Seismic surveys

A seismic survey involves firing pulses ofsound energy through the layers of rockbeneath the Earth’s surface and recordingthe energy that is bounced back. In a typicalsurvey area of 100sq km, some 25,000shots are fired. The recording of reflectedpulses provides images of the sub-seafloorstrata and gives geologists an idea ofwhether the area has oil or gas potential. If itdoes, a company may decide to go aheadwith exploratory drilling (see informationsheet on drilling and production).

Impacts

Available evidence indicates that seismicsounds in the marine environment are neithercompletely without consequences nor arethey certain to result in serious andirreversible harm to the environment.However, it’s true to say that in the hugerange of effects between those extremes,

there are many potential detrimentalconsequences. In general, the risks attachedare poorly quantified – indeed, they are oftenunknown – and are likely to vary betweendifferent environments and organisms.Fortunately, techniques exist to minimizeadverse impacts.Laboratory studies on fish, turtles andmarine mammals indicate that the soundsproduced by seismic surveys can causehaemorrhages, and brain and hearingdamage, if they are close to the airguns.

In the sea, of course, most species canswim away from the sound source, but evenso, studies have revealed significant effectson fishery resources (see table below).Scaring effects in fish have been monitored,leading to a change in swimming patterns.

Recommendations

• carry out strategic environmental assessments and involving coastalmanagers, the fishery sector and communities in identifying zonesand periods vulnerable to seismic surveys;

• establish legal standards for seismic surveys;

• prohibit seismic surveying in shallow and vulnerable areas such asMarine Protected Areas, mangrove areas, estuaries and nurseryareas important for the renewal of fish stocks;

• avoid seismic surveys during the migration of key species;

• prevent seismic surveys when cetaceans are in the area;

• require an environmental impact study before allowing any seismicsurveying (in line with UNCLOS); and

• require companies to use the “soft start” technique.

Looking foroil and gas

Survey vessel with airguns towed behind 3D image of seafloor and sub-seafloor

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While catch reductions last just a few days,there is limited knowledge about the long-term consequences, which may be moreprofound if seismic surveys are carried outwhen fish migrate. Experts argue that duringsuch periods, shoals (schools) may becomedispersed and lose track of their migratorypath. Moreover, when dispersed, the distinctadvantage of swimming in a shoal is lost, andindividuals or smaller groups can becomeeasier prey for predators. As a precautionarymeasure some countries prohibit, andresponsible companies refrain from, seismicsurveying during migration periods.

It is widely recognised that marine mammalsare particularly sensitive to seismic surveys,which can result in a permanent shift in theirhearing threshold. In other words, they couldbecome deaf to certain sound frequencies.Several studies have shown that whales anddolphins not only stop feeding andinteracting, but also change their divingpatterns. Sperm whales in the Gulf of Mexicoappeared to move more than 50km awaywhen surveys began. Similarly, sperm whalesin the Indian Ocean stopped vocalising inresponse to seismic pulses that were firedmore than 300km away.

Shallow areas such as estuaries, mangrovesand coral reef ecosystems are particularlyvulnerable zones and may need protectionfrom seismic testing. These critical habitatsharbour many species – corals and fisheggs, for example – that cannot swim awayto escape the sound source. Theseorganisms may well become exposed atclose range to the airguns, leading to possibledevelopmental arrest or abnormalities.However, this has been observed only in asmall proportion of exposed eggs or larvae.While more research is needed on theimpacts of seismic surveys in such habitats,many scientists have argued the case for amoratorium.

In short, seismic surveys have the potentialto cause significant impacts on cetaceans,fish and other marine life forms – but for themost part, these impacts can be avoided ifthe industry applies responsible managementmeasures such as spatial/temporalavoidance of critical habitats, refraining fromsurveying when cetaceans are spotted, andemploying a “soft start”, whereby the noisevolume is slowly built up to give any marinelife the chance to move away.

Regulations

Many companies looking for oil and gas inthe West African Marine Ecoregion arerelatively small, and have unclear corporatepolicies for responsible managementmeasures. It is therefore important thatcountries introduce laws governing seismicsurveys in order to prevent any easily avoideddetrimental effects.

At the international level there are no specificregulations for seismic surveys, although thegeneral principles outlined in the UnitedNations Law of the Sea (UNCLOS) do apply.Unlike other international treaties that applyonly to chemical or biological substances,UNCLOS includes forms of energy in itsdefinition of pollution. Because sound is aform of energy, the general duties describedin UNCLOS should be considered for seismicsurveys. Therefore, all member countriesof the convention are obliged to:

• protect the marine environment fromany sort of pollution;

• prevent pollution from occurring;

• act with precaution; and

• carry out environmental impactassessments (EIAs) before allowingany polluting activity to take place.

Examples of national legalrestrictions

A number of countries already restrict surveyactivities in their territorial waters. For example:

Australia• Prohibition of seismic surveys in sensitive

habitats with a Marine Protected Area status.

Canada and the United States• EIA for seismic surveys.• Keeping a certain distance between the survey

ship and marine mammals. • Prohibition of seismic surveys during times

of the year when marine mammals are parti-cularly abundant.

Norway• Prohibition of seismic surveys in fishing

zones, observing a buffer zone of 50kmaround the outer edges of the fishing areas(surveys within these zones are only allowedwhen no fishing takes place).

• Prohibition of seismic surveys during fishmigration periods.

• Prohibition of seismic surveys in shallow areasknown to be nurseries for fish.

United Kingdom• EIA for seismic surveys.• Prohibition of seismic surveys during the

spawning and migration periods of commer-cial fish species such as the herring.

• Prohibition of seismic surveys if cetaceans areseen within 500m (surveys may therefore onlybe carried out in daytime and only when thereis reasonable visibility).

• Survey vessels have to wait for 20 minutesafter the last sighting of cetaceans beforeproceeding.

Species Gear type Noise level Catch reduction

Atlantic cod (Gadus morhua) Trawl 250 dB 46-49% lasting at least 5 days

Atlantic cod (Gadus morhua) Longline 250 dB 17-45% lasting at least 5 days

Atlantic cod (Gadus morhua) Longline Un-determined 55-79% lasting at least 24 hours

Haddock (Melanogrammus aeglefinus) Trawl 250 dB 70-72% lasting at least 5 days

Haddock (Melanogrammus aeglefinus) Longline 250 dB 49-73% lasting at least 5 days

Rockfish (Sebastes spp) Longline 223 dB 52% – effect period undetermined

An FPSO system is an offshore productionfacility that is typically ship-shaped andstores crude oil in tanks located in the hullof the vessel. The crude oil is periodicallyoffloaded from the FPSO to tankers fortransport.

Today over 100 FPSOs are in use world-wide, with at least another 80 at the designstage. The first deepwater oil project in theWest African Marine Ecoregion, theChinguetti oil field in Mauritania´s EEZ, isdeveloped with an FPSO.

Recommendations

• develop a regional legal framework with neighbouring countriesfor the development of offshore oil and gas that includes themanagement and design of FPSOs;

• collaborate with other regional legal frameworks for the marineenvironment, e.g. the OSPAR convention for the North Sea andNorth East Atlantic or, HELCOM for the Baltic Sea;

• incorporate the IMO recommendation for double hulled FPSOsin domestic law and a regional legal framework;

• take notice of the Bureau Veritas survey on FPSOs as well as theimpact assessment on FPSOs carried out by the US governmentand the recommendations of the expert panel on oil and gasdevelopment in Mauirtania;

• transpose the IMO safety guidelines for the Construction andEquipment of Mobile Offshore Drilling Units (MODU code) for themanagement of FPSOs and offshore drilling units to domestic lawand a regional legal framework for offshore oil and gasdevelopment;

• designate an exclusion zone with a radius of at least 500 metersaround the platform for all extraneous maritime traffic;

• impose sufficient liability insurance for oil spills or other types ofpollution of the marine environment caused by FPSOs, terminaloperations or drilling and production activities (cleanup,compensation, etc.).

FPSOsFloating Production,Storage and Offloading vessel

Berge Helene, first FPSO in the West AfricanMarine Ecoregion off Mauritania.

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Different kindsof FPSOs

There are 3 different kinds of FPSOs:• FPSOs made out of former oil transportation

tankers with a single hull configuration, • FPSOs made out of former oil transportation

tankers with a double hull configuration,• New and purpose-built FPSOs with double

hull configuration.

Today, single hulled oil tankers are cheaplyavailable on the market as they will not beallowed to transport oil because of thedouble hull policy required by internationalshipping law (International MaritimeOrganisation, provision 13G of MARPOL73/78). However, they can still be used asstatic production and storage platforms(FPSOs) for which international shipping lawwith regard to hull configuration is notapplicable. This makes single hulled FPSOconversions an interesting developmentoption for oil and gas companies especiallyfor the smaller African deepwater fieldswhere cost is critical to profitability. TheFPSO, Berge Helene, in use off theMauritanian coast is an example of such asingle hulled FPSO conversion.

Lack of Internationalregulation, need forlocal solutionsEven if FPSOs look like ships and mayactually be made out of former oil tankers,the status of the FPSOs as a “ship” ininternational shipping law is unclear.Application of the Conventions of theInternational Maritime Organisation (IMO) onFPSOs is under debate (see also information

sheet on legal frameworks for offshore oiland gas development). Loopholes in theinternational legal frameworks need to befilled at the national and regional levels.

Waste productsTypical ship waste products that are alsoproduced by FPSOs are regulated by theIMO convention for the prevention ofpollution (MARPOL 73/78) e.g. grey water,garbage, air pollution and oil content in deckand tank cleaning water. There are no regulations at the internationallevel for the most important waste productsrelated to oil production and drilling (drillingfluids, cuttings, water and gas from the oil

reservoir). These products are broughtonboard the FPSOs and are then either,shipped to shore, discharged into the sea(with or without treatment) or re-injected intothe oil or gas reservoir (see also informationsheet on offshore oil and gas drilling andproduction wastes). Suitable managementoptions for different regions need to beaddressed at the national level.

FPSO “ship” safetyThe IMO has developed several guidelinesand codes to maintain compatibility forFPSOs with international law for maritimesafety. The Code for the construction andequipment of Mobile Offshore Drilling Units(MODU code) was developed to recommendthe application of the InternationalConvention for the Safety of Life at Sea - theSOLAS Convention. Because the important provision 13G inAnnexe 1 of the MARPOL Convention, thedouble hull requirement, is not applicable toFPSOs, the IMO nevertheless formulated anon-binding recommendation to only usedouble hulled FPSOs. States that wish to have the same safetystandards for oil and gas operations that alsoexist at the international level for conventionalvessels should incorporate these IMOguidelines and recommendations into bindinglegislation at the national or regional level.

Best domestic andregional law

All FPSOs used in the North East Atlantic arepurpose-built and double-hulled. The USgovernment issued studies leading to apolicy to only allow newly built and doublehulled FPSOs in the Gulf of Mexico.

Safety zones

FPSOs in the North East Atlantic and theNorth Sea and offshore platforms in the Gulfof Mexico have safety zones with a radius ofat least 500 meters around them to keep allmaritime traffic a reasonably safe distanceaway.

Oil spill compensationOil spills can be caused by platforms-including FPSOs. This can happen when oilis offloaded from the FPSO to an oil tanker,if an FPSO is perforated by another ship asthe result of an accident, or simply when anFPSO ruptures due to metal fatigue. In any case, compensation is not covered byany international convention. The CivilLiability Convention or the Fund Conventionsare exclusively written for oil spills caused byoil tankers and thus exclude all platforms.That’s why the UN Law of the Sea (UNCLOS)stipulates the need for States to ensure thatoffshore oil and gas operators have sufficientinsurance coverage for damages caused byoffshore oil and gas platforms.

Best practiceThe United States has put in place anunlimited liability requirement for gross (orwilful) negligence for oil spills caused by oiltankers and also for all offshore oil and gasoperations. All tankers trading in US watersand all oil and gas platform operators arerequired to demonstrate to local authorities(with Certificates of Financial Responsibility)that they carry adequate insurance to covermaximum financial risk. Unlimited liabilityprovides a strong incentive within the privatesector (insurance company - oil and gascompanies) for self-regulation in addition tonational supervision.

Low cost - high risk

The hull of an FPSO may be punctured after acollision with another vessel in the same way asan ordinary oil tanker. Making proper riskassessments is difficult as historical data islacking. The vast majority of FPSOs has only beenput into service in the second half of the 1990s.

Several studies have been undertaken to assessthe risks involved with the use of FPSOs. Thewell respected classification firm Bureau Veritashas performed a survey on half of the FPSOs inservice. Their conclusions: FPSOs made out offormer oil transportation tankers are unsuitableto serve as oil production and storage platforms.Structural and fatigue problems arise over timeeven in the calmest of conditions. Furthermorethe study concluded that oil tankers are built tomeet ship specifications, whereas offshorestructures must always be designed for 100-year wave conditions. Additionally, an oil tankerhas very specific loading criteria which do nomatch the more extreme and frequent loadingand offloading sequences of an oil productionand storage platform.

Hydrocarbon reserves are trapped underground inpermeable reservoir rocks such as porous sandstoneor fractured limestone. Movement towards the surfaceis stopped or slowed down by impermeable rockssuch as clay, cemented sandstone and salt, which actas seals. A large water reservoir is situated underneaththe oil and gas. As soon as seismic surveys reveal thatsuch rock structures are likely to contain hydrocarbonreserves, exploratory drilling starts. Drilling operationsalso take place when production wells are drilled.In the case of a large oil field, more than 50 productionwells are typically drilled.

During drilling, a drill head at the end of a tube systempenetrates the different rock layers. Fluids are injectedinto this tube system for lubrication, pressure andtemperature control, and for the removal drilling debris(cuttings). These fluids can either be based on oil,synthetic compounds or water. Choice of fluidsdepends on the type of rock encountered duringdrilling, which means that during one single drillingdifferent types of fluids are used. The mixture of fluidsand cuttings (also called drilling mud) is pumped backto the surface. Part of the mud is reused andre-injected into the tube.

Recommendations

• carry out strategic environmental assessments in line with theAbidjan Convention and the Paris Declaration and involve coastalmanagers, the fishery sector and communities in identifying zoneswhere oil and gas production should be prohibited;

• establish specific legal water quality standards;

• formulate similar mitigation measures to those already implementedelsewhere;

• prohibit production and drilling in vulnerable areas such as in oradjacent to Marine Protected Areas, mangrove areas, deep sea coralreefs, seagrasses, shellfish banks, estuaries and all nursery areasimportant for the renewal of fish stocks;

• require zero discharge regime, especially for produced water that islikely to impact the vulnerable areas cited above; and

• require independant environmental impact studies before allowingany drilling and production.

Recommended websites:Global Marine Pollution Gateway http://oils.gpa.unep.org/

United Kingdom Offshore Operators Associationhttp://www.ukooa.co.uk/

Environmental Impact of the Offshore Oil and Gas exploration and productionhttp://www.offshore-environment.com/

Drillingand production

Cross-section of an oil and gas field(source: UKOAA website)

gas cap

oil2km

water

waterseal or

cap-rock

permeablereservoir

rock

gas disolved in oil

spill poiny4km

Berge Helene, first FPSO in the WestAfrican Marine Ecoregion off Mauritania.

Drill headDrilling in action

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OSPAR ConventionNorth-east Atlantic

Helcom ConventionBaltic Sea

United States

Drilling muds

- oil based muds shipped to shore.- water-based and synthetic-based

muds are tested for toxicity priorto discharge.

- prohibition on discharging mudscontaining more than 1% of oil.

- oil based muds shipped to shore.- water-based and synthetic-based

muds are tested for toxicity priorto discharge.

- prohibition on discharging mudscontaining than 1% of oil.

- prohibition on discharging mudswith more than 1 mg cadmiumand mercury per kilo.

- oil-based muds shipped to shore.- water-based and synthetic-based

muds are tested for toxicity prior todischarge.

Produced water

- re-injecting into the geological for-mation in vulnerable areas such asestuaries and coastal areas.

- when discharged to sea oilcontent is lowered to 30 mg/L.

- re-injecting into the geologicalformation in vulnerable areas suchas estuaries and coastal areas.

- when discharged to sea oilcontent is lowered to 30 mg/L.

- re-injecting into the geological for-mation in vulnerable areas such asestuaries and coastal areas.

- when discharged to sea oil contentis lowered to 15 mg/L in Alaska,18 mg/L in California, 29 mg/L inGulf of Mexico.

Gas either exploited or re-injected. either exploited or re-injected. either exploited or re-injected.

Most significant sources of pollutiongenerated during drilling and productionstages are:

• Drilling muds

• Geological formation water(also called produced water)pumped up with the hydrocarbons

• Gas

Drilling muds

Drilling muds are composed of a large rangeof different and complex chemicalcompounds. They consist of gelling anddeflocculating agents (bentonite clays),filtration control agents, pH and ion-controlsubstances, barites, biocides, corrosioninhibitors, lubricants, defoaming agents andtrace elements of heavy metals such asarsenic, barium, chromium, cadmium, leadand mercury. A production platform maydischarge about 60,000 m3 of drilling fluidsand 15,000 m3 of drilling cuttings.

The most common impacts observed duringdrilling activities are the smothering ofbottom-dwelling organisms living in the directvicinity of the drilling operations. Mostresearch on the impacts consists of toxicitytests measuring direct and short-term effectson a limited number of seafloor organisms.This research concludes that water-baseddrilling fluids are the safest for the marineenvironment, whereas oil-based drilling fluidsare the most toxic and most persistent intime; after 150 days only 5% is biodegraded.

Geological formationwaterGeological formation water (also calledproduced water) is by far the largest-volumeby-product or waste stream associated withoil and gas production. All hydrocarbonreserves have varying volumes of water,which is also inevitably pumped to thesurface during exploitation. In the firstproduction year no production water maybe extracted, but at the end of productionvolumes may reach 40,000 m3/day.Production water consists primarily ofrelatively warm water from the oil reservoir,containing dissolved and dispersed oils, highsalt concentrations, heavy metals, polycyclicaromatic hydrocarbons (PAHs) and, onoccasion, naturally occurring radioactivematerial. This reservoir water contains nooxygen.

Produced water can lead to serious pollutionand cause unpredictable cascading effectson marine ecosystems. Of special concernare hydrocarbons that occur naturally inproduced water, such as organic acids,PAHs, phenols and volatiles. These solubleorganics are not easily removed fromproduced water during treatment on theplatform. This means that these more or lessdissolved compounds end up in the ocean ifthe waste stream is discharged to sea.Research on the ecological impacts of PAHcontent in production water has shown thatit can affect fertility of male fish and delayspawning periods by several weeks. PAHsare carcinogenic and persistent in time, andmoreover, accumulate in the food chain.PAH content in produced water from gasfields is on average much larger (up to 11times) than PAH content in produced waterfrom oil fields.

Gas

Gas associated with oil fields is sometimesflared off (burnt and released into theatmosphere). Nigeria and Russia have longbeen two of the world's largest sources offlaring, which has contributed significantly toclimate change and local pollution. It is bestpractice either to market the gas or to re-injectit into the oil reservoir – a process that isincreasingly becoming the norm for oilproduction. Now, about 40% of gas iscurrently flared in Nigeria, compared with 80%in 1993 – this is an obvious improvement, butthere is still a long way to go.

International regulations

At the international level no specificregulations exist for waste productsgenerated by drilling activities or production.Similarly, the regional Abidjan Convention

lacks any precise norms for drilling andproduction waste, but it does recommendthat member states carry out StrategicEnvironmental Assessments whendeveloping their hydrocarbon resources.

Also, the general principles of the UNConvention on the Law of the Sea (UNCLOS)– of which all the sub-region’s countries aremembers – apply to the waste productsgenerated by offshore oil and gasdevelopment. Therefore governments shouldnot only protect the marine environment frompollution, but also prevent it from occurring inthe first place, act with precaution, and obligecompanies to carry out independentenvironmental impact studies at alldevelopment stages.

Due to lack of detailed guidance at theinternational level, offshore oil and gasproducing countries have created their ownregulations nationally and/or regionally.

Examples of national and regional regulatory frameworks

The world depends on finite oil and gas resources to power its transport,homes and industries. But the use of these fossil fuels results in a range ofenvironmental and social costs which need to be balanced against the benefitsthat oil can bring.

Key to maximising benefits and minimizing conflicts is good governance:decision-making based on transparency and the participation of a broad spectrumof stakeholders from government and civil society.

Oil and gas exploitationin West Africa

Because of social problems and declining oilreserves on land, most future oil and gasproduction in West Africa will be fromoffshore wells in sensitive marineenvironments which are critical for humanlivelihoods. Virtually the whole coastal zonehas been divided into oil blocks.This includes protected areas, key fishbreeding and fishing grounds, and importanttourism areas.

Hydrocarbons can produce vital income butthe history of oil in Africa has been fraughtwith social and environment problems andoften failed to contribute to sustainabledevelopment. Development of hydrocarbonshas little impact on employment, becauseit’s a high-tech capital-intense sectorrequiring a small number of highly skilledpeople. While oil exports generate littlegrowth in other sectors, oil spills have badlydamage sectors like tourism, fisheries andagriculture of producer countries and theirneighbours.

Dr Emil Salim, chairman of the World Bank-funded Independent Extractive IndustryReview (EIR), is highly critical of theextractive industries:

“ Not only have the oil, gas and miningindustries not helped the poorest people indeveloping countries, they have oftenmade them worse off. Countries which relyprimarily on extractive industries tend tohave higher levels of poverty, childmorbidity and mortality, civil war, corruptionand totalitarianism than those with morediversified economies.”

The EIR suggests three broad policyrequirements for the extractive sector:poverty alleviation; effective social andenvironmental policies; and respect forhuman rights.

Recommendations

• protect the natural resource base, human rights and sustainabledevelopment plans;

• establish an Inter-Ministerial Committee to oversee the extractiveindustries;

• improve governments’ ability to negotiate with and manage oilcompanies;

• obtain international assistance in negotiations and management;

• carry out Strategic Environemental Assessments to ensuringstakeholder involvement and harmonization of development sectors(See SEA factsheet);

• strengthen environmental monitoring;

• ensure adequate legal infrastructure for controlling offshore oiloperations;

• enforce all laws, conventions and treaties and cancel contractswhen companies break laws;

• join the EITI (see below).

The EITI (Extractive Industries Transparency Initiative - http://eitransparency.org- is a coalition of governments, companies, civil society groups, investorsand international organisations which:

• promotes equitable benefit sharing from the extractive industries;

• aims to improve transparency and accountability;

• has a robust yet flexible methodology.

Good Governanceand the Extractive Industries:managing non-renewable resources for sustainable benefits

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Governance problemsassociated with oil andgas production

Without good governance, the oil and gasindustry impacts on people and theenvironment through:

• impacts on the economy which can haveadverse social effects such as corruption,armed conflict, and the over-dependenceon oil and gas for revenue to the detrimentof other economic sectors (the “Dutchdisease”)

• climate change; and

• operations on land and at sea.

Environmental problems often lead to civildisturbances and impact food security andpeople’s livelihoods. For example, poormanagement and governance of oilresources have already caused domestic andinternational conflicts in Angola, Cameroon,Chad, the Democratic Republic of Congo,Nigeria, Sierra Leone and Sudan.

Not all resource-rich countries have fared thesame. Thirty years ago, Indonesia andNigeria had comparable per capita incomesand both heavily depended on oil revenues.But today, Indonesia’s per capita income isfour times that of Nigeria’s, which fell fromUS$302.75 in 1973 to US$254.26 in 2002.In 2008, Nigerian leaders declared that manyproblems they encountered in developing theoil sector could have been avoided if bettergovernance and transparency had beenestablished earlier.

Time to act

The amount of oil in the world is finite, butdemand continues to accelerate. As stocksdiminish, prices will rise – and manycountries’ development plans will be badlyhit. The impact of a rapid rise in oil priceswas clear in 2008 when the price per barreljumped to $150, causing havoc amongworld economies. Experts predict $150-200a barrel within a decade (www.globalsecurity.org/military/intro/oil.htm).

Developing countries will find the cost ofimported oil and gas painfully high – this,too, will affect their development plansunless they use their own reserves carefully,reduce their consumption levels, increasetheir energy efficiency and invest inrenewable energy resources. Thesedecisions will have far-reachingconsequences on how a country’s energy isgenerated, who has access to it and whobenefits from it. Therefore, transparentdecision-making is essential if public supportis to be maintained and assured.

UN concerns aboutgovernance

The UN Secretary-General was soconcerned about governance problemssurrounding oil development in West Africathat he appointed Mr. Ahmedou ouldAbdallah as a Special Representative.He presented some of the critical issuesassociated with oil and gas development in2004:

Tensions are caused by a scramble forhighly priced oil, boundary disagreements,corruption and over-dependence on oil.

Disputes occur at many levels:

• between states on delimitations of landborders and maritime boundaries;

• between governments and oil companieson contracts and revenues;

• between governments and theirpopulations on revenue sharing;

The UN is trying to resolve disputes through“good governance” by:

• supporting democratic reforms in producercountries to minimise the risks of wars andincrease stability in oil producing regions;

• providing arbitration and negotiation;

• encouraging the sharing oil resources/revenue (e.g. Nigeria and EquatorialGuinea, Senegal and Guinea Bissau;

• promoting transparency (keeping the publicinformed, ascribing to EITI ( see below),and Publish what you Pay:www.publishwhatyoupay.org) to maximizebenefits;

• recommending development projectswhich benefit all.

As the world’s oil supplies become scarcer, prices will inevitably rise – and the poorwill suffer most. If this situation is not addressed, serious social, environmental andpolitical problems could result. That’s why contracting needs to be open andtransparent.

Hydrocarbons are finite resources, but ifmanaged correctly, they can contributesignificantly to sustainable development.Investment in these resources shouldgenerate the best economic return for thecountry while protecting the environmentand human rights.

Oil and gas development requires largecapital investment in geological surveys andidentifying hydrocarbon resources before anycommercial exploitation begins. Becauseinvestment risks are so high, and acquiringcapital and expertise difficult, mostdeveloping countries grant developmentrights to foreign companies with very mixedresults. The difference between a good and abad contract can be measured in $ billions.

Differences inobjectives andnegotiating power Many international extractive industries aremore economically powerful than thedeveloping countries with which they arenegotiating, and the two often haveconflicting objectives. Oil companies, forexample, want to produce oil and gas at thelowest cost and the highest profit margin,whereas the host country’s objectives may

include public interest goals, quality of life,protection of the environment, economicgrowth, foreign exchange and fullemployment.

It is important to establish a national interministerial extractive industry committee,with its chairman appointed by thegovernment, to deal with planning, SEAs,contracting, transparency and enforcementof laws. Some of the biggest problems haveoccurred when all the responsibility fordeveloping oil, gas and mining is left in thehands of one ministry.

Recommendations

• invest in the protection of natural resources for present and futuregenerations;

• establish an interministerial commission for extractive industries;

• implement measures to ensure that gas and oil investments do notdistort the economy (exceed absorptive capacity) or communities;

• share benefits without compromising the ability to manage andapply laws;

• address domestic energy needs before allowing exports to take place;

• obtain the informed consent of local communities and ensure theyprofit directly;

• guarantee effective planning through SEAs and ESIAs;

• include the value of environmental and social services in cost-benefit analyses;

• use Best Available Technology (BAT) and to minimize atmosphericemissions (e.g. flaring), aquatic pollution (drilling fluids, ballast wateretc.) and soil pollution;

• formalize transparency (EITI, PWYP);

• ensure that companies pay all fines and the government’s rights touse company boats, vehicles and planes for monitoring.

• maximize the profits for the local economy: jobs, profit sharing, etc;

• ensure that the companies have a sufficient insurance for financialresponsibility (unlimited coverage for serious infraction)

• insist that the companies repair all damage possible after closure;

• create and prefinance closure protocols; and

• ensure that a percentage of oil revenues are invested in renewableenergy.

Investments in hydrocarbonsand renewable energy systems

Countries %

Cameroon 11

Mexico 31

Canada 35-50

Côte d’Ivoire 55

Equatorial Guinea 60

Nigeria (deep water) 65

Gabon onshore 73

Sudan 77

Norway & Nigeria (onshore) 84

Iran 93

Percentage of revenues from oil operationsreceived by governments

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Integration of hydro-carbon investmentsin National PlansExtractive industries should be developed inthe context of national sustainabledevelopment, poverty reduction andenvironmental plans, national andinternational laws, treaties and conventions.

Foreign assistanceshould be sought whencontracting

This can come from aid donors and frominternational lawyers, who can supportgovernment negotiating and contract reviewteams. There are two good example of this:

Liberia: A civil war fought mainly over naturalresources devastated Liberia between 1989and 2003. Then, in 2006, the new Presidentset about renegotiating the contracts. Sheset up a review team and enlisted theInternational Senior Lawyers Project (ISLP),which offers pro bono help to developing anddeserving nations.Of the 95 contracts reviewed, 36 werecancelled and 14 were recommended forrenegotiation. The new contracts producedsignificant gains for the state and the affectedcommunities.

Nigeria: To control corruption Nigeriaintroduced a law in 2004 recognising thecountry’s Extractive Industry TransparencyInitiative (NEITI). In 2009 the initiative’sexecutive secretary reported that as a result,

$5 billion had been saved through fraudprevention in the first five years. Nigeria alsocreated new Environmental controlinstitutions and clamped down on pollutionand enforcement of contracts.

ContractsContracts can be divided into two basictypes: concession licences and contractualarrangements. The differences arise fromvarying attitudes towards compensation,reward-sharing schemes (including levels ofgovernment involvement) and the levels ofcontrol granted to companies. Under concession licences, the state ownsall mineral resources, but the rights toproduce the minerals are granted inexchange for royalty and tax payments.

Joint VenturesTwo or more parties form a joint venture (JV)to develop oil and gas and agree to create anew company. Both contribute equity andshare the revenues, expenses and control ofthe enterprise. JVs are often establishedbetween local and foreign companies (about75% are international) but failure rates are30-61%. A typical example of a JV company is theShell Petroleum and DevelopmentCorporation (SPDC) in Nigeria. This operatesa JV agreement involving the NigerianNational Petroleum Corporation (NNPC),which holds 55%, Shell 30%, EPNL 10%and Agip 5%.Problems arose when the company tried torecover operating costs from the statepartner. Replacement of old pipes andinstallations was delayed for years. Corrodedand leaking 40-year-old pipelines were left in

the ground, creating serious environmental,social and human rights abuses. When theJV Company was found guilty of breakinggas flaring and oil pollution laws, the statehad to pay 55% of the fines imposed.

Production-sharingcontracts

Under a production-sharing contract (PSC),mineral/hydrocarbon resources are owned bythe state, which brings in a foreign companyas a contractor to provide technical andfinancial services for exploration anddevelopment operations. The main objectives of a PSC are toencourage foreign investors and to ensureequity between the revenue of the state and

the profit of the company, while strengtheningthe state’s management of operations.

The PSC is attractive to foreign firmsbecause they can book the reserves in theirbalance sheets even though they don’t ownthem. The attraction to producer countries isthat they can share the profits without therisks and they can still insist on laws beingrespected without having to contribute tofines when the exploitation company breaksthe law.

Contract problemsConflicts of interest between public andprivate partners have arisen over a range ofissues including failure to follow national andinternational standards, human rightsabuses, allowable expenses, taxation, fines,corruption and repatriation of profits.Tendering can reduce corruption, but it is

often the principal entrypoint for imposing “crony”contracts. Gross Revenue

(e.g. one barrel of oil @ $100)

Government Revenue Company Revenue

Cost Recovery(Operating Costs, e.g. depreciation, depletion, etc.)

Profit Oil Split(60/40

(Taxable)

Taxes(40%)

Royaty(10%)

(40%)

$10.00

$32.40 $21.60

$36.00

$8.64 ($8.64)

$51.04 $48.96

51% 49%

$100.00

$90.00

$54.00

A single barrel of oil at $100is tracked through aProduction Sharing Contract,based on a model firstdeveloped by Johnston, 1994. A 10% royalty is applied.Operation costs, in which thecompany is allowed to recovercosts out of net revenues, arelimited at 40% of grossrevenue less the 10% royalty.The remaining revenue isshared 60/40 in favour of thegovernment. The company’spays a 40% tax rate. Aftertaxes, the company’s financialentitlement comes to 49%.

Source: Adopted from Johnston (1994a).

A typical partnership model showinghow revenue can be allocated to all parties

Particularly Sensitive Sea Areas (PSSAs) are areas of the seas and oceans thatrequire special protection from maritime traffic.

Marine areas of particular importance fortourism, recreation, traditional subsistence,science or education can benefit fromPSSAs – which can also help preservefishery resources by providing extraprotection to coastal wetlands, estuaries,mangrove forests and other importanthabitats. Where these areas are threatenedby maritime traffic, it is possible to obtain aPSSA designation from the InternationalMaritime Organisation (http://www.imo.org/environment/mainframe.asp?topic_id=1357).

According tointernational law

Within their 200 nautical mile ExclusiveEconomic Zone (EEZ), countries may not‘impair’ a foreign ship’s right of ‘innocentpassage’. But because internationalregulations generally apply to all shipswherever they go, it can be difficult toprotect particularly sensitive areas.

PSSA designation enables area-specificrules to be matched to local needs andconditions. The marking of PSSAs onnautical charts also serves to informmariners of the need to take special carewhen approaching a sensitive area.

Recommendations• all those with a stake in protecting their coastal and marine

environments should encourage their governments to proposePSSAs to the IMO;

• governments of the West African Marine Ecoregion should involvecoastal managers and communities in identifying candidate areasand preparing proposals for PSSA identification and protection forsubmission to the IMO;

• where a sensitive and vulnerable site is shared by two or morecountries, they should work together on a proposal and developjoint protective measures;

• the identification process of PSSAs should be used in StrategicEnvironmental Assessments for the offshore oil and gas industry;

• an exclusion zone with a radius of at least 500 meters should bedesignated around the platform for all extraneous maritime traffic;

• the IMO should recognise exclusion zones around FPSOs as AreasTo Be Avoided (ATBAs).

PSSAs:protecting the West African MarineEcoregion from shipping impacts

Identifying PSSAs

The criteria for PSSA designation are:

Ecological: Uniqueness, dependency,representativeness, diversity, productivity,naturalness, integrity, vulnerability.Social, Cultural and Economic: Economicbenefit, recreation, human dependency.Scientific and Educational: Research, baselinesand monitoring studies, education, historicalvalue.

A proposal for a PSSA may only be submitted bya member government of the InternationalMaritime Organisation (IMO). The petition shouldinclude an assessment of the area’s vulnerabilityto damage by shipping activities, identifyproposed measures to protect the area, andexplain how those measures would work. Itshould further describe the oceanographic andecological conditions that make the area sensitiveto shipping impacts, and should indicate anyother sources of environmental pressure – thedevelopment of offshore oil and gas, for example.

Identifying PSSAs is also valuable when preparinga Strategic Environmental Assessment thatshould precede offshore oil and gas development.Such PSSAs could benefit from special protectionfrom the oil and gas industry be designated asno-go or restricted zones (see also SEAs factsheet).

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Through the IMO, various measures are available to better protect PSSAs from transiting maritimetraffic. They include:

In addition, it is possible to imposealternative routes on passing maritime traffic.For example:

• Recommended track:A specially examined route that is as freefrom danger as possible, and along whichships are advised to navigate.

• Area to be Avoided:A routing measure involving an area withindefined limits in which navigation isparticularly hazardous and where it shouldbe avoided by certain classes of ships or,indeed, all ships. (http://www.imo.org/)

Examples of other types of IMO measures are:

• No anchoring area:A routing measure covering an area withindefined limits where anchoring ishazardous or could result in unacceptabledamage to the marine environment.

• Ballast water management area:The establishment of an area for ballastwater exchange. The purpose is to preventinvading organisms from infesting localecosystems and causing irreversibledamage.

• Special liquid discharge restrictions:These may cover oily waste, garbage orsewage water.

Special innovative measures may also beintroduced to address specific localproblems.

The West AfricanMarine EcoregionSome of the world’s busiest shipping routespass through the West African MarineEcoregion. Oil tankers heading to North andSouth America and Europe from the Gulf andAfrican oil fields transport some 400-500million tonnes of crude oil and refinedproducts through the Ecoregion every year(http://oils.gpa.unep.org/framework/region-10-next.htm, http://www.mowca.org/).

The density of this maritime traffic constitutesan immediate threat to valuable marineecosystems in the region. An accidentinvolving an oil tanker would have devastating

and long-term impacts on the well-being ofmillions of coastal people who depend uponfishery resources for their livelihoods. Thetourism sector would also suffer if any oil spillwere to reach resort beaches. DesignatingPSSAs in these areas would reduce the risksand lead to safer shipping.

Establishing a series of PSSAs in the regioncould also address chronic pollutiongenerated by ships. Special dischargerestrictions (especially of oil) could beimposed on passing vessels in and nearcritical habitats.

Area-specific rules to increasemaritime safety (SOLAS tools)

Many measures aimed at increasing shippingsafety, such as alternative routing systems, canalso be applied by coastal states in areas that donot qualify as a PSSA but where maritime traffic isparticularly hazardous due to topography,shallowness or shipping intensity.

Because new offshore oil and gas fields can be adanger to shipping– governments may considerhaving them recognised as Areas To Be Avoided(ATBAs) or as Precautionary Areas under theInternational Convention for Shipping Safety(SOLAS). Then, vessels transiting the area wouldbe warned to use extra care and/or follow amandatory shipping route. Because the WestAfrican Marine Ecoregion is not well known as anoffshore oil and gas development area,governments can make a strong case with theIMO for international recognition of offshoreplatforms. This may lessen potentially dangeroussituations, especially if new oil and gas fields arenear or within international shipping lanes.

1

14

3

6

6

4

5

3

3

1

InshoreTraffic Zone

Zone deNavigation

Côtière

Insh

ore

Traf

fics

Zone

Zone

de

Nav

igat

ion

Côt

ière

Two-way route within definedlimits, providing safe passage forships through waters wherenavigation is difficult ordangerous.

Traffic separation schemeswhich require ships to staywithin designated lanes.

Inshore traffic zones and deepwater routes to separate localtraffic from transiting traffic.Pictures courtesy of EdwardKleverlaan IMO.

Ship routes from observed reporting positions(yellow dots). Courtesy Global Ballast WaterManagement Programme

West African Marine Ecoregion with MarineProtected Areas

What are StrategicEnvironmentalAssessments (SEAs)and why are theyneeded?

SEAs are high-level decision-making toolsused to promote sustainable development.They ensure that one a group of developmentactivities does not undermine others.

Strategic Environmental Assessment wasformally recommended as a critical tool forcountries wishing to develop thehydrocarbon sector by the Abidjan andNairobi Conventions. This was because oiland gas had been found in many countriesand oil development in one country canseriously impact other countries. Manyfishers in West Africa are already affected bythe damage caused by more than 6,000 oilspills to the Niger Delta mangroves – onceone of the most important fish breedinggrounds in the region.

SEAs help decision-makers broaden high-level planning from single-sectoralapproaches (e.g. individually assessing oiland gas, mining, fisheries, tourism, etc.) to abroader, holistic and participatory approachacross multiple sectors – for exampleidentifying how offshore oil and gasdevelopment, coastal tourism, agricultureand fisheries together impact upon eachother and marine ecosystems. SEAs lookparticularly at combined/cumulative impactson people and the environment.

An SEA is undertaken much earlier than aproject-level environmental and social impactassessment (ESIA). It provides forintersectoral and extensive publicparticipation in decision-making and sets thestandards for the ESIAs which follow.

SEAs can also ensure that the developmentof the oil or mining sector is aligned with theprinciples in national strategies for povertyreduction and sustainable development.

Benefits of SEA

Strategic Environmental Assessmentscomplement and facilitate subsequentproject-level ESIAs. They are undertaken bygovernments to assist in participatorydecision-making and are best coordinatedby an inter-ministerial committee. They canalso be undertaken at a district or provinciallevel if several extractive activities areenvisaged in the same region.

SEA identifies the main groups ofgovernmental, civil society and private sectorstakeholders and provides a platform fordialogue and learning to find their commoninterests. For example, in WAMER hundredsof thousands of artisanal fishers, as well ascommercial fishing companies and anexpanding tourism market, all depend uponmaintaining the health of their marine andcoastal resources. It also helps forgeconsensus on the most relevant issues – forexample protecting key fishing and fishbreeding zones and key habitats likemangroves and sea grass beds.

RecommendationsSEA

• is sustainable development tool;

• helps maximize the benefits and beneficiaries of developmentactivities;

• ensures coherence and coordination between all related andoverlapping activities related to a sector or region;

• is base on transparency, stakeholder participation and dialogue;

• ensures that stakeholders are part of overall decision-making;

• provides a mechanism for conflict avoidance and resolution.

AcknowledgementsThe author wishes to thank Dr Robert Goodland and all other peoplewhose papers he has quoted.

Strategic EnvironmentalAssessments

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Definition of SEA

1. The Strategic Environmental Assessmentis a flexible process: proactive,participative, and systematic.

The SEA focuses on three main classes ofwork:

a) Policies, legislation and other rulesgoverning actions;

b) Plans and strategies, including regional,watershed and sectoral plans (e.g. new orrevised national water, mining orhydrocarbon codes, a new povertyreduction strategy, etc.); and

c) Programmes, or sets of coordinatedprojects, rather than specific individualprojects themselves, partly becausespecific projects are identified at theconclusion of the SEA. If a number ofprojects – for example oil and gas ormining – are proposed for a region, theSEA tackles the region as a whole, gaininglessons learned from similar projectsalready in the region, such as cumulativeimpacts.

2. An SEA should be scheduled as early aspossible – the sooner the better-preferably as soon as the decision is takento draft a policy, plan or programme, andwell before individual projects have beenidentified in order to ensure theparticipation of different ministries and civilsociety stakeholders.

3. The SEA is designed to identify, predict,report, prevent, compensate or otherwisemitigate the economic, social, health andenvironmental implications of the policy,plan or programme being assessed. Itenhances the benefits of the policy, planor programme, and is particularly effectivein preventing expensive and damagingerrors.

4. The SEA is a decision-making tooldesigned to promote better projects,postpone questionable projects, and helpcancel the worst projects in a programmeor sector. It also helps decision-makers toselect among alternatives. Effective SEAsrank alternatives in a sector in one ormore orders of quality (for example, morerather than less sustainable; lowernegative social impacts rather thanhigher).

5. The SEA is totally transparent and fullyparticipatory, as mandated by the UNAarhus Convention. Free, prior andinformed consent (FPIC) is the goal.

6. The SEA complements conventional ESIAof individual projects. A project-level ESIAtakes a proposed project and assessesthe environmental implications. ESIAs thatfollow SEAs will be faster and cost lessbecause only better projects will havebeen taken up.

Many SEAs have been carried out with goodexamples in Ghana (Guide to StrategicEnvironmental Assessmentwww.cea.lk/pdf/SEAGuideline.pdf),Mauritania, Sierra Leone, the UK, Norwayand Canada.

Policies

Plans SEA

ESIA

Programmes

Projects

ESIA SEA

Is reactive to a specific developmentproposal.

Can be proactive in a way that informs developmentproposals and can address geographic regions ortechnical sectors

Focuses on project-specific impacts. Enables the creation of a framework against whichimpacts and benefits can be measured.

Has a well-defined beginning and end,and informs a particular developmentdecision.

Can ensure that the right information is availableto inform multiple decisions over a period of time.

Assess the direct positive and negativeimpacts of a single proposed activity.

Enables cumulative impacts to be assessed andidentifies implications and issues for sustainabledevelopment.

Focuses on the mitigation of impacts.Enables a focus on achieving and maintaining achosen level of environmental quality.

Emphasises the reporting of impactsin a document for decision-makingpurposes.

Is seen more as a “process” than a “product”.A written report and a mechanism for continuedcollaboration are produced.

Differences between an SEA and an ESIA

DEAT (2007), Strategic Environmental Assessment Guideline, Integrated Environmental Guidelines Series 4 ISBN: 978-0-9802694-0-6. See also OECD Guidelines (http://www.oecd.org/dataoecd/4/21/37353858.pdf.)

IntroductionIn many developing nations, large-scaleextractive projects often receiveinsufficient governmental and citizenoversight. While petroleum and miningcompanies have significant financial,technical, and political resources withwhich to advance their business interest,most developing governments and civilsociety often do not. In the absence ofeffective oversight, companies havebeen known to lower social andenvironmental standards to reduce costsand maximize short-term financialreturns, leaving local people, theenvironment, and governments unfairlydisadvantaged and exploited.

To correct this problem, local citizensneed to be involved in the oversight ofindustry operations that affect their lives,Thus, governments should require theestablishment of independent,representative Citizen Advisory Councils(CACs) to provide informed publicoversight for the extractive sector, to befunded either from government resourcerevenues or from industry.

While government regulators andindustry are not required to adopt theCAC’s advice, many recommendationswill likely be adopted if they result fromthorough research and vetting. All of theCAC's work should be open to thepublic. Interested citizens can attend andprovide public comment as well. Arobust public outreach andcommunications effort should bedeveloped.

Structure and Functionof a CAC

A CAC should be structured to give localcitizens a direct voice in the corporateand governmental decisions that affectthem and their communities. The groupshould become "the eyes, ears, andvoice" for the local public on industryissues.

Board of Directors:

A CAC should be directed by a Board ofDirectors (either volunteer or paid),consisting of members representing allstakeholder communities potentiallyaffected by the project. These boardseats might, for instance, representfishing, conservation, tourism,communities, etc. Representativesshould not be chosen by industry orgovernment. A CAC may also have non-

Recommendations

• establishment of a CAC should be required by government in orderfor the project to be in legal compliance,

• the CAC should exist for the lifetime of the project or projects,

• sufficient funding is essential,

• a citizens group can be independent with industry funding, withproper safeguards. Funding should come with no strings attached,

• the CAC should represent all stakeholder groups that are potentiallyaffected by the project,

• board members should be appointed by, stakeholder groups and beindependent of industry or government,

• board members do not have to be experts,

• cooperation works better than confrontation,

• agreeing on how to disagree reduces conflict,

• a clear mission and identity should be established early on.

Citizens’ Advisory Councilsfor oversight of extractive industry

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voting, members from relevantgovernmental agencies. The Boardshould meet regularly, and at eachmeeting representatives of industry andgovernment should be asked to report ontheir operations and listen to citizensconcerns. This regular interchange is vitalto the interest of each constituency, andresults in a constructive climate forproblem solving. The board is responsiblefor hiring staff, making policyrecommendations, and allocating theannual budget.

Staff:

The day-to-day activity of the CAC is theresponsibility of a paid staff and caninclude an executive director, deputies,communications manager, communityliaison, finance manager, projectmanagers, and administrativeassistance.

Committees:

Much of the work by a CAC can beconducted by Board appointed technicalcommittees. The committeesrecommend actions to the Board, andconduct research approved and financedby the Board.

Responsibilities:

The broad mission of a CAC is to enablecitizens to ensure the highest standardsof environmental and social responsibilityof an industrial project. The CAC shouldbe empowered to provide oversight onall aspects of extractive industrydevelopment in their region - permitting,exploration, production, transportation,refining, public revenue collection, riskmanagement, and environmentalcompliance. The CAC should provideoversight, advice, and advocacy onissues such as where to allowdevelopment, rates of reserve extraction,Best Available Technology (BAT)standards, accident prevention andresponse, legal liability, environmentalmonitoring, revenues and taxes, etc...It should have a voice in the selection ofexport routes and transportationmethodologies and should review andsubmit written comments on all projectoperations.

The CAC should commissionindependent scientific studies andreports on issues of relevance to thepublic, the media, government agencies,legislative bodies, and the industry.Conducted jointly with government andindustry, this research will foster a morecooperative spirit among these groups,minimizing conflict and contention.

Funding:

Substantial and stable funding for such agroup is critical. The budget should becommensurate with the CAC’sresponsibilities. One thing thatdistinguishes the CAC concept fromother advisory structures, is that the CAChas sufficient funding to conduct its work.Typically, about 1/3 of the annual budgetis devoted to staff; 1/3 to administration(office rent, supplies, equipment, audits,etc); and 1/3 for research and contracts.

There are several possibilities for financialsupport including direct funding (e.g.endowment) by the extractive industry orgovernment (with sufficient safeguardsagainst outside bias and control). Lackingdirect support by the extractivecompanies, the International FinancialInstitutions (IFIs) could require companiesreceiving loans to establish and fundsuch independent, credible publicparticipation as a condition of their loan.In the short-term, assistance of anoutside, philanthropic NGO can besolicited.

Avoiding corruption and co-option:

To prevent financial corruption, a CACshould commission annual, independentfinancial audits and report results in theirpublicly available annual reports. As well,clear conflict of interest and disclosurepolicies for directors and staff should beinstituted. CAC members should remainaccountable to their respective

stakeholder groups, and have highstandards of transparency and openness.The citizens groups represented in a CACcontrol the process - not government orindustry.

ConclusionGiven the obvious benefits to democraticgovernance and sustainabledevelopment,it is recommended that governmentsrequire the establishment of CitizensAdvisory Councils. Such councils willprovide an unprecedented level oftransparency and informed publicparticipation with regard to industrialactivities - an important prerequisite toachieving a prosperous, equitable, just,and sustainable society.

Oil Spill RiskAssessment

Once a major oil spill has occurred, restoringspill-injured ecosystems and economies isvery difficult. Although governments mustprepare to respond to spills, their mostimportant responsibility is to prevent suchevents.

For spill prevention, it is necessary to identifyareas that are at significant risk. An Oil SpillRisk Assessment should identify all potentialcauses, locations, sizes and types ofhazardous substances that may be spilled,as well as potential flow characteristics andtrajectories. The risk assessment shouldinclude a systematic analysis of ship typesand traffic patterns, cargoes, and identifynavigational characteristics that mayincrease risks. In addition, all petroleumfacilities – floating production, storage andoffloading (FPSOs), terminals, offshoreplatforms, onshore and offshore pipelines,etc. – should be thoroughly analysed.

This analysis will identify where risks ofsignificant oil pollution events lie (includingcross border) and where governmentpreventive action should focus.

In addition, the Risk Assessment shouldinclude a detailed analysis of allenvironments, species and humancommunities at risk from such major spills.

Oil Spill RiskReduction/Mitigation

With the results of the spill Risk Assessment,governments should require theimplementation of cost-effective riskreduction/mitigation measures. For oil andgas tanker traffic, such measures mayinclude:

• ship traffic management/monitoringsystems;

• weather restrictions for entering/leavingport or loading/unloading;

• additional navigational aids (buoys, lights,etc);

• ship vetting standards (double- hulls,redundant steering and engine systems,etc);

• enhanced pilotage requirements forhazardous waterways;

• rescue and/or escort tugs on standbyfor tanker transits;

• enhanced inspection protocols whiletankers are in port; and

• placing spill booms around tankers duringloading/offloading.

Recommendations

• undertake comprehensive risk and vulnerability assessments;

• require operators to carry sufficient insurance to cover potentialclean-up and compensation;

• ratify relevant international treaties and conventions;

• insist on the highest safety standards for all operations, includingdrilling, storage, transferring, and transportation;

• ensure independent SEA and ESIA;

• establish National Oil Spill Fund;

• ensure adequate response equipment and regular trainingof operators and responders.

Oil SpillPrevention and Response

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It is important for governments to identify risks caused by major oil spills, minimisethose risks as much as possible, and sufficiently prepare for a major spill should itoccur.

Spill risk reduction protocols should beinstituted for all other potential spill sources,(terminals, pipelines, platforms, FPSOs, etc).These include independent engineeringaudits commissioned by the government;regular inspection and maintenance of allfacilities; and the requirement for BestAvailable Technology.

Oil Spill Response/Contingency Plan

In addition to mitigating/reducing spill risk asmuch as possible, governments mustprepare for a major spill. They shoulddevelop a National Oil Spill ContingencyPlan, and require all petroleum facilities andship owners to have their own Oil SpillContingency Plan approved by thegovernment.

Contingency Plans should include a detailedplan for all spills, and take into account amaximum probable discharge. They shouldbe structured in a three-tier system based onsize of spill:

• Tier I – response just with local assets;

• Tier II – requiring additional assets from in-country organisations; and

• Tier III – requiring assistance ofinternational oil spill response consortia.

Oil Spill Contingency Plans should includethe following:

1. Securing the Spill Source to stop furtherrelease of oil by, for example,offloading/lightening of ruptured tankers,capping wells, clamping pipelines, etc.

2. Response Planning Standard – including arequirement for operators to be capable ofrecovering 300,000 barrels of oil from thesea surface within 72 hours, including allequipment and personnel on standby toaccomplish such a task.

3. Response Organisation – includingpersonnel who will respond to a spill, thenotification and command system, theirtraining, and the financial contractingauthority. All spill response contractorsand their equipment on-hand should beidentified.

4. A National Oil Spill Fund should beestablished to finance oil spill preventionand response efforts, based on a nominaltax of perhaps US$0.05 a barrel on allpetroleum produced, imported or shippedthrough their borders. The fund should beavailable for all governmental efforts in spillprevention and response, includingemergency response.

5. Spill Containment – sufficient oil booms,skimmers, storage equipment, personnel,and spare parts for recovered oil to be onstandby and inspected regularly. Inaddition, materials for personnelprotection from hazardous materialsshould be placed in strategic locations.

6. Dispersants Protocols –Dispersants shouldbe approved for use only in offshore areaswhere the water depth is more than 100m,where the oil/dispersant mix will notcontact any sensitive environment such asthe sea bed, mangroves and reefs, andwhen winds are in the 10-20 knot rangewith 0.5-1m wave height.

7. Ignition Protocols – detailing where andunder what conditions igniting a spill isapproved. These must include thepresence of a sufficient fire boom, and theisolation of any burning oil which mayignite additional oil (e.g. oil still aboard atanker or in tanks at a terminal).

8. Shoreline Cleanup – including a plan forrecovering oil that comes ashore, including:

• cleanup technologies to be used (includingbioremediation);

• skimmers/storage barges to receiverecovered oil;

• equipment to be used; and • personnel (and their support and training)

for any shoreline cleanup.

9. Waste Disposal – to identify locations andmethodologies for disposing of recoveredoil and oiled material, including re-processing recovered oil into usefulproducts (pavement, refining, etc.).

10. Wildlife Response – a plan to deal withwildlife in and around the spill area,including:

• how and when to attempt to recoverinjured wildlife (without scaring un-oiledwildlife into the spill);

• keeping un-oiled wildlife away from thepath of the slick;

• sanitation protocols to avoid diseasetransmission in holding facilities, and

• release protocols (zoos, into the wild, etc.).

11. Spill Drills – governments should requireall operators to respond to spill drills(announced and un-announced). Trainingof all response personnel should berequired, as well as pre-contracting andtraining local residents to assist in a spillresponse.

12. Damage Assessment – a comprehensiveenvironmental, socio-economicassessment of spill damage, identifyingthe agencies to be involved, the studiesand data collection to be conducted, andcollection of economic impactinformation from businesses to supportclaims for compensation to the spiller,their insurer or the international oil spillcompensation regimes (e.g. InternationalMaritime Organization) to which thegovernment is party.

13. Restoration – under this plan, variousenvironmental restoration measures areemployed (a) to restore any populationinjured by the spill; (b) to replace orsubstitute the injured resources; or (c) toprovide a positive environmental offset.

14. Regulatory Review – governments shouldregularly review their oil spill prevention,response and liability standards forconsistency with the highest internationalstandards.