Local Risk Management

Access to water is essential to the communities and ecosystems near our operations and for our ability to produce natural gas and oil. We identify and mitigate water risks at every stage of development and continue to work to improve our environmental performance.

Governance

Our governance structure provides board and management oversight of our risk processes and mitigation plans. Priority water risks and mitigation measures are provided to the executive leadership champion for water.  They are also identified by application of the SD Risk Management Standard and are mapped to key categories in the enterprise risk management (ERM) process and shared with category risk owners to inform their assessments of risk ranking and mitigation actions. By identifying major crosscutting risks and trends, we closely link action plan efforts to key performance issues and mitigate identified risks. The ERM system and mitigation actions are reviewed regularly by executive leadership and the board of directors.  

Read more about our sustainable development governance structure.

Strategy

Water is an essential natural resource for communities, ecosystems and economic development. It is also integral to our operations. Our strategic priorities are to:

  • Continue to integrate water management into asset lifetime risk assessments, asset planning and project design.
  • Identify, rank and mitigate water risks through established management processes.
  • Identify and implement opportunities for improving water management performance through metrics tracking and through leveraging technology and innovation.
  • Promote continuous improvement of a water stewardship culture through development of corporate guidance and engagement with company staff and external stakeholders.

Portfolio Risks and Exposure

Water risks are evolving globally in response to cumulative effects of human water demand and impacts to local water resources, physical effects of climate change, local water stress, and changing priorities and expectations of governments, investors and society. Risks could impact our business through project delays, business interruption, policy or regulatory costs. Potential water risks for our business and asset portfolio are related to:

  • Restricted access to water supply or produced water discharge/disposal options.
  • Policy changes to address basin-level cumulative effects, limiting production techniques such as hydraulic fracturing or restricting produced water discharge/disposal.
  • Changes related to the impact of physical effects of climate change on local water resources, such as changes in precipitation patterns and temperature.
  • Actions by investors and the financial sector including ESG performance and reporting expectations, shareholder resolutions, access to capital and credit ratings.

For our operations, local water risks are determined by the combination of social, regulatory, economic and environmental conditions, which are unique to every basin or offshore marine area. Risks are influenced by the type of operation – whether we explore for or produce crude oil, bitumen, natural gas, natural gas liquids or liquefied natural gas – and whether we operate an unconventional reservoir or within a conventional field onshore or offshore.

Assessing Water Risks

As part of the annual risk management process mandated by our SD Risk Management Standard, water risks are identified and assessed by subject matter experts in each business unit (BU), operated asset and project. Water risk assessments consider: 

  • Local availability of water needed for drilling, enhanced oil recovery (EOR), hydraulic fracturing, steam generation, terminals, liquefied natural gas (LNG) production and decommissioning.
  • Transport and storage of source water and produced water.
  • Produced water or process wastewater treatment requirements.
  • Water quality of discharged produced water and process wastewater.
  • Produced water disposal.

Once identified, each risk is plotted on a matrix that evaluates both its likelihood of occurrence and consequence. In evaluating the consequence severity, we consider potential impacts on employee and public safety, socio-cultural and economic impacts to stakeholders, environmental impacts, and reputational and financial implications.

Risk Register and Action Plan

For risks rated significant or high, mitigation actions are developed and included in the corporate SD Risk Register. The standard describes the process and requirements for priority risks and mitigation actions that are included in the register. 

The 2019 Risk Register includes two categories for water: secure source of water supply and produced water management.

Risks 2019 Mitigation Actions and Milestones
Secure Source of Water Supply
Insufficient access to freshwater, due to basin-level cumulative and long-term water withdrawal.
  • Achieved sourcing agreement with local Indigenous group and secured long-term water license for our Montney operations.
  • Worked towards achieving oil sands freshwater intensity reduction goal. 
  • Worked with business units to develop freshwater intensity metrics.
  • Enabled produced water recycling through installation of central gathering, distribution and treatment facilities at China Draw and Montney.*
  • Developed local produced water recycling targets for China Draw and Montney.*
  • Integrating water sourcing risks into climate resiliency (physical climate impacts) workshops and project planning and design.*
Produced Water Management
Insufficient available produced water disposal capacity or restrictions due to basin-level cumulative and long-term produced water disposal.
  • Installed produced water central gathering and distribution system for new wells in Eagle Ford, Dewitt County.
  • Participating in research initiatives on third party reuse of treated produced water.
  • Monitored seismic events in the vicinity of operations and completed seismicity risk assessments.
  • Achieved performance goal for oil in water concentration in produced water discharges of less than 10 mg/L in Norway.

 * Mitigation applies to both secure source and produced water management risks. 

Our corporate Water Action Plan addresses these priority risks and provides information about the accountable action owner, milestones and target completion dates. Line-of-sight goals for business units and key functions are shown as specific action items within the plan, and progress is reported through our governance structure to the ELT and board.