The data and the dilemma
OIL AND GAS IN THE ERA OF REGULATIONS AND RENEWABLE ENERGY
JEFF LADNER, SPHERA SOLUTIONS, WASHINGTON, DC
IN THE NEXT 18 MONTHS, China expects to complete a new
section of pipeline that stretches from Daquing, in the upper northeast region of the country, all the way to Mohe, which lies on the
Russian border, some 600 miles north.
It’s a massive project that will reportedly pump 15 million tons
of crude oil into China each year, and as with any new pipeline
initiative, there will undoubtedly be concern about environmental
consequences, such as the emission of greenhouse gases and other
China, like most of the world, has been moving toward more
environmentally friendly endeavors for years. For instance, a
Bloomberg New Energy Finance study found that China and India
together represent a $4 trillion opportunity for the energy sector by
2040 with renewable energy attracting 73% of new investments in
China alone over the next 23 years. About two-thirds of that spending,
will go toward wind and solar energy combined, 18% to nuclear
energy and just 10% each to coal and gas.
Regardless of a push toward renewable energy sources or a tough
regulatory environment, oil and gas companies find themselves in
a bit of a dilemma. While they certainly feel the market and regulatory pressure that has come their way, they are also arguably the
most proactive safety organizations in the world. Oil and gas companies were early adopters of using analytics and emerging technologies to help keep workers safe and protect the environment,
but that doesn’t get nearly as much attention as it should.
The truth is that regulations generally take a long time before
they can be implemented regardless of whatever the political climate
is in any country at any given moment. In other words, even if a
new government comes in and seeks changes on environmental
issues that seem to move like a landslide, in reality, regulatory initiatives often move more languorously like a large stone being slowly
dragged by incoming waves.
Oil and gas companies are realizing the importance of being
proactive on environmental issues in particular to not only keep in
compliance or stay ahead of potential regulations, but also to boost
their bottom lines and improve their standing with customers and
Beyond environmental considerations, workplace injuries can
be costly—and sometimes deadly. In June for instance, three Brazilian
workers died and one was injured after a boiler exploded on an
offshore drilling rig. The accident is currently under investigation.
No workplace accident, especially one involving fatalities, is ever
acceptable, but they happen way more often than they should.
Workplace injuries and illnesses in the US cost companies nearly
$60 billion in 2014 alone—the most recent year with statistically
valid data available—according to the 2017 Liberty Mutual Workplace Safety Index. However, in the oil and gas industry, the number
of incidents has actually trended downward.
As writer Ben Casselman detailed a couple of years ago in a
Five ThirtyEight article, when he wanted to visit an oil rig in 2009,
Chevron required him take a two-day safety course, which included
a lesson in how to escape a sinking helicopter—a useful skill for an
unlikely scenario. (Keep in mind that this took place a year before
the Deepwater Horizon disaster that killed 11 people and spilled
almost five million barrels of oil into the Gulf of Mexico.) He also
explained how oil and gas companies, to help protect the environment, won’t even let their workers flick their cigarettes off the side
of a rig.
Oil and gas companies have taken a proactive approach to safety.
According to the US Bureau of Safety and Environmental Enforcement, which is tasked with improving safety and environmental
protections in the oil and gas industry, there were 151 injuries and
86 fires and explosions in 2016—by far the lowest total since the
bureau started keeping stats in 2009—and two fatalities. The goal,
of course, is zero incidents, but there are signs of progress.
DEEP INTO THE DATA
Oil and gas companies are turning to data and analytics to help
them stay up to or ahead of the curve in terms of environmental
and safety-related regulations. Because of the nature of the oil and
gas industry, there are inherent risks, and sophisticated technology
is already being used to help companies deal with those risks.