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Navigating Risk Management in Oil and Gas Projects

Updated: Dec 16, 2023

As a Health, Safety, and Environment (HSE) Consultant, I emphasize the importance of understanding and managing risks throughout the life cycle of oil and gas projects. This approach not only safeguards the environment and personnel but also significantly influences the financial health of an organization. Here, we delve into the various stages of an oil and gas project, highlighting the critical HSE considerations at each phase.

1. Due Diligence

Before embarking on any new venture, whether it's an acquisition, investment, or application for an exploration license, a thorough risk assessment is crucial. This includes evaluating potential health, safety, environmental, social, human rights, political, and corruption risks. The findings of this assessment inform decision-making processes and shape future risk management strategies.

2. Pre-Qualification

At this stage, organizations seeking exploration licenses must submit comprehensive documentation to authorities. This typically covers legal status, financial stability, technical competency, and plans for managing HSE risks, alongside contributions to local economic development.

3. Exploration and Seismic

Upon receiving exploration rights, companies conduct seismic surveys to assess geological structures and the likelihood of hydrocarbon presence. This phase is prefaced by environmental, social, and human rights impact assessments, managed through the Project Delivery Process (PDP).

4. Site Survey

Before drilling, detailed site surveys are conducted. These surveys aim to gather information about the proposed drilling location, ensuring safety and environmental protection. Typically, these activities have minimal social and environmental impact and may not necessitate separate Environmental or Social Impact Assessments.

5. Exploration Drilling

In the exploration drilling phase, the presence of oil or gas is determined. Preceding this phase is an extensive assessment of potential health, safety, environmental, social, and human rights impacts. The findings guide the development of strategies to mitigate risks and ensure responsible operations.

6. Appraisal Drilling

Following a successful exploration phase, appraisal drilling assesses the size and characteristics of the discovery. The social and environmental impact considerations for appraisal drilling are similar to those of the exploration phase, with corresponding assessments conducted in advance.

7. Development

If appraisal results are positive, a development plan is formulated and submitted for approval. This includes a comprehensive risk assessment and a long-term evaluation of environmental and social impacts. The plan also outlines benefits for local communities and strategies for managing potential impacts.

8. Production

During the production phase, which can span decades, ongoing reviews of social and environmental performance are essential. This ensures that identified impacts are mitigated and any changes in risks are appropriately managed. Maintaining safe operations, competent personnel and well-maintained equipment is a continuous requirement.

9. Decommissioning

The final phase involves the safe and environmentally responsible closure of operations when hydrocarbons can no longer be extracted. The focus here is on protecting people and the environment and preventing unacceptable legacy issues for local stakeholders and the organization.

In the oil and gas industry, effective risk management across the project life cycle is not just a regulatory requirement; it's a fundamental aspect of sustainable and responsible operations. By integrating comprehensive HSE strategies at each stage, organizations can minimize risks, protect the environment and communities, and enhance their operational efficiency and reputation.

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