Forum 22: Managing water in upstream and downstream operations

Block 5: Sustainability Commitment Forum 22: Managing water in upstream and downstream operations New tools address water risks and enhance environmental and operational performance in the oil and gas sector Mr. Karl Fennessey Senior Consultant ConocoPhillips, USA Ms. Claire Rosalynde Gough, Talisman Energy, Canada Ms. Ruth Romer, IPIECA, United Kingdom

Forum 22: Managing water in upstream and downstream operations New tools address water risks and enhance environmental and operational performance in oil and gas sector Water, particularly fresh water, is a scarce resource in many parts of world. As fresh water has many uses in the upstream and downstream operations of oil and gas companies; incorporating fresh water management into strategic oil and gas processes is an integral part of: • social and environmental responsibility; • managing water-related business risks, and • improving operational efficiency. IPIECA has been engaged in the issue of fresh water for the last decade. This poster session provides an overview of ongoing IPIECA water initiatives and activities that include: • IPIECA’s customization of the World Business Council for Sustainable Development (WBCSD) Global Water Tool (GWT) for the oil and gas industry. This free and publically-available tool helps companies organize water data, report using consistent water metrics and terminology, and identify and plan for current and potential future risks. • A new overview of freshwater issues for the oil and gas industry highlights fresh water issues for the oil and gas industry and the business case for water risk identification and action. • A best practice document, Petroleum refining waste / wastewater use and management, which describes good practices and strategies used in petroleum refineries to manage water. • Recently updated Oil and gas industry guidance on voluntary sustainability reporting based on five reporting principles; relevance, transparency, consistency, completeness and accuracy. This Guidance sets out industry guidelines on reporting including a new fresh water indicator (E6). • A planned water management guide will highlight industry good practice for fresh water management in upstream operations. IPIECA’s suite of tools, guidance and publications are valuable additions to company portfolios. They enable the oil and gas industry to effectively address water risks and enhance environmental and operational performance.

The Global Energy Challenge With increasing energy demands, industry strives to balance the environmental and socio-economic tradeoffs In addition to the focus on carbon emissions, potential impacts to water resources are of increasing interest. IEA outlook, 2010

Water and the business case Fresh water is already a scarce resource in many parts of the world Water is a local issue, but may be influenced by large-scale trends e.g. climate change UNEP/GRID-Arendal, 2000 • The Business Case - risk factors for industry: • Access and availability – Challenge of scarcity and water quality • Regulation – Competition for resources and increasingly stringent regulations. Growing pressure by civil society, consumers and media • Operations – Effective water management within operations • Financial – Adherence to criteria from financial investor bodies • Reputation – Corporate reputation and licence to operate

Water initiatives for business • The WBCSD publication - ‘Water for Business – Initiatives guiding sustainable water management in the private sector’ – (March 2010), compiles and shares the relevant tools and standards to support company efforts in managing water-related risks and mitigate water-related impacts. • Current initiatives / tools: • Aquawareness • Alliance for Water Stewardship • BIER Water Footprint Working Group • CDP Water Disclosure • Collecting the Drops: A Water Sustainability Planner, GEMI Local Water Tool - NEW • Corporate Water Gauge • GRI Water Performance Indicators • IPIECA GWT for oil and gas - NEW • ISO Water footprint: Requirements and guidelines • Strategic Water Management in the Minerals Industry • UK Federation House Commitment to Water Efficiency • UN CEO Water Mandate • Water Brief for Business • Water Footprint Network • Water Footprint, Neutrality and Efficiency Umbrella Project • Water Neutral Offset Calculator • Water Sense Program • Water Stewardship Initiative • Water Use Assessment with Life Cycle Assessment • WBCSD Global Water Tool • WRI Aqueduct

What does IPIECA do? • IPIECA helps the oil and gas industry improve its environmental and social performance by: • Developing, sharing and promoting good practices and solutions • Enhancing and communicating knowledge and understanding • Engaging members and others in the industry • Working in partnership with key stakeholders • IPIECA is the industry’s principal channel of communication with the United Nations. • Water is one of the 9 IPIECA focus areas. • The Water Task Force focus on assessing water risk and enhancing environmental and operational performance

Water in the oil and gas sector Fresh water is a socio-economic, environmental and key business issue and has multiple uses in upstream and downstream oil and gas operations Water risks: • Environmental – impact to regional ecosystems • Social– competition for the resource • Health – fresh water and sanitation (employee health) • Regulatory – government restrictions • Resource – availability and quality • Reputation – corporate reputation Incorporating fresh water management into strategic oil and gas processes is an integral part of: • social and environmental responsibility; • managing water-related business risks, and • Improving operational efficiency

IPIECA action - addressing water risk and enhancing environmental and operational performance A company’s water needs should be understood in relation to local externalities • e.g. water availability, quality, stress, access to improved water sources and sanitation… Understanding water use can be improved by considering each part of the oil and gas value chain

IPIECA tools, guidance and publications (1/2) IPIECA ‘Overview of fresh water issues for the oil and gas industry’, 2010 • Members only document, a high-level overview of relevant fresh water issues, exploring the business case for water risk identification and action. • IPIECA ‘Petroleum refining waste / wastewater use and management’, 2010 • Manual describing typical ‘best practices’ and strategies used in petroleum refineries to manage water, including ways to reduce water usage. • IPIECA/API/OGP ‘Oil and gas industry guidance on voluntary sustainability reporting’, 2010 • The guide facilitates industry benchmarking and aggregation of data, enabling consistency in reporting driving performance improvement • The guide includes a new fresh water indicator (E6)

IPIECA tools, guidance and publications (2/2) • IPIECA ‘The Global Water Tool for oil and gas’, 2011 - NEW • The Tool helps oil and gas companies map their water use and assess risks for their overall global portfolio of sites. • The tool is customised for each type of operation • IPIECA ‘Biofuels and Water document’, launch March 2012 • Outcome of Biofuels and water workshop, 2011 • Addresses water issues related to first generation bioethonal and biodiesel • IPIECA is currently working to develop guidelines for fresh water management across the oil and gas lifecycle • An internal guide for industry with a focus on the most freshwater intensive activities for upstream, onshore oil and gas activities.

IPIECA Global Water Tool for oil and gas This is a customized version of the free and easy-to-use World council for Sustainable Development (WBCSD) Global Water Tool. The Tool will help oil and gas companies map their water use and assess risks for their overall global portfolio of sites considering each part of the oil and gas value chain.

Where are the water risks in your portfolio? How many of your refinery sites are in extremely water-scarce areas and therefore at greatest risk? How will that look in the future? What percentage of your production volume is in water scarce areas? And in 2025 and 2050? How many of your sites are in countries that lack access to improved water and sanitation?

What does the GWT for oil and gas do? Provides a high-level preliminary screening of risk across an asset portfolio. Compares your company’s water use (site-by-site) with validated water, sanitation and population information Enables calculation of water consumption, efficiency and intensity metrics Establishes relative water risk in your company’s portfolio to prioritize action Creates IPIECA and GRI Water sustainability reporting indicator data,inventories, risk and performance metrics, and geographic mapping. Enables effective communication with internal and external stakeholders on your company’s water issues.

The Tool is comprised of: Excel workbook – inputs Eight inventory input sheets for each type of oil and gas operation, detailing site location and water usage information. • Production • Transport – Terminals • Gas processing • Refining • Drilling • Petrochemicals • Retail • Oil sands

Online mapping - outputs This feature enables you to plot all of your sites with external water datasets and download locations in a map. There are unique icons for each of the 8 types of oil and gas value chain units

Other outputs: Oil and gas metrics; country/watershed reports; reporting metrics and maps Reporting metric outputs Mapping outputs

Bonus Biodiversity data layer Why? As with water, managing biodiversity or ecosystem-related issues globally requires an understanding of a company’s ecosystem impact & dependencies locally. Mapping areas of water scarcity/stress as well as areas of biodiversity importance is of business value to companies in recognizing and managing these combined risks The Biodiversity data Conservation International have supplied Biodiversity hotspots data Biodiversity hotspots adds an additional level of risk assessment and functionality. The Biodiversity data layer provides a high-level screening to be complemented by more detailed subsequent assessment Note: Not being in a hotspot does not necessarily mean the area is of interest, or vice versa.

What next? Ensuring compatibility between the Global Water Tool and the Local Water Tool Promotion of the IPIECA Global Water Tool across the Oil and Gas sector Scoping of Exploration and Production best practices • Outcomes will complements existing refining document

IPIECA the global oil and gas industry association for environmental and social issues www.ipieca.org For more information or to talk with Karl Fennessey please visit us after the presentation at Booth 9127

Mr. Karl Fennessey Senior Consultant ConocoPhillips, USA Karl D. Fennessey is a director, climate change and sustainable development, for ConocoPhillips located in Houston, Texas. Fennessey began his industry career in 1989 with The Dow Chemical Company where he served in various refining, engineering, technology, and corporate strategy positions. Fennessey joined ConocoPhillips in 2008. Fennessey is a member of the state appointed Texas Water Conservation Advisory Council. He has previously served on the Great Western Credit Union Board and as the Finance Chair on the Global Environmental Management Initiative Board. Fennessey earned a bachelor of science degree in chemical engineering from the University of Texas in Austin in 1988. He is a registered Professional Engineer

Forum 22: Managing water in upstream and downstream operations