Consensus Building for Arctic Offshore Oil & Gas Drilling
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From 1985 to 1987, a small group of unlikely partners in Alaska defined common ground in the oil arena before the current national awareness of the risks of offshore oil production existed. The successful collaboration discussed herein raises the question if consensus building among the oil industry, environmental community and other stakeholders is possible today, and offers lessons learned and suggestions for initiating such collaboration.
As I watched executives from Exxon, Chevron, Conoco, Texaco, and Philips leaning over maps of the Bering Sea in Alaska alongside leaders from Sierra Club, National Resources Defense Council, other environmental groups, a commercial fishermen’s association, and Alaska’s native villages, I knew we were about to do something quite unusual. A collaborative process that started with an unlikely meeting of oil and environmental executives in Moro Bay, California–who thought the federal Outer Continental Shelf (OCS) leasing program produced unnecessary conflict–was culminating after a year of intense discussions and negotiations. The result was a carefully crafted plan to access the sea’s oil reserves while protecting the marine environment, fishing grounds, and native village way of life. No one got everything they wanted but the priorities of each side appeared largely intact and there was a willingness to work together to implement the plan.
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Organized by Robert Redford’s Institute for Resource Management, a small, nonprofit organization for which I served as executive director, the group identified common areas of concern and problems with the OCS leasing process and how it could be improved. Each developed maps of their priorities for offshore development or marine conservation in the Bering Sea. We overlaid the maps and identified areas of conflict and of mutual agreement. We examined assumptions and goals and developed trust necessary to arrive at a meaningful consensus. On occasion, it looked like things would fall apart, but as facilitators, we conferred with each interest group to resolve misunderstandings, thereby reducing the tensions that emerge during consensus building processes. Finally, a preliminary plan was formulated and circulated to the company boards of directors, membership committees and village councils. With support from the respective groups, we presented the plan to the Secretary of Interior and Congressional committees, who applauded the result of honest collaboration. The plan was included as an alternative in the Mineral Management Service five-year plan and environmental impact statement for oil leasing in the Bering Sea.
The experience demonstrates how collaboration and consensus building resolve challenges concerning a wide range of interests, and can be applied to the current battle over the offshore oil and gas reserves in the arctic between environmental groups, oil and gas corporations, and the governments of the United States, Russia, Canada, Denmark, and Norway.
Three important lessons learned are:
1. Consensus building is a slow, deliberate process that is most successful when founded on a series of small agreements that build trust between the parties and lay the groundwork for larger issues.
2. Each party in a controversy has a data set that supports their position. Sometimes it is necessary to develop a “joint data set” to establish “common facts” before meaningful discussions can move forward.
3. The role of a trusted facilitator is critical to design and manage the process, keep focus on the big picture, and resolve and diffuse conflicts and misunderstandings that will arise as the parties wrestle with different assumptions, objectives and interests.
The following are suggestions to initiate a collaborative process:
• Organize a small investigation committee of industry leaders and identify a short list of possible issues that would benefit from stakeholder input.
• Bring in a facilitator to screen the issues and hold private discussions with stakeholder groups to assess interest and feasibility.
• Start small; choose something manageable and able to be addressed with a limited number of parties.
• With the help of a facilitator, organize a small group of stakeholders with varied interests to informally explore discussions on a specific issue of interest to all parties.
• If there is support for moving forward, develop a preliminary project plan and process design strategy that can then be reviewed by all parties.
• Keep things confidential; don’t involve the media or government directly until some level of comfort and agreement has been reached and the time is right to expand beyond the initial parties and areas of agreement.
• Be patient and mindful that collaboration and consensus building have unique benefits. Recognize that contention is a healthy part of the process, but finding common ground is possible among parties with divergent views and goals if people of good intensions can move beyond skirmishes toward the greater good.
Paul Parker is an Associate at The Cadmus Group, Inc.
Ofwat allows retailers to raise prices from April
Retailers can recover a portion of excess bad debt by temporarily increasing prices from April 2022, according to an Ofwat statement.
The regulator confirmed its view that levels of bad debt costs across the business retail market are exceeding 2% of non-household revenue, thereby allowing "a temporary increase" in the maximum prices. Adjustments to price caps will apply for a minimum of two years to reduce the step changes in price that customers might experience.
Measures introduced since March 2020 to contain the spread of Covid-19 could lead to retailers facing higher levels of customer bad debt. Retailers’ abilities to respond to this are expected to be constrained by Ofwat strengthening protections for non-household customers during Covid-19 and the presence of price caps.
In April last year, Ofwat committed to provide additional regulatory protection if bad debt costs across the market exceeded 2% of non-household revenue.
Georgina Mills, Business Retail Market Director at Ofwat said: “These decisions aim to protect the interests of non-household customers in the short and longer term, including from the risk of systemic Retailer failure as the business retail market continues to feel the impacts of COVID-19. By implementing market-wide adjustments to price caps, we aim to minimise any additional costs for customers in the shorter term by promoting efficiency and supporting competition.”
There are also three areas where Ofwat has not reached definitive conclusions and is seeking further evidence and views from stakeholders:
- Pooling excess bad debt costs – Ofwat proposes that the recovery of excess bad debt costs is pooled across all non-household customers, via a uniform uplift to price caps.
- Keeping open the option of not pursuing a true up – For example if outturn bad debt costs are not materially higher than the 2% threshold.
- Undertaking the true up – If a 'true up' is required, Ofwat has set out how it expects this to work in practice.
Further consultation on the proposed adjustments to REC price caps can be expected by December.
"While it’s great that regulators are helping the industry deal with bad debt in the wake of the pandemic, raising prices only treats the symptoms. Instead, water companies should head upstream, using customer data to identify and rectify the causes of bad debt, stop it at source and help prevent it from occurring in the first place," she said.
"While recouping costs is a must, water companies shouldn’t just rely on the regulator. Data can help companies segment customers, identify and assist customers that are struggling financially, avoiding penalising the entire customer in tackling the cause of the issue."
United Utilities picks up pipeline award
A race-against-time plumbing job to connect four huge water pipes into the large Haweswater Aqueduct in Cumbria saw United Utilities awarded Utility Project of the Year by Pipeline Industries Guild.
The Hallbank project, near Kendal, was completed within a tight eight-day deadline, in a storm and during the second COVID lockdown last November – and with three hours to spare. Principal construction manager John Dawson said the project helped boost the resilience of water supplies across the North West.
“I think what made us stand out was the scale, the use of future technology and the fact that we were really just one team, working collaboratively for a common goal," he said.
Camus Energy secures $16m funding
Camus Energy, which provides advanced grid management technology, has secured $16 million in a Series A round, led by Park West Asset Management and joined by Congruent Ventures, Wave Capital and other investors, including an investor-owned utility. Camus will leverage the operating capital to expand its grid management software platform to meet growing demand from utilities across North America.
As local utilities look to save money and increase their use of clean energy by tapping into low-cost and low-carbon local resources, Camus' grid management platform provides connectivity between the utility's operations team, its grid-connected equipment and customer devices.