Oil and Gas

Certification system rates social and environmental responsibility of production sites

How do oil and gas production sites rate on social and environmental responsibility? During today's OnPoint, David Poritz, president of Equitable Origin, discusses his organization's performance standards for oil and gas sites in Latin America and gives details on a Colombia production site that recently received certification. Poritz also discusses his company's plans to expand throughout North America.

Transcript

Monica Trauzzi: Hello and welcome to OnPoint. I'm Monica Trauzzi. Joining me today is David Poritz, president of Equitable Origin. David, thank you for coming on the show.

David Poritz: Thank you for having me.

Monica Trauzzi: David, Equitable Origin is a certification system for oil and gas sites, and you certified your oil production site in Colombia. Why did you start in Latin America, and what was it about that site that made it good for your standards?

David Poritz: Sure, so Latin America has a very interesting mix or what I like to call a cocktail. In Latin America you find high levels of biodiversity, most notably the Amazon rainforest, which is obviously an internationally recognized and protected resource, but you also find very large oil and gas and mining resources as well as many communities who live on or near those resources, so it's this mixing of communities, the environment and oil and gas that has historically created lots of conflict, which has meant that there's big opportunities for improving it, so we chose the region because we saw an immediate need both coming from governments, coming from industry as well as coming from communities.

Monica Trauzzi: So walk us through a bit of the background on how it works. I mean essentially you're auditing a company's business practices and how forward do they need to be with details?

David Poritz: So our system, one of the key components of it is it's site-specific so we do not certify companies at a corporate level. We're focused on every individual site at the production level, and the reason we so that is because there's often a big disconnect between what happens at a corporate level and what's actually implemented at the local level. So our vision and our mission is how do we make sure that we're aligning best environmental social practices and actually verifying that, on the ground. So that's one of the key components to our system in the way that it was conceived. For over three years we developed our EO100 Standard, which is the first standard in the oil and gas industry that actually had input from industry, from NGOs, from local communities and from governments, and that serves as the basis for all the work that we do.

Monica Trauzzi: So what are the key markers that you look at to determine whether a site is socially and environmentally responsible?

David Poritz: Our system is approximately half-focused on environmental components -- so air, water, soil quality, biodiversity -- and about half-focused on social components: community development, a concept called free prior and informed consent, which means does the community want the company to be there, indigenous peoples' rights. Those are the components or the pillars that are actually evaluated through the audits. We as an organization do not audit the companies. That's outsourced to third-party groups, so also one of the key components is we develop the standards. We engage key stakeholders in the process of those standards, but then it's actually independently verified by third-party individuals.

Monica Trauzzi: How could these standards play a role in addressing some of the on-the-ground concerns that we see surrounding fracking?

David Poritz: Sure, so a lot of the components that we see in conventional oil and gas in terms of the spatial impacts, the environmental impacts and the social impacts are also very similar to unconventional. So as an organization and as a company, our initial focus was on conventional oil and gas that was found in Latin America because of the reasons, which I articulated previously, however most of the components that we see affecting fracking also are present in conventional, so as an organization and as a company, one of the things that we're working to do is to actively evaluate and figure out what components would be needed in order to supplement our existing standards in order to properly address holistically the impacts and the concerns that fracking has today.

Monica Trauzzi: How involved do you want governments to be in this? Should government be involved in this system?

David Poritz: So ideally government is a critical stakeholder and a critical actor. In the context of Latin America where we have a lot of experience the governments have played a really important so, in Colombia, where we just successfully completed the first full certification of the first site, which was operated by Canadian company, called Pacific Rubiales, they actually produce about 250,000 barrels a day, which equates to about 25 percent of Colombia's national production. And the government of Colombia was a key actor in supporting the implementation of those standards and actually commenting on the content of those standards. So our view is that, when possible, engaging the government -- and getting them to push the standards and support the standards -- is really critical and really important.

Monica Trauzzi: How much demand is there within the oil and gas industry for a stamp of approval like this one? Are they really focused on the social-responsibility aspects of production, or is it more about pleasing investors?

David Poritz: So I think it's about both, and I also think that we're seeing a really interesting shift and a really interesting change. Historically again many people would argue that environmental and social issues were kind of viewed by oil and gas executives as more soft issues that weren't core to their business. I've personally seen over the last two to three years -- and I think many people would agree -- that environmental and social issues, whether you want to call it, you know, corporate social responsibility or environmental and social performance, these are becoming core business issues that oil and gas executives are really wanting to incorporate into their operations, and the reason for that is because when companies do not implement these systems and when they do not have adequate mechanisms to ensure that, their environmental and social performance across their operations is minimized. They're exposing themselves to quite sizable risk both from legal -- both from regulators and from lawsuits -- but also reputational, in terms of their brand. So I think one of the very promising trends that I'm seeing and I think that we're seeing as a community is that investors are starting to take these issues -- and oil and gas executives are starting to take these issues -- really seriously.

Monica Trauzzi: All right. Very interesting and we'll end it there. Thank you for coming on the show.

David Poritz: Sure. Thank you for having me.

Monica Trauzzi: And thanks for watching. We'll see you back here tomorrow.

[End of Audio]

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