OIL, LIVELIHOODS AND ENVIRONMENT

Four days of training, information and ideas:

1) Oil, ownership and ‘development’

2) Companies

3) Environmental impacts & communities

4) Livelihoods and community mapping

Day 1: Oil, ownership and ‘development’

Bacteria

Complexcells

Multi cellularorganisms

DinosaursMammals

Humans

4,000,000,000 years

What a barrel of oil can contain

POLLUTION

DESTRUCTION

CONFLICT

INSECURITY

DISTORTED ECONOMY

CORRUPTION

GREED

GLOBAL WARMING

The key players in the barrel

LOCAL COMMUNITIES

MILITIA GROUPS

ARMS INDUSTRY

PRIVATE SECURITY

SERVICE CONTRACTORS

OIL COMPANIES

GOVERNMENT

CONSUMERS

What should a barrel of oil contain?

ENERGY DIVERSITY

HIGH ENVIRONMENTAL STDS

ECONOMIC DIVERSITY

DEVELOPMENT

INVESTMENT

ACCOUNTABILITY

TRANSPARENCY

HUMAN SECURITY

$$$…Oil companies exist to make money. Governments allow companies to make money in return for giving them a big share of the profits.

Oil is different from most businesses because when it works it makes LOTS of money because oil is a great source of ENERGY.

The main event…

QuickTime™ and aTIFF (Uncompressed) decompressor

are needed to see this picture.

Land, Oil and division of ownership

America is one of the very few countries in the world in which the oil, gas, and minerals in the ground belong to the surface owner - the person or people who own the land ‘in fee simple’.

In nearly all countries the underground resources and minerals belong to the state or the King.Sudanese oil belongs to the state, and in theory, is there to be developed for the benefit of all Sudanese people.

The land belongs to whoever lives upon it or derives a living from it. But the state may take that land in order to develop the resources that lie under it -(or build a road.. Or dam, or .. ) but only after paying the landowners a fair price.

Like most countries, Sudan has developed a system of ‘blocks’. Blocks are Concession Areas, which they lease to operators to explore for oil and gas.

A typical exploration lease lasts 5 years, if the company finds oil, they negotiate a production lease which may last 10 -15 - 20 years.

Forms of development

• Single operator and royalty

• Multiple operators and PSAs

GovernmentLine Ministry

Company

GovernmentLine Ministry

TechnicalAuthority

Company A Company B Company C

?

?

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Licenses• Exploration license - 5 yrs

– Seismic survey - two kinds: 2D and 3D– Exploration wells - ‘wildcat’ wells

• Production Sharing Agreement - 10 - 20 yrs– Field development

The small print is important

Typical sequence…

• Oil and mineral rights law (Government)• Gazettement or definition of blocks (cadastral survey) (Government)• Bid round (Government - with companies bidding)• Issuance of PSA (Government)• Work (Company)

Geological desk study (existing data)

Field geology

Seismic survey

Exploration drilling

Then IF you find oil… (Company)

Early field development and production

Field development (reservoir management) and production

Field closure and abandonment

Afternoon session: GPS basics

• Batteries

• On / Off

• Setup (this may take time)

• Logging waypoints & notes– What the screen means and says

Day 2: COMPANIES

• Oil Majors• Mid caps• Consortiums• Contractors (and sub-contractors, and

sub-sub contractors)• Seismic• Drilling• Civil engineering• General oilfield services• Security

Oil Majors (aren’t, really)

Company Country State share % Reserves (bn barrels)

Aramco Saudi Arabia 100 259.4

NIOC Iran 100 125.8

INOC Iraq 100 115.0

KPC Kuwait 100 99.0

PDVSA Venezuela 100 77.8

Adnoc UAE 100 55.2

Libya NOC Libya 100 22.7

NNPC Nigeria 100 21.2

Pemex Mexico 100 16.0

Lukoil Russia 100 16.0

Gazprom Russia 100 13.6

ExxonMobil US 0 12.9

Yukos Russia 8 11.8

Petrochina China 90 11.0

Qatar Petroleum Qatar 100 11.0

Sonatrach Algeria 100 10.5

BP Britain 0 10.1

Petrobras Brazil 32 9.8

ChevronTexaco US 0 8.6

Total France 0 7.3

Companies don’t own oil: countries own oil.

Companies just drill, pump and deliver oil to markets.

• Mid caps

• Small oil companies

• Consortiums

Operator: company A 72%Shareholder: company B 18%Shareholder: company C 5%Shareholder: company D 3%Shareholder: company E 2%

• Contractors (and sub-contractors, and sub-sub contractors)

– Seismic (acquisition / analysis)

– Exploration drilling (and mud / logging / testing) logging

– Field development / reservoir management

– Civil engineering (bulldozers…)

– Oilfield services (everything from catering to transport)

– Security

• Contractors (and sub-contractors, and sub-sub contractors)– Seismic (acquisition / analysis)

• Contractors (and sub-contractors, and sub-sub contractors)

– Drilling (and mud / logging / testing) logging

• Contractors (and sub-contractors, and sub-sub contractors)

– Civil engineering (bulldozers…)

Footprint 1: the design

Footprint 2: the reality

Footprint 3: the next reality

Production

Produced water . . .Is typically 85% of what comes out of the ground

Its not an oil company, it’s a (dirty) water company, oil is just a by-product..

• Contractors (and sub-contractors, and sub-sub contractors)

– Security

GPS: making tracks & finding things

• How to load location data

• How to tell the difference between different location formats– UTM– Decimal degrees– Degrees minutes seconds

Lets go and find some things…

Day 3: SEIA..

8 principles for SEIA:• Participation: An appropriate and timely access to the process for all interested

parties.• Transparency: All assessment decisions and their basis should be open and

accessible.• Certainty: The process and timing of the assessment should be agreed in advanced

and followed by all participants.• Accountability: The decision-makers are responsible to all parties for their action

and decisions under the assessment process.• Credibility: Assessment is undertaken with professionalism and objectivity.• Cost-effectiveness: The assessment process and its outcomes will ensure

environmental protection at the least cost to the society.• Flexibility: The assessment process should be able to adapt to deal efficiently with

any proposal and decision making situation.• Practicality: The information and outputs provided by the assessment process are

readily usable in decision making and planning.

http://www.unescap.org/drpad/vc/index.htm

EXECUTIVE SUMMARY IDENTIFICATION AND ASSESSMENT OF IMPACTS ENVIRONMENTAL MANAGEMENT & IMPACT MITIGATION:Environmental impacts during construction OPERATING PHASE

INTRODUCTION Footprint Hard wasteScope of work Air quality Traffic managementApplication of the environmental impact assessment Noise Emergency plans: spillsNATIONAL LEGAL FRAMEWORK AND APPLICATION Groundwater Drilling discharge / additivesMinistry of Oil and Mineral Resources and the PSA Environmental impacts during operation Aquifer protectionEnvironmental law Air quality Well testing and hydrocarbon disposalNational environmental standards NoiseAir quality Ground water ENVIRONMENTAL MANAGEMENT & IMPACT MITIGATION:Wastewater quality Environmental impacts after closure SITE CLOSURE AND RESTORATIONHazardous waste Well abandonmentNoise ANALYSIS OF ALTERNATIVES Drilling pad and cellarInternational treaties Project justification Waste pitThe law on antiquities Alternatives for pad location Flare pitPROJECT DESCRIPTION Alternatives for rig access routes Sewage and wastewater treatment plantExploration well Alternatives for borrow pits & quarries CampPad design Alternatives for campsites Hard waste facilityPlant utilities Social considerations Water well abandonment or handoverProduced hydrocarbons, storage and disposalFuel storage ENVIRONMENTAL MANAGEMENT & IMPACT MITIGATION:Drilling mud chemical additive use & storage CONSTRUCTION PHASEWater sources Protection of archaeological sitesQuarries and borrow pits SupervisionAccommodation facilities for construction workers Post project impact monitoring

Protection of vegetationDESCRIPTION OF THE AREA Access road construction impactsCharacteristics of the study area Minimising impacts of road constructionEcology of the area Water wellStability of the environment Minimising land disturbance in camp constructionArchaeology Drilling pad constructionExisting human impacts Security bund constructionGrazing and bee-keeping Drilling fluids / cuttings waste pitSalt mining Flare pit

Generator sets and fuelWastewater and sewage disposalHardwaste disposal facility

Why it fails..“.. Environmental protection is an integral part of corporate social responsibility. ** strictly follows environmental protection laws and regulations, attaches importance to climate change and ecological protection, and continuously promotes energy conservation and emission reduction work to realize the coordinated development of production and environmental protection.”

“.. We adopt strict management systems and environmental protection plans to ensure environmentally friendly operations, so as to effectively protect the natural environment of various operation areas like deserts, wetlands and natural reserves. We also urge subsidiaries to establish environment management systems, pollutant discharge-reduction index systems, monitoring systems and appraisal systems. By 2007, 216 subsidiaries of ** had passed ISO14001 certification. And in 2008, 41 subsidiaries of **, including all our engineering and equipment manufacturing units, passed ISO 9000 quality certification.”

• How to work with operating companies..– Lowering risks– Lowering costs– Improving public image– Improving long-term prospects

• What to do if the company doesn’t respond / won’t engage…