A Good Environmental Reputation: A Valuable Asset For The Future

By Jeet Bindra, President
Chevron Pipe Line Company

Second International Pipeline Congress and Exposition

Boca del Río Veracruz, México

It's a privilege to be here today to talk to you about Chevron's commitment to safe operations and protection of the environment.

Everyone in the petroleum industry today would agree that our worldwide operations are being looked at more closely than ever before. That's because our industry as a whole doesn't have a very good reputation for protecting the environment.

One disastrous event can bury a company's good record in an instant and can brand the entire industry with the same sullied reputation. As the Oil & Gas Journal recently put it: Oil and gas companies are continuing an uphill battle around the world to regain the respect and trust of the public - after being battered by charges of pollution, discrimination and disregard for any value other than profit.

Fair or unfair, those charges will stick unless we start doing a better job of getting the word out. And that word is: We are getting better and better at protecting the environment.

This afternoon I'll cover some of the key elements of a program we have developed at Chevron to ensure that our environmental practices meet or exceed the highest standards in the industry. I'll briefly describe some of the projects that my company, Chevron Pipe Line, has been involved in - to show you how we employ the latest methods and technology to ensure safe and environmentally friendly pipeline operations. Then I'll finish with some of the guiding principles that Chevron Pipe Line has developed to guide its business practices worldwide.

Any company doing business today must demonstrate a genuine concern for the environment or suffer the consequences that a bad reputation can bestow. In today's world, most large multinational companies live in the glare of the spotlight. And that glare can be twice as intense for oil companies. That's why our safety and environmental practices must be second to none. But we need to do a better job of convincing people outside the industry that we aren't merely responding to the glare of that spotlight.

We, like most everyone else on the planet, are genuinely concerned about protecting the environment for future generations including our own. We, too, are environmentalists. Unfortunately, the title of environmentalist has been usurped by those with more radical points of view.

There are some people, of course, whom we'll never be able to convince. But we must demonstrate to the wider public that our operations can be environmentally friendly. One way we can do that is to take that extra step beyond what's expected of us. We must do more than the laws, the permits or the regulations require.

Simple compliance doesn't go far enough to address public concerns about a project. Success or failure is often determined by those public concerns. In the past, we thought we had done our job if we complied with all the necessary rules and regulations. But then when something bad happened, the media would pounce on it, and we would immediately assume a defensive posture - often by spouting statistics on the safety of our operations. Unfortunately, as we all know, the public was seldom convinced.

We can do a better job of convincing them by becoming more proactive and less reactive. I think we're getting better at doing that, but there's still room for improvement.

We have to give as much credence to the perception the public has of our operations as we give to the reality - because public perception is a formidable force.

Public perceptions, accurate or not, create regulations - good and bad. Public perceptions can greatly influence a project's outcome, sometimes in spite of the facts. You might ask why.

It's because people don't want to hear about tanker safety when they remember the Exxon Valdez. They do not want to hear about the safety of airline travel when they can recall a terrible plane crash. And they do not want to hear statistics on pipeline safety when they can remember a pipeline accident somewhere.

Perceptions versus reality - how can we bring those public perceptions closer to the reality of our operations? We can make our operations more "open" - more accessible - to the public. We can involve all stakeholders in every facet of a project - from development to abandonment. And we can use the mass media - especially television and the Internet - to spread our message.

People know energy is important, but they also want to know that it's safe and clean and that the industry is committed to providing them with a product that meets those criteria. Environmental issues and regulations can vary widely throughout the world. But there are two things that all countries - at least those where we operate - have in common.

First, there's an increasing environmental awareness of our existing operations. And second, there's the expectation that our new projects will be built in an environmentally responsible manner. These two things exert their influence on every one of Chevron's operations, whether it's drilling, production, refining or transportation.

So how has Chevron responded to this growing emphasis on the environment - this increased scrutiny of our operations? We established one of the most comprehensive and far-reaching environmental and safety programs in the oil business, and we call it Protecting People and the Environment, or PP&E.

The preamble of our PP&E program states: "We are committed to protecting the safety and health of people and the environment. We will conduct our business in a socially responsible and ethical manner. Our goal is to be the industry leader in health and safety performance and to be recognized worldwide for environmental excellence."

The overall objective of our PP&E program is to continuously improve Chevron's Health, Safety, and Environmental performance. The program contains 10 key principles as follows:

  1. We will design, operate and maintain our facilities to prevent injuries, illnesses and incidents.
  2. We will continually reduce pollution and waste.
  3. We will conserve energy and natural resources.
  4. We will respond quickly and effectively to any emergency.
  5. We will comply with all regulations that apply to our operations.
  6. We will communicate openly with the public regarding the potential impacts of our business on them or their environment.
  7. We will manage the potential risks of our products throughout each product's life cycle.
  8. We will work closely with our carriers and distributors to ensure the safe distribution of our products.
  9. We will evaluate and address any health, safety or environmental concerns before we purchase, sell or lease any property.
  10. We will work with our public representatives to base the laws and regulations that govern our operations on sound risk-management and cost-benefit principles.

These are the ten key principles that guide all of Chevron's upstream and downstream operations all around the world. They're not just words on paper.

To make sure that each of these principles is implemented consistently by all of our operations, we have devised a set of implementation guidelines for each, as well as a monitoring system and a strict reporting procedure.

Adherence to Chevron's PP&E principles is one of the key elements included in our annual employee performance evaluations. And that's for all Chevron employees, including me.

A further example of how seriously Chevron takes its environmental and safety performance is that our safety incident rate is included in our Success Sharing Program. Employees receive annual bonuses based on achieving established goals. This bonus program is having a very positive effect on our safety record.

Back in 1996, for instance, Chevron Pipe Line recorded a 3.2 incident rate per 200,000 hours worked - versus a target of 1.6. So far in 1997, we have a 1.4 incident rate. If we can maintain that rate for the remainder of the year, every Chevron Pipe Line employee will get a bonus equal to 1.33 percent of his or her annual pay.

Accountability and recognition are the key ingredients driving Chevron's highly successful environmental and safety efforts - efforts that have brought us many environmental awards. Just recently, for instance, we won the National Health of the Land Award in the United States. The award recognizes Chevron's outstanding environmental practices during an almost 50-year partnership with the Bureau of Land Management and the Fish and Wildlife Services.

Now I would like to narrow the focus a bit by looking briefly at several projects that my company, Chevron Pipe Line, has been involved in.

The first one took place more than 10 years ago in the western United States. Back in the mid-1980s, we were constructing the Raven Ridge CO2 pipeline from Rangely, Colo., to Rock Springs, Wyo. - a distance of about 200 kilometers.

Before construction began on that pipeline, we conducted an extensive environmental impact study on the proposed pipeline route. We wanted to find out what we had to do so we wouldn't disturb the wildlife and natural vegetation along the route.

Wildlife biologists were hired to coordinate the study along with the Wyoming Fish and Game departments and the U.S. Bureau of Land Management. The result was a meticulously planned pipeline construction schedule that was designed to minimize the impact on the environment.

For example: Red flags were placed to indicate the exact nesting and mating areas of the sage grouse. When construction crews reached those areas, pipeline construction was halted. Over 400 workers and tons of equipment were then moved to the next part of the route that didn't include any nesting areas. And at the end of the nesting season, the crews returned and completed those portions of the pipeline they had skipped earlier.

The pipeline was also routed around other areas that biologists said contained habitats typical of the black-footed ferret, an endangered species. We did this, even though we never saw a single black-footed ferret.

The next project I would like to talk about was completed and dedicated last spring when Chevron and our partner Pemex inaugurated the first refined products pipeline connecting the United States and Mexico. The 32-kilometer-long common-carrier pipeline goes from Chevron's terminal and pumpstation in El Paso, Texas, to the Pemex terminal in Juarez.

The pipeline includes some of the latest innovations in pipe design and leak detection. The pipe is designed to handle more than twice the pressure it will actually operate at. The pipe's also coated with the latest in anti-corrosion coating. All welds were inspected by X-ray. The pipeline was buried at an average depth of 4 feet, which is more than the U.S. Department of Transportation requires.

There's continuous 24 hour-a-day monitoring for leaks as well as a backup power system in case of a power loss. In addition to that, there is a weekly aerial surveillance of the pipeline route and a routine inspection of all operating systems and equipment. And the pipeline was located away from areas of public use in order to minimize the possibility of third-party damage.

Today this pipeline is successfully transporting nearly 18,000 barrels of gasoline and diesel a day. The installation of the El Paso-Juarez pipeline has also produced several positive side effects: By removing almost 100 tanker trucks per day from the local roads, the pipeline has helped reduce noise levels and traffic congestion and has improved air quality in the El Paso-Juarez area.

It also demonstrates the power and efficiency of what has turned out to be a truly cooperative and mutually beneficial relationship between Chevron and Pemex. Chevron is pleased and honored that our PP&E principles and practices have been adopted to guide the continuing operation and maintenance of the El Paso-Juarez pipeline.

Now I'd like to briefly describe one more project of particular interest to Chevron, and, I might add, to me personally: the Caspian Pipeline.

The Caspian Pipeline project is the result of an incredible level of cooperation involving 11 oil companies from six countries, as well as the governments of Russia, the Republic of Kazakhstan and the Sultanate of Oman. Together we plan to build a 1,500-kilometer pipeline primarily to transport crude from our super-giant Tengiz Field on the northeast shore of the Caspian Sea to the Russian port of Novorossiysk on the northern coast of the Black Sea.

The Caspian Pipeline is going to cost about 2 billion U.S. dollars to build. We plan to begin pumping crude through it in two to three years. Peak throughput could eventually reach 1.5 million barrels per day. Although we have not started construction of the pipeline yet, we have included many important environmental safeguards in its design.

The Caspian Pipeline will be routed around environmentally sensitive areas. It will include the latest telemetry equipment to continuously monitor pipeline integrity and performance. It will also include specially installed block valves, which are capable of instantly cutting off the flow of oil in case of a massive rupture. Even though Russian pipeline regulations don't presently require this level of safeguards, we are designing the Caspian Pipeline with the same demanding specifications we would design for any other pipeline, no matter where it is.

At Chevron Pipe Line, we're committed to being a leader in safe and environmentally sound operations; to complying with all regulatory standards; to meeting all common-carrier obligations and to providing high-quality, cost-competitive transportation services to all of our customers.

Chevron Pipe Line's reputation for safe and reliable operations is something we are very proud of, and we want to keep it that way.

I want to thank the people of Pemex for inviting me to speak with you today on an issue that's vital to the future of the petroleum industry. Our ability to grow and prosper in the coming years could depend not only on how well we protect the environment but also on how well we communicate our environmental successes to the public at large. A good environmental reputation will be a valuable asset for the future.

Updated: December 1997