Linking Ecosystem Services to Business Risk: An Oil and Gas Perspective. Sandra Werner, ExxonMobil David Yoskowitz, Harte Research Institute

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1 Linking Ecosystem Services to Business Risk: An Oil and Gas Perspective Sandra Werner, ExxonMobil David Yoskowitz, Harte Research Institute Dec 11, 2014

2 Goals Explain the Environmental and Socio-economic Risk Management Process. Show the linkages to Ecosystem Services using an example. 2

3 Are Ecosystem Services Considered? Regulations Cost Policy Ecosystem Services Environmental and Socioeconomic Risk Management Process Schedule Profit Technical Feasibility Evaluation of Risk Business Decision/ Concept Safety 3

4 How Does the Process Work? Iterative Process 1. Identify Aspects Aspect: An activity, product or service that can interact with the environment or people (e.g., air emissions, water withdrawal, infrastructure, etc.). 2. Characterize Setting Environmental: Flora, fauna, climate, etc. Public/Socioec: Other users, communities, etc. Regulatory: Existing and developing regulations. 3. Identify Alternatives Examples: Different technologies, timing, routing or siting options, etc. 4. Develop Risk Scenarios 5. Assess Significance Risk Scenario: Links an aspect to a potential consequence through consideration of credible events or conditions. Risk Significance: Based on an estimation of consequence severity and probability or likelihood. 4

5 Example: Marine Jetty, Papua New Guinea Brownfield area located Northwest of Port Moresby. Former sisal plantation, pasture land and firing range during World War II. Bay area required little to no dredging for shipping access. LNG Plant Mangroves Schematic of the Marine Jetty (trestle design) for PNG LNG loading 5

Mangroves stabilize the shoreline. Local villages close to LNG plant site.

6 Setting Setting: Coastline is edged with mangroves. Mangroves are a sensitive species and home to a diverse community of life. Mangroves stabilize the shoreline. Local villages close to LNG plant site. Villagers rely on fishing for food supply and business. Mangroves along the PNG coastline. LeaLea Fish Market. 6

7 Alternatives and Risk Considerations Facts: Jetty construction requires pile driving. Pile driver must be placed on a solid surface. Typical construction methods: Temporary earthen causeway: Relatively wide footprint on mangroves and associated habitat (e.g., fish nursing areas). Could enhance potential for localized shoreline destabilization. Temporary obstruction could displace fish and impact fish catch, potentially leading to grievances and compensation claims. Barge and tugs: Frequent barge positioning disturbs mangroves and seafloor. Could temporarily impact fish habitat and fish catch. Novel method: Cantilever bridge: Smaller footprint than causeway or barge. 7

8 Linkages to Ecosystem Services Risk Considerations Disturbance to mangrove habitat Disturbance to seafloor Disturbance or displacement of fish Impacts on fishing Grievances and compensation claims Potential localized shoreline destabilization Ecosystem Services Provisioning: Food Cultural: Historic Value Aesthetics / Existence Supporting: Habitat Nutrient Cycling Regulating: Erosion Control Storm Protection Waste Regulation Nutrient Regulation 8

9 Lens of Ecosystem Services Consequence Increasing Shoreline stabilization Mangrove habitat Environmental Setting Aspect Jetty Construction Fish habitat Disturbance to habitat, socioec impacts Risk Scenario(s) Higher Local villages Socioeconomic Setting Fishing Lens of Ecosystem Services Increasing Probability Lower 9

10 Cantilever Bridge Novel design Self-propelling Reduced environmental footprint 10

11 Summary Environmental and socio-economic risk management is part of our day-to-day business. It is a rigorous process that takes place throughout a project s lifecycle and is applied at all (small and large) scales. Ecosystem services are an integral part of this process. Through this linkage, ecosystem services play an important role in business decisions. 11

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