OIL & GAS MIDSTREAM - SASB...

OIL & GAS MIDSTREAMResearch Brief

Sustainable Industry Classification System™ (SICS™) #NR0102

Research Briefing Prepared by the

Sustainability Accounting Standards Board®

June 2014

www.sasb.org© 2014 SASB™

T M

™

www.sasb.org

© 2014 SASB™

SASB’s Industry Brief provides evidence for the material sustainability issues in the industry. The

brief opens with a summary of the industry, including relevant legislative and regulatory trends

and sustainability risks and opportunities. Following this, evidence for each material sustainability

issue (in the categories of Environment, Social Capital, Human Capital, Business Model and

Innovation, and Leadership and Governance) is presented. SASB’s Industry Brief can be used

to understand the data underlying SASB Sustainability Accounting Standards. For accounting

metrics and disclosure guidance, please see SASB’s Sustainability Accounting Standards. For

information about the legal basis for SASB and SASB’s standards development process, please

see the Conceptual Framework.

SASB identifies the minimum set of sustainability issues likely to be material for companies within

a given industry. However, the final determination of materiality is the onus of the company.

Related Documents

• Non-Renewable Resources Sustainability Accounting Standards

• Industry Working Group Participants

• SASB Conceptual Framework

INDUSTRY LEAD

Himani Phadke

CONTRIBUTORS

Andrew Collins

Henrik Cotran

Stephanie Glazer

Anton Gorodniuk

Jerome Lavigne-Delville

Nashat Moin

Arturo Rodriguez

Jean Rogers

Gabriella Vozza

OIL & GAS MIDSTREAM Research Brief

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Classification System, Accounting for a Sustainable Future, and Materiality Map are trademarks

and service marks of the Sustainability Accounting Standards Board.

http://www.sasb.org/standards/download/

http://www.sasb.org/sectors/non-renewable-resources/

http://www.sasb.org/approach/conceptual-framework/

1RESEARCH BRIEF | OIL & GAS MIDSTREAM© 2014 SASB™

is being paid to enhanced conservation of

ecosystems, as well as safety of oil and gas ac-

tivities after several high-profile accidents and

spills. Furthermore, several midstream compa-

nies own or operate pipeline infrastructure that

is difficult to replicate in a particular area and

requires large capital expenditures. This creates

natural monopoly conditions. Pipeline opera-

tions are therefore heavily regulated to ensure

activities do not hinder competition. Therefore,

management (or mismanagement) of material

sustainability issues has the potential to affect

company valuation through impacts on profits,

assets, liabilities, and cost of capital.

If Oil & Gas Midstream companies reported

metrics on the material sustainability risks as

well as opportunities that could affect value

in the near- and long-term in their regulatory

filings, then investors would obtain a more

holistic and comparable view of performance.

This would include both positive and nega-

tive externalities, and the non-financial forms

of capital that the industry relies on for value

creation.

Specifically, performance on the following

sustainability issues will drive competitiveness

within the Oil & Gas Midstream industry:

• Reducing direct greenhouse gas (GHG)

emissions and harmful air pollutants;

• Mitigating ecological impacts of network

construction and operations;

• Ensuring competitive behavior through fair

pricing and access to the midstream infra-

structure; and

• Ensuring operational safety, maintaining a

culture of safety among workers, and taking

adequate actions to prevent and address

emergencies.

SUSTAINABILITY DISCLOSURE TOPICS

Environment

• Greenhouse Gas & Other Air Emissions

• Ecological Impacts

Leadership and Governance

• Competitive Behavior

• Operational Safety, Emergency

Preparedness, and Response

INTRODUCTION

The Oil & Gas Midstream industry serves as criti-

cal infrastructure for the transport and storage of

hydrocarbons that serve the energy needs of the

economy. Growth in shale oil and gas production

in the U.S. is creating the need for an expanded

midstream network of pipelines, rail, tankers,

and terminals.

While facilitating the transport of hydrocarbons

from areas of oil and gas production to con-

sumer markets, the industry essentially handles

hazardous materials, and as such, its environ-

mental and social impacts can be significant if

not properly managed. The construction and

operation of midstream assets have the potential

to create environmental and social externalities

that companies in the industry must address in

order to protect and enhance shareholder value.

In recent years, regulation and public opinion

have focused on greenhouse gas emissions from

the Non-Renewable Resources sector and their

impact on climate change. Increased attention


INDUSTRY SUMMARY

The Oil & Gas Midstream industry consists of

companies involved in the transportation or

storage of natural gas, crude oil and refined

petroleum products. Midstream natural gas

activities involve gathering, transporting, and

processing of natural gas from the wellhead,

removal of impurities, production of natural

gas liquids, storage, pipeline transport, and

the shipping, liquefaction or regasification

of liquefied natural gas (LNG). Midstream oil

activities, meanwhile, mainly involve transport

of crude oil and refined products over land, us-

ing a network of pipes and pumping stations,

as well as trucks and rail cars. Tanker ships or

barges transport oil and refined products over

oceans and rivers. Companies that operate

bulk stations and terminals, as well as those

that manufacture and install storage tanks and

pipelines, are also part of this industry.

Integrated oil and gas companies may oper-

ate across two or more parts of the oil and gas

value chain, including midstream operations

discussed here, upstream (exploration and pro-

duction) operations, and refining and marketing

operations. Sustainability disclosure topics spe-

cific to the three components of the value chain

are discussed in separate SASB Industry Briefs.

The global Oil & Gas Midstream industry has

an annual revenue of around $670 billion.1, I

The Midstream industry has on- and offshore

operations in North America, mainly in the U.S.

The midstream companies listed in Appendix I

had gross margins ranging from 2.07 percent

to 7.31 percent in fiscal year 2013, and net in-

come margins of 0.22 percent to 5.44 percent

in the same year.2

Transmission and distribution, which involve

the undertaking of both midstream companies

and utilities, comprise nearly half of the cost

of delivered gas. This signifies the importance

of pricing in this segment for the end-user

price of gas. On the other hand, distribution

and marketing costs are only one-tenth of the

price of gasoline at the pump.3, 4 In the U.S.,

the Federal Energy Regulatory Commission

(FERC) regulates the rates for interstate pipeline

transportation. Pipelines are considered natural

monopolies, with pipeline companies holding

significant market power, since pipeline infra-

structure in a particular area generally provides

control over all the oil or gas transported to

the area.5 Pipeline companies can only increase

rates if they can prove that they experienced

a rise in the cost of operations or undertook

investments to improve infrastructure. Due to

the nature of pipeline construction, there is

a high barrier to entry in this segment of the

Midstream industry.

Midstream companies also generate revenues

from fees charged for transportation of oil or

gas through other means, such as trucks or

barges, and for storage services.6 Generally, Oil

& Gas Midstream industry revenues are driven

by increases in the demand for oil and gas,

which leads to higher volumes transported and

stored. As utility companies turn increasingly to

I Industry composition is based on the mapping of the Sustainable Industry Classification System (SICSTM) to the Bloomberg Industry Classification System (BICS). A list of five representative companies appears in Appendix I.


natural gas, and as domestic unconventional

hydrocarbon production is growing, industry

revenue is likely to increase in the medium

term, particularly for pipeline companies. How-

ever, the production of oil from oil sands has

led to the transport of heavy, highly viscous,

acidic bitumen. Unlike other oils that float on

water, bitumen sinks to the bottom of water

bodies, making it difficult to clean if released

and so is more harmful to the environment.

Therefore, transport of bitumen is causing

concern from environmental groups and the

general public.7

Purchases of materials, which include fuel to

run compressors and pumps, are a major ex-

pense for the pipeline segments of the industry

– accounting for 35 percent of total revenues

for crude oil and 45 percent for gas pipelines.

Other major costs for this segment are wages

(19 percent and 13 percent of revenues re-

spectively for crude oil and gas pipelines) and

depreciation of capital equipment (14 percent

and 12 percent of revenues respectively for

crude oil and gas pipelines). While the industry

has been able to reduce expenditure on wages

with automation, the capital intensive network

has a fixed cost of depreciation every year. Fur-

thermore, maintenance charges have increased

due to the expansion and aging of the pipeline

infrastructure.8, 9 Midstream companies trans-

porting oil or gas via other means may own or

lease physical assets such as trucks, rail termi-

nals, and rail cars.10 Midstream companies are

often structured as Master Limited Partnerships

(MLPs), which are publicly-traded companies,

but organized as partnerships under state law.

For energy MLPs, unit-holders generally pay

income taxes at individual rates rather than

paying tax at the corporate rate as a business.11

Recent industry trends are likely to affect the

profitability of several market segments of the

Oil & Gas Midstream industry. The amount

of crude oil transported via rail has grown

exponentially as some refiners have expressed

a preference for the flexibility of rail in sourc-

ing crude oil from multiple markets over fixed

pipeline commitments. Even though pipeline

transport costs a third to half of rail transport,

the short-term contracts, modular nature of rail

tracks, and ability to access nearly any market

nation-wide makes rail an attractive option.12

In order to capitalize on lower domestic crude

oil prices, U.S. East Coast refiners that have

traditionally processed imported Brent crude

have announced plans to process domestic

Bakken crude oil. To gain access to Bakken

crude without delays, they are purchasing rail

cars and building rail terminals. In March 2013,

71 percent of Bakken crude was transported by

rail.13 According to the Association of American

Railroads, 97,135 carloads of crude oil were

shipped across the country in the first quarter

of 2013, a 166 percent increase over the same

period the previous year.14

As the share of rail transport continues to

grow, larger midstream companies are begin-

ning to diversify and add rail capacity. Some

midstream companies may already have more

diversified operations than their peers. For ex-

ample, Kinder Morgan delivers more than 1.6

billion cubic feet of carbon dioxide per day via

pipeline to upstream companies for enhanced

oil recovery, which involves injecting fluids or

gases to increase yield from oil fields.15

Furthermore, with the expansion of shale gas

production in the U.S., many companies are

looking to export LNG. Previously, the U.S.


depended on significant volumes of natural gas

imports, requiring LNG import terminals. With

a shift in focus to exports, many midstream

companies are looking to gain approval for

constructing and operating LNG export facili-

ties. For exports to countries that do not have

a Free Trade Agreement (FTA) with the U.S.,

companies need to get approval on a case-by-

case basis from the U.S. Department of Energy,

and Federal Energy Regulatory Commission

(FERC). Such approvals can take several months

to materialize, in the face of geopolitical,

safety, environmental, and U.S. public interest

considerations.16

LEGISLATIVE AND REGULATORY TRENDS IN THE OIL & GAS MIDSTREAM INDUSTRY

Since this industry plays a supporting role to

the broader oil and gas sector, regulations af-

fecting the demand and supply of oil and gas

and related products have a direct impact on

the industry. The natural monopoly character-

istics of some segments of the industry mean

that the industry faces heavy, direct regulation

related to competitive behavior. Addition-

ally, specific environmental and safety laws

and rules can affect operations. The follow-

ing section provides a brief summary of key

regulations and legislative efforts related to this

industry.II

While much of the industry is deregulated, the

Midstream natural gas segment is heavily regu-

lated in the U.S. by FERC. In the 1980s, FERC

implemented a series of rulings that changed

the role of pipeline companies from gas

merchants to transportation service providers.

FERC regulates construction and expansion of

gas pipeline, storage and LNG facilities, facility

abandonment, access to pipeline capacity, and

establishment of rates for service. The follow-

ing includes some of the federal programs and

regulations related to environmental and social

impacts that are reviewed for any pipeline pro-

ject impact and related compliance.17

• Endangered Species Act;

• National Historic Preservation Act;

• Coastal Zone Management Act;

• Clean Water Act (CWA), including the

National Pollutant Discharge Elimination

System program;

• Clean Air Act (CAA);

• Archaeological and Historic Act;

• Wild and Scenic Rivers Act;

• National Wilderness Act;

• National Parks and Recreation Act;

• Magnuson-Stevens Fishery Conservation and

Management Act;

• New Source Performance Standards (NSPS);

and

• Oil Pollution Act.

Pipeline companies are also subject to regu-

lations from state utility commissions for

II This section does not purport to contain a comprehensive review of all regulations related to this industry, but is intended to highlight some ways in which regulatory trends are impacting the industry.


intra-state operations.18 FERC also regulates

rates and access to oil pipelines, but does not

oversee their construction. Instead, state regu-

lations govern route approval for oil pipeline

construction. State or federal environmental

permits for pipeline construction typically

involve an environmental assessment, which

must address potential environmental impacts

and prevention or mitigation measures.19

Furthermore, several regulations govern air

emissions from the Midstream industry’s opera-

tions. Under the U.S. Environmental Protection

Agency’s (EPA) CAA rules, stationary emitters

of large quantities of greenhouse gases (GHGs)

are required to report their emissions to the

agency. California’s cap-and-trade system, As-

sembly Bill 32 (AB32), puts a limit on emissions

from the energy-intensive process of cooling,

liquefying, pressurizing, and transporting gas.20

The industry’s activities are also subject to the

federal New Source Performance Standards

(NSPS), which include standards on volatile

organic compounds and sulfur dioxide for the

oil and gas industry.

In addition, the U.S. Department of Trans-

portation (DOT), U.S. Fish & Wildlife Services,

and individual states have laws governing

the industry. The DOT’s Pipeline and Hazard-

ous Materials Safety Administration (PHMSA)

establishes national policy, sets and enforces

standards, and conducts research to prevent

incidents related to hazardous materials trans-

portation.21

The Hazardous Liquids Pipeline Safety Act (HLP-

SA) of 1979 (amended by the Pipeline Safety

Improvement Act of 2002 and the Pipeline

Inspection, Protection, Enforcement and Safety

Act of 2006) includes safety requirements

for the design, installation, testing, construc-

tion, operation, replacement, and manage-

ment of pipeline and tank facilities. Pipeline

operators are required to adopt measures

designed to reduce the environmental impact

of oil discharges from on-shore oil pipelines,

including maintaining a comprehensive spill

response plan and performing related train-

ing for personnel. Furthermore, the Pipeline

Safety, Regulatory Certainty and Job Creation

Act of 2011 increased maximum penalties for

violating federal pipeline safety regulations. It

also directs the DOT to conduct further studies

on issues, such as reviewing certain pipeline

exemptions.22

Nearly half of all crude oil moves by water

worldwide.23 The Jones Act of 1920 (also

known as the Merchant Marine Act) requires

all goods transported by water between U.S.

ports to be carried in U.S.-flagged ships. The

U.S. Coast Guard is primarily responsible for

implementing the Act to Prevent Pollution from

Ships, a U.S. law that implements the provi-

sions of the International Convention for the

Prevention of Pollution from Ships. This applies

to all U.S.-flagged ships anywhere in the world,

plus all foreign-flagged ships in navigable wa-

ters and ports under U.S. jurisdiction. Violators

of the act are subject to fines for discharges

into the sea and air.24


Environmental laws affecting upstream or

downstream oil and gas activities or related

industries could also affect Midstream industry

operations. The administration of President

Obama has focused on mitigating carbon

emissions. The administration recently pro-

posed new rules to reduce emissions from U.S.

power plants by 30 percent from 2005 levels

by 2030.25 As a result, plants polluting the most

(i.e. coal-fired power plants) may be required

to limit emissions. This is likely to increase

the fraction of power that is generated from

natural gas, boosting revenue for companies in

this industry.

Furthermore, rules related to market manipula-

tion and price fixing by FERC and other agen-

cies could affect the Midstream industry. The

Dodd-Frank Wall Street Reform and Consumer

Protection Act of 2010 expanded the powers

of the U.S. Commodity Futures Trading Com-

mission (CFTC) to prosecute parties involved

in the manipulation of commodities markets.

Following this, the CFTC issued Anti-Manipu-

lation and Anti-Fraud Rules, prohibiting price

manipulation in swaps, futures, and physical

commodities trading.26 Similarly, based on au-

thority provided by Congress, the Federal Trade

Commission (FTC) issued a rule prohibiting

market manipulation specifically in the whole-

sale petroleum industry, which became effec-

tive in 2009. The rule relates to “the purchase

or sale of crude oil, gasoline, or petroleum

distillates at wholesale, and the reporting of

false or misleading information related to the

wholesale price of those products.”27 The FTC

is also a member of the Oil and Gas Price Fraud

Working Group, an interagency effort by state

and federal authorities to monitor and share

information on the oil and gas markets.28

SUSTAINABILITY-RELATED RISKS & OPPORTUNITIES

Industry drivers and recent regulations suggest

that while traditional value drivers will continue

to impact financial performance, intangible as-

sets such as environmental and social capitals,

company leadership and governance, and

the company’s ability to innovate to address

environmental and social issues are likely to

contribute increasingly to financial and busi-

ness value.

Broad industry trends and characteristics are

driving the importance of sustainability perfor-

mance in the Oil & Gas Midstream industry:

• Use of fossil fuels: The Midstream industry

is capital-intensive and relies on fossil fuels

to transport oil and gas. As a result, it is

impacted by rising fuel costs and stringent

air emissions regulations.

• Negative externalities: Regular opera-

tions, accidental leaks, spills, and explosions

from the extensive network of pipelines,

railroads, and ship tankers used to transport

oil and gas can cause significant impacts on

terrestrial and marine biodiversity. In addi-

tion, the transport process burns fossil fuels

and releases GHGs and other harmful gases

that lead to environmental degradation and

have negative health impacts.

• Social license to operate: Pipeline com-

panies in particular rely on support from

communities to grant them rights-of-way for

their pipelines. Negative impacts, or nega-

tive public perceptions of such companies,


are therefore likely to disrupt or destroy this

social license to operate.

As described above, the regulatory and legisla-

tive environment surrounding the Oil & Gas

Midstream industry emphasizes the importance

of sustainability management and perfor-

mance. Specifically, recent trends suggest a

regulatory emphasis on environmental protec-

tion, which will serve to align the interests of

society with those of investors.

The following section provides a brief descrip-

tion of each sustainability issue that is likely to

have material implications for companies in the

Oil & Gas Midstream industry. This includes an

explanation of how the issue could impact val-

uation and evidence of actual financial impact.

Further information on the nature of the value

impact, based on SASB’s research and analysis,

is provided in Appendix IIA and IIB. Appendix

IIA also provides a summary of the evidence

of investor interest in the issues. This is based

on a systematic analysis of companies’ 10-K

and 20-F filings, shareholder resolutions, and

other public documents, as well as the results

of consultation with experts participating in an

industry working group convened by SASB.

A summary of the recommended disclosure

framework and accounting metrics appears in

Appendix III. The complete SASB standards for

the industry, including technical protocols, can

be downloaded from www.sasb.org.

ENVIRONMENT

The environmental dimension of sustainability

includes corporate impacts on the environ-

ment. This could be through the use of non-re-

newable natural resources as inputs to the fac-

tors of production (e.g., minerals, ecosystems,

and biodiversity) or environmental externalities

and harmful releases in the environment, such

as air and water pollution, waste disposal, and

greenhouse gas emissions.

Although midstream companies are not

responsible for drilling and extracting natural

resources, the construction and operation of

pipelines, rail tracks, compressor stations, stor-

age facilities, and terminals can have significant

ongoing impacts on the environment and hu-

man health. In addition to complying with nu-

merous laws and regulations, companies that

are mindful of their impacts on climate, local

air quality, and ecosystems will find themselves

better positioned to expand their services.

Greenhouse Gas & Other Air Emissions

The Oil & Gas Midstream industry generates

significant quantities of GHGs and air emis-

sions that can be hazardous to human health

and the environment. Operations can be

impacted directly by regulations limiting and/or


pricing carbon emissions or other air pollut-

ants. Community opposition to the siting of

pipelines or road and rail routes can also affect

midstream operations, particularly as new

routes are required to transport hydrocarbons

from areas of expanding unconventional oil

and gas production. Uncertainties about the

nature of future GHG regulations also create

operational risks for companies. On the other

hand, operational efficiencies could be gained

from managing fugitive emissions of saleable

natural gas, resulting in higher revenues and

lower costs.

The primary sources of air emissions in the Oil

& Gas Midstream industry include: compres-

sor engine exhausts, oil and condensate tank

vents, natural gas processing, and fugitive

emissions. The industry also has emissions

from trucks, trains, and ships. Air emissions

include: carbon dioxide, methane, ethane,

benzene, toluene, xylene, carbon monoxide,

and ozone.29 Inhaling these vapors or being

in contact with contaminated soil or water

can pose risks to human health. High levels of

emissions for some of these pollutants have

been detected near pipelines and compres-

sor stations in Texas. At times, these emissions

have exceeded human health standards.30

Fugitive emissions or gas leaked during the

transportation of natural gas are difficult to

monitor and address. Methane is the primary

component of natural gas and its global warm-

ing potential is 21 times that of carbon dioxide.

While natural gas is a cleaner burning fuel

than coal (a shift from coal to gas in electricity

generation is expected to provide a 50 percent

reduction in GHG emissions), leakage of the

highly potent GHG methane from the natural

gas value chain has the potential to lower the

extent of benefits significantly.31 As a result, the

management of methane emissions from natu-

ral gas transport and storage has emerged as a

major operational, reputational, and regulatory

risk for midstream companies. This is especially

true when considering the expansion in natural

gas production from shale resources.

Companies that cost-effectively reduce emis-

sions from their operations by implementing

innovative monitoring and mitigation technolo-

gies and processes and improving fuel efficiency

could reduce regulatory risks and enjoy opera-

tional efficiencies. Company performance in this

area can be analyzed in a cost-beneficial way

internally and externally through the following

direct or indirect performance metrics (see Ap-

pendix III for metrics with their full detail):

• Scope 1 emissions, percentage covered

under a regulatory program;

• Long- and short-term strategy to manage

Scope 1 emissions; and

• Air emissions from industry-specific

pollutants.

Evidence

Financial impacts on midstream companies

from their GHG and other air emissions could

be of three types: additional costs from regula-

tions of GHGs or air emissions that aim to


internalize the societal costs of emissions, po-

tential for generating additional revenues from

capturing and selling GHGs like carbon dioxide

and methane, and cost savings from enhanced

fuel efficiency.

Under the CAA, facilities in petroleum and

natural gas systems are required to report emis-

sions from combustion, venting, equipment

leaks, and flaring. Total GHG emissions in 2012

from natural gas processing, transmission,

underground storage, and LNG imports/exports

reported to the EPA amounted to around 85

million metric tons of carbon dioxide equiva-

lent (CO2-e), or 39 percent of the total from

petroleum and natural gas systems.32 Given

the significant contribution of petroleum and

natural gas systems to global GHGs and other

harmful air pollutants, the EPA introduced rules

in 2012 for oil and gas companies to reduce

emissions. These include, for example, require-

ments under the NSPS for new storage tanks at

compressor stations to reduce volatile organic

compound (VOC) emissions by at least 95 per-

cent (for tanks with VOC emissions of six tons

a year or more).33

Similarly, state-level legislation and regula-

tions can also affect operations of midstream

companies with significant GHG and other air

emissions. As a result of California’s AB32 cap-

and-trade system, several midstream facilities,

including compressor and storage stations, are

required to reduce emissions or buy carbon

credits (or permissions to emit) from the mar-

ket.34 Both reduction of emissions and purchase

of credits pose additional costs to the industry.

Regulations in this area are also constantly

evolving, creating operational risks for the

industry. For example, California is also con-

ducting field measurements of fugitive meth-

ane emissions from natural gas distribution

pipelines. The results of the study are expected

to inform the cost-effectiveness of developing

regulations specific to fugitive GHG emissions

from these operations.35

Enbridge Energy Management LLC reports,

in its fiscal year (FY) 2012 Form 10-K, that as

a result of the CAA (as well as the CWA) the

company will “incur costs in the next several

years for air pollution control equipment and

spill prevention measures in connection with

maintaining existing facilities and obtaining

permits and approvals for any new or acquired

facilities.”36 They also acknowledge that com-

pliance with NSPS will incur additional costs.

Violations of air emissions rules could lead to

regulatory fines and penalties, including ad-

ditional measures to control emissions that may

entail increased operating costs or capital ex-

penditures. ConocoPhillips, an exploration and

production company with pipeline distribution

facilities, agreed to pay $175,000 to the EPA

for violations of the Title V Federal Operating

Permit Program of the CAA at two compres-

sor stations in Colorado.37 Measures taken as a

result of the settlement will significantly reduce

emissions of VOCs, hazardous air pollutants,

and carbon monoxide. In addition, the com-

pany is expected to conserve 5.5 million cubic

feet of gas annually.38

Companies like Oneok Partners are cognizant

of the implications of future GHG regulations

for their industry. The company mentions in its

Form 10-K for FY 2013 that “[f]uture legisla-

tion and/or regulation designed to reduce

[GHG] emissions could make some of our

activities uneconomic to maintain or operate.”


The company says that it may not be able to

pass on all the higher costs to its customers or

recover all compliance costs, adversely affect-

ing the company’s future results of operations,

cash flows, or financial condition. However,

according to the company: “Although the

regulation of [GHG] emissions may have a ma-

terial impact on our operations and rates, we

believe it is premature to attempt to quantify

the potential costs of the impacts.“39

Management of GHG emissions can also be an

area of opportunity for the oil and gas indus-

try. In 2010, ExxonMobil Corp., an integrated

oil and gas company, captured and sold four

million metric tons of carbon dioxide from its

gas processing facilities to area oil producers

for enhanced oil recovery.40 Furthermore, most

methane control technologies have payback

periods of less than three years. The Natu-

ral Resource Defense Council estimates that

control processes could generate $2 billion in

annual revenues for the oil and gas industries

and reduce methane emissions by 80 percent.41

Value Impact

Regulation of GHG emissions results in direct,

chronic impacts on the industry. Midstream

companies could face significantly higher op-

erational costs and capital expenditures, either

through monitoring or reduction of emissions

or purchase of carbon credits. Regional and

federal regulations on other air emissions

can impose additional costs of reporting and

compliance, as well as one-time costs and

contingent liabilities related to fines and settle-

ments for violations of the law. Human health

consequences of localized air emissions can

also impact a company’s reputation and brand

value, and ultimately its intangible assets.

Companies with significant GHG emissions

could also face a higher risk profile, and

therefore cost of capital, due to the uncertain

nature of future (likely more stringent)

GHG regulations.

In particular, increasing concerns about

methane leakage are likely to increase future

regulatory risks. The probability and magnitude

of the impact of GHG emissions and other air

emissions on financial results in this industry

are likely to increase in the medium term.

Ecological Impacts

Storage and transport of the vast quantities

of crude oil, natural gas, and related products

produced worldwide to refineries and end

users through a vast network of maritime

transportation, pipelines, trains, and trucks has

considerable risk to the environment and local

communities. Of these, pipeline construction

and operations can have the most significant

ecological impacts, including habitat loss and

alteration through land use. Leaks and acciden-

tal discharges can also damage ecosystems in

the areas of operation.III

Pipelines can impact the environment in sev-

eral ways, including natural habitat loss and

III The impacts of low probability, high magnitude spills and explosions are discussed further under the topic of Operational Safety, Emergency Preparedness and Response.


fragmentation, changes in species movement,

and sedimentation. Although most pipelines

are buried, their construction, monitoring, and

maintenance require clearing and maintaining

open easements over ecologically-sensitive land

and private property. A pipeline right-of-way

(ROW) grants the pipeline operator a “per-

manent, limited interest in the land.” Among

other things, this enables the pipeline company

to install, operate, alter, repair, maintain, re-

place, and protect one or more pipelines within

the designated easement.42 While the widths of

pipelines vary, during operations approximately

50 feet of permanent easement is maintained

over the pipes. It may be wider during the

construction phase.43

Such pipeline rights-of-way can reduce water

quality, cause extensive soil disturbance during

construction, and increase risk of erosion and

sedimentation. They can also remove vegeta-

tion and wetlands, and disturb wildlife habi-

tat by creating a significant and permanent

fragmenting feature through natural habitats.

Offshore pipelines can also have significant

environmental impacts: Disturbance of surface

sediments, their communities, and hard sub-

strate communities can result in long-lasting

alteration of the bottom topography.44

Regulatory agencies, supported by legislation

that protects endangered species and ecologi-

cally sensitive areas, require plans to mitigate

or remediate negative ecological impacts prior

to project approval. Midstream companies

could mitigate operational risks by incorporat-

ing considerations of ecological impacts in their

project planning, including optimizing existing

rights-of-way, and preventing and proactively

managing ecological impacts during construc-

tion or operations. They could also improve

reputation, and therefore, long-term growth

by gaining easier access to new projects and

sources of revenue.

This is particularly important as the number

and size of protected conservation areas has

increased exponentially around the world over

the past several years.45 As oil and gas com-

panies attempt to access more remote, eco-

logically sensitive locations like the Arctic and

deep-water resources, and as growth in uncon-

ventional hydrocarbon production necessitates

an expanding midstream infrastructure, risks

that pipeline routes and midstream operations

will affect biodiversity, and therefore, company

value could be exacerbated.

Company performance in this area can be

analyzed in a cost-beneficial way internally

and externally through the following direct or

indirect performance metrics (see Appendix III

for metrics with their full detail):

• Environmental management policies and

practices for active operations;

• Land owned, leased, and/or operated within

areas of protected conservation status or

endangered species’ habitat;

• Disturbed land and restoration of impacted

area; and

• Number and volume of spills, volumes

in ecologically sensitive areas, volumes

recovered.


Evidence

Ecological considerations factor into planning

the locations of pipelines and terminals and

have the potential to affect project costs. These

considerations are often driven by legislation

that protects endangered species. TransCana-

da’s proposed route for the Keystone XL pipe-

line was revised several times to reduce risks

to an array of wetlands and dunes near the

Ogallala aquifer in Nebraska.46 Furthermore,

the U.S. Fish and Wildlife Service required

TransCanada, the Keystone XL pipeline builder,

to train field workers on the correct procedure

to clear land to reduce threats to the American

burying beetle and other endangered species.47

This is a heavily regulated industry with many

acts governing the planning and permitting

processes. However, concerns remain over envi-

ronmental and social impacts that might affect

project development, despite well-established

environmental laws in North America protect-

ing biodiversity and ecosystems. For example,

there are organized campaigns against — and

public opposition to — the construction of

the Keystone XL pipeline due to its potential

impacts on the environment. TransCanada

had one of many regulatory hurdles to clear in

November 2011: That month, President Obama

cited environmental concerns about the pipe-

line’s route in Nebraska to delay a final decision

on the pipeline. In April 2014, the U.S. State

Department announced an indefinite exten-

sion to an inter-agency review of the pipeline.

The Department cited ongoing litigation over

the constitutionality of a Nebraska law that

allowed the pipeline’s route through the state.48

Given regulatory uncertainty and public opposi-

tion to the Keystone XL pipeline, TransCanada

is considering building rail loading and unload-

ing facilities, a more expensive option com-

pared to the pipeline, which would also require

the company to modify its existing contractual

relationships with customers.49 The company

has already spent $2 billion preparing the $5.4

billion Keystone XL pipeline as it awaits regula-

tory approval.50

As concerns over ecological impacts grow,

companies could face the risk of additional

areas being designated as protected under new

or existing laws. In fact, from 1990 to 2010,

global protected area coverage increased from

8.8 percent to 12.7 percent on land, and from

0.9 percent to 4 percent in marine areas under

national jurisdiction.51

Midstream companies recognize the costs

and operational risks associated with regula-

tory requirements around biodiversity protec-

tion. Enterprise Products Partners notes in its

Form 10-K for FY 2013: “Some of our current

or future planned facilities may be located

in areas that are designated as a habitat for

endangered or threatened species and, if so,

may limit or impose increased costs on facility

construction or operation. In addition, the des-

ignation of previously unidentified endangered

or threatened species could cause us to incur

additional costs or become subject to operat-

ing restrictions or bans in the affected areas.”52

Companies face the risk of lawsuits for ecologi-

cal impacts due to operational spills, leaks, and

clearing of vital ecosystems. In 2013, Southeast


Louisiana Flood Protection Authority-East filed

a lawsuit against a number of oil and gas and

pipeline companies. The flood protection agen-

cy blamed them for the ecological destruction

of coastal wetlands as a result of the network

of thousands of miles of oil and gas pipeline

canals in the area. The agency alleges that oil

and gas production and transportation resulted

in killing vegetation, eroding soil, and allow-

ing salt water to spread into freshwater areas.

These activities also affected the ecosystem’s

ability to provide a natural defense to storms in

the state of Louisiana.53

Oil and gas activities, including pipeline opera-

tions, allegedly have taken up $470 billion of

Louisiana’s natural resources over the previous

20 years. The flood protection agency’s lawsuit

seeks abatement and restoration of affected

coastal lands. According to the U.S. Geologi-

cal survey, oil and gas activities are among the

primary causes of coastal land loss. Since 1932,

the state has lost more than 1,900 square

miles of coastal lands. In the coming decades,

an additional 700 square miles are expected to

be lost.54

Midstream operations in the Arctic can be par-

ticularly challenging, with risks of substantial

ecological impacts and significant fines. Inte-

grated oil company BP was fined $25 million

in 2011 to settle charges related to two spills

occurring from its pipeline network in Alaska

in 2006 and failure to comply with a govern-

ment order to maintain the pipelines to prevent

corrosion. The poor maintenance led to the

discharge of more than 5,000 barrels of oil into

the Arctic tundra and into a lake on Alaska’s

North Slope.55

Value Impact

Minimizing risks and impacts to biodiversity

and ecosystems can help companies manage

operational risk, which can have direct impacts

on costs and contingent liabilities. A higher risk

profile could affect cost of capital. U.S. Federal

agencies require plans to mitigate or remediate

negative ecological impacts prior to approval.

Together with regulatory compliance, this

could require significant capital and operational

expenditures. Operating in ecologically sensi-

tive areas can lead to delays in project approval

or completion. It could also require increased

expenditures for pursuing alternative options.

For projects with large capital requirements,

this could affect overall profitability. Negative

ecological impacts could also result in sig-

nificant litigation costs, regulatory penalties,

remediation costs, or contingent liabilities.

A company’s reputation in managing ecological

impacts could also have chronic effects on its

growth over the long-term. A stronger license

to operate through best practices in biodiver-

sity management could enable the company to

access new locations for its transportation and

storage infrastructure, and therefore, expand

operations and revenues.

With the expansion of midstream operations to

accommodate the growth in North American

oil and gas production, and increasing con-

cerns and protection of ecologically sensitive

areas and species, the probability and magni-

tude of impact on financial results from this

issue are likely to increase in the future.


SOCIAL CAPITAL

Social capital relates to the perceived role of

business in society, or the expectation of busi-

ness contribution to society in return for its

license to operate. It addresses the manage-

ment of relationships with key outside stake-

holders, such as customers, local communities,

the public, and the government. It includes

issues around access to products and services,

affordability, responsible business practices in

marketing, and customer privacy.

Midstream industry operations rely on pipeline

rights-of-way, requiring negotiations with local

communities and individual property owners.

These negotiations can hinge on the significant

social externalities that midstream operations

in general have the potential to generate. The

release of air pollutants, as well as the safety

and integrity of operations, are particularly

significant. These impacts are addressed by the

disclosure topics of “Greenhouse Gas & Other

Air Emissions,” as well as “Operational Safety,

Emergency Preparedness, and Response.”

LEADERSHIP AND GOVERNANCE

As applied to sustainability, governance

involves the management of issues that are

inherent to the business model or common

practice in the industry and that are in po-

tential conflict with the interest of broader

stakeholder groups (government, community,

customers, and employees) and therefore cre-

ate a potential liability, or worse, a limitation

or removal of license to operate. This includes

risk management, safety management, supply

chain and resource management, conflict of

interest, anti-competitive behavior, and corrup-

tion and bribery.

For midstream companies, activities that

restrict competition, create unfair pricing, or

result in market manipulation can have signifi-

cant repercussions due to regulatory action.

In addition, maintaining the safety of vast

midstream assets is important for a company’s

social license to operate and to minimize

operational risks.

Competitive Behavior

Companies that own natural gas pipelines and

storage facilities face numerous and constantly

changing regulations from the FERC in all

aspects of their operations, including rates

charged, access offered to pipelines, and the

siting and construction of new facilities. Pipe-

line companies enjoy a natural monopoly, and

FERC regulations ensure that companies do

not abuse this position through unfair pricing,

discriminatory service, or by other means.

Furthermore, concerned about the impacts of

oil and gas market distortions on American

consumers and businesses, regulators in the

U.S. have focused on and investigated market

manipulation by oil and gas companies, includ-

ing midstream companies in recent years. This

includes new market manipulation regulations

from the FTC and the CFTC, with a potential

impact on the Midstream industry.

Midstream companies face uncertainty in

relation to their ability to change the rates


charged, which could affect their ability to re-

cover costs. Companies could face complaints

from market participants —complaints that

result in prospective rate changes or compen-

sation payments. Companies may also face

penalties from the FERC or other agencies for

violating regulations governing competitive

behavior.56






• Amount of legal and regulatory fines and

settlements associated with federal pipeline

and storage regulations.

Evidence

Midstream companies have faced numerous

fines and penalties related to manipulation of

prices, unauthorized fees, and unlawful use of

pipeline capacity. These penalties could have a

chronic impact on company value. For exam-

ple, Enterprise Texas, an affiliate of midstream

company Enterprise Product Partners, had to

pay a civil penalty of $315,000 in 2013 under

an agreement reached with the FERC related to

unauthorized fees charged to customers of its

pipelines between 2004 and 2012. The compa-

ny agreed not to pass through any of the costs

of the penalty to its present or future custom-

ers, and also refunded $7.2 million to custom-

ers.57 In 2009, the FERC fined some midstream

companies more than $9.5 million for alleged

violations of rules related to pipeline capacity

utilization. The FERC combined civil penalties

with certain compliance measures, and in some

cases, disgorgement of unjust profits.58

Companies could also face significant fines

from violating market manipulation rules

implemented by other agencies. Regulations

issued by the FTC in 2009 to prohibit market

manipulation in the petroleum industry, includ-

ing midstream companies, carry civil penalties

of up to $1 million per violation per day.59

Market manipulation actions by midstream

companies could also affect their license to op-

erate. The company Energy Transfer highlights

this concern in its Form 10-K for FY 2012, stat-

ing, “Should we violate laws and regulations

prohibiting market manipulation, we could be

subject to substantial fines and penalties and

lose the governmental authorizations needed

conduct our businesses.”60 [sic] Furthermore,

in their Form 10-K filings, several midstream

companies highlight the risk to value from

third-party damages claims related to market

manipulation.61 Oneok Inc. reports in its Form

10-K for FY 2013 that it could face material

costs in the future related to ongoing litigation

claiming damages for alleged market manipu-

lation or false reporting of prices to gas index

publications by the company and others.62

Value Impact

Companies’ ability to manage the chang-

ing legal and regulatory environment, as well

as their ability to ensure their operations are

competitive, could have both acute and chronic

impacts on value. Acute impacts could arise


from major regulatory sanctions in the form of

extraordinary expenses and contingent liabili-

ties to compensate third parties. Such rulings

may also impose limits on companies’ ability

to charge higher prices and restrict their license

to operate in certain markets, with dual im-

pacts on revenue in terms of market share

and pricing.

Over the long-term, repeated violations —

whether resulting in minor or significant regu-

latory penalties at the time — could affect a

company’s reputation. This chronic effect could

restrict a company’s ability to gain regulatory

approvals and expand operations, limiting its

long-term revenue growth potential and raising

its risk profile and therefore, cost of capital.

Operational Safety, Emergency Preparedness, and Response

Operating a vast network of pipelines, rail

cars, or trucks necessitates vigilance in relation

to the integrity of operations and prepared-

ness for emergency situations like accidents,

spills, or leaks. An aging pipeline infrastructure

could increase the likelihood of such incidents

without proper inspection, maintenance, and

retrofitting. Spills or accidents resulting in un-

intended releases of hydrocarbons could have

wide-ranging impacts on the environment,

employees, and local communities. These

products have the potential to combust and

accidents can result in fires or explosions. They

may release toxic chemicals into the environ-

ment, affecting the health of both employees

and local community members. Furthermore,

the physical properties of crude oil and its

derivative products can hinder the normal

functioning of organisms, such as marine life

and vegetation.

For the midstream gas segment, the main risks

are pipeline explosions and environmental

contamination from compressor stations. For

transportation of oil, in addition to pipeline

leaks, accidents of oil tankers or barges and

spills from rail cars are also quite common.

These factors could erode a company’s social

license to operate. Significant events could

create one-time costs from fines and corrective

actions and contingent liabilities for environ-

mental remediation or damages in lawsuits.

Spills also represent lost revenues. Performance

on operational safety could affect a company’s

risk profile over the long-term.

In order to avoid or minimize such risks,

investigations of past incidents show that it is

extremely important to develop a strong safety

culture, and establish a thorough and system-

atic approach to safety and risk management.

This includes emergency preparedness and

response and operational integrity, across the

company and in relationships with contractors.

The physical properties of the products being

transported can have significant implications

for safety procedures and emergency prepared-

ness plans.







• Number of reportable pipeline incidents,

percentage significant;

• Number of releases from rail transportation;

and

• Management systems for a culture of safety

and preparedness.

Evidence

Spills, leaks, and explosions of oil and gas

during transportation or storage are frequent

occurrences, representing not only costs for

companies, but also lost revenues. Ensuring

the integrity of the 2.5 million miles of pipe-

lines that are responsible for delivering oil

and gas to markets across the U.S. is critical.

Pipelines have an average of 280 spills a year,

with nearly 3.5 million gallons of oil spilled

from pipelines each year in the past decade.63

In 2013, there were 622 reported incidents,

resulting in 10 fatalities, over $310 million in

property damage, and 89,000 net barrels of

oil lost. A majority of those incidents were

the result of materials or welding defects and

equipment failures.64

Transporting crude oil by rail is also risky.

According to the Association of American Rail-

roads, the rate of hazardous material spills by

railroads is about 2.7 times greater than pipe-

lines.65 Between 2002 and 2012, U.S. railroads

suffered 129 spill incidents resulting in 95,256

gallons of lost crude oil.66

Transportation by marine tankers, although

likely not under the direct control of midstream

companies, also carries risks of spills and leaks.

According to the International Tanker Owners

Pollution Federation Limited, approximately

5.75 million metric tons of oil were lost as a

result of tanker incidents between 1970 and

2012.67 While tanker safety has improved

over time, in 2012 there were seven spills that

discharged an average of 100 metric tons per

incident.68

Incidents and incident response can have

significant impacts on the reputation of oil and

gas midstream companies and create substan-

tial one-time costs or contingent liabilities. In a

related industry, Pacific Gas & Electric (PG&E),

one of the largest providers of natural gas and

electricity, could face $2.25 billion in penal-

ties for a deadly gas pipeline explosion in San

Bruno in 2010. That incident burned down

several houses and resulted in eight deaths and

many injuries.69 A division of California Public

Utilities Commission recommended the fine,

which, if approved, would be the largest ever

imposed by a state regulatory agency. It could

lead to bankruptcy for PG&E. The company

was charged with 12 pipeline safety violations

in a criminal case related to the 2010 explosion

in April 2014. Regulators investigating the blast

determined that inadequate quality controls,

deficient management, and a corporate culture

that emphasized profits over safety caused the

accident. Mandated safety work and other

expenses as a result of the accident cost the

company $1.4 billion.70

Other incidents highlight the potential chan-

nels of impact on company value. The state of

Arkansas is seeking civil penalties for alleged

violations of state waste and pollution laws by

Exxon as well as liability for damages related

to a pipeline spill of about 5,000 barrels of


heavy Canadian crude oil that contaminated

22 homes, forcing residents to evacuate.71 In

another case, Magellan Midstream Partners,

which owns the longest refined petroleum

product domestic pipeline, agreed to pay $5.3

million in civil penalties for violations of the

CWA, due to discharges from its pipelines in six

states over ten years.72

In 2010, Enbridge Energy Partners LLP re-

ported a pipeline rupture in Michigan. The leak

released 843,000 gallons of oil into Talmadge

Creek and Kalamazoo River.73 The diluted bitu-

men released in the spill sank to the bottom

of the waterways. Despite the costly clean up

(upwards of $810 million), the EPA estimates

that about 180,000 gallons remain in the river

bottom sediment.74 The civil penalty was a

record $3.7 million.75

Regulations related to pipeline safety are

continually evolving and becoming more strin-

gent as a result of the significant impacts on

communities, workers, and the environment

from pipeline incidents. The 2002 and 2006

amendments to the HLPSA resulted in the DOT

adopting rules that require pipeline operators

to implement integrity management programs,

including more frequent inspections, correction

of identified anomalies and other measures, to

ensure pipeline safety in “high consequence

areas.” Such locations are high population

areas, areas unusually sensitive to environ-

mental damage, and commercially navigable

waterways.76 Federal pipeline safety regulations

also require operators to have public aware-

ness programs to educate the public, appropri-

ate government organizations, and persons

engaged in excavation-related activities.77

In addition, 2012 PHMSA guidance on record

keeping for the industry could in fact affect

revenues. According to Kinder Morgan’s Form

10-K for FY 2013, failure to locate such records

or to verify maximum pressures at which

pipelines are operating could result in reduc-

tions of allowable operating pressures. This, in

turn, would reduce available capacity on their

pipelines.78

Midstream companies with rail cars also face

risks from oil spills and explosions, as well as

heightened public and regulatory concerns. For

example, in July 2013, 72 carloads of crude oil

transported by U.S.-based Rail World Inc. broke

loose from the tracks in Canada and resulted

in 47 deaths. The incident also destroyed many

homes, businesses, a municipal library, and a

bar.79 Concerns arising from these incidents are

leading to new rail safety rules. The DOT is pro-

posing new rules for a comprehensive update

to structural standards for tank cars and also to

operational standards. These rules are expected

to create additional costs for both railroad

companies and for midstream companies, who

would have to bear the cost of retrofitting or

replacing rail tank cars.80

Many of the leading midstream companies

discuss in their Form 10-K filings the possibility

of significant operating and capital expendi-

tures related to operational safety, and higher

expenditures with new and future regulations.

For example, according to the Form 10-K

disclosure for FY 2013 by Plains Group Hold-

ing, the company had significant and increas-

ing capital and operating expenditures in the

past few years, in order to meet U.S. DoT rules

regarding pipeline integrity. The company


states that in the U.S., costs associated with

the inspection, testing and correction of identi-

fied anomalies were approximately $57 million

in 2013, $39 million in 2012, and $32 million

in 2011. It expects significant additional costs if

new or more strictly interpreted pipeline safety

requirements are implemented.81

Between 2010 and 2012, Sunoco Logistics

experienced releases at different pipeline and

pump station facilities. This required the com-

pany to implement corrective actions and envi-

ronmental remediation pursuant to orders from

the EPA and PHMSA. The company also had

to pay a minor settlement amount in relation

to one such incident.82 Such smaller incidents

are unlikely to have acute, material impacts

on company value in the short-term. However,

their cumulative effect over the medium- to

long-term could erode a company’s license to

operate, and could invite greater regulatory

scrutiny, with higher costs.

Value Impact

Recurring accidents can have a chronic impact

on value over the long-term, by affecting a

company’s reputation with local communities,

ultimately affecting its social license to oper-

ate. This can impact a company’s ability to gain

rights-of-way and new sources of revenue.

Companies seen as having a poor safety record

could also face higher insurance premiums

and risk premiums. This affects both operating

costs and the cost of capital.

Acute impacts on value can arise from high

magnitude, but low probability events. These

impacts include extraordinary legal costs and

contingent liabilities resulting from regulatory

actions and private lawsuits. Safety culture can

contribute to lower the probability and mag-

nitude of accidents, with significant impact on

companies’ risk profile and cost of capital.


APPENDIX I: Five Representative Companies

Oil & Gas MidstreamIV

COMPANY NAME (TICKER SYMBOL)

Plains All American Pipeline (PAA)

Enterprise Products Partners (EPD)

Energy Transfer Equity (ETE)

Global Partners (GLP)

Sunoco Logistics Partners (SXL)

IV This list includes five companies representative of the Oil & Gas Midstream industry and its activities. This includes only companies for which the Oil & Gas Midstream industry is the primary industry, that are U.S.-listed but are not primarily traded Over-the-Counter, and where at least 20 percent of revenue is generated by activities in this industry, according to the latest information available on Bloomberg Professional Services. Retrieved on 30 May 2014.

V This list includes five companies representative of integrated oil and gas activities. This includes only companies for which the Integrated Oil & Gas industry is the primary industry under the Bloomberg Industry Classification System, and that are U.S.-listed but are not primarily traded Over-the-Counter, according to the latest information available on Bloomberg Professional Services. Retrieved on 9 June 2014.

Integrated Oil & GasV

COMPANY NAME (TICKER SYMBOL)

Exxon Mobil Corp (XOM)

Royal Dutch-ADR (RDS)

Chevron Corp (CVX)

Petrochina-ADR (PTR)

BP (BP)


APPENDIX IIA: Evidence for Sustainability Disclosure Topic

Sustainability Disclosure Topics

EVIDENCE OF INTERESTEVIDENCE OF

FINANCIAL IMPACTFORWARD-LOOKING IMPACT

HM (1-100)

IWGsEI

Revenue & Costs

Assets & Liabilities

Cost of Capital

EFIProbability & Magnitude

Exter- nalities

FLI% Priority


75* 100 3 High • • • Medium • • Yes

Ecological Impacts 70* 93 2 High • • • High • Yes

Competitive Behavior 80* (-) (-) Medium • • • High No


60 100 1 High • • • High Yes

HM: Heat Map, a score out of 100 indicating the relative importance of the topic among SASB’s initial list of 43 generic sustainability issues; asterisks indicate “top issues.” The score is based on the frequency of relevant keywords in documents (i.e., 10-Ks, shareholder resolutions, legal news, news articles, and corporate sustainability reports) that are available on the Bloomberg terminal for the industry’s publicly-listed companies; issues for which keyword frequency is in the top quartile are “top issues.”

IWGs: SASB Industry Working Groups

%: The percentage of IWG participants that found the disclosure topic to likely constitute material information for companies in the industry. (-) denotes that the issue was added after the IWG was convened.

Priority: Average ranking of the issue in terms of importance. One denotes the most important issue. (-) denotes that the issue was added after the IWG was convened.

EI: Evidence of Interest, a subjective assessment based on quantitative and qualitative findings.

EFI: Evidence of Financial Impact, a subjective assessment based on quantitative and qualitative findings.

FLI: Forward Looking Impact, a subjective assessment on the presence of a material forward-looking impact.


APPENDIX IIB: Evidence of Financial Impact for Sustainability Disclosure Topics

Evidence of

Financial Impact

REVENUE & EXPENSES ASSETS & LIABILITIES COST OF CAPITAL

Revenue Operating Expenses Non-operating Expenses Assets Liabilities

Risk ProfileIndustry

Divestment Risk

Market Size Pricing Power COGS R&D CapExExtra-

ordinary Expenses

Tangible Assets

Intangible Assets

Contingent Liabilities & Provisions

Pension & Other

Liabilities


• • • • • • • •

Ecological Impacts • • • • • •

Competitive Behavior • • • • •


• • • • • •

HIGH IMPACTMEDIUM IMPACT


APPENDIX III: Sustainability Accounting Metrics | Oil & Gas Midstream

TOPIC ACCOUNTING METRIC CATEGORYUNIT OF

MEASURECODE


Gross global Scope 1 emissions, percentage covered under a regulatory program

Quantitative Metric tons CO2-e, Percentage (%)

NR0102-01

Description of long-term and short-term strategy or plan to manage Scope 1 emissions, emissions reduction targets, and an analysis of performance against those targets

Discussion and Analysis

n/a NR0102-02

Air emissions for the following pollutants: NOx (excluding N2O), SOX, volatile organic compounds (VOCs), and particulate matter (PM)

Quantitative Metric tons NR0102-03

Ecological Impacts

Description of environmental management policies and practices for active operations


n/a NR0102-04

Percentage of land owned, leased, and/or operated within areas of protected conservation status or endangered species habitat

Quantitative Percentage (%) by acreage

NR0102-05

Terrestrial acreage disturbed; percentage of impacted area restoredVI

Quantitative Acres, Percentage (%)

NR0102-06

Number and aggregate volume of hydrocarbon spills, volume in Arctic, volume in Unusually Sensitive Areas (USAs), and volume recovered

Quantitative Number, Barrels (bbls)

NR0102-07


Amount of legal and regulatory fines and settlements associated with federal pipeline and storage regulationsVII

Quantitative U.S. Dollars ($) NR0102-08

Operational Safety, Emergency Prepared- ness, and Response

Number of reportable pipeline incidents, percentage significant

Quantitative Number, Percentage (%)

NR0102-09

Number of (1) accident releases and (2) non-accident releases (NARs) from rail transportationVIII

Quantitative Number NR0102-10

Discussion of management systems used to integrate a culture of safety and emergency preparedness throughout the value chain and throughout project lifecycles


n/a NR0102-11

VI Note to NR0102-06 – Disclosure shall include a description of the registrant’s environmental restoration best practices and the percentage of operations to which it was applied, if not all. VII Note to NR0102-08 – Disclosure shall include a description of fines and settlements and corrective actions implemented in response to events. VIII Note to NR0102-10 – Disclosure shall include a discussion of processes, procedures, and strategies to manage non-accident and accident releases.


APPENDIX IV: Analysis of 10-K Disclosures | Oil & Gas Midstream

The following graph demonstrates an aggregate assessment of how the top ten U.S.-domiciled Oil & Gas Midstream companies, plus the top three U.S.-domiciled Integrated Oil and Gas companies, by revenue, are currently reporting on sustainability topics in the Form 10-K.

Oil & Gas Midstream


Ecological Impacts



0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

TYPE OF DISCLOSURE ON SUSTAINABILITY TOPICS

NO DISCLOSURE BOILERPLATE INDUSTRY-SPECIF IC METRICS

100%

93%

N/A

100%

IWG Feedback*

*Percentage of IWG participants that agreed topic was likely to constitute material information for companies in the industry.


References

1 Data from Bloomberg Professional service accessed on June 12, 2014, using the ICS <GO> command. The data represents global revenues of companies listed on global exchanges and traded over-the-counter (OTC) from the Oil & Gas Midstream industry, using Level 3 of the Bloomberg Industry Classification System.

2 Reported company data for fiscal year 2013 using the FA <GO> command on Bloomberg Professional service, accessed on June 9, 2014.

3 U.S. Energy Information Administration. Natural Gas Explained –Natural Gas Prices. June 29, 2012. Accessed July 17, 2013. http://www.eia.gov/energyexplained/index.cfm?page=natural_gas_prices

4 U.S. Energy Information Administration. Natural Gas Explained – Factors Affecting Gasoline Prices. June 29, 2012. Accessed July 17, 2013. http://www.eia.gov/energyexplained/index.cfm?page=gasoline_factors_affecting_prices

5 “Natural Gas Regulations. The Market Under Regulation.” NaturalGas.org. Accessed on June 8, 2014. http://naturalgas.org/regulation/market/

6 For example, see Company Overview for Plains All American Pipeline. Accessed on June 8, 2014. http://www.paalp.com/our-company/overview-1749.html

7 Sassoon, David. “Crude, Dirty and Dangerous.” The New York Times. August 20, 2012. Accessed June 10, 2014. http://www.nytimes.com/2012/08/21/opinion/the-dangers-of-diluted-bitumen-oil.html?_r=0

8 IBISWorld. Gas Pipeline Transportation in the U.S. December 2012.

9 IBISWorld. Oil Pipeline Transportation in the U.S. December 2012.

10 For example, see Company Overview for Plains All American Pipeline. Accessed on June 8, 2014. http://www.paalp.com/our-company/overview-1749.html

11 Fleischer, Victor. “How the I.R.S. Encourages Oil and Gas Spinoffs.” Dealbook, The New York Times. June 18, 2013. Accessed June 8, 2014. http://dealbook.nytimes.com/2013/06/18/how-the-i-r-s-encourages-oil-and-gas-spinoffs/?_php=true&_type=blogs&_php=true&_type=blogs&_php=true&_type=blogs&_r=2&

12 Loder, Asjylyn, and Matthew Philips. “Amid U.S. Oil Boom, Railroads Are Beating Pipelines in Crude Transport.” Bloomberg BusinessWeek, sec. Energy June 13, 2013. Accessed June 13, 2013. http://www.businessweek.com/articles/2013-06-13/amid-u-dot-s-dot-oil-boom-railroads-are-beating-pipelines-in-crude-transport

13 Bloomberg Terminal. BI RNMKN – Themes. Accessed June 11, 2013.

14 Sobczak, Blake. “Is rail-bound crude oil a disaster waiting to happen?” EnergyWire, May 31, 2013. http://www.eenews.net/stories/1059982047 (accessed June 20, 2013).

15 Kinder Morgan, “Kinder Morgan CO2”. Accessed June 28, 2013. http://www.kindermorgan.com/business/co2/

16 Harder, Amy. “Approval of Natural-Gas Export Project Gets Mixed Reaction From Lawmakers.” The Wall Street Journal. March 24, 2014. Accessed on June 8, 2014. http://online.wsj.com/news/articles/SB10001424052702303725404579459313806209976

17 Dominion Resources, “Appalachian Gateway Project.” Accessed June 21, 2013. https://www.dom.com/business/gas-transmission/appalachian-gateway/index.jsp.

18 “Natural Gas Regulations. The Market Under Regulation.” NaturalGas.org. Accessed on June 8, 2014. http://naturalgas.org/regulation/market/

19 IBISWorld. Oil Pipeline Transportation in the U.S. December 2012.

20 California Environmental Protection Agency: Air Resources Board. “Regulation for the Mandatory Reporting of Greenhouse Gas Emissions.” February 2013. Accessed June 9, 2014. http://www.arb.ca.gov/cc/reporting/ghg-rep/regulation/mrr-2012-clean.pdf

21 Pipeline and Hazardous Materials Safety Administration. Mission and Goals. Accessed June 8, 2014. http://www.phmsa.dot.gov/about/mission

22 Forms 10-K for fiscal year 2013 for Plains Group Holdings (Page 1-36) and Oneok Partners (Page 1-16).

23 Author’s calculations based on data from: BP Statistical Review of World Energy 2013. Accessed June 27, 2013. http://www.bp.com/content/dam/bp/pdf/statistical-review/statistical_review_of_world_energy_2013.pdf

24 U.S. Environmental Protection Agency (EPA). “Act to Prevent Pollution From Ships.” Page 333. Accessed June 9, 2014. http://water.epa.gov/type/oceb/upload/atppfs.pdf

25 Nunez, Christina. “Obama to Seek 30 Percent Cut in Power Plant Emissions, Reports Say.” National Geographic. June 1, 2014. Accessed June 8, 2014. http://news.nationalgeographic.com/news/energy/2014/06/140601-obama-to-seek-30-percent-cut-in-emissions/

26 http://www.cftc.gov/ucm/groups/public/@newsroom/documents/file/amaf_factsheet_final.pdf.

http://www.eia.gov/energyexplained/index.cfm?page=natural_gas_prices

http://www.eia.gov/energyexplained/index.cfm?page=natural_gas_prices

http://www.eia.gov/energyexplained/index.cfm?page=gasoline_factors_affecting_prices



http://naturalgas.org/regulation/market/

http://www.nytimes.com/2012/08/21/opinion/the-dangers-of-diluted-bitumen-oil.html?_r=0

http://www.nytimes.com/2012/08/21/opinion/the-dangers-of-diluted-bitumen-oil.html?_r=0

http://www.paalp.com/our-company/overview-1749.html

http://www.paalp.com/our-company/overview-1749.html

http://dealbook.nytimes.com/2013/06/18/how-the-i-r-s-encourages-oil-and-gas-spinoffs/?_php=true&_typ




http://www.businessweek.com/articles/2013-06-13/amid-u-dot-s-dot-oil-boom-railroads-are-beating-pip



http://www.eenews.net/stories/105998204

http://www.eenews.net/stories/105998204

http://www.kindermorgan.com/business/co2/

http://online.wsj.com/news/articles/SB10001424052702303725404579459313806209976

http://online.wsj.com/news/articles/SB10001424052702303725404579459313806209976

https://www.dom.com/business/gas-transmission/appalachian-gateway/index.jsp

https://www.dom.com/business/gas-transmission/appalachian-gateway/index.jsp

http://naturalgas.org/regulation/market/

http://www.arb.ca.gov/cc/reporting/ghg-rep/regulation/mrr-2012-clean.pdf


http://www.phmsa.dot.gov/about/mission

http://www.phmsa.dot.gov/about/mission

http://www.bp.com/content/dam/bp/pdf/statistical-review/statistical_review_of_world_energy_2013.pdf

http://www.bp.com/content/dam/bp/pdf/statistical-review/statistical_review_of_world_energy_2013.pdf

http://water.epa.gov/type/oceb/upload/atppfs.pdf

http://news.nationalgeographic.com/news/energy/2014/06/140601-obama-to-seek-30-percent-cut-in-emissi



http://www.cftc.gov/ucm/groups/public/@newsroom/documents/file/amaf_factsheet_final.pdf.

http://www.cftc.gov/ucm/groups/public/@newsroom/documents/file/amaf_factsheet_final.pdf.


References (Cont.)

27 http://www.ftc.gov/os/2009/08/P082900mmr_finalrule.pdf.

28 http://www.ftc.gov/opa/2011/09/gasprices.shtm.

29 Pennsylvania Department of Environmental Protection, Bureau of Air Quality. “Northcentral Pennsylvania Marcellus Shale Short-Term Ambient Air Sampling Report”. May 6, 2011. Accessed June 20, 2013. http://www.dep.state.pa.us/dep/deputate/airwaste/aq/aqm/docs/Marcellus_NC_05-06-11.pdf

30 Armendariz, Al. “Emissions from Natural Gas Production in the Barnett Shale Area and Opportunities for Cost-Effective Improvements.” Environmental Defense Fund, January 26, 2009. Accessed June 20, 2013. http://www.edf.org/sites/default/files/9235_Barnett_Shale_Report.pdf

31 Climate Central. “Limiting Methane Leaks Critical to Gas, Climate Benefits.” May 22, 2013. Accessed August 5, 2013. http://www.climatecentral.org/news/limiting-methane-leaks-critical-to-gas-climate-benefits-16020

32 United States Environmental Protection Agency. “Greenhouse Gas Reporting Program. Petroleum and Natural Gas Systems.” Accessed on June 8, 2014. http://www.epa.gov/ghgreporting/ghgdata/reported/petroleum.html

33 United States Environmental Protection Agency. “Summary of Requirements for Equipment at Natural Gas Compressor Stations. EPA’s Air Rules for the Oil and Natural Gas Industry.” Accessed on June 8, 2014. http://www.epa.gov/airquality/oilandgas/pdfs/20120417summarycompressor.pdf

34 California Environmental Protection Agency: Air Resources Board. “Regulation for the Mandatory Reporting of Greenhouse Gas Emissions.” February 2013. Accessed June 9, 2014. http://www.arb.ca.gov/cc/reporting/ghg-rep/regulation/mrr-2012-clean.pdf

35 California Air Resources Board. “Proposed First Update to the Climate Change Scoping Plan: Building on the Framework.” February 2014. Accessed on June 8, 2014. http://www.arb.ca.gov/cc/scopingplan/2013_update/draft_proposed_first_update.pdf

36 Enbridge Energy Management LLC. Form 10-K. 2012. p.32.

37 Hart Energy, “ConocoPhillips Agrees to Pay US$175,000 in U.S. EPA Fines.” Last modified February 11, 2010. Accessed June 24, 2013. http://www.midstreambusiness.com/Regulation/ConocoPhillips-Agrees-Pay-US175000-US-EPA-Fines_n10549

38 U.S. Environmental Protection Agency. “Agreements with Williams and ConocoPhillips resolve alleged Clean Air Act violations on Southern Ute Reservation.” November 2, 2011. Accessed July 25, 2013. http://yosemite.epa.gov/opa/admpress.nsf/0/D19971F9FA2962BE8525793C0065C7EF

39 Form 10-K for fiscal year 2013. Oneok Partners. Page 1A-24.

40 U.S. Department of Energy. National Energy Technology Laboratory. Carbon Dioxide Enhanced Oil Recovery. March 2010.

41 Harvey, Susan et al. “Leaking Profits. The U.S. Oil and Gas Industry Can reduce Pollution, Conserve Resources, and Make Money by Preventing Methane Waste.” Natural Resources Defense Council. March 2012. http://www.nrdc.org/energy/files/Leaking-Profits-Report.pdf

42 University Park: Penn State College of Agricultural Sciences, 2010. “Marcellus Education Fact Sheet. Negotiating Pipeline Rights-of-Way in Pennsylvania.” Accessed June 28, 2013. http://pubs.cas.psu.edu/freepubs/pdfs/ua465.pdf

43 University Park: Penn State College of Agricultural Sciences, 2010. “Marcellus Education Fact Sheet. Negotiating Pipeline Rights-of-Way in Pennsylvania.” Accessed June 28, 2013. http://pubs.cas.psu.edu/freepubs/pdfs/ua465.pdf

44 Boesch, D.F. and N.N. Rabalais. Long-term Environmental Effects of Offshore Oil and Gas Development. 2003. p.25-6.

45 United Nations Environment Programme. “Sustainable Tourism in Protected Areas. Protected Areas, Biodiversity, and Conservation.” http://www.unep.fr/shared/publications/other/3084/BP8-2.pdf

46 Efsthathiou Jr., Jim. “Route Change Forces Keystone Foes to Shift Focus.” Bloomberg News, April 17, 2013. Accessed August 5, 2013. http://www.bloomberg.com/news/2013-04-17/route-change-forces-keystone-foes-to-shift-aim-to-climate-change.html

47 Synder, Jim. “Beetle-Bedeviled Keystone XL Needs Dead Rats to Let It Be.” Bloomberg News, May 30, 2013. Accessed June 25, 2013. http://www.bloomberg.com/news/2013-05-31/beetle-bedeviled-keystone-xl-needs-dead-rats-to-let-it-be.html

48 “The Keystone XL Pipeline Timeline.” The Wall Street Journal, April 24, 2014. Accessed June 2, 2014. http://blogs.wsj.com/washwire/2014/04/24/the-keystone-xl-pipeline-timeline/?KEYWORDS=keystone+xl

49 Snow, Nick. “Girling: TransCanada considering rail as Keystone XL alternative.” Oil and Gas Journal, June 2, 2014. Accessed June 2, 2014. http://www.ogj.com/articles/print/volume-112/issue-6/general-interest/girling-transcanada-considering-rail-as-keystone-xl-alternative.html

50 Harder, Amy, and Janet Hook. “Obama Extends Review of Pipeline Project.” The Wall Street Journal, April 18, 2014. Accessed June 2, 2014. http://online.wsj.com/news/articles/SB10001424052702304626304579509811049451686?KEYWORDS=keystone+xl&mg=reno64-wsj

http://www.ftc.gov/os/2009/08/P082900mmr_finalrule.pdf

http://www.ftc.gov/os/2009/08/P082900mmr_finalrule.pdf

ttp://www.ftc.gov/opa/2011/09/gasprices.shtm

http://www.dep.state.pa.us/dep/deputate/airwaste/aq/aqm/docs/Marcellus_NC_05-06-11.pdf



http://www.edf.org/sites/default/files/9235_Barnett_Shale_Report.pd

http://www.edf.org/sites/default/files/9235_Barnett_Shale_Report.pd

http://www.climatecentral.org/news/limiting-methane-leaks-critical-to-gas-climate-benefits-16020

http://www.climatecentral.org/news/limiting-methane-leaks-critical-to-gas-climate-benefits-16020

http://www.epa.gov/ghgreporting/ghgdata/reported/petroleum.html



http://www.epa.gov/airquality/oilandgas/pdfs/20120417summarycompressor.pdf

http://www.epa.gov/airquality/oilandgas/pdfs/20120417summarycompressor.pdf



http://www.arb.ca.gov/cc/scopingplan/2013_update/draft_proposed_first_update.pdf

http://www.arb.ca.gov/cc/scopingplan/2013_update/draft_proposed_first_update.pdf

http://www.midstreambusiness.com/Regulation/ConocoPhillips-Agrees-Pay-US175000-US-EPA-Fines_n10549



http://yosemite.epa.gov/opa/admpress.nsf/0/D19971F9FA2962BE8525793C0065C7EF

http://yosemite.epa.gov/opa/admpress.nsf/0/D19971F9FA2962BE8525793C0065C7EF

http://www.nrdc.org/energy/files/Leaking-Profits-Report.pdf

http://www.nrdc.org/energy/files/Leaking-Profits-Report.pdf

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http://www.unep.fr/shared/publications/other/3084/BP8-2.pdf

http://www.unep.fr/shared/publications/other/3084/BP8-2.pdf

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http://www.bloomberg.com/news/2013-05-31/beetle-bedeviled-keystone-xl-needs-dead-rats-to-let-it-be.



http://blogs.wsj.com/washwire/2014/04/24/the-keystone-xl-pipeline-timeline/?KEYWORDS=keystone+xl



http://www.ogj.com/articles/print/volume-112/issue-6/general-interest/girling-transcanada-considerin




http://online.wsj.com/news/articles/SB10001424052702304626304579509811049451686?KEYWORDS=keystone+x




References (Cont.)

51 International Institute for Sustainable Development. “Biodiversity Policy and Practice. UNEP-WCMC/IUCN Report Highlights Growth in Protected Areas.” 7 September 2012. Accessed on June 8, 2012. http://biodiversity-l.iisd.org/news/unep-wcmciucn-report-highlights-growth-in-protected-areas/

52 Form 10-K for fiscal year 2013. Enterprise Products Partners. Page 1-41.

53 Schwartz, John. “Louisiana Agency Sues Dozens of Energy Companies for Damage to Wetlands.” The New York Times Blog, July 24, 2013. Accessed July 26, 2013. http://www.nytimes.com/2013/07/25/us/louisiana-agency-to-sue-energy-companies-for-wetland-damage.html

54 Southeast Louisiana Flood Protection Authority – East. “Oil, Gas and Pipeline Companies Sued for Louisiana Coastal Land Loss and Flood Risk, According to SLFPA-E.” PRNewswire, New Orleans, July 24, 2013. Accessed July 26, 2013. http://slfpae.com/News%20Release%20on%20Coastal%20Land%20Loss%207-24-13.pdf

55 Broder, John. “BP Is Fined $25 Million for ’06 Spills at Pipelines.” The New York Times. May 3, 2011. Accessed on June 8, 2014. http://www.nytimes.com/2011/05/04/science/earth/04pipeline.html

56 For example, see Form 10-K for FY 2012, Enterprise Products.

57 “FERC fines Texas gas pipeline for unauthorized charges.” Argus Media Ltd., August 27, 2013. Accessed June 1, 2014. http://www.argusmedia.com/News/Article?id=862260

58 Irvin, Kenneth W. and M. Ostrander. “FERC fines companies more than $9.5 million for pipeline capacity release violations.” McDermott Will & Emery on Lexology.com, July 9, 2009. Accessed June 1, 2014. http://www.lexology.com/library/detail.aspx?g=870c41e0-d34c-4335-9fd6-24a243721123.

59 Form 10-K for fiscal year 2013, Plains Group Holding, page 1A-43.

60 Form 10-K for fiscal year 2012, Energy Transfer.

61 For example, see Form 10-K for FY 2012, Targa Resources Partners.

62 Form 10-K for fiscal year 2013, Oneok Inc., page 3-39.

63 Shogren, Elizabeth. “Arkansas Oil Spill Sheds Light on Aging Pipeline System.” NPR Morning Edition, April 4, 2013. Accessed June 25, 2013. http://www.npr.org/2013/04/04/176189205/arkansas-oil-spill-sheds-light-on-aging-pipeline-system

64 U.S. Department of Transportation. “All Reported Pipeline Incidents.” Accessed on June 8, 2014. http://primis.phmsa.dot.gov/comm/reports/safety/Allpsi.html

65 Loon, Jeremy van and Gerrit De Vynck. “Quebec Disaster Spurs Rail-Versus-Pipelines Debate on Oil.” Bloomberg, July 8, 2013. Accessed July 26, 2013. http://www.bloomberg.com/news/2013-07-07/quebec-disaster-spurs-rail-versus-pipelines-debate-on-oil.html

66 Snyder Jim and Jim Efstathiou Jr. “North Dakota Oil Transport Risk Revealed in Quebec Blast.” Bloomberg, July 9, 2013. Accessed July 26, 2013. http://www.bloomberg.com/news/2013-07-10/north-dakota-oil-transport-risk-revealed-in-quebec-blast.html

67 London: International Tanker Owners Pollution Federation Limited, 2013. s.v. “Oil Tanker Spill Statistics 2012.” Accessed June 25, 2013. http://www.itopf.com/information-services/data-and-statistics/statistics/documents/StatsPack_001.pdf

68 London: International Tanker Owners Pollution Federation Limited, 2013. s.v. “Oil Tanker Spill Statistics 2012.” Accessed June 25, 2013. http://www.itopf.com/information-services/data-and-statistics/statistics/documents/StatsPack_001.pdf

69 Mather, Kate. “Record $2.25-billion fine recommended in San Bruno explosion.” Los Angeles Times, May 6, 2013. Accessed June 25, 2013. http://articles.latimes.com/2013/may/06/local/la-me-ln-san-bruno-explosion-20130506

70 Gullo, Karen. “PG&E Charged by U.S. Over Fatal 2010 Pipeline Explosion.” Bloomberg. April 2, 2014. Accessed on June 8, 2014. http://www.bloomberg.com/news/2014-04-01/pg-e-charged-by-u-s-over-fatal-2010-pipeline-explosion.html

71 “U.S., Arkansas sue Exxon over Pegasus pipeline spill.” Reuters UK, June 13, 2013. Accessed June 20, 2013. http://uk.reuters.com/article/2013/06/13/exxon-arkansas-suit-idUKL2N0EP1GD20130613

72 Whitley, Chris. U.S. Environmental Protection Agency, “Magellan Midstream Partners to Pay $5.3M in Civil Penalties for 11 Petroleum Pipeline Spills in Six Midwestern States.” Last modified June 16, 2008. Accessed June 24, 2013. http://yosemite.epa.gov/opa/admpress.nsf/324e040292e1e51f85257359003f533a/9171fe9405af4a228525746a0076304d!OpenDocument.

73 U.S. Environmental Protection Agency. “EPA’s Response to the Enbridge Oil Spill.” Last updated July 25, 2013. Accessed July 26, 2013. http://www.epa.gov/enbridgespill/

74 Song, Lisa. “Dilbit Sinks in Enbridge Oil Spill, but Floats in Its Lab Study.” Inside Climate News, March 14, 2013. Accessed July 26, 2013. http://insideclimatenews.org/news/20130314/tar-sands-dilbit-sinks-enbridge-oil-spill-floats-its-lab-study

75 Enbridge Energy Management LLC. Form 10-K. 2012. Page 31.

http://biodiversity-l.iisd.org/news/unep-wcmciucn-report-highlights-growth-in-protected-areas/



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http://www.argusmedia.com/News/Article?id=862260

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References (Cont.)

76 Form 10-K for fiscal year 2013. Plains Group Holdings. Page 1-36.

77 Pipelines and Informed Planning Alliance. “Partnering to Further Enhance Pipeline Safety In Communities Through Risk-Informed Land Use Planning Final Report of Recommended Practices.” November 2010. Accessed on June 8, 2014. http://primis.phmsa.dot.gov/comm/publications/pipa/PIPA-Report-Final-20101117.pdf

78 Form 10-K for fiscal year 2013. Kinder Morgan. Page 1-32.

79 Loon, Jeremy van and Gerrit De Vynck. “Quebec Disaster Spurs Rail-Versus-Pipelines Debate on Oil.” Bloomberg, July 8, 2013. Accessed July 26, 2013. http://www.bloomberg.com/news/2013-07-07/quebec-disaster-spurs-rail-versus-pipelines-debate-on-oil.html

80 Smith, Loren. “New Rail Safety Rules Likely Unveiled in June.” Capital Alpha Partners LLC. May 29, 2014. Accessed from Bloomberg Professional service on June 8, 2014.

81 Form 10-K for FY 2013, Plains Group Holdings. Page 1-36.

82 Form 10-K for FY 2013, Sunoco Logistics. Page 3-29.

http://primis.phmsa.dot.gov/comm/publications/pipa/PIPA-Report-Final-20101117.pdf

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http://www.bloomberg.com/news/2013-07-07/quebec-disaster-spurs-rail-versus-pipelines-debate-on-oil.h



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