By Jay Stracke, Editorial Coordinator
With the oil and gas industry coming under ever-increasing scrutiny by society at-large, maintaining environmentally sustainable operations has become more important than ever to the future of the drilling industry. Company management are recognizing the challenge: According to a survey conducted this year by Darcy Partners and Pickering Energy Partners, 70% of oil and gas executives said environmental, social and corporate governance (ESG) was important or very important, while almost 60% said ESG has become more important now compared with a year ago.
At a virtual panel session held at the 2020 Unconventional Resources and Technology Conference on 21 July, industry stakeholders discussed the best ways to develop and promote sustainability within their organizations.
One problem that came up early during the session is that, while oil and gas companies appear to recognize the importance of ESG, they’re slower when it comes to taking action. For example, 50% of the companies that were surveyed did not even issue a sustainability report, according to Walker Dimmig, Sustainability Program Lead for Darcy Partners. Additionally, 70% of the companies did not engage with an ESG rating agency.
Mr Dimmig urged the industry to become more proactive, noting the difference between compliance sustainability and strategic sustainability. “Compliance is just making sure you’re meeting whatever bar is out there from a regulatory perspective,” he said. However, moving ESG to a strategic priority can help companies to improve their overall risk management, improve their operational efficiency and even help identify potential new business opportunities. “Increasingly, we’re also seeing it being tied to access to capital,” he added.
Ultra Petroleum, an independent E&P focused on natural gas reserves in Wyoming’s Green River Basin, described the company’s approach to sustainability as coming from the very top – its executives and Board of Directors. “This sustainability idea is endemic to all parts of our business,” said Kelly Bott, Director of ESH&R at Ultra. She noted that the company had been working on sustainability for years, but it saw a need to challenge itself for continual improvement. “We’re working really hard to leverage a culture of sustainability and environmental diligence, and really push that to all levels within our company.”
Ultra has also worked with groups like the Environmental Partnership, which asks companies to agree to annual sustainability reporting, to further its goals. This year, the company issued its first sustainability report “in an effort to really increase our transparency,” Ms Bott said.
Kathleen Sgamma, President of the Western Energy Alliance (WEA), also emphasized that compliance with environmental regulations isn’t enough to maintain the industry’s social license to operate. Instead, a real opportunity exists in communicating a company’s best practices and achievements with the general public. To realize this opportunity, companies must go above and beyond, consistently engaging with the local communities where they operate.
Ms Sgamma noted that while most, if not all, of WEA member companies already go above and beyond, oftentimes they are so focused on their operations that they overlook the critical need to share what they do with the public and to tell their stories effectively. “When you don’t tell the world about your message, you don’t tell the world about all the things you’re doing in your operations to reduce environmental impact – those voluntary things you do that go above and beyond regulations and all that you’re doing in the community – if you don’t tell the world about that, the assumption is that you’re not doing them.”
During the session, Ms Bott described several initiatives that Ultra Petroleum has piloted over the past couple of years, including using solar heat trace pumps to replace 565 pneumatic heat trace pumps. The company has also deployed new software-based solutions enabling automated well control, which has removed more than 2,000 pneumatics. “So we are removing not only the emissions directly associated with those pneumatics but all of the fugitive emissions that may be there, as well,” she said.
In fact, Ultra now has a full fugitive emissions monitoring program that oversees more than 2,000 wells on approximately 350 pads. While the company had always met its commitment to repair leaks within seven days, it wanted to improve the efficiency of these inspections and repairs. By having field operations take charge of camera inspections, adding new-generation cameras and training 38 inspectors, including four full-time inspectors, Ultra can now do immediate repair and verification of any leaks, Ms Bott said. The company averaged just 0.54 days to repair last quarter, and its leak occurrence rate was 0.07%, she added.