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Why ESG Topics are Trending in the Oil & Gas Industry

ESG topics are buzzing among oil and gas professionals around the world. With the rise in sustainability and environmental concerns in the energy industry and growing conversations around current and future ESG standards, it is vital that companies are proactive rather than reactive. Implementing SCADA systems has many benefits that provide the proactive approach needed to maintain ESG standards. First, it is important to understand the basis of ESG and how these standards apply to the oil and gas industry.

The Meaning of ESG in the Oil & Gas Industry

ESG is an acronym that stands for Environmental, Social, and Governance. ESG standards provide a framework for judging the sustainability and ethicality of an investment. Companies that ignore ESG issues risk being perceived as less desirable investments.  Further, regulation of ESG standards is increasing, and proactive ESG standards implementation reduces later compliance burdens.

ESG is especially relevant to oil and gas companies because of the growing pressure on our industry to protect the environment. Below are possible concerns and questions that pertain to the oil and gas industry when it comes to ESG standards.

Environmental - This is the ESG area most impactful to operators.  Immediate examples are flaring of natural gas and spills.  Fugitive gases at plants and carbon emissions from transportation and compression equipment are other examples.

Social - Employee safety is the most meaningful of these concerns.  This area also encompasses human rights and community relationships.

Governance – This encompasses concerns regarding management structure. How are processes and procedures being managed? Are employees receiving adequate support to fulfill their role?

Why ESG is Important to Oil & Gas Companies

The oil and gas industry is inextricably linked to each of the individual elements represented in ESG. The importance of environmental concerns to the industry is obvious. The carbon emissions and energy production of each company may run afoul of regulators and impact how investors view a company. At the same time, communities have a heightened consciousness around social concerns like worker safety and it’s important to act proactively in these areas. Corporate governance is now tasked with developing strategic approaches to each of those concerns, along with an ethical approach to the employee and management structure.

Rather than viewing ESG as an obstacle, many oil and gas companies are beginning to view environmental and social considerations as an opportunity to build value and increase the efficiency of their operations. Evidence indicates that companies that consider and invest in ESG concerns experience a positive return. One specific method of investing in ESG is implementing modern SCADA systems for oil and gas companies.

The Intersection of ESG Factors and SCADA Systems

The implementation of SCADA systems within the oil and gas industry has numerous advantages when it comes to maintaining ESG standards. These systems allow creation of streamlined processes that are easily managed while improving efficiency.

Environmental Benefits of SCADA Systems

SCADA systems allow organizations to monitor emissions and detect leaks or other issues ahead of time. With early detection comes quicker response times, minimizing and eliminating negative effects on the environment. Proactive maintenance and the mitigation of environmental risk generally leads to a reduction in costs as well. Flaring of natural gas is a “hot” issue right now (pun intended).  Operators should consider monitoring the temperature of flare stacks and incinerators to ensure proper combustion.  Other direct examples of the intersection of SCADA and ESG are the monitoring of tank levels and fluid within firewalls to help prevent spills.  Finally, the decreased driving allowed by SCADA reduces transportation emissions.


Social Benefits of SCADA Systems


The functionality of SCADA systems provides substantial benefits to the workforce onsite. For example, remote valve operation capabilities keep teams safe and provide built-in support for Electronic Shutdown (ESD) systems. Alarm notifications promote worker safety as does the reduced driving possible with effective SCADA systems.  The most dangerous activity that field personnel undertake is driving! 

Corporate Governance Benefits of SCADA Systems

SCADA systems enable organizations to provide decision makers with accurate and efficient reporting on performance metrics. Through an organized management system, supervisors will see more accurate data and it improves team coordination. When workers feel like they have the adequate tools and systems they need to perform well, they perform at a higher level.

With the use and support of SCADA systems, together we can be proactive when it comes to ESG standards while providing a necessary service that sustains the world we live in.