INTERNATIONAL OIL AND GAS EXPLORATION AND PRODUCTION INDUSTRY TRADE ORGANIZATIONS: WHAT HAVE THEY DONE FOR YOUR COMPANY LATELY?

• Jurisdiction: United States

International Environmental Law for Natural Resources Practitioners
(Mar 1997)
CHAPTER 12A
INTERNATIONAL OIL AND GAS EXPLORATION AND PRODUCTION INDUSTRY TRADE ORGANIZATIONS: WHAT HAVE THEY DONE FOR YOUR COMPANY LATELY?
Kit Armstrong
Chevron Overseas Petroleum Inc.
San Ramon, California

Table of Contents

I. INTRODUCTION

II. TYPICAL FUNCTIONS OF INDUSTRY TRADE ORGANIZATIONS

III. BENEFITS AND CHALLENGES OF TRADE ORGANIZATION ACTIVITIES

IV. SOME KEY ORGANIZATIONS AND ACTIVITIES

A. Introduction

B. International Organizations

1. Oil Industry International Exploration and Production Forum (E&P Forum)

a. Scope and Membership

b. Mission and Objectives

c. Organization

d. Environmental Activities

e. Reports and Publications

f. Involvement in International Agreements

(1) Global Environmental Standards for Offshore Oil and Gas E&P Activities

(2) Decommissioning and Disposal of Offshore Installations

2. International Petroleum Industry Environmental Conservation Association (IPIECA)

a. Scope and Membership

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b. Mission and Objectives

c. Organization

d. Environmental Activities

e. Reports and Publications

f. Involvement in International Agreements

(1) Global Climate Change

(2) Oil Spills

3. International Chamber of Commerce (ICC)

a. Scope and Membership

b. Mission and Objectives

c. Organization

d. Environmental Activities

4. World Business Council for Sustainable Development (WBCSD)

a. Scope and Membership

b. Mission and Objectives

c. Organization

d. Environmental Activities

C. National Organizations

1. Petroleum Industry Organizations

2. United States Council for International Business (USCIB)

V. CONCLUSION

Appendices:

1. E&P Forum 1995 Annual Report (excerpts)

2. E&P Forum Catalogue of Reports — Titles of Current Interest, 1995 Edition (excerpts)

3. IPIECA 1995-1996 Annual Report (excerpts)

4. List of IPIECA Publications

5. ICC 1995-1996 Annual Report (excerpts)

6. WBCSD 1995 Annual Report (excerpts)

7. USCIB 1995/1996 Annual Report (excerpts)

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I. INTRODUCTION

A variety of industry organizations are involved in environmental activities of interest to the international oil and gas exploration and production industry. They exist at international, regional and national levels, and encompass organizations specific to the oil and gas industry as well as multi-sector industry organizations. Some multi-sector industry organizations have been formed to address a specific environmental issue, such as global climate change. However, these are not typically considered to be trade associations and will not be discussed in this paper.

The objectives of this paper are to:

1. Briefly summarize the typical functions of industry trade organizations in dealing with environmental issues.

2. Point out the benefits — and potential challenges — their environmental activities offer to the international oil and gas industry as a whole, and to individual companies doing business internationally.

3. Provide information about certain key industry organizations that deal with a broad spectrum of environmental issues of concern to the oil and gas E&P industry.

4. Discuss some examples of how such organizations are involved in development and implementation of international environmental agreements.

II. TYPICAL FUNCTIONS OF INDUSTRY TRADE ORGANIZATIONS

Industry organizations, whether international or national, typically do some or all of the following activities with respect to environmental matters:

• Monitor issues and trends (regulatory, technical, political, social, etc.), both well-established and emerging.

• Provide input to regulatory agencies and government bodies on specific topics through educational information and lobbying.

• Share best practices and other operational experience among companies.

• Develop technical data on key issues through original research and/or compilation of existing data.

• Prepare operating guidelines, codes of practice and similar recommended standards or criteria for industry and company environmental performance, reporting and other activities.

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• Build relationships with outside governmental and non-governmental organizations.

• Educate and communicate with the public about industry activities.

• Conduct formal and informal industry benchmarking efforts.

III. BENEFITS AND CHALLENGES OF TRADE ORGANIZATION ACTIVITIES

In carrying out the above-mentioned activities, industry organizations can provide significant benefits to individual companies and the industry generally. A sampling of those benefits include:

• Addressing industry and company regulatory goals and objectives.

• Helping companies anticipate, understand and respond to key environmental issues and trends affecting the industry, including changing public expectations regarding industry activities.

• Improving broad industry environmental awareness and performance through sharing of best operating practices.

• Enhancing industry credibility on environmental issues with governments, communities and other stakeholders.

• Effectively leveraging use of individual company resources to address environmental issues shared by multiple companies.

• Providing opportunities for benchmarking company environmental programs and performance.

• Facilitating networking and business relationships among companies.

However, some industry organization activities which provide significant benefits can also have important implications for companies, including those who are not members. For example, many such organizations have published voluntary industry "codes of practice", operating guidelines, or compilations of best practices. These, in effect, establish or formally articulate industry-wide standards of performance. They provide a basis for defining what the industry means by "relevant international standards" or "good international oilfield practice" regarding the environment, where such standards are not contained in international agreements or national/local law.

At the same time, however, they also provide standards that governments can adopt into regulatory requirements. They provide a basis against which non-governmental organizations

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(NGO's) and the public can evaluate — and criticize — individual company environmental performance. Finally, evidence of a company's failure to conduct its activities in accordance with such standards may be used as evidence to support government or third party claims against the company for damages resulting from the company's environmental performance.

For these reasons, any oil and gas company doing business, or hoping to do business, internationally should have an interest in monitoring such industry trade organization activities. The company should seriously evaluate whether its short- or long-term business interests could be significantly affected by an industry organization's activities in key areas. If so, the company may want to actively participate. Participation is the only way the company will be able to influence those activities, and thus be able to maximize potential benefits while minimizing potential adverse consequences for the company's business interests.

IV. SOME KEY ORGANIZATIONS AND ACTIVITIES

A. Introduction

This paper will focus on four key international industry organizations that address a range of environmental issues of interest and concern to the international oil and gas E&P industry. Two of them — the Oil Industry International Exploration and Production Forum (E&P Forum) and the International Petroleum Industry Environmental Conservation Association (IPIECA) — represent only the oil industry. The other two — the International Chamber of Commerce (ICC) and the World Business Council for Sustainable Development (WBCSD) — represent a number of industry sectors, including petroleum. National industry organizations are also briefly discussed.

The E&P Forum and IPIECA are deeply involved in activities under certain international agreements of particular interest to the oil and gas industry. Among these are conventions regulating marine disposal of wastes, oil spill prevention and response, decommissioning of offshore oil and gas structures, and global climate change. These activities are discussed in the sections of the paper dealing with those two organizations.

B. International Organizations

1. E&P Forum

a. Scope and Membership

The Oil Industry International Exploration and Production Forum (E&P Forum) is headquartered in London and represents the worldwide oil and gas exploration and production industry. Its approximately 60 members are primarily private and state-owned oil companies from both developed and developing countries around the world, as well as a number of national oil industry associations, such as the American Petroleum Institute (API).

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b. Mission and Objectives

The original driver behind creation of the Forum was the need for the oil and gas E&P industry to have a vehicle for more effective communication with regulators at the international level. This focus is reflected in the Forum's long-standing mission statement, which expresses the Forum's intent to:

• represent the interests of the upstream oil and gas industry with international regulatory bodies;

• be recognized by authorities as sensitive to social, environmental and political realities and as a credible presenter of industry views;

• ensure that international regulatory bodies realize industry's views of the potential impact of their proposals on the industry; and

• be consulted by international bodies in the development of regulations which concern the upstream industry.

However, the purposes and functions of the Forum now go far beyond direct regulatory issues and communications. The Forum's stated objectives commit it to:

• Increase...