Building Strong Stakeholder Relations and Minimizing Operational Risks in the Oil and Gas Industry Through Market-Based Certification

Abstract

Many Oil and Gas Exploration and Production (O&G) companies devote significant resources to keep their employees safe, protect the environment around their operations, stimulate local economies and build strong and trusting relationships with community stakeholders. Despite these efforts, recent public opinion surveys show that the oil and gas industry is mistrusted more than any other, and cite questionnaire responses that reveal a negative impression of the sector for having minimal regard for social and environmental issues. This mistrust translates into direct operational, reputational, legal, and financial risks for O&G companies throughout the project life cycle, from exploration to production and to decommissioning. The O&G industry is not the only sector to have attracted criticism and been challenged by social campaigns to improve sustainability performance. It is worthwhile to learn from the responses of other initiatives that have successfully made a virtue of their corporate responsibility through third-party certification, especially those built around market mechanisms, such as with sustainable palm oil and soy; responsibly produced timber, fish, and mining; and Fair Trade cotton and coffee. These approaches serve to create a constructive relationship between producers, consumers and stakeholders that reduce risk to both society and to business and facilitate wealth creation. Between 2009 and 2012, Equitable Origin developed the first and only stakeholder-based, social and environmental certification system specifically for the oil and gas industry. The system includes a rigorous, comprehensive standard for exploration and production, a certificate trading platform and a consumer-facing ecolabel program that enables downstream customers to support operations working to high HSE standards and better production practices. Pacific Rubiales Energy (PRE), the largest private operator in Colombia, committed in 2012 to implement the fundamental principles of this standard in two of their producing fields to be the first fully certified oil and gas operations to the market by the end of 2013. This paper will present the process, practices and results of PRE's commitment to achieve certification, including a thorough performance gap analysis against the EO100™ Standard and the lessons-learned for putting in place the systems and practices to meet the requirements of certification.