Topic: extractive industries

Shale Gas

Kevin Lustig — Tue, 20 Nov 2012 18:10:56 -0500

WRI is providing insight into this issue by:

Creating guidance on how to define the life cycle of shale gas projects, in order to better assess their impacts
Studying how shale gas development in China affects the energy picture in the U.S. and internationally
Taking a detailed look at how we produce and consume energy in U.S. states and regions
Assessing the risk to water resources posed by shale gas development

Shale gas is a game-changer for global energy supply. It is already transforming the U.S. energy outlook (see figure below), and is expected to deliver over 40% of domestic gas production by 2025. Opinion is bitterly divided, however, over the environmental risks and benefits of this abundant new source of energy – so much so, that the different sides struggle to agree even on basic facts. The debate is raging over two key issues – on-the-ground impacts to water, air, communities, land use, wildlife, and habitats; and the broader energy and global warming implications of developing shale gas.

Upcoming Event
April 4, 2013
Launch of a new WRI working paper Clearing the Air: Reducing Upstream Greenhouse Gas Emissions from U.S. Natural Gas Systems

Managing Land for Mining and Conservation in the Democratic Republic of Congo

Peter Veit — Thu, 09 Aug 2012 13:46:41 -0400

This paper originally appeared on the Africa Biodiversity Collaborative Group website. The full text of the paper is available here.

Summary

With significant areas of overlapping high biodiversity resources and mineral wealth, the Democratic Republic of Congo (DRC) faces increasing pressure from competing uses of land widely considered incompatible. This policy paper reviews the rise of commercial mining and the mining concessions afforded ostensibly at the expense of conservation efforts where protected areas and mining permits overlap. The paper highlights the need for the DRC to review and harmonize multiple and often contradictory laws, strengthen land use laws, and build implemetation and enforcement capacity.

Read the full paper

Q&A: Avoiding the Resource Curse in Uganda

Peter Veit — Fri, 08 Apr 2011 14:48:36 -0400

The following Q&A and photo essay originally appeared on allAfrica.com, and are reposted with permission.

Uganda stands to be the latest African country to benefit from newly discovered resources of oil. If used successfully, the nation’s petroleum reserves could spur development and improve the lives of millions of Ugandans. But if used improperly – with lack of transparency and insufficient regard for the environment – Uganda could become stricken by the “resource curse,” or a negative overall impact despite great potential to improve a nation’s wellbeing.

WRI is working with Ugandan non-governmental organizations to help assure that Uganda’s petroleum industry is transparent, benefits all Ugandans and is environmentally careful. Peter Veit, a senior fellow at WRI, and associate Florence Landsberg, discussed the impact of the discovery of oil in Uganda with allAfrica’s Cindy Shiner.

Lake Albert

Kyohero fishing village on the shores of Lake Albert, Uganda. The discovery of oil around the Lake Albert region has raised hopes of boosting development in the nation. Photo: Greenwatch

Development Challenges

Women coming from the market at Runga fish landing site in the Lake Albert region. Although development has improved with the construction of new roads, population growth and greater trade have depleted fish stocks that local communities rely on for their livelihoods. There are concerns that local development will not be sustainable. Photo: Robert Byaruhanga

Kisoro Market

Biweekly Market in Kisoro, south of Lake Albert on the border with Rwanda. This is within the Albertine Rift, where oil is being explored in Uganda. Photo Richard Duncombe

Community Engagement

Local non-governmental organizations have been active in undertaking community engagement for villages affected by oil production on Lake Albert. Photo: Robert Byaruhanga

Awareness of Rights

They are being made aware of their rights and how the discovery of oil might affect their communities. The goal is to avoid the ‘resource curse’ that has plagued some nations that have vast wealth underfoot, but have failed to develop. Photo: Robert Byaruhanga

Community Meeting at Bombo Parish

Here, villagers put on a drama show on the impact of oil exploration. This was held at Bombo parish, Kigorobya subcounty, Hoima District in the Lake Albert region. Photo: Robert Byaruhanga

Managing the Flow of Oil

Open drill waste management pit managed by Tullow Oil in Uganda’s Hoima District. With the assistance of the World Resources Institute (WRI), Ugandan NGOs are working to help ensure that Uganda’s petroleum industry is transparent, benefits all Ugandans and is environmentally careful. Photo: Greenwatch

National Parks

Government officials and others on tour of Kaiso Tonya Oil Exploration sites on Lake Albert. There are fissures within the Ugandan government over how to deal with oil exploration and extraction in the country’s national parks. Photo: Robert Byaruhanga

Total, S.A. Petrol Station, Kampala

Total owns two major oil concessions in the Lake Albert region of Uganda. Three promised petroleum bills are being presented to parliament this year about management of Uganda’s oil revenues. WRI says they should give a good indication about how transparent the government will be regarding Uganda’s oil industry. Photo: Alisa Zomer, WRI

A Need for Transparency

Mini buses crowd the streets of Kampala, Uganda. The actors linked to Uganda’s oil agree that the discovery of petroleum is a good thing for the country, as long as there is transparency, respect for the environment and sustainable development. Photo: Richard Duncombe

Tell us about WRI’s work in Uganda.

Veit: We’ve been working in Uganda for over 20 years on a range of issues that place us nicely to deal with some of the oil issues. We have been looking at alternative revenue-sharing formulas for oil revenue management and reinvestment. We’ve been looking at issues of disclosure and transparency, specifically on the production-sharing agreements, but also more broadly on oil revenue information.

Florence [Landsberg] has been working on the environmental aspect of the potential oil effects, both to protected areas and, perhaps most importantly, on local populations around Lake Albert. More recently we’ve been working on land-grabbing issues in the oil districts. Land values have increased, the number of land transactions has increased and the number of non-Bonyoro people that have acquired land in the oil districts has increased significantly.

What are the potential environmental impacts? The Albertine Rift has great value for its biodiversity.

Landsberg: There are direct impacts; they are going to convert wild areas to settlement and things like that. But I would like to speak about the indirect impacts.

For example, the Albertine Rift in Uganda used to be quite remote. You will have more migrations of more people into the area, and better roads. The rate at which natural resources are used is going to increase - which could be an opportunity for development, except that it is not likely to be sustainable. Many local populations around the lake are fisher folks. They already have a hard time, because there are less fish and they are smaller. And now that there are more people around the lake and more access to markets, there has been more overfishing, so the situation is worsening.

You said that development would not be sustainable – why?

Landsberg: The fish stock is already at risk, because there is more catching of fish that are not mature. The upgrade of the roads has allowed for more fish to be exported. The restocking of the fish is not going to happen if there is no intervention.

Veit: To add to that, many scientists will tell you that the Albertine Rift is the most biologically diverse area in all of Africa. There are national parks, wildlife sanctuaries, forest reserves, and there already is some impact on these protected areas. For example, there is drilling in Murchison Falls National Park, even though many public interest environmental lawyers in Uganda will tell you that the law does not allow that. Kenneth Kakuru of Greenwatch has filed a pleading in the High Court over extractive resource industries in national parks.

There was already discussion of de-gazetting one of the parks to make way for an oil refinery. There is discussion of a pipeline that would take the oil to Mombassa that would have effects on biodiversity. And there is also discussion about oil workers poaching inside protected areas.

How receptive has the government of Uganda been to these issues being brought to their attention?

Veit: There’s what appears to be an interesting split between the president, his cabinet and the oil department, versus the forestry department and the Uganda Wildlife Authority. On one hand, the Wildlife Authority has threatened to kick Tullow Oil workers out of some parks. (More here.) On the other hand, there seems to be no stopping extractive industries from operating in fully protected national parks such as Murchison.

Ken Kakuru tells me that the law allows for extractive industries in reserves and sanctuaries, but not in national parks. Even if Ken’s case succeeds and the judge rules that drilling is illegal, I would not be surprised if the judge does not order the government to stop all drilling in national parks. Even if he does, I suspect the government would either not comply or simply change the law.

How much power do wildlife authorities have to follow through on threats to expel oil workers?

Veit: Not sure. But even if they have the legal authority to do so, it is unclear whether they would actually do so. My sense is that they are using the media to raise the profile and push Tullow to be more careful and watchful. Tullow doesn’t want this type of publicity.

The bottom line is: drilling is taking place in Murchison Falls and in some of the forest reserves and sanctuaries as well. The National Environment Management Authority (Nema), which approves the environmental impact assessments (EIAs), is under some political pressure in reviewing these EIAs. As far as we know, most, or all of the EIAs have been approved - an indicator that suggests the oil sector will continue to be developed. I don’t know of any oil EIAs that were rejected by Nema, although they have called for changes in the associated mitigation plans.

Landsberg: There was one project, the early production scheme, that was inside a gazetted area, that at the very last moment actually stopped. They located somewhere else. So it does happen.

Veit: An oil refinery there, which was targeted to be placed within a protected area, was subsequently scrapped. But the information we have suggest that it had less to do with the Uganda Wildlife Authority and more to do with the European funder, who was not happy.

To what degree is there enough transparency and fairness in governance to assure that the wildlife and environment authorities have genuine power?

Veit: Probably not enough. I doubt [President Yoweri] Museveni would allow drilling to stop. Eventually he would step in and broker some agreement.

We’re not privy to those discussions. The EIAs that have been approved usually come back with some conditions, which need to be met by the oil companies before they can proceed. But the bottom line is that oil development will progress in that area. There’s just too much oil, and it means too much for Uganda as a whole.

Landsberg: Under certain conditions that can be good. Establishing these conditions is the role of environmental impact assessments at project level and the strategic environmental impact assessments at regional level. That’s where there could be some improvement. The strategic environmental impact assessment hasn’t taken place yet.

The strategic environmental assessment aims at comparing different development alternatives at a regional level. It means that you don’t only look at oil development. You weigh a scenario with oil development versus a scenario with some oil, some renewable energy, some tourism development, for example. It could translate into a zoning where no oil development would be allowed in order to preserve the area’s tourist potential. A strategic environment assessment will provide the regional context in which the impacts of a specific project will happen, which will be addressed in the project EIA.

What effect do you think this year’s elections might have in terms of Uganda’s oil, how it is used and the transparency process?

Veit: If Museveni wins then probably not much. If [Kizza] Besigye wins, perhaps. The parliamentary elections are more interesting in this regard. If the opposition picks up a number of seats then they may be powerful enough to change matters. There is a caucus of MPs on oil, which can be influential.

You had mentioned problems of land grabbing. Are there proper land-use laws in place in Uganda?

Veit: Uganda’s land law recognizes undocumented customary tenure arrangement, but in practice, it can be difficult for rural people to protect their customary holdings. Much of the ‘land grabbing’ is legal. The law provides opportunities for well-connected and well-heeled individuals to acquire land through the legal processes. So a lot of that land is being taken and held in speculation for when the likely development that comes with the oil sector takes place.

I have been told that when rural people see oil workers coming on their land, they quickly sell it out of fear that the government will just expropriate it and they won’t get anything. There are more land transactions taking place in western Uganda than in any other part of the country. Many of the transactions are resulting in new owners who are not Bunyoro or Acholi – the traditional groups in western Uganda.

What we’re trying to do is create more transparency around some of these transactions. A lot of them are willing seller-willing buyer types of arrangements. But a lot of the land in that area is held under customary land arrangements, is undocumented and the transactions are being done in ways that are not clear until it’s been finalized. That’s one of the problems – the fact that a lot of it is undocumented, unregistered, untitled land. Nobody knows how much land is actually titled and registered in Uganda, but it’s actually a very, very small percentage.

Is this creating any tension locally?

Veit: Most of that area is claimed by the Bunyoro Kingdom and most of the people acquiring land are non-Bunyoro people. That’s creating problems, because a lot of people make their living off the land. When they sell their land, it creates problems for their livelihoods and well-being.

Which major oil companies are operating in Uganda?

The three companies that hold oil real estate in Uganda are Tullow, Tower and Dominion, all UK exploration companies. Tullow has made the major find in Lake Albert. They are hoping to transfer themselves into an oil production company as well. But in order to speed up production, they want to sell a third of their shares to Total France and another third to a Chinese oil company, CNOOC (China National Offshore Oil Company). That sale has not yet been approved by the government of Uganda. It’s partly held up by some capital gains tax the government claims that Tullow owes them.

Do you think there will be any difference in terms of impact if a Chinese company comes in?

Veit: We’ve been grappling with that question ourselves. WRI has an office in China that we recently opened, and we have an effort ongoing to do two things. One is to put in place better social and environmental safeguards with Chinese banks that are investing in the Chinese national oil companies. The second is to work more closely with the Chinese companies themselves to make sure they actually implement those higher standards. We have been meeting with Chinese oil companies in Beijing and briefing them on Uganda laws.

The recent Wall Street Reform [and Consumer Protection] Act here in the United States requires companies to submit annual reports to the SEC (Securities and Exchange Commission) and be much more open about the revenues that they pay foreign governments. The Chinese company that is likely to buy some of these shares, as well as Total, would qualify, and therefore in their annual reports to the SEC they might have to be much more open about some of their dealings with the government of Uganda. (See WRI’s working paper for more details.)

Uganda stands to potentially gain quite a lot through its oil resources. From the work you’ve done so far, do you see a trend that indicates a positive outcome for the country’s development?

Landsberg: Locally, there are better roads, better infrastructure, better healthcare and education. There are good things for sure. The fact that people can export their fish to market is a good thing. Now it really depends - are they going to do it for two years, three years or forever? It’s about sustainability at the local level.

I think it’s a great opportunity for Uganda, and all local NGOs agree on that. We just want to make sure it’s done the best way possible.

Veit: Tullow Oil certainly has made an effort to invest in the areas in which they are drilling. That’s a good thing. The real prize here is when the oil production starts and the oil revenues begin to flow. There are statements by the president of Uganda and other senior officials that they will manage these oil revenues in ways that will promote economic growth and poverty reduction. A lot of this will be codified in three promised petroleum bills that are supposed to be presented to parliament this year and next.

We won’t know the details until those bills are public. Only one has been released so far, and it doesn’t deal with oil revenue management and reinvestment. However, it does deal with transparency issues. The public statements the president has made on transparency are not consistent with what we see in the first of these petroleum bills. The bill is much more secretive and does not allow as much disclosure on production and revenue as the president has promised or that’s in the national oil policy. So we’re a little nervous.

The Norwegians are providing guidance to the [Ugandan] government and that bodes well, because the Norwegians have done well at managing their oil. So if you have anybody in there advising the government, that’s probably a good set of actors to do so. There’s a very active NGO society, and parliamentarians are beginning to speak up on these issues. Even the High Court. For example, several years ago, Ken Kakuru took a case to the High Court to have a Power Purchase Agreement for a dam declared a public document. He won. Yet, recently, a Magistrate Court ruled that the oil Production Sharing Agreements (PSAs) do not need to be released. I believe Ken will win his up-coming case in the High Court regarding the PSAs. It has made some rulings that would suggest that they have some independence from the executive branch on these matters.

In Deep Water: Weak Governance and the Gulf Oil Spill, a 30-Year Timeline

Maggie Barron — Fri, 11 Feb 2011 11:19:28 -0500

Summary

The Deepwater Horizon Blowout last April in the Gulf of Mexico is the largest oil spill in U.S. history. It will be many years before we know the full extent of the disaster in terms of its impact on the environment and the economy.

Regardless of the final damage tally, the system put in place to avoid these types of disasters has proven inadequate. This is evident from the investigations and recommendations of the National Oil Spill Commission, established by President Obama, whose report was published on January 11, 2011. It was also implicit in the immediate response by the federal government to restructure and rename the agency responsible for regulating the oil and gas industry – formerly the Minerals Management Service, now the Bureau of Ocean Energy Management, Regulation and Enforcement.

How did we reach this point? As a new timeline of events from WRI shows, the governance problems that allowed the spill to happen began long before the blowout, and long before the Deepwater Horizon well was authorized.

A Thematic Timeline

The World Resources Institute (WRI) has conducted a wide-ranging review of the decisions, policies, participants and events that formed the backdrop to the April 2010 oil spill in the Gulf. This timeline is intended to serve as a resource and reference tool for policymakers, academics and journalists interested in a larger accounting of the oil drilling governance and regulatory system, going back to 1978. The research draws from, and references, a broad range of primary sources including congressional testimony, federal agency and commission reports, documents released through Freedom of Information Act requests, and secondary news sources.

Key recurring governance failures highlighted over the 30-year timeline include:

Efforts by government agencies to keep pace with the risks associated with new drilling technologies were undermined as new guidelines were not adopted or enforced.
Lack of transparency and accountability over the collection and expenditure of oil revenues led to mismanagement of royalty fees owed to the American people.
A revolving door culture between the public and private sector coincided with the failure of the U.S. Attorney’s Office to prosecute ethical breaches.

Key Policy Issues

The timeline is accompanied by thematic icons to highlight specific streams of influence and decision-making areas that contributed to the complex system failure.

Moving Forward

This timeline seeks to shed light on the circumstances, policies and decisions that helped enable America’s worst oil spill. It does not provide recommendations, but rather highlights key governance issues that need to be addressed if the U.S. is to avoid another such disaster. The National Oil Spill Commission Report, released early January 2011, clearly states the extent of governance reform required:

To assure human safety and environmental protection, regulatory oversight of leasing, energy exploration, and production require reforms even beyond those significant reforms already initiated since the Deepwater Horizon disaster. Fundamental reform will be needed in both the structure of those in charge of regulatory oversight and their internal decision-making process to ensure their political autonomy, technical expertise, and their full consideration of environmental protection concerns.

The report goes on to make detailed recommendations ranging from technical standards to auditing and permitting requirements. These recommendations will take time and resources to integrate and, as the new 112th Congress settles into office, proposed budget cuts and calls for regulatory reform may pose a challenge. It is therefore critical that non-governmental organizations play an active role in ensuring that environmental resources are managed safely and fairly and that the lessons of the last 30 years regarding U.S. deepwater oil extraction are learned and acted upon.

Avoiding the Resource Curse: Spotlight on Oil in Uganda

Maggie Barron — Mon, 24 Jan 2011 16:49:34 -0500

Uganda has made significant progress in codifying the rights of access to information (ATI) and participation, and toward putting in place the institutional infrastructure, including a regulatory framework, for the oil sector. Political roll-backs that are re-concentrating power in the executive branch of government and the growing scale of known oil reserves, however, may jeopardize these advances.

In this context, the passage of a new law in the United States requiring companies that file annual reports with the U.S. Securities and Exchange Commission (SEC) to disclose the payments they make to host governments for the extraction of oil, natural gas and minerals, could help shore up transparency around investment in Uganda’s extractives industry and avoid the failures in governance that have exposed other countries to the “resource curse.”

Download WRI’s Comments on Uganda’s Access to Information Regulations

Update: On 21 April 2011, the government of Uganda signed into law new regulations for implementing Uganda’s Access to Information (ATI) Act of 2005. The ATI Regulations were long awaited and widely welcomed, since many local and international advocates believed their absence had hindered full implementation of the Act, and stymied efforts to increase transparency and accountability. The Regulations support implementation of the ATI Act in a number of important ways. For example, they establish procedures for citizens to request government-held information and for government to respond to citizen requests. But the Regulations also include a number of burdensome provisions that make access unnecessarily costly and difficult and, as such, they are not in the spirit of the strong right to information provision found in Uganda’s Constitution. Read WRI’s full comments on the Regulations (PDF, 211 Kb)