They Know But Won't Admit: How Oil and Gas Companies are Adapting to Climate Change
In one of most ironic flip-flops in environmental history, the oil and gas industry is beginning to adapt to climate change. And it's no wonder. The majority of industry's infrastructure is located in some of the most climate vulnerable regions on the planet. Nearly 75 percent of the Alaskan pipeline, for example, is built over increasingly unstable permafrost, which is now thawing under warmer temperatures. The Mackenzie Valley in Canada alone has recorded over 2,000 sink holes, rock slides, and large depressions from thawing permafrost.
The pipeline's famous elevated design was the result of a 20 year study (PDF) on the stability of climate and permafrost from 1950 to 1970. Based on the historic record, engineers designed the supports for the pipeline to withstand some fluctuation in permafrost, but not for the extensive melts now predicted. Indeed, that 20 year study was the one of the coldest periods in Alaskan history. Whoops. Now the supports for the Alaskan pipeline have to be upgraded for a changing climate, and, since the physical lines are heavily subsidized by federal and state governments, it is unclear who will pay.
Now the very industry that publicly denies the very reality of climate change, is looking to climate experts for help. They cooperated with consultants who analyzed oil and gas industry's ability to absorb impacts from a changing climate. The resulting report was a terse assessment showing that the oil and gas industry was far behind the climate action curve.
IBM teamed with two heavyweight climate consultancies, Acclimatise and Carbon Disclosure Project to produce the report, Building Business Resilience to Inevitable Climate Change. Located in the UK, the climate consultants work primarily with very large corporations to identify how climate change will impact their products. The oil and gas industry, already overly sensitive to political and economic swings, is not prepared for the impacts to their physical assets. For example, oil platforms located in shallow oceans were not at all built with sea level rise in mind. This is not to mention being battered by bigger and more frequent storms such as Hurricane Katrina.
The consultant group also analyzed several impacts that could affect the industry in unexpected ways. Take water, for one example. Oil and gas extraction heavily depends on local water resources for production. Climate change is expected to significantly increase the demand for high quality surface and ground water around the world. In addition to shortages, higher demand increases risks to the industry from potential civil and geo-political conflict. demand comes increased governmental regulation, which will cost the industry more in permitting and development.
The report (PDF) generated a "Global Risk Landscape," which identifies 8 areas that will impact the oil and gas industries.
To effectively adapt to climate change, the solutions offered were broad and general. IBM and Acclimatise identified several key areas of action, the bulk of which address corporate operations. First, industry should begin to assess how climate change affects individual company's business models. In other words, the consultants want the industry to internally reflect and ask, Are current plans taking account of a changed climate world? Second, can infrastructure be adapted to accommodate impacts? Engineers will need to find inexpensive solutions to protect oil and gas assets, especially if those assets lifespans are coming to an end. Finally, they consultants recommend the industry incorporate climate change science into operations. It is this last point that I find most ironic. Like the snake eating its own tail, will oil and gas realize they're their own worst enemy?
Editor's note: Michael Cote, the author of this piece, is a climate adaptation and urban planning expert, friend (and once-upon-a-time newspaper reporter) who I first met in Copenhagen before the COP15 climate talks. Over the past couple of months, I've been working with Cote to develop a regular feature for GOOD's environment hub on climate adaptation solutions from around the world. We're still working on a title for his regular, recurring series of posts, so let us know if you have any suggestions! —Ben Jervey