We seek to adopt industry best practice when managing material social responsibility issues, exceeding stakeholder expectations for governance, environmental and social performance wherever we can.
- 20% reduction in our Total Recordable Injury Rate to 1.53 from 1.91 in 2015.
- 14 High Potential Incidents were recorded in 2016, compared to seven in 2015, due largely to an improved understanding of how these events are defined in both the personal and process safety environments.
- 31 instances of safe working behavior were recognised through our safety awards programme.
- Zero Tier 1 and two Tier 2 process safety events occurred, down from three and five respectively in 2015.
- We became a participant in the Voluntary Principles on Security and Human Rights.
- Zero significant spills occurred.
- We outperformed our emissions intensity target by achieving a 50% reduction in emissions intensity from 93 ktCO2-e/mmboe in 2009 to 46 ktCO2-e/mmboe in 2016.
- 3-5 cubic metres of compost per day generated from food waste was distributed for re-use internally or within host communities.
- 99% of our employees and on-site consultants have completed corruption prevention training.
- Human rights training materials were developed for personnel in high-risk roles, along with employee induction materials that will be rolled out in 2017.
A targeted plan toward improved safety performance
In 2016, our Total Recordable Injury Rate (TRIR) declined 20%, from 1.91 in 2015 to 1.53. This is our best performance since 2009 and is the fourth consecutive year-on-year improvement. Of the 12 recordable incidents during the year, there were two Lost Work Day cases, four Restricted Work Day cases and six cases requiring medical treatment.
Our TRIR in the first half of the year was 65% higher than in the second half of 2015. In June 2016, we conducted a workshop for operational and senior management to review our performance and try to understand and address the root causes behind the increase in injuries. The review identified a small number of activities and locations that were contributing to the trend.
Our response included:
- An increase in senior leadership presence in operational areas.
- A ‘Small Stuff Matters’ awareness campaign, aimed at improving awareness to reduce the number of minor incidents such as cuts and bruises.
- A renewed focus on pre-start planning, especially for new activities.
- Continued implementation of engineering projects designed to reduce incidents through equipment modifications.
The result was a significant reduction in recordable injuries, from 10 injuries during the first six months of the year to two in the second.
In contrast to the improvements in recordable incident performance, we experienced an increase in High Potential Incidents reported during the year, from seven in 2015 to 14 in 2016. The increase was largely related to the inclusion of potential Major Accident Events (MAEs) as High Potential incidents during 2016. We had reviewed our facilities to improve our understanding of potential MAE scenarios, leading to an increase in the number of near miss incidents classified as MAEs. In turn, this resulted in an increase in the number of incidents we now classify as High Potential. Eight out of the 14 High Potential Incidents related to process safety, and of those eight, six were linked to potential MAEs.
In 2016, as part of our ongoing monitoring of Lanco performance, we saw an opportunity to engage with one of our land transport providers to determine how we could work together to improve their safety performance. When we reviewed their performance data, we identified several incidents involving lost loads. None involved injury, but many resulted in minor spills and equipment damage. We worked with the Lanco to implement a safety improvement plan that included load lashing training, driver assessments and pre-departure checks. The safety improvement plan delivered a 50% reduction in lost loads during the second half of the year.
Maintaining high process safety standards
Process safety in the oil and gas industry focuses on the major hazards typically associated with drilling and production activities. Left uncontrolled, these hazards can lead to loss of life, environmental damage and loss of assets as a result of toxic releases, fires or explosions. The goal of process safety management is to ensure that proper systems and procedures are in place to control the hazards. Demonstrating that effective preventative and mitigating controls are in place provides assurance that process safety is being properly managed.
In 2016, we concluded our Process Safety Improvement Plan (PSIP). Launched in 2013, the PSIP was designed to accelerate process safety improvements across the Company. The Plan resulted in substantial improvements to risk management relating to our production and drilling activities in PNG.
The key process safety initiatives that we undertook during 2016 included:
- Conducting technical safety studies to support risk management efforts and identify risk reduction options at all facilities.
- Executing engineered risk reduction projects to improve how we manage the interface between high-pressure and low-pressure systems.
- Introducing tools to assist operators with isolating and temporarily removing safety-critical equipment from service during maintenance.
- Installing software to enable real time monitoring of system parameters and excursions outside the design operating envelopes.
- Completing an alarm rationalisation programme at two facilities to reduce panel alarms to a manageable level and ensure an appropriate response by panel operators.
- Preparing a Basis for Safe Operations for the Central Processing Facility that formally documents our compliance with accepted risk levels.
As a result of these and other measures, we witnessed a substantial improvement in process safety event (PSE) performance, from three Tier 1 and five Tier 2 PSEs in 2015 to zero Tier 1 and two Tier 2 PSEs in 2016.
With our PSIP successfully concluded in 2016, the Process Safety Management Framework will guide ongoing process safety management.
In 2017, we will continue to work with our field operators to build their understanding and management of process safety and work towards further reducing our Tier 2 PSEs.
Demobilising from our Kurdistan operations
Due to disappointing results from our appraisal drilling programme in Taza in the Kurdistan Region of Iraq, in 2016 we made the decision to relinquish our interest in the Taza licence and withdraw from the country. This required us to permanently abandon the three wells drilled, remove all traces of the operation, rehabilitate the land where our well pads were located, and wind down our office in Sulaymaniyah.
Although our Taza operations were only in the exploratory phase, departing from a project can have a significant impact on the lives of host communities, so we attempted to do so in a considerate and transparent manner.
We took the following steps:
- Awareness and consultation – We conducted a Town Hall meeting and many smaller consultations to notify local government representatives and host community members of our intention to exit. Compensation for land used during the operations has been finalised according to government rates and will be fully paid early in 2017.
- Rehabilitation – We cleared sites of all introduced materials and other features such as roads and levelled work sites were removed, re-contoured or left as is, depending on the landowner’s preference. We received acceptance and consent forms from all landowners, indicating their satisfaction with our rehabilitation activities and the compensation we provided. These were signed on-site, providing them with an opportunity to ask any questions or raise and resolve any concerns. The lands have now been formally handed back through the relevant authorities.
- Waste removal – Drill cuttings, which include traces of drilling mud chemicals and hydrocarbons from the well, were chemically fixed and buried in lined and sealed pits, in accordance with local regulations. We transported other hazardous and non-hazardous waste to certified landfill sites.
- Recycling and repurposing – Wherever possible, we donated items such as fencing and reusable building materials to local landowners or police. We handed our water supply wells and pumps to the local water authority for use in water delivery to local villages.
Throughout the demobilisation process, members of Oil Search’s Community Affairs team were on call to talk with local landowners. Local suppliers were engaged throughout the demobilisation process. There have been site visits by government representatives and they have accepted Abandonment and Reclamation Reports outlining the steps we took. A stakeholder engagement employee remains present in Sulaymaniah as a point of contact for government and community members.
Waste treatment improvements
Due to the lack of waste processing facilities in PNG, incineration is our largest waste disposal method. In November 2016, we commissioned a new high-temperature incinerator at the Kutubu Waste Management Area that has improved the performance and efficiency of our waste management. Its benefits include:
- Reduced health, safety and environmental risks, due to a reduction in air emissions and the amount of time that waste is stored.
- Increased waste handling capacity, including the volume and type of waste that can be treated.
- Improved ability to dispose of redundant liquid chemicals onsite.
- Reduced maintenance costs.
We established designated waste metals management areas and consolidated scrap metal stockpiles at various facilities, allowing for better management and treatment.
In 2015, we commenced a bio-remediation trial to investigate the viability of processing hydrocarbon-contaminated sand organically onsite. During 2016, we identified the optimum combination of additives such as bacteria and compost for the effective degradation of hydrocarbons. This was challenging due to the high levels of rainfall and humidity in our operational areas in the Southern Highlands. However, the trial was successful and we have now established a dedicated bioremediation facility.
Developing a strategic biodiversity approach
We are currently developing a more strategic approach to managing the biodiversity impacts and opportunities presented by our operations. This approach aligns with our continuous performance improvement commitment, as outlined in our Social Responsibility Policy and Strategy, and will ensure we comply with current and future environmental regulations in PNG.
In 2016, we conducted a biodiversity risk assessment for all licence and adjoining areas, drawing on the results of environmental impact assessments, revegetation surveys and aquatic surveys. It identified areas as being of high, medium or low biodiversity value by assessing the prevalence of:
- intact, remnant and untouched forests,
- threatened flora and fauna,
- endemic species.
In 2017, we will combine this information with the results of an assessment of the residual impacts arising from our activities. Our intention is to identify any gaps or opportunities and put in place a plan to manage our impacts on biodiversity. We will continue to engage with the PNG Government over the implications of proposed changes to environment legislation, which require resource companies to invest in biodiversity offsets for future projects.
During the year, we continued to work with the Lake Kutubu Wildlife Management Authority (WMA), supporting their work in managing and protecting the lake’s biodiversity. We conducted a net swap programme to enable villagers to swap their existing small diameter nets for larger diameter nets which are more likely to target introduced tilapia fish and allow smaller endemic species to escape. In addition, we continued to explore scientific methods for the reduction and elimination of tilapia from the lake. Towards the end of the year, we commenced consultation with the Conservation and Environmental Protection Agency (CEPA), National Fisheries Authority and the WMA Committee to develop a solution. Further planning and evaluation will be undertaken in 2017.
Consultation and engagement continues with the WMA Committee and CEPA to establish a community-led Lake Management Plan. At various workshops throughout the year, community representatives contributed ideas and views on culturally appropriate outcomes that will help meet their socio-economic and conservation priorities. These are being evaluated by technical experts for their conservation merit and application under a sustainable governance and management model.
We will explore further opportunities to partner and collaborate with our peers and other organisations on biodiversity outcomes during 2017.
Strengthening our climate change understanding
2016 marked the final year of our five-year operational emissions reduction target. Our emissions in 2016 were 941 ktCO2-e and our emissions intensity 46 ktCO2-e/mmboe. Compared to an emissions intensity of 93 ktCO2-e/mmboe in 2009, this represents a 50% reduction and out-performs our target level of a 12% reduction in emissions intensity by 2016 against a 2009 baseline. This achievement was predominantly due to ongoing flare reduction initiatives and, to a lesser extent, the shift in composition of production from largely oil to oil and gas during the period.
Over the last few years, there have been many developments in our sector relating to climate change, so we conducted a robust situation analysis during 2016. The analysis informed our new Climate Change Strategy, ensuring we remain prepared for future carbon constraints.
The analysis included:
- Consideration of the role of oil and gas in the energy outlook to 2035.
- Benchmarking peer strategies and initiatives in response to climate change.
- Evaluating opportunities to continue reducing emissions from existing assets.
- Evaluating and considering investor and stakeholder concerns and information requests.
- Evaluating PNG climate change commitments and opportunities.
Given the smaller scale of our activities and operations compared to our peers, we considered a combination of the scenario analyses conducted by leading energy authorities, including the International Energy Agency and Wood Mackenzie, and major oil and gas peers. Our outlook and strategic response reflects a consensus view obtained from these sources.
The resulting Climate Change Strategy was approved by the Oil Search Board in October. It formalises several existing initiatives already underway, and will be reviewed annually. We will explore further new initiatives in 2017. These include: greater collaboration with our peers and industry bodies; evaluating and setting an internal carbon price; adding climate-related KPIs for members of our senior management team; and other measures to ensure we adequately understand and consider the risks associated with climate change.
During the year, we participated in a REDD+ workshop organised by the PNG Climate Change Development Authority (CCDA) that covered topics such as the National Forest Monitoring System Action Plan, Greenhouse Gas Inventory and Forest Reference Level. We also attended a post-Paris Agreement update and ratification workshop organised by the CCDA.
We continue to monitor our global and local response and actions to ensure we are playing an appropriate role in our industry’s climate change actions. See Climate Change for further information on our climate change position, governance, strategy and implementation.
Aligning our occupational health system with best practice
In 2016, we reviewed our occupational health systems and procedures against best practice across eight key areas, including: health risk management, control of workplace exposures, medical emergency management, fitness-for-work, health reporting and public health.
While we performed well in all areas, we have identified opportunities to improve how we control workplace exposures. To address this, we have scheduled the implementation of a dedicated programme in 2017 that will involve greater collaboration between our health and safety departments.
Also during the year, we re-aligned our disease collation process with the World Health Organisation International Classification of Diseases and cross-checked the requirements with those of the PNG Government. We are now amending our database to ensure we align with these standards.
Stronger focus on embedding human rights
In December, our application to become a Corporate Pillar Participant in the Voluntary Principles on Security and Human Rights (VPSHS) was approved. This is a visible demonstration of our commitment to human rights and to reducing the risk of our potential involvement in a human rights abuse. As signatories, we are required to implement the principles of the VPSHS in our business activities.
We’d already integrated implementation of many aspects of the Principles in our way of operating. For example, our security personnel contracts address unacceptable behaviours such as sexual violence, forced evictions and arbitrary arrest or detention.
We have also started working towards a Memorandum of Understanding with the Royal PNG Constabulary to promote and agree our shared expectations for the behaviour of public security forces. This will underpin our compliance with the Voluntary Principles, and efforts to reach agreement will continue in 2017.
During the year, we strengthened the integration of human rights into our business. We developed a human rights training programme for high-exposure roles and an induction training module for roll-out in 2017. Human rights elements were also integrated into stakeholder engagement and consultation, compensation, risk assessments, and as indicators in baseline studies. We also drafted and trialled a land access and resettlement procedure and a social impact assessment and management procedure which integrate core human rights principles.
These procedures were vital to informing the process of our first resettlement at Kobalu during the Muruk drilling campaign. The temporary resettlement of Kobalu was completed in 2016 in accordance with the Temporary Resettlement and Livelihood Restoration Plan agreed with the community. Unfortunately, conflict in the area, which was unrelated to the drilling project, meant that most villagers were unwilling to rebuild their homes at the originally selected site. We subsequently agreed with the community that the cash compensation proposed for reinstatement of homes, gardens and pig houses could be utilised at the discretion of each home-owner to re-establish livelihood elsewhere.
Responding to instability in the Hela Province
The Hela Province of PNG is home to the country’s largest natural gas project, the PNG LNG Project, which is operated by ExxonMobil PNG Limited on behalf of six partners, including Oil Search.
We have a long history of activity in the province, which is known for its strong culture and proud traditions. Like other parts of rural PNG, it experiences high levels of tribal-related fighting and lacks public services and development. Ongoing legal issues between local landowners themselves and with the PNG Government regarding unpaid PNG LNG Project royalties, are adding to community unrest.
In August, Hela landowners began protesting the lack of royalty payments outside PNG LNG gates, blocking access to project wellheads and roads. PNG LNG operations continued as normal and Oil Search’s operations were not impacted. The PNG Department of Petroleum & Energy (DPE) responded with a mediation meeting with local landowners to discuss their grievances. As a trusted Operator in PNG, we used our strong community relationships to facilitate communication between the groups so an agreement could be reached.
The protests ended 10 days later after all parties agreed to a Memorandum of Understanding (MOU). This included the payment of a US$11 million Infrastructure Development Grant (IDG) by the PNG Government to the Hides Special Purpose Authority within a week of the agreement’s date of 18 August.
At the time of writing, payment of the IDG had not occurred due to legal action by other landowners in the region against the PNG Government.
Towards the end of 2016, tribal-related violence and the number of illegal firearms increased in Hela. In December, the PNG Government declared a State of Emergency and deployed 300 police and PNG Defence Force personnel to help restore law and order. The Government is likely to maintain security in the region until the 2017 election is completed. These events did not disrupt PNG LNG or Oil Search operations.
In 2017, we will continue to support efforts towards a resolution and stability in the region, including our ongoing contribution to sustainable development and facilitating opportunities for communication between parties.