Oil and Gas article analysis 1500 words

Commentary on an Article by Stedman (1983) :

This is an analysis of an article by (Stedman, 1983) from the perspective of EIA or Environmental Impact Assessment. It should be noted at the outset that this article now almost three decades old, at a point when EIA policy was an evolving concept and there was little state concern for the environment during this time. Furthermore the article is written from an American perspective only and since then there have been many changes at the Global level in terms of the regulation and implementation of EIA/EIS initiatives. This article makes an interesting read mainly because it is possible to discern from it the sheer disregard of the environment by the hydrocarbon industry and the state of it almost three decades ago. This was a frustrating period for concerned scientists and environmentalists as they saw greedy governments paying little attention to the entire scenario of “going green” or lending any support to the slogan of environmentalism and a sustainable future.

Stedman (1983) does mention many interesting aspects of the environmental disasters in the past few decades, a prominent one being in the year 1969 where there was an oil spill in Santa Barbara. This disaster was pivotal in lying down the foundation stone for the inception and implementation of EIA measures in the form of National Environmental Policy Act (NEPA). The article comments upon the offshore petroleum leasing Environmental Impact Statements, which were written at that point. He has commented upon the stakeholder approach to the EIA, which was subsequently supported and adopted later on in American petroleum leasing policy. The stakeholders here of course were not only the government departments within the Ministry of Interior, and the major industry players of the Oil and Gas industry, but also the general public.

For the first time in American history, as the concept of EIA emerged it was possible for policymakers to embark upon a more holistic approach to environmental policy, looking at it from the perspective of jobs and this has become a focal point of consideration for the government. The Arab Oil embargo was a final warning to the hydrocarbon industry that it needed to organize itself in a more productive, sustainable and environmentally friendly manner.

After the seventies there was a significant shift in American energy security policy. The American public was indignant that until now the USA had been dependant on Arab oil and therefore local policy makers clamoured to secure energy security and independence. In addition to the above, now that domestic oil and gas offshore operations would increase there was a chance that the environmental risks involved would increase greatly and cause many problems. There was a clear tension between the bid for ensuring America’s energy security and the domestic unrest by environmentally concerns governmental and non-profit agencies.

It was also possible to see as Stedman (1983) notes that there was a much more compliance ridden approach to EIS and EIA during the 1970’s when such tasks of health and safety had a checklist approach to them as delegated to governmental bodies and prescribed in lengthy regulations. Many industry players were upset that the environmental litigation now backed by the NEPA would cause unnecessary delays and losses in their Oil and Gas exploration activities as well as the petroleum leasing routines.

Such a marked tension between going green as pitted against an increasingly unsure future for the oil producing potential of United States has continued till date – arguably the recent Gulf oil spill was a result of a US government desperate to secure home-produced oil as quickly as possible. In fact, the European Union has come through a similar and more complicated journey in terms of the regulatory paradigm that needs to be secured in order to avoid environmental criticism and damage and also to boost domestic energy reserves.

It is possible to see that as this procedure for environmental impact assessment (EIA) developed in terms of securing a healthy and red tape free procedure for Offshore Petroleum leasing, the concern for economic efficiency became a focal concern as five year leasing rounds began. There was an effort to get together geological technocrats to advise upon the technical possibilities of biohazards as well as the health and safety concerns and regulations as they related to the energy experts. There were talks to discuss the possible environmental damage avoidance schemes in new plots of leasing areas. More importantly there was a stress on detailed documentation and public hearings wherever the leasing and licensing rounds began. Later, on noting the damage being done to the Oil and Gas industrialists in terms of the delay and unnecessary paperwork produced by public hearings, the procedure was subsequently simplified by the Reagan administration. Streamlining the repetitive agency meetings and public hearings and the EIA review was reduced to a lesser time consuming procedure did this. Stedman also proposed in his article that if there was an improved data acquisition and interpretation procedure, EIA Preparation would become much simpler.

While Stedman noted back in the 1983 that such a measure eroded the opportunity for public review, almost two decades later, as international hydrocarbon policy has evolved in the light of new political and regional challenges, the Author of this commentary would like to take on a different position/opinion here. In the light of recent examples such as the fate of Shell after the Brent Spar spill, the Author of this commentary is of the opinion that sometimes-open decision-making and giving the public excessive information is not a very good idea. Firstly it is a waste of time as passionate environmentalists and NGO’s who want to “Save the Environment” have very little knowledge of what is actually going on during a leasing, exploration and decommissioning process. The lessons from the Brent Spar spill in the UK during the nineties and the improper allegations made against Shell caused enough damage to a petroleum company’s reputation. Too much public involvement can always discourage foreign investment in the oil and gas industry.

It is better to make the EIA a more technical and scientific process now. This is evident from the recent approach taken by the EU where the Operators are directly responsible to the governmental authorities for their failure to protect the environment during drilling and exploration as a part of their lease undertakings. While there is sufficient public involvement, an effort is always made to keep it more practical and less passionate to avoid delays. The aim of a good EIA system should be that it should avoid being overly prescriptive; and while it should set goals, it should not have a checklist effect on the industry. The cost of EIA compliance remains high in terms of the paperwork it produces as well as the delays caused when work is halted due to disagreement. Thus the process should be more effective, responsive and coherent.

Three decades later, it seems now American policy has become more coherent with an older and wiser approach to Environmental Impact Assessment (EIA). Many changes have thus been made post the complications posed by the two Iraq wars and the Afghan war. The American energy security policy is also more focused now on ensuring regular supplies of hydrocarbons from extraneous sources. This has relaxed the pressure on the local oil producing jurisdictions like Alaska and California. It can still learn a lot from the EU Strategic Environmental Assessment (SEA) regime, which lays the foundations for formal procedures through which stakeholders and decision makers are able to gather environmental information about hydrocarbon projects and take this information into account in decision making for the future development consent of petroleum projects subject to EIA.

On a final note, the commentator does agree with Stedman’s contention that unnecessary litigation and delayed consultations can only damage the hydrocarbon industry. This is true in terms of the costs and difficulties posed by financing long and expensive public consultations where there are substantial disagreements between various stakeholders. It seems that to counter this, unlike Stedman’s view, governments will now have to reduce the information given to the public as it can be misconstrued and should take a firm step to go ahead with leasing and development, where the EIA gives mixed signals, but the country’s economy is at stake. There is always an option to utilize the same money to compensate the general public through royalties, and compulsory land purchase. It has been seen that many a times the entire debate has been concerned more with money and industrial rivalries than the actual damage to environment. Many companies might resort to litigation and the use of EIA as a tool for delaying and hindering the entire licensing and development process. The State has to be mindful of the sometimes nefarious and selfish commercial interests which can often form the premise of EIA problems. The hydrocarbon industry needs self-regulation and capitalist freedom now more than ever due to the global recession, which has plagued the US for the past three years.

In conclusion, 27 years down the lane, while the EIA remains an important and positive industrial practice, America still has a lot to learn from other jurisdictions like the EU and the Gulf regions in terms of performing a balancing act when it comes to saving the environment and ensuring that the petroleum market does not suffer from the hindrance posed towards the “invisible hand” (as noted by Stedman) in order to let the US hydrocarbon market function efficiently.




Stedman, B. J. Expand and accelerate: offshore oil and gas leasing and the EIA process. Environmental Impact and Assessment Review. 1983; 4 (3-4)