Oil and petrochemicals
The landscape is changing fast for oil and petrochemicals majors dealing with the monumental environmental challenge of delivering energy in a carbon-constrained world.
Key challenges and opportunities
Delivering energy in a carbon-constrained world
There has been a disconnect in the way we speak about the role of petroleum products over the next 30 years. On one hand, there is agreement that we must curb carbon emissions substantially to avoid detrimental consequences. On the other, petroleum companies have continued to point to predictions of energy usage, such as those from the US Department of Energy, that forecast petroleum products as the dominant energy source for the foreseeable future.
This landscape is now changing, particularly in the United States, where the new administration is seeking to change the energy forecast. The result is that there will be room for more innovative strategies to deliver substantial percentages of global energy demand with low-carbon technologies. Therefore, a key challenge for the sector is to establish the business case for low-carbon and renewable energies, and to scale these technologies to the new energy market.
Exploitation of oil sands can have significant and harmful consequences. Environmentally, oil sand extraction creates enormous volumes of contaminated water, sludges and solids while deforesting large tracts of land. It is also highly energy intensive, making it one of the most carbon-intensive energy products. Economic margin on oil sands can be quite low resulting in the potential for frequent boom-and-bust cycles which can have enormous impact on local and regional societies. Exploiting oil sands in an economically, environmentally and socially sustainable manner continues to be a challenge for the sector.
Despite efforts such as the Extractive Industry Transparency Initiative (EITI), petroleum companies continue to struggle with disclosure of revenues in the markets where they operate. Examples range from lack of transparency in transfer-pricing agreements to lack of reporting on revenues accrued from joint ventures and subsidiaries. In both cases, the companies and the host governments are keeping information from community stakeholders and allowing the possibility of corruption and disproportionate profit-taking.
We work with global leaders in the oil, gas and petrochemical industry. For example, we have:
- benchmarked the accountability performance of ExxonMobil, BP, GDF Suez and Shell
- helped Amerada Hess develop its health, safety and environment report
- worked with Atlantic LNG to help it develop its 2008 sustainability report
- benchmarked the sustainability report of Marathon Oil against peers, reporting indicators and best practice.
We also contribute to sector sustainability initiatives. For example, we have helped the International Petroleum Industry Environmental Conservation Association (IPIECA) and API, the North American oil and natural gas trade association, to develop a sustainability reporting standard for the industry.