International Petroleum Industry Research Articles

Meeting Increasing Demands for Upstream Scope 3 Reporting: A Framework for the Drilling Industry

Summary This paper details the scope and framework applied for quantifying upstream Scope 3 greenhouse gas (GHG) emissions of offshore drilling operations. A step-by-step methodological approach is presented, comprising environmental impact modeling of drilling and rig operational activities through the application of the life cycle assessment (LCA) methodology. The study aims to break down upstream Scope 3 emissions to a process level, demonstrating how upstream Scope 3 emissions can be quantified and evaluated to a greater detail level compared with what current Scope 3 reporting levels offer today. A North Sea drilling case study conducted in collaboration with a major drilling contractor is used for showcasing the impact burden levels, challenges, and prosperity of accounting, reporting, and tracking upstream Scope 3 emissions as a drilling contractor. A total of 141 drilling and rig operational activities were identified and prioritized for impact calculation, presenting a detailed breakdown of upstream Scope 3 emissions results for offshore well drilling. Impacts are quantified in tonnes of carbon dioxide equivalent (CO2eq.) emitted per day in operation. The study does not include downstream Scope 3 and reports limited to direct (Scope 1) emissions. Results show a total upstream Scope 3 emissions burden of 412 tCO2eq./d in operation. Of the eight assessed upstream Scope 3 categories, purchased goods account for the largest contribution of 32%. Activities related to the operation and maintenance of drilling equipment account for the largest impact contribution of 351 tCO2eq./d, corresponding to 86% of total upstream Scope 3 emissions. The reported outputs may serve as a benchmark for future Scope 3 accounting and reporting within the drilling industry, as well as for LCA inventories for oil and gas production. A set of system boundaries for assessing upstream Scope 3 emissions is suggested, along with recommended emission calculation methods. The presented framework may serve as an alternate supplement to the International Petroleum Industry Environmental Conservation Association (IPIECA) adapted version of the GHG Protocol’s Scope 3 Standard in terms of Scope 3 inventory boundary setting and data prioritization with relevance to drilling contractors, and finally to the International Association of Drilling Contractors (IADC) industry guideline for environmental, social, and governance (ESG) reporting.

How transnational rules can contribute to the improvement of the Brazilian regulatory system for unitization—an analysis under the transnational legal order perspective

Abstract Unitization is the most effective method to avoid irrational, wasteful and environmentally unsustainable production of oil and natural gas. Therefore, it is important to notice that unitization is a complex practice. It is effective for the equitable production division of a deposit shared by different owners. However, compulsory membership can result in costly negotiation and make exploration and production projects less attractive. In the pre-salt, the most productive Brazilian oil province, unitization processes are common and even more complex due to the following factors: (i) there are three different tax regimes in the pre-salt polygon; (ii) when the reservoir is shared with an area not granted yet (referred to as an open area), the Brazilian regulation establishes that the unitization process must be carried out with the public company, Pré-sal Petróleo S.A., representing the Government; (iii) moreover, due to the high productivity of the pre-salt layer, the financial values involved in this process are substantial, even with a participation of less than 1 per cent in the shared reservoir. Brazil established a robust regulation on unitization in 2013, which was amended in 2017 and, again, in 2020. This demonstrates that the regulatory improvement process, in the search for a more efficient regulation—that balances the attraction of investments and protection of the public interest—is continuous. This article proposes that in this process of regulatory improvement, good international petroleum industry practices (good practices), contractual models drawn up by industry associations and codes of conduct shall be used as a reference. These non-state rules, which are the result of self-regulation by the upstream sector of the oil industry, will be considered in this article as transnational rules, following the approach of Halliday and Shaffer, who propose the existence of a transnational legal order.

Sustainability reporting indicators used by oil and gas companies in GCC countries: IPIECA guidance approach

The purpose of this article is to assess the quality of the sustainability reporting indicators used by oil and gas companies (OGCs) in Gulf Cooperation Council (GCC) countries. This study utilizes the International Petroleum Industry Environmental Conservation Association (IPIECA) guidance as a new robust methodology to assess the quality of sustainability reporting, which is considered a comprehensive benchmark that directly relates to the oil and gas sector. This study conducts a content analysis of the sustainability reports published by OGCs in GCC countries for the 2016–2018 period. The results reveal that the quality of the sustainability indicators disclosed by companies is largely unsuitable. The results also show that companies fail to report detailed information on environmental indicators as the most important category for OGCs. The findings demonstrate that most OGCs in Qatar pay more attention to sustainable reporting indicators than the OGCs in other GCC countries. This study successfully addresses many previously outstanding issues regarding the quality of the sustainability reporting indicators used by OGCs in GCC countries. Hence, the findings paint a clear picture of the situation so that regulators, policymakers, and managers can correct the existing shortcomings in the quality of sustainability reporting and promote sustainability reporting guidance best practices.

The Concept of lex petrolea from a Dispute Resolution Perspective: When Further Development is not Possible

The argument has been made that there is a specialist body of law that has emerged from the practices of the international petroleum industry, a separate body of lex mercatoria, referred to as ‘ lex petrolea’. The article examines the literature on this and the supporting arguments, ultimately rejecting them, since, among other reasons, the absence of a specialist dispute resolution platform that could ensure a continuous and coherent elaboration, application and interpretation of petroleum principles and customs is sufficiently serious to undermine academic and practical development of the concept.

Early warnings and emerging accountability: Total’s responses to global warming, 1971–2021

Building upon recent work on other major fossil fuel companies, we report new archival research and primary source interviews describing how Total responded to evolving climate science and policy in the last 50 years. We show that Total personnel received warnings of the potential for catastrophic global warming from its products by 1971, became more fully informed of the issue in the 1980s, began promoting doubt regarding the scientific basis for global warming by the late 1980s, and ultimately settled on a position in the late 1990s of publicly accepting climate science while promoting policy delay or policies peripheral to fossil fuel control. Additionally, we find that Exxon, through the International Petroleum Industry Environmental Conservation Association (IPIECA), coordinated an international campaign to dispute climate science and weaken international climate policy, beginning in the 1980s. This represents one of the first longitudinal studies of a major fossil fuel company’s responses to global warming to the present, describing historical stages of awareness, preparation, denial, and delay.

Climate change mitigation information disclosure of oil & gas sector in India: A perception analysis

Greenhouse gas (GHG) information of business activities disclosed in corporate annual reports lack consistency in content due to variability of perceptions on environmental issues among company executives. Prior studies examined factors affecting environmental disclosures by comparing different firm characteristics, but no reference of executives' perceptions on climate change disclosures was identified in the existing literature. This study aimed at investigating perceptions of executives from 26 listed oil and gas (O&G) companies on climate change mitigation (CCM) information disclosures in annual reports. A questionnaire was constructed referring to the sustainability reporting framework of International Petroleum Industry Environmental Conservation Association (IPIECA) to receive responses from executives of the sample O&G companies. The study revealed that the executives of O&G companies across different value chains perceived materiality for disclosure for all the four climate change indicators- GHG emission, energy use, renewable energy, and flared gases. Significant differences in mean scores of CCM information disclosures existed within four groups of executives holding different positions as well as executives who had different levels of knowledge about annual reports. This study puts forward that climate change mitigation disclosures in annual reports gets affected by level of positions held by executives in their respective companies and their level of knowledge of annual report.

Estimation of net oil and gas reserves and sensitivity analysis of influencing factors for net present value under royalty & tax contracts – a case study on X project, Kazakhstan

The Royalty & Tax Contract is one of the most common cooperation modes in the international petroleum industry. Under this mode, contractors take the share of net oil and gas reserves in kind, and pay royalties, income taxes and other taxes/fees to the landowner. The net reserves owned by a contractor refer to the remaining economical recoverable reserves that the contractor can obtain during the remaining contract period, and represent the contractor’s actual revenue. Taking the XX project in Kazakhstan as an example, this paper presented the method for estimating net oil and gas reserves under the Royalty & Tax Contract, discussed how the production, decline rate, development plan, oil prices, costs and taxes affect net reserves from the technical, economic, commercial and engineering perspective, and made sensitivity analysis of the most critical influence factors like oil production, oil prices, operation expenditure and investment. Finally, some development optimization and evaluation strategies were proposed to maximize the contractors’ economic benefits.

Reuse of Produced Water Grows in the Oil and Gas Industry

This article, written by JPT Technology Editor Judy Feder, contains highlights of paper SPE 199498, “Reuse of Produced Water in the Oil and Gas Industry,” by Madeleine Gray, International Petroleum Industry Environmental Conservation Association, prepared for the 2020 SPE International Conference and Exhibition on Health, Safety, Environment, and Sustainability, originally scheduled to be held in Bogota, Colombia, 28-30 July. The paper has not been peer reviewed. The onshore oil and gas industry investigates new and improved ways to manage the supply and disposal of produced water continually. Within oil and gas operations, produced water increasingly is being recycled and reused for enhanced oil recovery, drilling, and well stimulation. The growing global demand for water resources also is creating interest in reusing produced water outside oil and gas operations. The complete paper focuses on sources of produced water from conventional and unconventional onshore oil and gas operations and addresses the challenges and opportunities associated with reusing the produced water. Introduction Produced water is water that is brought to surface during oil and natural-gas production. It includes formation, flowback, and condensation water. Produced water varies in composition and volume from one formation to another and is often managed as a waste material requiring disposal. In recent years, increased demand for, and regional variability of, available water resources, along with sustainable water-supply planning, have driven interest in reusing produced water with or without treatment to meet requirements within the industry or by external users. Reuse of produced water can provide important economic, social, and environmental benefits, particularly in water-scarce regions. It can be used for hydraulic fracturing, waterflooding, and enhanced oil recovery, decreasing the demand for other sources of water. However, reuse for offsite, non-oilfield applications such as crop irrigation, wildlife and livestock consumption, industrial processes, and power generation, is subject to a variety of constraints and risks. Practical considerations for offsite reuse include supply and demand and regulatory, infrastructural, economic, legal, social, and environmental factors. Sources, Chemical Properties, and Management of Produced Water The information contained in the paper is based on an internal survey conducted by the International Petroleum Industry Environmental Conservation Association (IPIECA) of 14 of its member companies, interviews with selected external stakeholders covering a range of sectors and geographic regions, and a literature review of readily available information. The external stakeholders were identified from the membership survey as well as from IPIECA and consultant experience. Sources and Volumes. Onshore oil and gas operations generate millions of barrels of produced water each day world-wide. The composition and flow of produced water can differ dramatically from one source to another.

An approach to environmental sensitivity index study at coastal area toward oil spill accident: A case study on the northern and southern coast of Madura Island

Coastal resources and their local community economic activities are prone to oil spills pollution from tanker accidents or unappropriated operational procedures from the oil and gas industry. This study was aimed to develop supporting a prevention strategy to minimize damage and to ensure vulnerable natural resources and the local community in coastal areas are protected. Two methodologies applied to perform an integrated Environmental Sensitivity Index (ESI) named IPIECA (International Petroleum Industry Environmental Conservation Association) method and methodology that was developed by an expert from the Center of Coastal and Marine Resources Studies, IPB University (CESI, Composite ESI). The area study was located in the coastal area of Madura Island, East Java Province. Various ecosystems, shoreline types, and coastal area utilizing types have resulted in many combinations of ESI. The highest level of sensitivity will be prompted by the existence of an important ecosystem and economically land use utilizing. The important ecosystems, such as mangrove ecosystems, will result in more sensitive areas in IPIECA criteria than in CESI criteria. Consistently, in terms of socio-economic activities, land use, which has high production value and a high amount of persons employed, will be categorized as a very sensitive area.

The Fate of MTBE and BTEX in Constructed Wetlands

Hydrocarbon contamination of water resources is a global issue. These compounds are generated and discharged into the environment in industrial areas from chemical and petrochemical plants, oil refineries, power plants, and so forth. Fuel hydrocarbons, namely, BTEX (benzene, toluene, ethylbenzene, and xylenes) and MTBE (methyl tert-butyl ether), are commonly found in groundwater, posing environmental and health risks to humans and ecosystems. Nature-based technologies represent an alternative solution, providing high efficiency, an environmentally friendly character, simple operation, and cost efficiency, which are characteristics particularly desired by the international petroleum industry. This article discusses the use of the green technology of constructed wetlands to remediate water polluted with hydrocarbons. Although the number of related international experiences and studies is limited, the article presents the latest developments of wetland technology for the removal of MTBE and benzene-BTEX. The discussion includes the overall efficiency of the different wetland types that have been tested and used, the main transformation and removal processes that regulate the fate of BTEX and MTBE in constructed wetlands, and the potential for future investigations.

Eduardo G Pereira and Tonje P Gormley (eds), Local Content for the International Petroleum Industry

Eduardo G Pereira and Tonje P Gormley (eds), Local Content for the International Petroleum Industry

Inter-group performance of oil producing countries: a meta and global frontier analysis

PurposeThe purpose of this study is to compare the production efficiencies and frontiers differences of oil-producing countries (OPCs) in four inter-governmental organizations (IGOs) in the international petroleum industry with the aim of providing such countries understanding of group characteristics that help maximize their supply interests.Design/methodology/approachThe empirical analysis is based on 14 years of panel data covering the period from 2000 to 2013. In all 46 unique countries who are members of four IGOs relevant to the international petroleum industry are examined on individual and group bases. The authors use both metafrontier analysis and global frontier difference in examining the group average and group frontiers, respectively.FindingsGroups with high inter and intra-group collaborations which ensure exchange of information, organizational learning and innovation tend to do better than groups with even higher hydro-carbon endowment. Additionally, hydro-carbon resource endowment may not be the solution to group inefficiency without higher endowment in human capital, economic stability, technology and infrastructure.Practical implicationsChoice of inter-governmental organizational membership should be based on the level of inter- and intra-group collaborations, human capital endowment among others and not mere historic links or even resource endowment.Originality/valueThis is among the few studies to compare and rank IGOs. Specifically, it is among the first studies to analyze the petroleum production efficiencies of IGOs involved in the international petroleum industry. This study assesses the performance differences among OPCs with the aim of identifying for OPCs the characteristics of inter-governmental groups that are beneficial to efficiency in upstream petroleum activities.

Book review: Edith T. Penrose, The Large International Firm in Developing Countries: The International Petroleum Industry, First Edition (Routledge, Abingdon, UK and New York, NY, USA 1968 [2013]) 311 pp.*

"Book review: Edith T. Penrose, The Large International Firm in Developing Countries: The International Petroleum Industry, First Edition (Routledge, Abingdon, UK and New York, NY, USA 1968 [2013]) 311 pp.*" published on Jul 2018 by Edward Elgar Publishing Ltd.

Reconstructing MNE-host country bargaining model in the international oil industry

The purpose of this paper is to reconstruct a model of multinational enterprise (MNE)-host country (HC) relationship in the international petroleum industry. For such a purpose, this study draws on the lenses of the MNE-HC bargaining theoretical framework. Using a comprehensive case study as the primary research method, it attempts to answer the question of how the power balance between oil MNEs and host government changed in Kazakhstan between 1991 and 2012. The results bear out the viability of the obsolescing bargain theory, although they suggest that the existing theoretical framework does not fully capture the dynamics of bargaining power balance. Specifically, they extend Raymond Vernon’s ‘Obsolescing Bargain Model’ (1971) by considering firm resources and host country resources together, along with external factors influencing the MNE-HC relationship.

Management System Approach Aims To Meet Human Rights Expectations

This article, written by Editorial Manager Adam Wilson, contains highlights of paper SPE 164979, ’Management Systems Approach to Managing Human Rights Issues,’ by Tam Nguyen, Chevron, Bert Fokkema, Shell, Julie Vallat, Total, and Roper Cleland, IPIECA, prepared for the 2013 SPE European HSE Conference and Exhibition, London, 16-18 April. The paper has not been peer reviewed. A range of external expectations exists for companies to demonstrate how they respect human rights, including having business processes in place to prevent or mitigate human rights issues caused by the company’s projects or operations. The International Petroleum Industry Environmental Conservation Association (IPIECA) has responded to the emergence of external guidelines in connection to implementing human rights due diligence by improving existing management systems and processes. Background United Nations Guiding Principles on Business and Human Rights. The United Nations Guiding Principles on Business and Human Rights were developed through an iterative process spanning 6 years and involving extensive stakeholder consultation. In the first stage of the work, John Ruggie, United Nations special representative to the secretary-general, conducted 3 years of research to develop the global Protect, Respect, and Remedy Framework on business and human rights. Ruggie developed the framework to help clarify the distinct roles of states and businesses in human rights. It rests on three interdependent pillars—the state duty to protect against human rights abuses by third parties through regulation and legislation; the corporate responsibility to respect human rights through due diligence; and the need for citizens to have access to effective remedy, both judicial and nonjudicial. The United Nations Human Rights Council endorsed the framework in 2008. Upon endorsement, Ruggie established the United Nations Guiding Principles. The principles supplement the framework by outlining how governments should meet their duties and how companies should demonstrate their responsibilities. IPIECA’s Business and Human Rights Initiative. IPIECA launched a 3-year business and human rights project that leverages the collective experience and practical knowledge of its members. The objectives of the project are to Support the organizational capability of IPIECA members in two focus areas, company due diligence and community-level grievance mechanisms Serve as the authoritative reference body for the oil and gas industry on business and human rights issues, including the United Nations Guiding Principles on Business and Human Rights and other relevant external guidelines

Hacia una interpretación de la nacionalización de la industria petrolera mexicana

El propósito del ensayo es aportar algunos elementos tendientes a esclarecer los entretelones del proceso histórico que desembocó en la nacionalización de la industria petrolera mexicana y que marcó su derrotero hasta la irrupción del boom petrolero de la segunda mitad de los setenta. Interesa poner de relieve alguno aspectos decisivos de dicho proceso que no ha recibido la atención que ameritan en la literatura especializada y que encuentran su explicación en la peculiar vía de crecimiento seguida a lo largo de estos años por la industria petrolera internacional. El autor se refiere, en particular, a la secuencia ascendente de la renta diferencial.

New Edition Offers Guidance on Sustainability Reporting

The second edition of Oil and Gas Industry Guidance on Voluntary Sustainability Reporting has been issued by the International Petroleum Industry Environmental Conservation Association (IPIECA), the American Petroleum Institute (API), and the International Association of Oil and Gas Producers (OGP). An IPIECA Reporting Task Force, made up of more than 75 individuals from 20 IPIECA member companies and five trade associations, undertook the task of updating the guidelines from 2007 to 2010. The guidance was developed to share good practice across the industry and to encourage companies, both current and new reporters, to keep their stakeholders informed about their performance. The task force identified important and practical ways to measure sustainability performance in the oil and gas industry, including technical indicators. The second edition reflects feedback and improvements in reporting practices from many sources within and outside the industry. A fundamental part of the revision process was the involvement of an external stakeholder panel that advised on both the process and content of the guidance to ensure the delivery of an end product that was substantial, instructive, and credible. The panel consisted of leading experts in sustainability reporting practices and represented views of typical report reader groups, including business and industry, environmental and community-oriented nongovernmental organizations, investors, and multilateral institutions. The panel was asked to assess the quality, credibility, and effectiveness of the revision process and to provide ideas for improvement, and candid, significant, and challenging input was received. A joint statement from the stakeholder panel is included in the guidance. How to Report? The guidance recognizes that the industry includes differing types and sizes of multinational and national companies that face specific social and environmental challenges in different locations and that certain sustainability issues will be more important to some companies than to others. It places more emphasis in this revision on reporting as an engagement process and encourages companies to determine the issues that are most important for reporting to their own stakeholders. A range of issues are covered by the indicators that allow companies a choice on the depth and detail to be communicated. A significant front section on how to report has been included to assist those companies reporting for the first time as well as more experienced companies expanding their level of reporting. By providing flexibility and consistency, the guidance aims to serve both new and experienced reporters while avoiding the pitfalls of formulaic reporting. To support companies in communicating the issues of most interest to their stakeholders, the second edition of the guidance contains the following tools: A six-step reporting process, including a “materiality” step to determine the most important issues for reporting. A set of issues and indicators likely to be relevant for reporting by oil and gas companies. Three levels of reporting elements within each indicator to provide options that enable consistent reporting across the industry.

Assessment of greenhouse gas mitigation options and costs for California Petroleum Industry facilities: The shape of things to come

The California Global Warming Solutions Act of 2006 sets a goal for the state to reduce its greenhouse gas emissions to 1990 levels by 2020. In preparation for implementation of a cap and trade program under this Act, Chevron has undertaken a detailed assessment of greenhouse gas mitigation options and costs. Such an assessment is key to making compliance decisions within the constraints of a given cap and trade regime. If the cap and trade market is minimally restricted (i.e., recognizes that climate change is a global issue and thus has no geographic restrictions and no set requirement for onsite emission reductions), facilities can make the best economic (and environmental) choices of where to ‘make’ emission reductions inside the facility fenceline and when to ‘buy’ the emission reduction allowances or credits on the market. The scope of the study included Chevron’s two refineries and a large heavy oil steamflood production operation in California. This paper will discuss how mitigation technologies are identified and assessed, describe some of the key greenhouse gas mitigation alternatives of interest to the Chevron California facilities and present a business-based approach to analyzing mitigation costs. Technologies studied included energy efficiency, advanced energy (solar, wind, geothermal, biomass, nuclear, low temperature heat recovery) and carbon dioxide capture and storage (CCS). For each mitigation option, a consistent methodology, based on the International Petroleum Industry Environmental Conservation Association/American Petroleum Institute (IPIECA/API) Guidelines for Evaluation of Greenhouse Gas Emission Reduction Projects was used to assess baseline or ‘business as usual’ emissions, net emission reductions due to the project, capital cost, operating cost and any project benefits (e.g., reduced fuel use for energy efficiency projects). These values were then entered into a business evaluation tool to calculate a Net Present Value for each option. Key conclusions: Broad involvement of various disciplines is needed to identify new alternatives for greenhouse gas mitigation technologies. Other than CCS, options for significant reductions of refinery and petroleum production emissions were extremely limited in the facilities studied. Since cost-effective, feasible options are limited for refineries and petroleum production facilities, availability of sufficient allowances and offsets is an important element if state goals are to be achieved. Although a number of energy efficiency projects were identified, the cumulative total emissions reductions available through energy efficiency projects is minimal. Renewable and advanced energy projects that generate electricity generally have very high mitigation costs, and may not greatly benefit facilities if emission caps apply only to direct emissions, since these projects reduce the quantity of purchased electricity rather than emissions from the facility itself (and are therefore not eligible for credit under most regulatory design schemes). Renewable and advanced energy technologies for steam generation may have significant mitigation potential for heavy oil steamflood production. Further development and demonstration is needed to determine whether these technologies will be viable. In order to support good business decisions, it is important that greenhouse gas mitigation technology evaluation be done in a manner consistent with other business evaluation processes.

Harmonizing the quantification of CCS GHG emission reductions through oil and natural gas industry project guidelines

Abstract The technological option of capturing CO 2 from large point sources, compressing, transporting, and injecting it for long -term storage holds the potential for playing a key role in reducing greenhouse gas (GHG) emissions while providing affordable energy. The oil and natur al gas industry experience and expertise provide confidence in carbon capture and geological storage (CCS) as an effective GHG emission mitigation option. However, companies need consistent, reliable, and credible methodologies to derive GHG emission and emission reduction estimates. Harmonizing the quantification of GHG emission reductions, by applying common principles and criteria, supports efficient and consistent development of additional project activities. This paper provides an overview of the P etroleum Industry Guidelines for Greenhouse Gas Emission Reduction Projects (referred to as the Project Guidelines), a collaborative effort between the American Petroleum Institute (API) and the International Petroleum Industry Environmental Conservation Association (IPIECA) to develop guidelines for accounting and reporting of GHG emission reduction projects of interest to the oil and natural gas industry. Key concepts from the Project Guidelines for evaluating, quantifying, documenting, and reporting GHG emission reductions are presented with a specific focus on CCS activities. The paper draws from the Project Guidelines in add ressing the selection of appropriate baseline candidates, boundaries for scenario assessment, and compatible monitoring considerations. Case studies are used to demonstrate the application of commonly accepted emission reduction principles for CCS projects. Through the Project Guidelines, API and IPIECA aim to assist the petroleum industry in identifying, assessing, and developi ng CCS projects. By working toward consistent standards for GHG emissions reductions, our industry demonstrates its commitments toward environmental improvements and p romotes the development of real and sustainable actions to reduce GHG emissions.

Oil and Gas Industry Efforts on Behalf of Human Rights and Sustainable Development

Pillars of the Industry Richard Sykes, Executive Secretary of the International Petroleum Industry Environmental Conservation Association, weighs in on human rights and sustainability.