery and
ongoing operations. Finally we have to create forward
momentum to make sure that we deliver on quality, efficiency
and value as promised.
The Benefits
Clear business reasons can therefore continue to emerge from
the successful integration and delivery of ESIA;
• Planning and implementation most appropriately suited to
the project with corporate goals of building on schedule
and budget accomplished.
o Value from starting projects early (on accelerated
timescales)
o Value from avoiding fines and compensation
o Value from reducing waste and losses
• Informed and transparent project decision-making.
• Improved corporate reputation that leads to increased
credibility and competitive advantage.
• Obtaining and maintaining a license to operate.
• Constructive stakeholder engagement that benefits, both
directly and indirectly, the environment, wider
community and project.
These values may be understandable but the biggest challenge
lies in communicating them effectively rather than relying on
an intuitive recognition of enhanced social and environmental
performance. The most likely route to success is to present
these values in financial terms.
The costs will largely be a function of the size and complexity
of the project, the sensitivity of the environment (ecologically,
socially, politically), where the project is located, the extent of
existing oil & gas development and the degree to which the
area is already developed in terms of infrastructure. ESIAs for
each phase of activity may range in cost from a few tens of
thousands to millions of dollars. Typically however the cost
of the overall environmental programme on a project can be
expected to be around 2% to 5% of total CAPEX and OPEX,
with the ESIA accounting for perhaps a fifth of this at 0.5%
to 1%.
Risk Assessment
As with measuring any type of risk, one of the challenges to
recognising the benefits of good environmental performance is
that by its nature we are trying to measure something that has
not or will not happen. In circumstances where we have
previously performed badly we can use a trend of
improvement to track progress, but in a steady state situation
or where there is no operating history we have more
difficulties. How often do we have to say, “if we don’t do this
then something may happen”.
One requirement is therefore to be able to understand and
communicate all types of environmental and social risk. Direct
environmental risks include accidental events such as oil spills
and we have good data to demonstrate spill risks particularly
where all we need is to predict the likelihood of an event. The
situation becomes a little more difficult when we try to predict
consequences for routine activities. We know that the event
will happen, what we are now required to do is predict the
consequences of the event. The factors influencing the
SPE 86586 3

consequences of an event are often very complex and also
poorly or incompletely understood. So when asked “what are
the environmental risks associated with produced water
discharge” we start talking about a whole variety of
unquantified uncertainties. This has two effects, firstly it
makes it difficult for people to understand the message and
secondly the message itself is less persuasive. The same
principles apply to socio-economic as well as environmental
effects. We can relatively easily predict how many local
people will be employed, what is more difficult is to predict
how this will affect the community and an individual’s quality
of life. Another major risk factor is that oil and gas
developments also rely heavily upon having good relations
with neighbours and regulators. Very often the factor that
most influences that relationship is environmental and social
performance.
Work done prior to the workshop
A clear definition of the project lifecycle was necessary to link
to existing management systems. During the lifetime of a
project it passes through a number of management cycles.
Each cycle is linked to those that come before and after and
each project should share experience from other projects and
activities. This leads to a cycle of actions that are based on
known and understood consequences. In turn this leads to
greater transparency in project decision-making based on more
clearly defined influences (see figure 1).
Figure 1: management cycle at each project phase
Creating the potential for good
performance

Moving Towards Change

Influences
Early last year an industry taskforce through the International
Association of Oil and Gas Producers (OGP) was created with The Learn Plan
consequences Actions that
an objective to develop guidance in the form of ‘building- Outcomes Inputs
of our create good
blocks’ of good practice for application throughout the performance Do performance
Check
industry; guidance which is applicable to development
projects in any geographical area and which defines an Outputs
industry approach that would enable a consistent level to be
achieved by all operators. Ultimately the outcomes of the What we actually
taskforce have one simple aim – how to deliver better (and achieve
quantifiable!) value for projects through improved
environmental and social performance. To help achieve this a Major outcomes of the Workshop
workshop for industry professionals was held in Vienna on Before and during the workshop 28 performance areas were
17th and 18th November. The specific workshop aim was to identified as criteria to measure the success of ESIA
develop improved quality, consistency and industry alignment implementation into projects. They were loosely clustered
by sharing best practice and experience to deliver improved around the influences, inputs, outputs and outcomes of a
value in projects through appropriate social and environmental project in line with the management cycle.
performance.

There were three major inputs to the workshop that delivered

the desired outcomes, and provided a strong basis for the
future development of the ‘building blocks’.

1. 40 participants from 20 different companies and

organisations.
2. Six industry case studies that brought out key
learnings from both an HSE/social management
perspective, and a project management perspective.
3. Prior work that had been done by the taskforce. This
included identifying three major themes (value added
by starting early; integrating into design, decision-
making and planning; delivery of ESIA process and
commitments) and consequently the proposal of
performance criteria against which ESIA delivery
might be measured.

The workshop was a major step towards achieving better

alignment and consistency within the industry with learnings
from the six major case studies helping to form a focus for the
discussions.
4 SPE 86586

Figure 2: Criteria under which performance indicators can Not speaking the same language, both between different
be developed to measure the success of ESIA specialist units directly involved in the project, and
implementation between the project and external stakeholders. This can
create tensions, lack of knowledge transfer and
Communication Balance/ unnecessary delays
Policy integration
Competence Contracts often conflict with or omit ESIA parameters
Influences (FEED and procurement)

Commitment
Resources
Lack of continuity and communication which leads to
Risk awareness roles and responsibilities being unclear and a loss of
knowledge, reinforced by a lack of definition of project
Timing
objectives at the start of the process
Boundary Performance
Definition Management Inputs
Applying Scoping Case study 1
Managing
Roles and Learning A small E&P company finds itself operating in a conflict
Change
responsibilities zone. Pressure from NGOs back in their home country,
and the resulting negative press leads to loss of sales.
Monitoring This is despite the fact that they have a minority interest
Verification
in a Non Operated Venture. The company is left exposed
process Ecological Reporting
impact and has to hastily develop company policy and
Outputs mechanisms procedure. Time is wasted in unconstructive dialogue
with some NGO’s, leading to further adverse press.
Social impact Compliance Initial lack of baseline data and a defined strategic
mechanisms approach leaves them exposed to further criticism
Change in
Liabilities Biodiversity
Key learning:
Quality of Life Outcomes • Stakeholder confidence built through honest
Capacity partnership with clear objectives
building
Business Value Reputation Quality of • Baseline assessment prior to country entry to set
confidence decisions policies when dealing with identified risks
Feedback

From this, 5 areas were chosen for more detailed discussion:
1. Starting early
2. Integrating into design and decision making
3. Getting middle management commitment
4. Achieving more effective contractor management
5. Recognising the ESIA as a continuous process
The following points were made through first identifying the
key problems, and then consequent solutions.
Definition of the problem:
Case study 2
Operating in a sensitive environment, an exploration
project rapidly finds itself at the centre of a national
shrimp fishing crisis, and struggles to break out of it due
to raised expectations. Stakeholders start to exert too
much influence and distract (and trap) the operator from
their core business objectives.
Key learning:
• Local capacity building from the outset to
ensure expectations and accountabilities can be
met through the local community, and conflict
minimised

Lack of alignment between the different lifecycles of

social/environmental and oil & gas development
economics. This contributes to the ESIA being viewed as
a hoop jumping exercise rather than a means to add value.

Lack of management framework, awareness and

competence; this leads to a disconnect between the ESIA
and the design delivery teams along with a lack of
accountability and performance incentives for project
management. There can also be a communication and
credibility gap between ESIA specialists and project
management and engineering staff
SPE 86586
Case Study 3
An initial lack of clarity on accountabilities and coordination
between governing authorities, operator, ESIA contractor and
stakeholders prior to ESIA execution led to delays and
confusion at the vital early stages of the ESIA. This led to
project schedule delays and the design being frozen just as the
ESIA (and consultation) recommendations were completed.
Key learning:
• Invest time upfront to ensure there is a clear
structure and process for the ESIA
• Ensure the business case for starting early on the
ESIA is clearly recognised
Possible solutions
Improve the clarity of objectives at initiation phase of a
project with greater emphasis on numerical and
quantifiable criteria throughout and competencies
required.
Incorporate HSE/ESIA parameters into organisational
design with clear performance parameters and incentives
Reduce schedule related pressures which damage E&S
performance (maximise potential pre-work and resource
readiness; ensure ESIA schedule analysis is robust and
carried out at invitation; separate report deliverables from
design and planned related deliverables)
Create the right expectations of what an ESIA can
provide
Repackage the ESIA as a continuous system which is
integral to all project phases, including operations and
abandonment.
Major conclusions to come out of the workshop:
• The industry is largely experiencing the same problems
across the board with respect to ESIA integration
• Although there is a place for them, processes and
procedures are not a substitute for changing behaviours
and raising awareness
• The scope, level of detail and amount of work required for
the integrated impact assessment is highly variable and
dependent on the phase of the E&P workflow, the
complexity of the project and the specific country/
environment where the activity is planned or executed
• ESIA is just a starting point. E&S issues and risks need to
be integrated into existing project management processes
to have a lasting impact
• The ‘S’ in ESIA is still ill defined in terms of the extent
and content of the assessment
• Generic issues/blockers in ESIA process are applicable to
all E&P projects and workflow
• Level of data and amount of work is however very
variable depending on the complexity and stage of the
project
• The project management teams need to be engaged to
move this philosophy forward
5
• If the industry doesn’t control the issues that affect them,
those issues will control the industry. We have to help
ourselves in breaking out of this cycle
Moving Forward
In trying to deliver on the aims of the OGP taskforce the
following actions were identified as a means to move forward
in 2004:
1. Develop a series of industry case studies (good and
bad) to develop the business case tied strongly to cost
and schedule, showing effectiveness of the ESIA and
how much it costs as a percentage of overall project
costs.
2. A self-assessment tool to create a clear statement of
the projects position in relation to performance
criteria - emphasis on front-end loading.
3. Write the vision for a case-study; here is where we
want to be in 2008 (de facto reality) based on key
performance criteria. Are you happy with this?
Guidance (in the form of ‘building blocks’) can then
focus on how projects could be drawn towards that
point starting from the self-assessment statement.
4. Prepare a guide of what an ESIA is for all
stakeholders of an ESIA (project managers,
regulators…) focusing on key learnings from other
projects across the industry.
Conclusion
There is no quick fix to delivering better environmental and
social performance, but following on from the workshop 4 key
areas of focus for 2004 were agreed as ways forward for the
OGP initiative. There was universal agreement of the
requirement for a more consistent and efficient approach and
the value this initiative would bring to delivering this. The
biggest barrier at present to efficient and effective execution is
a lack of common appreciation by those involved of the
benefits that the ESIA process can, and has, provided. This
initiative should lead to alignment in purpose, earned trust,
more transparent project decision-making and shared values
between developer, regulator and other stakeholders with
project delivery in line with commercial requirements and
expectations.