Sustainability in Oil and Gas Industry: Impacts and Challenges

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Table of Contents
1.0 Introduction..........................................................................................................................2
2.0 Sustainability in three stages of oil and gas production.......................................................2
2.1 Upstream Stage.............................................................................................................3
2.2 Midstream Stage...............................................................................................................4
2.3 Downstream Stage...........................................................................................................5
3.0 Impacts of sustainability on the oil and gas companies and the environment.....................5
4.0 Challenges in oil and gas companies...................................................................................8
4.1 During implementation of sustainable methods...............................................................8
4.2 After the implementation of sustainable methods............................................................9
5.0 Sustainability and sustainable development in present and future.....................................10
6.0 Conclusion..........................................................................................................................12
References................................................................................................................................14

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1.0 Introduction
Environmental protection and preservation of natural resources is one of the major
concerns in the recent years for oil and gas companies. The production of oil and gas has led
to severe environmental crisis and climatic changes which has caused grave repercussions for
the society. Majority of the oil and gas companies have been accused for causing disorder to
the surrounding environment. This is the reason that they have been facing issues of
reliability issues from the public and the policy makers in the industry. There has been
various incidents in the past which has made people rethink about the usage of fossil fuel. For
instance, the Deep water Horizon Disaster in the Mexican Gulf in the year of 2010 and Santa
Barbara oil spill in the year of 1969 have developed a negative mentality in the minds of the
people from all over the world (Gros et al. 2014). This has resulted in seeking and
developing of sustainable practices in the oil and gas industry so that further degradation of
the environment can be prevented. The need for sustainability among all the companies in oil
and gas industry aims to meet the current needs of the population by upholding the prospect
of the future generation.
2.0 Sustainability in three stages of oil and gas production
Sustainability in the oil and natural gas industry can be understand only by evaluating
the different stages of supply chain in oil and gas production. The evaluation of the structure
of the industry is critical to highlight the role of oil and gas businesses in modern industry.
There are mainly three segregations of oil and gas process and they are upstream, midstream
and downstream. The upstream process consists of exploration and production where off-
shore and on-shore crude oil are searched for (Yusuf et al. 2014). The midstream and
downstream sectors are the supplements of the upstream process. The midstream deals with
the transportation of storage of crude oil after extraction and the downstream deals with
distribution and refining of the natural gas and crude oil.
Figure 1: Supply chain activities of oil and gas organizations

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Source: (Yusuf et al. 2014)
2.1 Upstream Stage
The above diagram clearly depicts the activities in the supply chain of the every oil and
gas organization. Therefore, implementation of sustainability practices within the supply
chain and development of green supply chain management is crucial for the sustainable
approach to oil and gas production. Green approaches to management of upstream is used for
cost reduction by efficient use of available resources. Environmental issues need to be
incorporated within supply chain management to facilitate sustainable development in
business. As stated by Abdulrahman, Huisingh and Hafkamp (2015), green management can
be defined as the process of including environmental perspective into manufacturing
processes, material sourcing, product development and delivery. The major green
management practices to be incorporated into upstream supply chain context are as follows:
 Joint planning to forestall and resolve issues related to ecology
 Minimization of logistical influence of material flow by developing cooperation
agreement between organizations
 Collaborating with the suppliers for developing environmental perspective
 Monitoring of the environmental activities of the suppliers
 Providing environmental requirements in design specifications to the suppliers
 ISO 14000 certification for all the suppliers
 Green purchasing
 Elimination of environmental impact of products by working jointly with suppliers
and product designers
Meanwhile, lean management is used to add value to the production by reduction
wastage of materials at every stage of production. Ruedel et al. (2017) stated lean
management is critical for integrating all the downstream and upstream activities to
reduce the variation in demand by streamlining, optimizing, creating and simplifying
capabilities by using effective modern systems. Therefore, in order to develop
sustainable practices by using lean management, following tools are recommended:
 Just in time (JIT)
 Consolidation of resources
 Outsourcing production
 Supplier involvement in development of product