Sustainability, Safety and Reputation during economic challenging times

The decline in oil prices has resulted in some companies decreasing investments, and some even cutting back expenditures. Safety, the environment, and the industry reputation are of concern as companies cut costs during declines.  Accidents continue occurring, indicating that the safety and environmental risks – and challenges of the oil and gas life cycle will continue regardless of oil prices. 

The industry has already gone through significant oil and gas price swings and critical global events several times, and we should learn from past lessons. HSE risks and challenges increase with low oil prices. In fact, the situation now is significantly augmented due to the job losses and wider economic impacts of the COVID-19 induced economic volatility. 

Lower prices and economic volatility often translate into job and maintenance cuts; some workers get distracted with the prospect of potentially losing their jobs, and others may start taking more risks to preserve their positions. The situation may be increased by conflicting communications coming from the top to maintain production while cutting costs.

The industry has already gone through significant oil and gas price swings and critical scenarios several times, and we should learn from past lessons. 

Looking forward, global energy demand will continue to grow but at a slower pace due to greater efficiency, slower population and economic growth, and new and improved technologies. And although more energy will be needed in a lower carbon way, the oil and gas industry will continue to play an important role in the energy portfolio and hydrocarbons will still account for just about half of the total energy mix in 2050. 

The current slowdown in investment will translate into falling production, requiring the drilling of more wells to keep up with upcoming future demand.

The industry's most important and valuable resource is its people. The message from management to the workers on the ground must be one of paying much more attention than ever to safety, environmental protection, and responsible operations while running more efficient operations and maintaining focus on operational integrity. The same message must be passed on to drilling and service companies, especially when contracts and prices are renegotiated. 

Bottom line, it is imperative to maintain focus on safety, the environment, and responsible operations regardless of the present price of oil. The message and actions coming from the top leadership at all times must be loud and clear: moving forward with HSE as the number one priority continuing operations in a very efficient and responsible way.

Mexico Oil & Gas auctions for 2018: Offshore and Onshore

The Oil & Gas auctions for 2018 will include deep-water, shallow-water, and onshore blocks (shale plays). 

Due within the first year after the Effective Date: Environmental Baseline Assessment (LBA), Environmental Impact Assessment (MIA), Social Impact Assessment (EVIS), HSE Management System (SASISOPA), Water Resource Permits, Waste Management Permits, HSE Notifications, ... Exploration Drilling Authorization

HSES Timeline

HSE International has performed dozens of offshore and onshore assignments in Mexico providing HSES support services to the O&G industry. Some examples include:

• Risk assessment and regulatory advice
• Permitting planning and compliance
• HSE Management System
• Sustainability-seeking E&S MS with IFC PS and WBG EHS Guidelines
• Locality strategy for entry in new area / new projects 
• HSES Due diligence
• Social and environmental baseline and impact assessment
• In-country support to offshore and on-shore oil and gas activities
• Training and capacity building

HSE International's consultants deliver strategy, clear advice and support with implementation in a way that is culturally and locally savvy.

For more information contact us at: solutions@hseinternational.com, (+1) 281.971.5909 www.hseinternational.com

Mexico: four more Oil & Gas auctions for 2018

HSE International, LLC

Mexico could launch up to four more oil and gas auctions before the end of 2018. The tender could include shallow-water fields as well as gas-rich shale areas. The government had previously mentioned three more tenders were planned, but a fourth could be a mix of fields including some deep-water areas.

Round 2.3 - Depp Water

This bid round includes 30 deep-water blocks for exploration in the Perdido Area, Salinas Basin, Mexican Mountain Chains (Cordilleras Mexicanas) and the Yucatan Platform, collectively an area three times the area for deep-water Round 1.4. Most of the blocks have an area of 2,000 square kilometers. The blocks in this Round will be awarded based on a license contract and include wet gas and dry gas, which will help reduce imports. The presentation and opening of proposals is scheduled for January 31, 2018.

Round 3.1 - Shallow Water

35 shallow water contractual areas under Production Shared Contracts integrate round 3.1. These contractual areas are divided into three sectors: Burgos, Tampico-Misantla-Veracruz and Cuencas del Suereste basins. These blocks have a range of prospective resources ranging from light to heavy crudes, as well wet and dry gas blocks. The auction is scheduled for March 27, 2018.

HSE International has performed dozens of offshore and onshore assignments in Mexico providing H&S, Environmental and Social (HSES) support services to the Oil and Gas industry. Some examples include:

• Risk assessment and regulatory advice
• Permitting planning and compliance (ASEA, SENER, CNH, other agencies)
• Social and environmental baseline and impact assessment
• Strategic social and environmental performance project
• Sustainability-seeking management systems with IFC PS and WBG EHS Guidelines
• Locality strategy design and implementation for sustainable development
• Due diligence
• In-country support to offshore and on-shore oil and gas activities
• Training

HSE International supports clients with a contextualized, integrated and cost-effective approach, delivering innovative solutions and helping clients manage their risks in a way that is culturally and locally savvy.  Learn more about the services we offer and our extensive international experience spanning 35 countries, including Mexico.

solutions@hseinternational.com (+1) 281.971.5909 www.hseinternational.com

Mexico Oil & Gas "Apertura" - Round 2 – 1st Call for Bids: 15 Shallow Water Blocks

Mexico launched on July 20th the first call for Round 2 of its Oil & Gas "Apertura", which covers 15 shallow water offshore blocks. 

The blocks are located along the coasts of Tampico, Misantla, Veracruz and southeastern Gulf of Mexico area.  The bidding process will take 8 months with awards of the offshore blocks are scheduled for March 2017. 

Shallow Waters and Above-Ground Risks

Successful bidders (e.g. IOCs) for the blocks located in shallow water of the Gulf of Mexico will sign a production sharing contract for 30 years with two possible extensions of five years.

These shallow water blocks present above-ground non-technical risks, that if inadequately managed often translate into project delays and cost overruns, and operational interruptions during the project life cycle.

The area encompassed by the Round 2 shallow water blocks is geographically extensive and environmentally diverse, and it includes sensitive areas with high biodiversity as well as communities that rely on natural resources.

Initial engagement with stakeholders has identified environmental and social concerns, and communities’ needs among those living closest to the oil and gas areas, including for example:

·       Impacts to ecosystems due to spills and leaks and wastewater discharges,

·       Increase in vehicular and vessel traffic, 

·       Impact on existing local infrastructure and services, 

·       Community health and safety, 

·       Local content requirements, 

·       Income generating opportunities,

·       Skills training,

·       Education, and

·       Basic services.

These challenges and expectations require a contextualized and integrated approach, and innovative solutions to manage the sustainability non-technical risks to ensure the success of the Apertura and oil and gas business ventures in Mexico.

How HSE International, LLC can help

The successful IOCs need to develop and adopt, from the onset, strategies based on a framework that integrates social, economic, environmental, and institutional factors, to have a clear vision for how to operate in the area. 

HSE International’s experience working in the oil and gas industry, in environmentally sensitive and complex social settings, and our international delivery capabilities working with local strategic partners in Mexico, can help IOCs develop and implement strategies based on a sustainability framework.

HSE International’s Sustainable Development Analysis (SDA) combines social, economic, environmental, political and institutional analysis to improve the understanding of the linkages between development dynamics and the political and social structures that shape development outcomes.

We have the knowledge and experience to assist IOCs develop and implement sustainable development frameworks to address these issues early in the project cycle, helping Companies’ manage the above-ground risks and impacts, and contribute to earning and maintaining the regulatory and social licenses to operate. 

HSE International has worked in the Mexico’s oil and gas sector since 2008, including supporting IOCs, NOCs and Regulators, along the oil and gas value chain. We have developed a process to address social, environmental, security and safety risks each step of the way, and are eager to contribute to a more sustainable development of the oil and gas sector in Mexico. 

For more information on how to manage above-ground non-technical risks, read HSE International’s post http://www.hseinternational.com/news-insights/2015/5/mexicos-oil-gas-apertura-shallow-waters-and-above-ground-risks,  and email us at: solutions@hseinternational.com

Mexico Oil & Gas “Apertura" - Round 1 Update: Deep Water Exploration

Mexico's deep water round contractual and regulatory requirements are complex and untested. It is important to clearly understand these requirements, the interrelations, and develop a detailed regulatory road map to ensure a smooth and timely execution synchronized with the technical exploration requirements and milestones.

Thus far, 26 Oil & Gas Companies have initiated the prequalification process for Mexico's deep water exploration round according to official information. This bidding round follows the three conducted so far under the Mexican Oil & Gas E&P Round 1 "Apertura", including rounds for shallow water exploration and extraction, and onshore mature blocks. The process has been accessible to all interested stakeholders, with typical (standard) contract models, the names of bidders and successful awards publicized through social media and dedicated internet web pages. 

The deep water bid round will feature 11 largely unexplored blocks in the Perdido and Cuenca Salina areas located in the Mexican side of deep waters of the Gulf of Mexico.  Oil companies have paid Mexico's oil regulator, the National Hydrocarbon Commission (Comisión Nacional de Hidrocarburos – CNH), nearly $80 million for seismic data ahead of the auction for deep-water fields. This sum reflects a fraction of companies’ spending in the past year to acquire geological data ahead of the Dec. 2016 auction.

Contractual and regulatory requirements include an HSE Management Program to manage risks (Programa de Administración de Riesgos: Conformación e Implementación del Sistema de Administración); conducting environmental and social impact assessments; determining environmental and social existing ("as is") conditions by executing baselines, and monitoring and reporting on industrial and operational safety, environmental protection, occupational health, and socio-economic conditions.

The regulatory approval process is complex and untested, and given the lead time required for offshore deep drilling equipment and associated logistics and facilities, it is important to clearly understand these requirements, the interrelations, and develop a detailed regulatory road map to ensure a smooth and timely execution synchronized with the technical exploration requirements and milestones. 

HSE International, LLC participated at the SPE E&P symposium on Health, Safety, Environment, and Sustainability, March 30 - 31 in Mexico City.  Presentations and panel discussions during the event, included key HSES regulators, notably the Industrial Safety and Environmental Protection Regulatory Agency for the Hydrocarbon Sector (Agencia de Seguridad, Energía y Ambiente – ASEA) and Mexico’s Energy Ministry (Secretaria de Energía – SENER) charged with social impact assessment and prior consultation. 

Regulations are in the process of being developed, with some to be released shortly and others to follow over the next months. Close coordination with ASEA, SENER and CNH is necessary to ensure adequate - timely approvals, while also seeking potential beneficial synergies. 

How HSE International, LLC can help

HSE International uses its sector-focused approach, deep knowledge and experience in the oil and gas industry, and international delivery capabilities to help our clients. HSE International has worked in the Mexican oil and gas sector since 2008, including supporting IOCs, NOCs and Regulators, along the oil and gas value chain. We have developed a process to address environmental, social and safety risks each step of the way and are eager to contribute to a more sustainable development of the oil and gas sector in Mexico. 

For more information email us at: solutions@hseinternational.com

Fernando Rodriguez, Founder and Managing Director of HSE International

HSE International LLC provides environmental, social, health & safety risk management consulting and sustainability services to industries, investors and institutions worldwide. We partner with local experts to promote local content, and our fusion integrates local knowledge with international expertise and assurance. http://www.hseinternational.com