The negative image of the oil and gas industry


The negative image of the oil and gas industry makes it
challenging for the industry to recruit the most talented
candidates in some locations as well as its ability to raise
capital from institutional investors who can often find the
business highly speculative and risky. Consumers are also
questioning whether oil and gas will remain a reliable fuel
source and desire a transition to cleaner sources of energy.
Companies that ignore these challenges run the risk that it
will be their balance sheet assets, and not competing oil
reserve assets, that are stranded in the long run. By
addressing these risks systematically, the industry would be
able to ensure that markets value and finance oil and gas in
an orderly transition to reflect changing demand outlooks.

 Addressing Trust Challenges and Regulatory
Other industries such as the US nuclear industry and
international airline carriers have created independent
industry-wide reporting standards and verification/auditing
methods and have established successful transparent,
voluntary systems for measuring and rewarding best-inclass standards. Mutualizing risks has proven successful in
other industries and pooling arrangements have proven
useful already in oil and gas, notable examples being the
tanker pools and the Canadian Oil Sands Innovation
Alliance. Partnering with institutions like the Extractive
Industries Transparency Initiative (EITI) and Sustainability
Accounting Standards Board (SASB) can also enhance
trust and assist companies in promoting standards industrywide. These same standards can be applied to ethical
lobbying practices and arm’s length relations with
regulators. Pooling arrangements that improve cooperation
in industry during times of supply emergencies such as fuel
loans and swaps can also reduce price volatility and give
consumers improved service and performance.
Generating employment, investment and sales of energy
products is no longer sufficient to ensure stakeholder
satisfaction of oil and gas in light of breakdown of public
trust in the industry’s capabilities and motives. To address
emerging threats to the industry’s licence to operate will
take a concerted effort in accountability, transparency and
improved stewardship and performance across the whole

 Relying on regulators and the courts to hold “bad
actors” to account have not served the interests of the wider
industry whose reputation is tainted by the same broad
brush. Rather, an institutional framework that provided an
agreed upon gauge for good practice would benefit both
industry and society. Such a framework could enhance
transparency and thereby provide confidence to investors
and the public that industry can mitigate the circumstances
of the necessary reliance on oil and gas as the energy
system transitions over the coming decades. For oil and
gas leadership, failure to address above-ground risks will
run higher competitive risks as delays will be critical to
resource development, while demand is stable and robust.
Eventually, players who remain competitive in the oil and
gas industry will have to consider whether it can be more
profitable to shareholders to develop profitable, low-carbon
sources of energy as supplements and ultimately
replacements for oil and gas revenue sources, especially to
maintain market share in the electricity sector. This will
require a change in the oil and gas industry investors’
mindset. To develop this second leg of the oil and gas
industry's activities, the industry may find new opportunities
by addressing the technological challenges associated with
the different parts of the renewable space, as well as how to
develop efficient combinations of large-scale energy
storage and transport solutions in a world with a lot of
variable renewable electricity.

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