Unconventional Oil and Gas Arctic Drilling 0

D e e p e r an d Cold er
T h e I m p ac ts an d R is k s o f De e p wat e r a n d
A r c ti c Hy d r o c a rb o n De v e l o p me n t
Alberto Serna Martin
March 2012
D eeper a n d C o ld e r: Th e I m p a c t s a n d R i s ks o f D e epwater a nd Arct i c H ydroca rbon Devel opm ent | Ma rch 2 0 12 2
Table of Contents
Executive Summary.......................................................................................................3
Introduction..................................................................................................................5
Global Energy Demand and the Shift Toward Unconventional Oil and Gas........6
Oceanic Oil and Gas Development Explained..........................................................6
Defining Deepwater, Ultra-deepwater and Arctic.....................................................6
The Growth of Oceanic Oil and Gas Development....................................................7
Deepwater and Arctic Development Around the World..........................................8
Potential Impact of Oceanic Oil and Gas Development..........................................9

Air....................................................................................................................................9
Habitat Degradation.......................................................................................................9
Employee and Contractor Health and Safety...........................................................10
Investor Risks................................................................................................................11
Regulatory Risk.............................................................................................................11
Litigation Risk...............................................................................................................13
Reputational Risk.........................................................................................................13
Operational Risk..........................................................................................................14
Best Practices................................................................................................................14
Transparency and Disclosure......................................................................................15
Process Changes: Activities to Decrease Impact on Biodiversity..........................15
Process Changes: Practices to Maintain Well Control............................................16
Process Changes: Emergency Management...............................................................17
Process Changes: Precautionary Approach..............................................................17
Process Changes: Decrease Fluid Toxicity................................................................18
Contractor Supervision and Management...............................................................18
Acting on Investor Risks and Opportunities............................................................19
Endnotes.......................................................................................................................21
Copyright 2012 Sustainaly tics - All rights reser ved

Deeper and Colder

Executive Summary
Despite mounting evidence that climate change requires a shift towards a low carbon
economy, hydrocarbon demand is on the rise. Oil and gas producers continue to push
offshore projects into unconventional, deeper and colder frontiers, driven primarily by
the need to secure future oil and gas reserves in a landscape dominated by national oil
companies (NOCs).
Hydrocarbon reserves in deepwater basins are vast, particularly in the Gulf of Mexico,
Brazil and West Africa. Arctic reserves are even larger. Unlike oil sands, hydrocarbons
produced in deep and Arctic waters are conventional, however, their extraction requires
the use of unconventional methods that can cause environmental and social impacts and
generate controversy. Moreover, the technological challenges of drilling at sizable depths
and managing extreme weather conditions in the Arctic generate significant operational
risks. Public concern has mounted following several recent safety incidents resulting in
a high number of fatalities on drilling platforms. Company reputation is impacted by
hydrocarbon spills that visibly threaten biodiversity and local economies. The recent
Deepwater Horizon incident caused a global cascade of regulatory reviews, the results
of which will inevitably increase operational costs. Confronted with the possibility of
such a scenario in the fragile and unique Arctic environment, oil companies face further
mistrust and resistance to operations in that region. Unplanned events, such as spills or
injuries, present significant reputational, regulatory and operational risks for individual
companies, their investors, and the oil industry as a whole.

Due to these operational uncertainties, there is still a long way to go to develop and
improve existing best practices. To reduce risk investors should encourage their holdings
to improve transparency, implement process changes, use less toxic products, and
actively manage contractors. Investor risk analysis can be strengthened with company
disclosure on reserves owned in deepwater and Arctic offshore basins. Company risk
mitigation can be accomplished by implementing best practices such as compiling
biodiversity baseline information, enhancing drilling standards that ensure well integrity,
and building sufficient emergency response capacity. Ensuring that contractors adhere
to company standards is also a major factor in both regulatory compliance and risk
avoidance. The industry also has opportunities to develop lower-impact methods and
technologies. Innovation will be the key to long-term success in higher-risk basins.
Responsible investors have an important role to play in decreasing the impacts and
mitigating the risks associated with deepwater and offshore Arctic hydrocarbon
development. Through their numbers and influence investors can engage with oil and
gas producers and encourage innovation, and the adoption and ongoing development
of best practices.
At the same time, responsible investors should view deepwater and offshore Arctic
developments in the context of the broader need to shift our economy away from its
dependence on fossil fuels. Oceanic hydrocarbon development, even with best practices
in place, does nothing to discourage fuel consumption. Therefore, while pushing for best
practices responsible investors should push even harder for investment in renewable
and sustainable forms of energy and for regulatory environments that incentivize such
investment.

Introduction
In December 2011, 53 crew members of the Kolskaya jack up rig died in the Subarctic Siberian waters of the Sea of Okhotsk. A window
was knocked out during a winter storm; flooding and sinking the rig in less than 20 minutes. Preliminary conclusions of the Investigative
Committee of Russia stated that safety violations and towing without consideration of the weather conditions were believed to be the
causes of the disaster.
In April 2010, 11 oil workers In July 1988, 167 oil workers

died during a fire and explosion were killed in the Piper Alpha
that led to the sinking of the disaster in the North Sea. In
Deepwater Horizon rig in the 1990, the Cullen Inquiry report
Gulf of Mexico. The resulting concluded that a condensate
three-month-long leak created leak was the initial cause
the largest accidental oil spill in of the multiple explosions.
the world. The U.S. Presidential The inquiry made 106
Commission determined that recommendations, including
the Macondo well blowout was one that created additional
caused by number of separate health and safety oversight.
risk factors, oversights,
and outright mistakes that
combined to overwhelm the
safeguards meant to prevent In August 2009, a spill occurred from the West Atlas rig in the Timor Sea. The Montara oil leak was one
such an event. of the worst spills in Australian history, leaking 400 barrels a day for more than 10 weeks. An inquiry
by the Australian government found that safety practices at the well were poor, adding that faulty
cementing of the well led to the blowout that caused the spill.
All of the incidents outlined above are indicative of a cascading chain of failure in
offshore drilling operations. These incidents resulted in regulatory reviews of safety,
significant media attention, reputational damage for individual companies as well as
for the entire offshore industry, and financial impacts for both the operating companies
and their insurers. Despite these risks and the low levels of trust for the offshore oil and
gas industry as a whole, companies are pushing into deeper, colder and more dangerous
environments in their pursuit of hydrocarbons.
In this report Sustainalytics outlines the impacts and risks of deepwater and Arctic
offshore hydrocarbon development. Several examples of leading practises are provided
along with an investor initiative and suggestions for shareholder engagement to address
risks with their holdings.

Global Energy Demand and the Shift

Toward Unconventional Oil and Gas
Climate change pressures have resulted in a global call for a reduction in energy demand
and a lower-carbon fuel supply. However, this transition will take decades. The current
reality is that energy consumption, mainly in non-OECD countries, is on the rise. The
International Energy Agency (IEA) projects that by 2035 global energy consumption will
increase by 36 per cent above 2008 levels. 1 In this scenario fossil fuels will continue to
supply the bulk of energy well past 2035. Oil consumption is projected to increase at a
rate of one per cent per year, from 85 million barrels a day in 2008 to 99 million barrels
a day by 2035.
As demand for fossil fuel continues to grow, many conventional sources are being
depleted, and an estimated 87 per cent of known available reserves on the planet today
are under the control of national oil companies (NOCs). 2 Due to this restricted access
to known reserves, many public companies are shifting their operations to higher-
risk areas and to unconventional oil and gas deposits. High-risk regions are generally
characterized by social volatility or environmental sensitivity, while unconventional
deposits are those that either contains heavier or more contaminated oil or gas, or that
occur in less accessible reservoirs or rocks. For unconventional deposits, conventional
extraction methods do not generate profitable returns.
The scale of global unconventional fossil fuel resources is vast. Deepwater and Arctic
oceanic reservoirs can be considered unconventional as they are situated in locations
that are difficult to access. More than half of the oil discovered since 2000 is in deepwater
oilfields, and the production of oil from these reservoirs is expected to grow in the
coming decades. 3 In the case of offshore reserves located north of the Arctic Circle,
undiscovered resources are estimated to be 90 billion barrels of oil, of which 84 per cent
occurs offshore. Moreover, the extensive Arctic continental shelves may constitute the
worlds largest unexplored prospective area for petroleum. 4
Oceanic Oil and Gas Development Explained
Defining Deepwater, Ultra-Deepwater and Arctic

Deepwater and ultra-deepwater projects occur outside of the continental shelf. Deepwater
drilling is carried out at water depths between 400 and 1,500 meters and ultra-deepwater
activities begin at water depths greater than 1,500 meters. 5, 6 Such projects require the
use of floating drilling rigs, and all underwater drilling and production components must
be able to withstand high pressures and extremely low temperatures.

Offshore Arctic drilling refers to oil and gas development activities that take place on
the continental shelf above the Arctic Circle or at locations at such high latitudes that
the average daily summer temperature does not rise above 10 degrees Celsius. While
drilling in the Arctic could certainly involve deepwater operations in the future, current
activities are carried out in shallow waters. Operating conditions include potential
exposure to long hours of darkness, pack ice, icebergs and extremely low temperatures.
Thus, companies operating in this region must ensure that vessels are able to withstand
pressure exerted by the ice and potential iceberg collisions.
Shallow water drilling: 0 - 400m

Deepwater drilling: 400 - 1,500m
Ultra-deepwater drilling: > 1,500m
The Growth of Oceanic Oil and Gas Development

Technological innovation within the offshore oil and gas industry has increased the
economic viability of offshore projects. Drilling for hydrocarbons underwater began
in the 1890s off the U.S. west coast. Since then, oil exploration and production have
continued in the shallow waters of the continental shelves around the world. Early Arctic
seismic surveys in Alaska and deepwater exploration projects in the Gulf of Mexico did
not begin until the 1970s.
Natural Gas Liq u id s The deepwater oil and gas development boom started in the late 1990s and accelerated
44
from 2000 onwards as rising oil prices increased the economic feasibility of such
projects. Total global production from deepwater fields rose from less than 200,000
20% barrels a day in 1995 to over five million barrels a day in 2007. The IEA expects that
Billion * by 2035 eight million barrels a day will be produced from deepwater resources. 7, 8
Estimates of recoverable oil located in deepwater and ultra-deepwater lies between 160
Oi l
90
and 300 billion barrels, which is between six and 12 per cent of the 2.5 trillion barrels
of total oil the IEA estimates remains to be produced worldwide. Although much of
13% the development of deepwater fields has occurred in the Gulf of Mexico, deepwater
Billion * discoveries have occurred in various basins around the world, notably in Brazil, West
Africa and South East Asia. 9, 10
Natural Gas
According to a study by the U.S. Geological Survey, the mean total of undiscovered
30% 1,669 conventional oil and gas resources in the Arctic is estimated to be approximately 1,669
trillion cubic feet of natural gas, 90 billion barrels of oil and 44 billion barrels of natural
Trillion * gas liquids of which approximately 84 per cent is expected to occur offshore. 11 This
number represents 30 per cent of the worlds undiscovered conventional natural gas,
13 per cent of the worlds total undiscovered oil resources and about 20 per cent of
% = Percentage of worlds supply the worlds natural gas liquids. 12 Reservoirs are spread among the various Arctic littoral
* = Measured in cubic feet countries: U.S., Canada, Greenland, Norway and the Russian Federation, the latter
Figure 1 holding the vast majority of the undiscovered natural gas. 13 (See figure 1)

Deepwater and Arctic Development Around the World
5 Arctic
1 Gulf of Mexico
3 4
West Africa Asia
2
Brazil
1 Gulf of Mexico
The Gulf of Mexico is the largest deepwater and ultra-deepwater production area in the world. Total proved hydrocarbon reserves in
2008 amounted 4.21 billion barrels, of which 3.59 billion barrels was crude oil. In 2009, around 32 per cent of the total oil produced
in the Gulf of Mexico came from ultra-deepwater wells, 50 per cent from deepwater and 18 per cent from shallow water production.
Active companies in the region include Anadarko, Apache, BP, BHP Billiton, Chevron, Eni, and Royal Dutch Shell.
Brazil
2 Recent large deepwater discoveries in Brazil have the potential to double the country s reserves. In 2011, the country s oil reserves
amounted to 12.85 billion barrels, of which 80 per cent is located in deepwater reservoirs in the Campos and Santos basins. Active
companies include BG Group, Chevron, Petrobras, Repsol, Royal Dutch Shell, Sinopec, and Total.
3 West Africa
In the last 15 years, Angola has become the second largest oil producer in Africa after Nigeria. The country has proven reserves of
approximately nine billion barrels and it has managed to produce almost two billion barrels per day. Of the 40 offshore oil concessions
in Angola, 27 are deepwater or ultra-deepwater in the Kuito, Girassol, Belize and Tomboco fields. Active companies include BP, Chevron,
CNOOC, Exxon, Sinopec, Sonangol, and Total.
4 Asia
In recent years there has been an increase in deepwater activities as Asian oil companies have signed large agreements with European
oil majors, such as the 2008 deal to explore the deepwater Gumusut field in Malaysia (signed by: Shell, ConocoPhillips, Murphy Oil
and Petronas Carigali); or the 2011 upstream partnership between Reliance Industries and BP to explore and produce offshore oil,
including ongoing deepwater projects in the Krishna-Godavari basin. Chinese companies are also developing deepwater rigs, such as
the CNOOC981, that will allow deepwater exploration and production from the Peal River Mouth Basin and the Qiong Dong Nan Basin
in the South China Sea.
5 Arctic
The Arctic remains the largest unexplored oil and gas reservoir on Earth. There have been an increased number of continental shelf
exploration licenses awarded and new licensing rounds in the Arctic littoral countries (U.S., Canada, Greenland, Iceland, Norway, and
Russia) in the last 10 years. Notably, in October 2011, the Obama administration upheld 500 leases issued in the Alaskan Chukchi Sea
after several environmental groups challenged the sale of the leases in court. Gazprom expects to start oil production in the Russian
Pechora Sea shelf from Prirazlomnoye field in 2012.

Potential Impact of O ce anic Oil and

Gas Development
Air
Emissions from combustion engines, the flaring of gas for safety reasons, and the escape
of fugitive methane emissions during transport cause the release of greenhouse gases
(GHG) and volatile organic compounds (VOCs). Emissions are higher on deepwater
platforms than on shallow water platforms because of the extra energy required to drill
deeper. Moreover, the farther a rig is from shore the higher the cost to ship by-products
to land for disposal, therefore, more natural gas is flared on deepwater rigs. 14
Habitat Degradation
PHYSICAL DISTURBANCE
Marine animal life can be negatively affected by various stages of deepwater and
Arctic oil development. Air guns, used during seismic surveys of potential oilfields,
vent pressurized air into the water producing noise up to 259 decibels. Studies have
shown that as a result of these acoustic disturbances some animal species can suffer
hearing loss, stress, and a change in behavioural patterns due to their hampered ability
to communicate. 15, 16 While the effects of air guns on shallow water species can be easier
to ascertain, the effects on species inhabiting the deepwater are difficult to determine
due to limited knowledge of their baseline behaviour.
Deepwater installations often encounter large fish, marine mammals, and giant
cephalopods, whose habitats are disturbed or destroyed by the presence of drilling
equipment and underwater hydrocarbon transport infrastructure. Moreover, offshore
development in the Arctic has the potential to negatively impact the habitats of mammal
species considered vulnerable and near threatened, including polar bears and some
whale species, as well as the routes travelled by migratory animals such as the humpback
whale. 17
Shoreline ecosystems provide the mainland with natural protection against hurricanes
and storms. Hydrocarbon transport to refining and consumption centres can cause
shoreline erosion and damage to coastal wetlands, coral reefs, and mangroves. In the
Gulf of Mexico, Louisianas shorelines have lost approximately 3,000 km due to human
activities including the construction of more than 12,000 km of pipelines to transport
hydrocarbons onshore. 18 Increased activity in deepwater development regions like Brazil
and West Africa can exacerbate shoreline change in these areas.
PLANNED DISCHARGES
During any drilling operation, waste is produced and requires disposal. Proximity to land
determines the viability of onshore disposal. Deepwater and Arctic operations typically
discharge drilling fluids, cuttings, produced water, and domestic waste to the sea and
the subsurface. Produced water often contains polycyclic aromatic hydrocarbons (PAHs)
along and other hazardous substances such as heavy metals. Concentrations of PAHs

in produced water are toxic and can negatively impact local ecosystems. In 2008, on
average, an offshore installation drilling in the North Sea discharged 1,681,916 cubic
meters of produced water into the ocean. 19 Since more than 200 deepwater wells
reached production status in 2011, hundreds of millions of litres of produced water are

discharged into the oceans every year.
Depending on the composition of the drilling fluids, synthetic oil and chemical
components containing traces of heavy metals, such as lead, can be discharged into the
sea. Deepwater projects require much larger volumes of drilling mud than shallow water

projects. Although several technologies exist to handle drilling fluids with contaminated
cuttings, companies often release fluids into the sea. Also, while some jurisdictions, like
the North Sea and the Gulf of Mexico, prohibit the discharge of synthetic-based mud,
West Africa, South America, and the Far East allow controlled discharges if cuttings meet
certain toxicity criteria. 20
hundreds of millions of litres of produced water are discharged into the

oceans every year.
UNPLANNED DISCHARGES: OIL SPILLS

There are several ways for hydrocarbons to be released from an offshore installation.
Malfunctioning valves, corrosion, and human errors are common. Blowouts, an
unexpected and uncontrolled pressure build-up, cause hydrocarbons to flow into the
borehole toward the surface. Because of the isolation of deepwater rigs, blowouts
and subsequent spills tend to take longer to contain compared to the same scenario
in shallow waters or on land. Oil spills undoubtedly have a negative impact on local
ecosystems. The almost five million barrels of oil spilled in the Gulf of Mexico during
the Deepwater Horizon incident killed 6,814 animals and injured 2,624 birds, sea turtles
mammals, and reptiles. 21
According to a report by the World Wildlife Foundation, the Arctic offers the highest
level of ecological sensitivity and the lowest level of capacity to cleanup after an oil
spill. The efficiency of standard industry oil spill response strategies such as mechanical
containment and recovery, in situ burning, and dispersant application can be questioned.
Again, due to the remoteness of the location and local conditions, such as ice cover, low
temperatures, reduced visibility or complete darkness, high winds, and extreme storms,
spill response activities can be delayed. 22 In cold conditions, oil is less susceptible to
bacterial degradation and evaporation, especially when trapped under ice. Conversely,
some operators claim that the low oil evaporation rates in the Arctic could result in a
more effective cleanup as more of the oil could be disposed of via in situ burning, and that
the ice may act as a natural barrier between the oil and the marine environment below.
Employee and Contractor Health and Safety

Work-related risks offshore can be operational, resulting from human error and impaired
performance, and/or anthropological, related to the physical and psychological well-being
of individual offshore workers. 23, 24 In the Gulf of Mexico, where most deepwater operations
are currently located, there were 3,695 safety incidents registered between 2006 and
2010, including 42 fatalities and 1,620 injuries of varying severity. 25 Geography also plays a
role in dictating other vessel safety risks such as severe weather or iceberg collision.

The majority of the activities carried out on offshore platforms, including most of the high
risk activities, are performed by contractors on the payroll of oilfield service companies.
From drilling, cementing, circulating mud, and running geophysics, all the way down to
the cooks, contractors are essential for rig operation. In fact contractors far outnumber
the oil and gas company representatives on a rig. According to a study carried out by the
Offshore Division of the Health and Safety Executive analysing the underlying causes of
the offshore accidents, contractors accounted for 62 per cent of injured parties. 26
Investor Risks
Regulatory Risk
The negative attention deepwater and Arctic drilling has received as result of recent
offshore catastrophes has had implications on regulatory frameworks. Various
jurisdictions have begun to review, or have already tightened, environmental and safety
requirements for the issuance of drilling permits (see text box 1 on page 12). Following
the Deepwater Horizon incident, the U.S. imposed a six-month moratorium on deepwater
projects, and issued new rules to address major safety gaps identified by investigations
into the incident (see text box 2 on page 12). 27 Companies whose operations were
halted had to resubmit safety plans in order to receive approvals to resume operations.
In the aftermath of the Deepwater Horizon incident, Arctic developments have also
experienced slowdowns partly due to the regulatory review sparked by the Gulf of
Mexico spill. Royal Dutch Shells plan to start exploration drilling in the Beaufort Sea in
2010 has experienced a longer permitting timeframe that has delayed operations for at
least two years.
Investors in companies holding deepwater and Arctic projects will see that, as a result of
tougher regulations and increased oversight, it will take more time to produce first oil. If
production takes longer, the development and operational costs of projects increase and
revenues are delayed. Companies with strong environmental and social management
practices should obtain permits more efficiently, have lower compliance costs and
experience fewer delays. Furthermore, these companies also lower the risk of a costly
non-compliance incident.
While more stringent regulations may increase costs or cause production delays, they
also help ensure higher safety standards and practice. In doing so, regulatory changes
play a critical role in managing risk and helping to avoid disastrous and costly events. As
a result, raising standards aids in the protection of the industrys reputation as a whole.

Offshore Safety Regulation Revisions in Various Global Jurisdictions

European Commission: In October 2011, the European Commission proposed a new law to ensure that European offshore
hydrocarbon production in EU waters follows the highest safety, health and environmental standards during the entire life cycle
of an operation. The proposal has mandatory requirements in the areas of emergency response, transparency and inspections.
Public participation is foreseen in licensing, and companies need to demonstrate technical and financial capabilities to ensure
environmental protection. The proposal will be discussed by the EU throughout 2012.
Source: European Commission
Canada: In December 2011, the Canadian National Energy Board (NEB) concluded a review of the safety and environmental
requirements for offshore drilling in Canadian Arctic waters. The process included consultation with interested parties such as
non-governmental organizations, local communities, other regulators and the oil industry. The NEB states that companies must
demonstrate that they would be able to complete a relief well and cap a blowout in the same season. Companies can get an
exemption to this requirement if they show they have alternative methods for quickly killing a blowout.
Source: National Energy Board of Canada
United Kingdom: One of the priorities for 2012 of the offshore division (OSD) of the U.K. Health and Safety Executive is to
conduct a revision of the U.K.s offshore oil and gas regulatory approach, touching upon health and safety and oil spill response
aspects.
Source: Health and Safety Executive
Greenland: With no producing wells in the country, the first offshore drilling legislation was introduced in 2010. In 2011, the
Ministry for Industrial and Natural Resources announced that it was setting higher requirements in Arctic waters. The new
requirements include ice handling programs and an exceptional two rig policy that demands companies install two drilling rigs
for every well. The purpose of the second rig is to reduce the time needed to mobilize a rig to drill an emergency relief well.
Source: NANOQ
China: In September 2010, the government began three weeks of additional safety checks to all offshore installations in the
wake of an oil spill at a Bohai Bay platform run by ConocoPhillips. In November 2011, it was reported that a revision of joint
offshore hydrocarbon development may be undertaken by the Ministry of Land and Resources. Current regulation lacks clarity
with regards to the obligations and responsibilities of companies and regulators during unplanned events.
Source: Reuters News
The International Maritime Organization, a UN body tasked with protecting the marine environment from pollution from ships, has set
up a working group to address pollution from platforms. If the working group succeeds, oil companies will witness the start of the first
international agreement ever dealing with offshore hydrocarbon development.
Box 1
New U.S. Environmental and Safety Rules Prompted by the Deepwater Horizon
As a direct consequence of the Deepwater Horizon tragedy, the U.S. Minerals Management Service was restructured to separate the
energy development functions from the safety and environmental enforcement function. Two new organizations emerged in October
2011: the Bureau of Ocean Energy Management (BOEM) and the Bureau of Safety and Environmental Enforcement (BSEE). The BSEE
developed and implemented two rules aimed at raising operations standards for companies operating in the U.S. outer continental shelf:
A Drilling Safety Rule set new standards for well design and well control equipment. Voluntary well design practices, recommended
by the American Petroleum Institute (API) became mandatory and third-party inspections and certifications are necessary for
every stage of the drilling process. In terms of well control equipment, an engineer must certify that blowout preventers meet
new standards for testing and maintenance, and are capable of severing the drill pipe under anticipated well pressure.
A Workforce Safety Rule requires companies operating offshore to develop and maintain a safety and environmental management
system (SEMS) making 13 previously voluntary health and safety elements mandatory. Companies are also required to provide
documentation that describes all elements of the SEMS program. Procedures such as emergency evacuation plans and oil spill
contingency plans must now be in place and validated by drills or records and documentation.
Source: Bureau of Safety and Environmental Enforcement

http://www.bsee.gov/BSEE-Newsroom/Speeches/BOEMRE-Director-Discusses-Strengthened-Oversight-of-Offshore-Oil-and-Gas-Drilling-and-
Development-at-the-Baker-Institute-s-Energy-Forum.aspx
Box 2

Litigation Risk
Generally, litigation risk relates to the effects of pollution and the subsequent
compensation claims filed by affected parties, who might also seek to receive punitive
damages after an unplanned event. In December 2010, BP took a pre-tax charge of USD
40.9 billion in order to fund claims, cleanups, and damages from the Deepwater Horizon
incident. As oil spills can have a large material impact on companies, there is also a risk
of litigation from a companys own shareholders. After the Deepwater Horizon incident
several groups of shareholders filed lawsuits against BP claiming that the company
misled them about its commitment to safety and operational integrity.
Liability is a deterrent to spills. Currently, the operators hold the liability, however,
the contractors physically perform the work and thus control a portion of the risk. In
the case of the Deepwater Horizon, the U.S. Coast Guard named some contractors as
potentially responsible parties, thus complicating traditional liability lines. Furthermore,
BP began an aggressive legal campaign to recover some costs from its contractors. Post-
Deepwater Horizon, the traditional distribution of risks and benefits between operators
and contractors is being challenged.
Stakeholders who oppose projects may also use legal tactics such as lobbying regulators,
challenging permits, or obtaining court injunctions, to delay or derail projects. Since 2010,
environmental groups and local Inupiat communities have been legally challenging air
permits issued by the U.S Environmental Protection Agency to Royal Dutch Shells drilling
vessel. Shells plans to start drilling during the Arctic summer of 2012 may experience
another delay if these appeals succeed. Operators that have strong relationships with
their stakeholders may benefit from reduced resistance to permitting and fewer lawsuits.
Reputational Risk
The powerful images of oil spills, worker fatalities, and the effects of climate change in
the Arctic can induce strong emotion among the general public and can expose companies
involved in deepwater and Arctic operations to significant negative media attention.
Negative reputational impacts related to operations in sensitive environments are an
issue that both companies and the industry as a whole have been facing for decades.
Exposure to reputational damage increases as non-governmental organizations (NGOs)
and local communities organize themselves in more sophisticated ways. Visual NGO
campaigns outlining the potential environmental effects of an Arctic oil spill provide
a significant amount of negative media attention that can lead to further distrust of
the offshore industry and an increase in opposition to drilling projects. In the 1990s
Royal Dutch Shell was subject to a boycott in Europe after it announced plans to sink
the Brent Spar storage installation in the North Sea. Some BP gas filling stations in the
southern U.S. were boycotted by consumers after the Deepwater Horizon sank resulting
in a temporary loss of business opportunities and reduced revenues.

Operational Risk
Operating in deepwater and Arctic environments is generally more complicated than
operating in shallow water. The depth of deepwater drilling translates into extremely
low temperatures and high pressures. Drilling risers and other equipment are built with
thicker walls and higher grade materials to handle the additional stress. However, there
is no one-size-fits-all technology that guarantees safe operations. For example, Brazilian
deepwater basins require well integrity techniques designed to adjust for shifting sand
that falls back into the well, while Gulf of Mexico operations need to be designed to
withstand severe storms and hurricanes.
In the Arctic, the most obvious operational challenge is ice. Ice movement is subject to
wind and water currents. Ice conditions can also vary significantly season-to-season,
or year-to-year, within an area. Thus, fixed platforms must be designed to withstand
the pressure exerted by ice. Drilling activities and support vessels can be delayed by
approaching icebergs or the more difficult to detect ice growlers.
Blowouts are often caused by well integrity issues related to poor cementing jobs or loss
of drilling mud pressure. The deeper the well, the more cement and drilling mud is used,
increasing the likelihood of well integrity failure. Furthermore, because of the isolated
nature of deepwater rigs, blowouts and subsequent spills tend to take longer to contain
compared to the same scenario in shallow waters or on land. In terms of emergency
planning, the last line of defence for an uncontrolled offshore spill is to drill a relief well.
The relief rig is relatively easy to acquire in the Gulf of Mexico with hundreds of rigs
operating in the area. However, in the remote Arctic, that relief well rig may take several
months just to reach the site, prior to beginning the drilling process.
Equipment selection for deepwater and Arctic operations requires an immense amount
of technical consideration. Due to the specialized equipment and risk profile of the
activities, average day rates for deepwater and Arctic projects vary from around USD
250,000 to USD 415,000 per utilization day. 28 Therefore, temporary stoppages or delays
due to operational failures, even if not critical, can represent high and unwelcomed
expenses for the company.
Best Pr actices
There are general operational best practices that oil and gas companies and their
servicing companies can employ to address the risks inherent to deepwater and Arctic
operations. While some best practices have been identified by evaluating what went
wrong in past incidents, other practices are based more on a precautionary approach
and the need to establish baseline data. Although not an exhaustive list, below are some
examples of leading practices for deepwater and Arctic operations.

Transparency and Disclosure

As unconventional resources carry more risk than conventional resources, the portion of
reserves in higher risk regions is a key indicator of risk exposure. Investors would benefit
from companies disclosing the percentage of offshore resources compared to overall
reserves, with a clear distinction between shallow water, deepwater and Arctic reserves.
Stock exchanges require oil companies to disclose oil and gas reserve information. In
January 2010, a rule requiring oil and gas companies to categorize reserves based on
final product (either conventional or unconventional) was implemented by the U.S.
Securities and Exchange Commission. 29 These revisions provide investors with a better
understanding of risk exposure and will facilitate a more meaningful comparison
between companies. Although this rule is an improvement, it does not allow investors
to distinguish between oil and gas from deepwater or Arctic reserves. As both costs
and risks are higher with deepwater and Arctic reserves compared to shallow water or
onshore reserves, investors would benefit from, and should encourage, a more detailed
categorization of reserve information.
Leading Practice Example: NEXEN INC. RESERVES DISCLOSURE

In its FY 2010 annual report, Nexen Inc. provides a graphic breakdown of its 2010 Proved +
Probable Reserves, under its major operating categories such as Synthetic, Syncrude, North Sea,
Other International, Canada, Gulf of Mexico, and Yemen. Analysts with some knowledge about
the companys operations in these regions would be able to distinguish the Gulf of Mexico as
containing some deepwater reserves. This level of disclosure is stronger than the industry average,
however a further company-wide breakdown of deepwater reserves would be a leading practice.
Process Changes:
Activities to Decrease Impact on Biodiversity
A greater understanding of deep marine life is needed in order to inform oil and
gas production best practices. Early partnerships between science-based research
organizations and oil and gas exploration companies can produce scientific data useful
for both groups. Companies operating in deepwater and the Arctic can aid in the
development of best practices by building a baseline data set that can be used to inform
mitigation strategies and avoid negative impact. For example, by monitoring local whale
behaviour drilling operations can be scheduled to avoid migration and calving periods.
Gathering baseline biodiversity data is important in deepwater and Arctic regions as
such data is lacking in comparison to warm water continental shelf regions.
Companies can implement strategies for reducing physical impacts such as reducing
underwater sound disturbances. For example, soft starting is recognized as a best
practice for seismic testing. The procedure begins by producing a low level of noise that
is gradually increased. The gradual increase allows marine mammals and fish to move
away from the testing areas and avoid exposure to high-volume sound. Companies can

also replace air guns with marine vibrators, which produce much lower pressure and
sound. Although it has a lower impact, marine vibrator technology is not yet as reliable
as traditional seismic technology.
Leading Practice Example: JOINT INDUSTRY RESEARCH - EXPLORATION AND

PRODUCTION SOUND AND MARINE LIFE JOINT INDUSTRY PROJECT
In 2005, the International Association of Oil & Gas Producers (OGP) began the exploration and
productions sound and marine life joint industry project. The program systematically surveyed
the literature for knowledge gaps about underwater sound and its effects on animals, and funds
research programs focused on sound source characterization and propagation; physical and
physiological effects and hearing; behavioural reactions and biologically significant effects; and
mitigation and monitoring. Participating companies include: BG Group, BHP Billiton, Chevron,
ConocoPhillips, Eni, ExxonMobil, Santos, Statoil, and Woodside. Shell and BP halted their
participation in the project in 2010.
Process Changes: Practices to Maintain Well Control

Controlled wells have a lower impact on biodiversity as the likelihood of unplanned
discharges is lower. Furthermore, blowouts are costly and preventable. If well integrity
is lost and emergency control equipment malfunctions, hydrocarbons can ignite and
cause spills, fires, and explosions. While there are regulations requiring that well control
systems function properly, these regulations vary between jurisdictions. Companies
can show best practice by setting voluntary internal standards that go beyond local
regulations. For example, companies can require laboratory testing for cement slurries
that will be used in cementing deepwater wells, increase blowout preventer (BOP)
testing frequencies, and increase the effectiveness of BOPs by using multiple sets of
rams (steel blades) designed to cut the drill pipe in case of an emergency. In order to
systematically reduce risk, companies need to rollout company-wide standards and not
simply implement new standards in specific regions.
Leading Practice Example: BPs ENHANCED DRILLING STANDARDS IN THE GULF OF MEXICO
In the aftermath of the Deepwater Horizon incident, BP announced a set of voluntary performance
standards that go beyond U.S. regulatory requirements and will be implemented by the company
for its operations in the Gulf of Mexico. Under the new drilling standards BP commits to:
Require contractors to use BOPs equipped with no fewer than two blind shear rams and a
casing shear ram on all drilling rigs under contract to BP for deepwater service;
Third-party verification in testing and maintenance of BOPs, in accordance with manufacturer
recommendations and industry recommended practice; and
Laboratory testing of cement slurries used in wells and disclosure of tests to the regulators
Although the enhanced standards go beyond regulatory requirements in the U.S., BP is not
requiring all of its worldwide drilling rigs to conform to this leading practice.

Process Changes: Emergency Management

Lessening the environmental impact of an event will also lessen potential legal claims,
compensation payouts, and regulatory fines. The management of emergencies begins
with preparedness. Realistic oil spill contingency plans that assess a companys oil
spill scenarios should be disclosed by every company intending to perform operations
offshore in compliance with or beyond regulatory requirements. Industry initiatives can
provide assistance to companies in the preparation of such plans. The International
Petroleum Industry Environmental Conservation Association (IPIECA) has a complete
guide to contingency planning for oil spills on water that companies can deploy for
deepwater projects. 30 This guide includes a toolkit for identifying potential response
capacity in relation to the size and location of the spill. Deepwater and Arctic spills are
often considered remote and their distance from infrastructure generally means a longer
response time. Smaller spills may be dealt with at the company level; however, larger
spills will need the resources of multiple companies. Such capacity currently exists in the
Gulf of Mexico, and other major deepwater basins should explore similar arrangements.
Leading Practice Example: MARINE WELL CONTAINMENT COMPANY (MWCC) AND

HELIX ENERGY SPILL CONTAINMENT SYSTEM
In the aftermath of the Deepwater Horizon spill, Anadarko, Apache, BHP Billiton, BP, Chevron,
Conoco Phillips, ExxonMobil, Hess, Royal Dutch Shell, and Statoil formed the Marine Well
Containment Company (MWCC), a non-profit company that will be ready to deploy an interim
containment system in case of an incident in the Gulf of Mexico. The equipment is owned and
maintained by the MWCC and vessels and mutual aid equipment will be made available by and
to the aforementioned companies. Companies must be a member in order to use the equipment
and services of the MWCC.
Oil spill containment also presents business opportunities for companies. Helix Energy Solutions
Corp. has designed a fast response system (HFRS) for future spills that has been cited as the spill
response system of record for six new drilling permits issued in the Gulf of Mexico.
MWCC and the HFRS are examples of leading practices, however, both are only available in the
Gulf of Mexico and other high risk deepwater and Arctic regions remain underserviced.
Process Changes: Precautionary Approach

Emergency management in the Arctic poses a different set of challenges. While some
companies claim an ice environment will provide recovery opportunities not present in
open water and enhance the use of mechanical recovery, in situ burning and dispersant
use, there is no real-world data available to support those claims. 31 IPIECA, together
with the API and other partners are developing new guidance for responding to spills in
icy waters. 32 In line with the precautionary approach to development of Arctic oil and gas
deposits, more information is needed before the industry understands the best ways to

manage environmental emergencies in the Arctic. Effective cleanup mechanisms may

include traditional containment methods, however, it is more likely that contingency
plans will be more complex for Arctic projects. Committing to drill exclusively during
open water season, when the presence of ice is lower and accessibility to spill sites is
greater, would reflect a precautionary approach. Companies can also allocate financial
resources for research on Arctic oil spills, for example through the Oil Spill Response and
Research Program of the BSEE.
Process Changes: Decrease Fluid Toxicity

Companies can reduce the impact of planned discharges by adopting strict discharge
policies such as sourcing products and services that are designed to comply with stringent
regulations and minimize environmental impact. Some oilfield service companies have
viewed this shift towards less toxic materials as an opportunity and are offering water-
based drilling fluids with lower marine toxicity and faster biodegradation, as well as
cuttings collection and containment systems that considerably reduce the environmental
impact of planned or unplanned discharges.
Leading Practice Example: OSPAR DISCHARGE GUIDELINES

The OSPAR commission is a regulatory body tasked with protecting the marine environment of the
North-East Atlantic. It has in place a number of measures to reduce discharges from the oil and
gas industry, considered to be the most stringent worldwide. OSPAR has an oil discharge standard
of less than 30mg/l (on average) for the total quantity of oil in produced water discharged. Since
1992, OSPAR has prohibited the use of diesel oil-based drilling fluids. Companies can improve their
environmental performance in the area of planned discharges by adopting a policy that follows
the OSPAR discharge standards.
Contractor Supervision and Management

In a business where contractors play such a prominent role, it is expected that operators
have a system in place to supervise contractors and to ensure that contractors conduct
operations in a manner consistent with the operators standards. Employee safety is at
stake and traditionally the operators hold the liability for unplanned events. Operators
should adopt a comprehensive, audited safety and environmental management system
(SEMS), including contractor pre-qualification and auditing, and ensure that the
SEMS is followed on board contracted rigs. The alternative is that contractors follow
their own management system, however, with several contracted service companies
working on one rig, independent management systems would not be efficient. The
safer option is to have all rig personnel working under the same high standards and
expectations. If a SEMS is properly implemented, auditing and monitoring functions
should be conducted to determine a contractor s compliance. The presence of an on-
site company representative can also help ensure that the operations are conducted in

accordance with the operators standards. As a best practice, prior to drilling, operators
and contractors should prepare a bridging document that outlines how the contractors
safety and environmental standards can link with the oil and gas companys standards.
Such documents are prepared on a well-by-well basis, are tailored to specific local
conditions, and outline chains of command during an emergency.
Leading Practice Example: COMPREHENSIVE BRIDGING DOCUMENTS

Following the Deepwater Horizon incident, the API and the International Association of Drilling
Contractors (IADC) created a template for a comprehensive bridging document. The API/
IADC Bulletin 97 Well Construction Interface Document allows the two sides to formally align
a contractor safety case with the operators safety management system. Although the concept
of a well-by-well bridging document is not new, this standard adds the elements of well design,
well execution plan, and critical well activity risk assessments to the traditional SEMS bridging
arrangement. By including these additional factors emphasis is placed on the higher risk activities
associated with deepwater and Arctic wells.
Acting on Inve stor Risks and Opportunities

As global demand for hydrocarbons increases, oil and gas producers will continue to
push offshore projects into extreme and sensitive environments in their quest to secure
future reserves. These higher-risk deepwater and Arctic unconventional supplies are
associated with environmental and social impacts, the most significant of which are on
biodiversity and employee health and safety. Such impacts create reputational, regulatory
and litigation risks for companies and their investors. Furthermore, the deepwater and
Arctic industry faces a greater degree of operational uncertainty that investors have not
been able to fully evaluate. As a result of the Deepwater Horizon incident, for example,
investors learned that the information they needed to analyze risk exposure and risk
mitigation in offshore activities was not readily available. The uncertainties and risks
associated with deepwater and Arctic extraction call for a response from investors.
Months after the Deepwater Horizon incident, a Ceres-led coalition of 62 global investors
with USD 2.5 trillion in assets under management sent letters to the CEOs of 28 major
energy companies engaged in deepwater drilling and 26 insurers. The letters requested
further disclosure of the companies risk oversight measures for deepwater drilling. 33
Current engagement should follow the same track of improved disclosure with a
particular focus on reserve disclosure and best practices. In order to better understand
their level of exposure to unconventional oil and gas, investors should request that
companies disclose a breakdown of higher risk reserves including deepwater and Arctic.
Environmental and social impacts and their associated risks can, to a significant degree,

be mitigated through the implementation and further development of best practices.

In many cases the industry is opting for selective implementation of best practices
depending on their exposure to reputational and regulatory risks. In some areas, best
practices can be implemented immediately; in other areas they will require time,
research and innovation. Of primary importance are:
Transparency provide information that allows investors to evaluate the risk

exposure of the companys reserve portfolio.
Process Changes include mitigation for impacts to biodiversity, high global
standards for maintaining well control, and, as a last defence, strong emergency
management programs.
Product Changes increase the use of green products and strive to reduce the
toxicity of all materials used on board, especially fluids that may be disposed of
offshore.
Contractor Management operators should ensure that contractors adhere to an
audited SEMS and that both parties complete comprehensive well-by-well bridging
documents.
While the practices outlined above are important and should be encouraged, it should
be noted that they do nothing to address or mitigate the contribution of fossil fuel
consumption specifically oil and natural gas to climate change. In fact, a positive
feedback cycle exists in that, as more oil and gas is extracted from Arctic environments,
the associated increase in carbon dioxide decreases the amount of Arctic ice. More ice-
free days translate into easier drilling conditions and the production of even more Arctic
oil and gas. Therefore, while pushing for impact mitigation in the deepwater and Arctic
oil and gas industry, responsible investors should also push for investment in renewable
energy and for regulatory environments that incentivize such investments.

Endnotes
1
World Energy Outlook 2010 (Paris: International Energy Agency, 2010).
2
National oil companies (NOC) are companies that are fully or majority owned by a national government. NOCs do not completely impede the access of
publicly traded companies to these resources; however, foreign companies are subject to operating restrictions which often include partnerships with NOCs
and technology transfer requirements.
3
World Energy Outlook 2010.
4
Peter H. Stauffer, ed., Circum-Arctic Resource Appraisal: Estimates of Undiscovered Oil and Gas North of the Arctic Circle, U.S. Geological Survey, 2008,
http://pubs.usgs.gov/fs/2008/3049/fs2008-3049.pdf.
5
On October 1, 2011, the U.S. Bureau of Ocean Energy Management, Regulation and Enforcement (BOEMRE), formerly the Minerals Management Service
(MMS), was replaced by the Bureau of Ocean Energy Management (BOEM) and the Bureau of Safety and Environmental Enforcement (BSEE) as part of a major
reorganization. BOEM is responsible for managing environmentally and economically responsible development of the U.S.s offshore resources. Its functions
include offshore leasing, resource evaluation, review and administration of oil and gas exploration and development plans, renewable energy development,
National Environmental Policy Act (NEPA) analysis, and environmental studies. BSEE is responsible for safety and environmental oversight of offshore oil and
gas operations, including permitting and inspections of offshore oil and gas operations. Its functions include the development and enforcement of safety and
environmental regulations, permitting offshore exploration, development and production, inspections, offshore regulatory programs, oil spill response and
training, and environmental compliance programs.
6
World Energy Outlook 2010.
7
Ibid.
8
Ibid.
9
Ibid.
10
Ibid.
11
Stauffer, Circum-Arctic Resource Appraisal: Estimates of Undiscovered Oil and Gas North of the Arctic Circle.
12
Arctic Oil and Natural Gas Potential, U.S. Energy Information Administration, accessed December 6 2011, http://www.eia.gov/oiaf/analysispaper/arctic/
index.html#aongr.
13
Donald L. Gautier, et al., Assessment of Undiscovered Oil and Gas in the Arctic, Science, 324, no. 5931, (2009): 1175-1179.
14
MMS GOADS and Offshore Methane Emissions: Lessons Learned from the Natural Gas STAR Program, U.S. Environmental Protection Agency, published May
6, 2008, http://www.epa.gov/gasstar/documents/workshops/2008-tech-transfer/neworleans3.pdf.
15
Ocean Noise: Turn it down: A Report on Ocean Noise Pollution, International Fund for Animal Welfare, published June 2008, http://www.ifaw.org /sites/
default/files/Ocean%20Noise%20Pollution%20Report.pdf.
16
Marine Mammals and Noise: A Sound Approach to Research And Management, Marine Mammal Commission, published March 2007, http://mmc.gov/
reports/workshop/pdf/fullsoundreport.pdf.
17
Red List, The IUCN Red List of Threatened Species, accessed December 2, 2011, http://www.iucnredlist.org /.
18
About Coastal Erosion: What are the causes? Parishes Against Coastal Erosion, http://www.paceonline.org /erosion_det.php?poErosion_ID=3.
19
About Coastal Erosion: What are the causes? Parishes Against Coastal Erosion, http://www.paceonline.org /erosion_det.php?poErosion_ID=3.
20
A. Mclean, A. Wilde, M. Zamora and M. Rafferty, The Top 10 Mud-Related Concerns in Deepwater Drilling Operations, American Association of Drilling
Engineers, 2010.
21
Deepwater Horizon Response Consolidated Fish and Wildlife Collection Report, RestoreTheGulf.gov, published November 2, 2010, http://www.
restorethegulf.gov/sites/default/files/documents/pdf/Consolidated%20Wildlife%20Table%20110210.pdf.
22
Oil Spill: Response Challenges in Arctic Waters, WWF, published October 2007, http://www.worldwildlife.org /what/wherewework/arctic/
WWFBinaryitem24363.pdf.
23
The Health and Safety Executives Offshore Division is responsible for regulating the risks to health and safety arising from work activity in the offshore oil
and gas industry on the U.K. continental shelf.
24
Offshore working time in relation to performance, health and safety: A review of current practice and evidence, University of Oxford for the Health and
Safety Executive, 2010, http://www.hse.gov.uk/research/rrpdf/rr772.pdf.

25
Incident Statistics and Summaries 1996-2011, Bureau of Ocean Energy Management, Regulation and Enforcement, published February 2011, http://www.
boemre.gov/incidents/IncidentStatisticsSummaries.htm.
26
John Hare, and Michael Johnson, Underlying Causes of Offshore Incidents, Health and Safety Executive, published May 15, 2009, http://www.hse.gov.uk/
offshore/offshore-incidents.pdf.
27
BOEMRE Director Discusses Future of Offshore Oil and Gas Development in the U.S. at Gulf Spill Series, Bureau of Ocean Energy Management Regulation
and Enforcement, press release published April 19, 2011, http://www.boemre.gov/ooc/press/2011/press0419.htm.
28
Offshore Rig Day Rates, Rigzone, http://www.rigzone.com/data/dayrates/.
29
Security and Exchange Commission, Modernization of Oil and Gas Reporting, accessed January 2012, http://www.sec.gov/rules/final/2008/33-8995.pdf.
30
Oil Spill Preparedness and Response Report Series Summary, IPIECA, 2008, http://www.ipieca.org /publication/oil-spill-preparedness-and-response-report-
series-summary.
31
Oil Spill: Response Challenges in Arctic Waters, WWF.
32
Response in the Arctic, IPIECA, accessed December 2011, http://www.ipieca.org /topic/oil-spill-preparedness/response-arctic.
33
Peyton Fleming, Investors Managing $2.5 Trillion Press Energy Companies to Better Disclose Spill Prevention and Response Plans for Deepwater Wells
Worldwide, press release published August 5, 2010, http://www.ceres.org /incr/news/oil-letters-080510.

About the Author

Alberto Serna Martin, Associate Analyst
Alberto is responsible for research and analysis within the oil and mining sectors. He is
also a member of the team responsible for the Global Compact Compliance Service. Prior
to joining Sustainalytics, Alberto worked for the Dutch environmental and development
non-governmental organization Both Ends. He completed a Masters degree in English
Language and Literature at the University of Alcal de Henares in Madrid and a Research
Masters in Human Geography, Planning and International Development Studies at the
University of Amsterdam (Cum laude).
Alberto Serna Martin

Associate Analyst
alberto.serna@sustainalytics.com
(+31) 20 205 00 01
About Sust ainalytics
Sustainalytics is a leading global provider of environmental, social and governance

(ESG) research and analysis for investors and financial institutions. We provide a global
perspective, underpinned by nearly 20 years of local experience and expertise in the
responsible investment market. Sustainalytics strives to continuously provide high-
quality solutions and commits to remain responsive to the current and future needs
of our clients. Recently, Sustainalytics was voted Best ESG Research House by IPE/TBLI.
Sustainalytics is headquartered in Amsterdam and has offices in Boston, Frankfurt,
Madrid, Paris, Timisoara and Toronto; and representatives in Brussels and Copenhagen.
The information herein has been obtained from sources that Sustainalytics believes to be reliable.
However, Sustainalytics does not guarantee its accuracy or completeness. Copyright 2011
Sustainalytics. All rights reserved. No portion of this material may be reproduced in any form
without the expressed written permission of Sustainalytics.
info@sustainalytics.com
contact@sustainalytics.com

Unconventional Oil and Gas Arctic Drilling 0

Hochgeladen von

Dokumentinformationen

Copyright

Verfügbare Formate

Dieses Dokument teilen

Dokument teilen oder einbetten

Freigabeoptionen

Stufen Sie dieses Dokument als nützlich ein?

Sind diese Inhalte unangemessen?

Copyright:

Verfügbare Formate

Unconventional Oil and Gas Arctic Drilling 0

Hochgeladen von

Copyright:

Verfügbare Formate

D e e p e r an d Cold er

Oceanic Oil and Gas Development Explained..........................................................6

Defining Deepwater, Ultra-deepwater and Arctic.....................................................6

The Growth of Oceanic Oil and Gas Development....................................................7

Deepwater and Arctic Development Around the World..........................................8

Potential Impact of Oceanic Oil and Gas Development..........................................9

Employee and Contractor Health and Safety...........................................................10

Transparency and Disclosure......................................................................................15

Process Changes: Activities to Decrease Impact on Biodiversity..........................15

Process Changes: Practices to Maintain Well Control............................................16

Process Changes: Emergency Management...............................................................17

Process Changes: Precautionary Approach..............................................................17

Process Changes: Decrease Fluid Toxicity................................................................18

Contractor Supervision and Management...............................................................18

Acting on Investor Risks and Opportunities............................................................19

Copyright 2012 Sustainaly tics - All rights reser ved

Deeper and Colder

Copyright 2012 Sustainaly tics - All rights reser ved

Copyright 2012 Sustainaly tics - All rights reser ved

In April 2010, 11 oil workers In July 1988, 167 oil workers

Copyright 2012 Sustainaly tics - All rights reser ved

Global Energy Demand and the Shift

Oceanic Oil and Gas Development Explained

Defining Deepwater, Ultra-Deepwater and Arctic

Copyright 2012 Sustainaly tics - All rights reser ved

Shallow water drilling: 0 - 400m

The Growth of Oceanic Oil and Gas Development

Copyright 2012 Sustainaly tics - All rights reser ved

Deepwater and Arctic Development Around the World

Copyright 2012 Sustainaly tics - All rights reser ved

Potential Impact of O ce anic Oil and

Copyright 2012 Sustainaly tics - All rights reser ved

hundreds of millions of litres of produced water are discharged into the

UNPLANNED DISCHARGES: OIL SPILLS

Employee and Contractor Health and Safety

Copyright 2012 Sustainaly tics - All rights reser ved

Copyright 2012 Sustainaly tics - All rights reser ved

Offshore Safety Regulation Revisions in Various Global Jurisdictions

Source: Bureau of Safety and Environmental Enforcement

Copyright 2012 Sustainaly tics - All rights reser ved

Copyright 2012 Sustainaly tics - All rights reser ved

Copyright 2012 Sustainaly tics - All rights reser ved

Transparency and Disclosure

Leading Practice Example: NEXEN INC. RESERVES DISCLOSURE

Copyright 2012 Sustainaly tics - All rights reser ved

Leading Practice Example: JOINT INDUSTRY RESEARCH - EXPLORATION AND

Process Changes: Practices to Maintain Well Control

Copyright 2012 Sustainaly tics - All rights reser ved

Process Changes: Emergency Management

Leading Practice Example: MARINE WELL CONTAINMENT COMPANY (MWCC) AND

Process Changes: Precautionary Approach

Copyright 2012 Sustainaly tics - All rights reser ved

manage environmental emergencies in the Arctic. Effective cleanup mechanisms may

Process Changes: Decrease Fluid Toxicity

Leading Practice Example: OSPAR DISCHARGE GUIDELINES

Contractor Supervision and Management

Copyright 2012 Sustainaly tics - All rights reser ved

Leading Practice Example: COMPREHENSIVE BRIDGING DOCUMENTS

Acting on Inve stor Risks and Opportunities

Copyright 2012 Sustainaly tics - All rights reser ved

be mitigated through the implementation and further development of best practices.

Transparency provide information that allows investors to evaluate the risk

Copyright 2012 Sustainaly tics - All rights reser ved

Copyright 2012 Sustainaly tics - All rights reser ved