Preserving Environmental Compliance in Low Cost Market Conditions
Authors: Chris Clodfelter , Josh Morrissette 
Published: March 2016

The oil and gas sector is subject to a wide array of environmental regulations with rigorous compliance requirements. Operating locations must have very clear guidance and direction to ensure the various regulatory obligations are met. Industry down turns however, can present a number of particularly difficult challenges to managing and maintaining compliance. These challenges are brought forth by facility closures, property or business divestiture, as well as reduced financial and personnel resources. A process was implemented at Baker Hughes to ensure environmental compliance is maintained during the current difficult market conditions.

Facility closures and property divestitures occur on a greater scale and shorter timeframe than during normal economic situations. Oil and gas companies must respond to market conditions at a much quicker pace than other industries in order to maintain profitability. To address the massive changes and aggressive timelines, a virtual workspace was created to manage the closures and divestitures of nearly 200 sites. The workspace is accessible by Health, Safety, and Environment (HSE) and real estate employees for reviewing and updating property status. This cross-function collaboration allows for tracking of permits and registrations which may need to be closed out or transferred; the status of HSE record retrieval and retention for closed facilities; the status of dangerous goods disposal or transfer to other operating facilities; updates on due diligence conducted both internally and by third parties; and the status of any environmental remediation necessary to close or divest the property. The workspace can also be modified to track annual reporting requirements which may become due following closure of the operation.

A similar challenge posed by the current market conditions is the consolidation of operations. These often involve transfers of both physical assets and human resources to other operating locations. The physical assets can include the transfer of dangerous goods such as radioactive sources, explosives and chemical inventory. Often, permit and registration modifications at the transfer location are required to accommodate the re-located goods and functions. Employee training needs may also change with these transfers, because of newly added activities, hazards and regulatory requirements. An internal Management of Change (MOC) process is required to maintain HSE compliance during such consolidations.

Failure to demonstrate and maintain environmental compliance will adversely affect the company, the industry and result in increased pressures by regulators, environmental agencies and the public to mandate legislative actions. Preserving environmental compliance during challenging conditions such as low cost markets is achievable by the HSE professional working as a business partner. This paper will outline challenges and provide recommendations to help HSE professionals understand, plan for and effectively manage environmental compliance during industry transitions.