Environment

Social Capital

  • Human Rights & Community Relations
  • Customer Privacy
  • Data Security
  • Access & Affordability
  • Product Quality & Safety
  • Customer Welfare
  • Selling Practices & Product Labeling

Human Capital

  • Labor Practices
  • Employee Health & Safety
  • Employee Engagement, Diversity & Inclusion

Business Model & Innovation

  • Product Design & Lifecycle Management
  • Business Model Resilience
  • Supply Chain Management
  • Materials Sourcing & Efficiency
  • Physical Impacts of Climate Change
General Issue Category
(industry agnostic)

Disclosure Topics (industry specific) for:
Oil & Gas – Midstream

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GHG Emissions

Greenhouse Gas Emissions

The midstream industry generates significant quantities of greenhouse gases and other air emissions from compressor engine exhausts, oil and condensate tank vents, natural gas processing, and fugitive emissions, in addition to emissions from mobile sources. GHG emissions contribute to climate change and create additional regulatory compliance costs and risks for midstream companies due to climate change mitigation policies. At the same time, the management of fugitive emissions of methane, a potent greenhouse gas, has emerged as a major operational, reputational, and regulatory risk. Financial impacts on companies will vary depending on the specific location of operations and the prevailing emissions regulations, and include higher operating or capital expenditures and regulatory or legal penalties. Companies that capture and monetize, or cost-effectively reduce emissions by implementing innovative monitoring and mitigation efforts and fuel efficiency measures could enjoy several benefits. These companies have the opportunity to reduce regulatory risks and to realize operational efficiencies in an environment of increasing regulatory and public concerns about air quality and climate change.

Air Quality

Air Quality

Air emissions from midstream companies include hazardous air pollutants, criteria air pollutants, and volatile organic compounds (VOCs), which can have significant, localized human health and environmental impacts.  Of particular concern are sulfur dioxide, nitrogen dioxide, and VOC emissions. The financial impacts on companies from air emissions will vary depending on the specific locations of operations and the prevailing air emissions regulations.  Active management of the issue—through technological and process improvements—could allow companies to limit the impact of regulations in an environment of increasing regulatory and public concerns about air quality. Companies could benefit from operational efficiencies that could lead to a lower cost structure over time.

Ecological Impacts

Ecological Impacts

The storage and transport of crude oil, natural gas, and related products through a vast system of maritime transportation vehicles, pipelines, trains, and trucks presents considerable risk to the environment and to local communities. Leaks, accidental discharges, pipeline rights-of-way, and open easements over ecologically sensitive land could impact ecosystems in several ways, including natural habitat loss and changes in species movement. Regulatory agencies, supported by legislation that protects endangered species and ecologically sensitive areas, require plans to mitigate or remediate negative ecological impacts prior to project approval. Together with regulatory compliance costs, these can require significant capital and operational expenditures. As concerns over ecological impacts grow, companies could face the risk that additional areas are designated as protected areas under new or existing laws. Companies that prevent and proactively manage ecological impacts can avoid project delays, remediation, and litigation liabilities, and gain easier access to new projects and sources of revenue.

Competitive Behavior

Competitive Behavior

Companies that own natural gas pipelines and storage facilities face numerous and constantly changing regulations from the Federal Energy Regulatory Commission (FERC) in all aspects of their operations, including rates charged, access offered to pipelines, and siting and construction of new facilities. Pipeline companies enjoy a natural monopoly, and FERC regulations ensure that companies do not abuse this position through unfair pricing, discriminatory service, or by other means. Due to concerns about the impacts of oil and gas market distortions on American consumers and businesses, new market manipulation regulations issued by the Federal Trade Commission or the Commodity Futures Trading Commission could also affect the Midstream industry. Companies could be affected by prospective rate changes, compensation payments, or regulatory penalties for violating regulations governing competitive behavior. Midstream companies face uncertainty in relation to their ability to change the rates charged, which could affect their ability to recover higher costs.

Critical Incident Risk Management

Operational Safety, Emergency Preparedness & Response

Midstream companies operate a vast network of assets that face risks of spills and accidents. Any incident that results in the unintended releases of hydrocarbons could have wide-ranging impacts on the environment, employees, and local communities. As a result of these concerns, new safety regulations related to pipeline and rail operations are emerging. Significant events could create one-time costs from fines and corrective actions and contingent liabilities for remediation or damages in lawsuits. These factors could also erode a company’s social license to operate. In order to avoid or minimize such risks, investigations of past incidents show that it is extremely important to develop a strong safety culture, and establish a thorough and systematic approach to safety and risk management. This includes emergency preparedness and response and operational integrity across the company and in relationships with contractors.

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