This report would be taking into account the various ethical issues that jeopardizes the work process within the oil and gas industry. It is a dangerous industry to work in, a place where life threatening activities might occur at any possible time. So many cases have been there where workers have died due to mishaps in the oil and gas companies. It is high time for these organizations to focus on the factor of eliminating the risk with the help of advanced technology and proper leadership. Mishaps within this industry happen to the best of them, like for instance the British Petroleum’s incident in the Gulf of Mexico. It is important for the big organizations of this industry to come forward and discuss on these safety measurements and stating the right things to do and the right way to move forward to (Lam 2014). The industry needs effective leaders who would be ethical in their work having the ability to make justified decisions and work aa per the code of conduct.
The commencement of supervising the ethical risk generally takes place with administering the risks of the company’s shareholders. It an organization is protecting its shareholders, it would in all probability be protecting itself against any sort of accidents. An activity that has the chance of carrying high risk of injury to the stakeholders needs redesigning with proper safeguards been put into proper position in lowering or eliminating the recognized risk. Lowering of risks to the stakeholders lowers incidence of accidents.
The US Bureau of labor Statistics recommends that more than half million people of US have been working in the oil and gas industry, within which the number of widespread workers estimated, is between five and six million (Heizer 2016). Their working nature with perilous materials in hostile conditions means the workers within the oil and gas industry are often interpreted to dodgy conditions. Most of the oil and gas organizations have been starting to take proper responsibilities and steps towards eradicating the potential dangers, reducing risks as much as possible. Advancement in technology along with an augmented attentiveness towards safety measures should be the dynamic force behind the operational restructuring.
This one is rare, but there is chance of risk on on-site explosions in the industry of oil and gas. The BP oil spill or otherwise known as the Deepwater Horizon oil spill commenced on 20th April, 2010, in the Mexican gulf on the project of BP controlled Macondo Prospect (Roncoroni, Fusai and Cummins 2015). Approximately around 9:45 p.m., the methane gas from the well extended into the riser of the drilling machine and rising into the drilling assemble, where it lighted and blasted, engulfing the overall platform. More than 126 crew members were embarked: seven of them employees of BP, 79 from the Transocean and other employees of several other organizations. The Deepwater Horizon descended on 22nd April morning, 2010. It is being considered the biggest fortuitous marine oil spill in the petroleum industry history, with the US government estimating the overall liberation to be at 4.9 million.
There are probable causes for such accidents, taking in the unexpected discharge of gas under pressure or the prologue of an explosion source into something volatile or combustible environment. The Hydrocarbon Releases (HCR) causing outbursts like in simple terms being leaks. Leaks are something that takes place during the time of operations, while imperative efforts are generally being prepared in reducing the HCRs. Innovations within the inaccessible monitoring knowledge that can be subjugated in reducing the risk factor. The present Step Change in the campaign for safety would be ably supported by the UK stakeholders in the offshore industry and established the things that could be attained by augmenting the focus on the safety measurements. In the year 2010, the overall number of HCRs has been 187. The Step Change in the campaign for safety intended in reducing this effect by atleast 50 per cent over a period of three years. The campaign did fell short of the expectations, reducing the leak numbers by atleast 49 per cent, with the advancement demonstrating the things that were possible when much of the attention is being given to the safety on-site (Smalley and Chebotar 2016). Subsequently an investigation followed into the disaster of Deepwater Horizon where discovery was being made on the failures of number of assets that has added towards the flare-up and hazardous HCR which had not been perceived.
Investigating into the probable unstable environments for the existence of flammable vapors is a significant in the practice of health and safety measures that should be esteemed by the usage of precise equipments for measuring. On previous occasions, the checks on equipments were the accountability of the on-site workforce. It implied positioning a human being into an environment that is potentially dangerous. Due to the exact nature of the location of the fossil fuel and withdrawal, critical infrastructure for the Oil and Gas Industry is often been located in the environments that are remote in nature, in places like middle of the ocean or in tremendous cold or heat (Bergh et al. 2014).
In late 2015, a fire aboard a fix in the Caspian Sea resulted in the deaths of number of oil and gas workers. This has been caused by the damaged gas pipeline in the high winds. Through the recording of the critical data to the cloud, companies have been understanding the influence of the extreme weather conditions on the oil rigs, implementing processes in lessening the risks of the incident being repeated again (Silvestre and Gimenes 2017).
The cloud technology along with the accessibility of the connectivity of internet presently facilitates the management of remote assets. The cloud infrastructure has the ability in supporting the regular observation of the data along with storing it on servers of remote nature anywhere globally in genuine time via IoT. Monitoring of the equipment established on the local assets conveys information to software that is being stored on the servers centrally located instead of being physically positioned on the site of the oil and gas.
With the availability of internet connectivity across anywhere, businesses have the ability in accessing the CEMS data feeding of the remote assets across the numerous sites globally. It is not required in storing and running the software on an on-site machine, removing the requirement for staffs that are on-site. Moreover, the data is being amassed steadily on the servers that are remote with appropriate backups, not reliant on the health and consistency of a machine positioned on-site.
The inaccessible measurement and testing of the assets can eliminate the fact of human risk. Along with continuous measurement, operators have been discovering leaks through the mass balancing process. In accounting with the entering of the materials and leaving the pipe, mass flows can be recognized that might be indefinite or is difficult to measure (Badiru and Osisanya 2016). For instance, operators can make use of the mass balancing in identifying the faulty valves existing within their pipe systems that might reason dangerous leaks. Inaccessible actions can be taken in updating the software, shutting down of the faulty systems, and if there lies danger of any explosion, extracting the on-site personnel on immediate basis.
Through the implementation of the associated technologies, the oil and gas industry has been mitigating risk and lessening the threat of the large scale disaster in oil and gas industry. Through the cloud technology, organizations of oil and gas sector have been remotely managing assets and reducing the number of personnel having to preserve apparatus in the environments that are dangerous. IoT and the cloud technologies have been empowering the oil and gas organizations in pre-empting an incident before it transpires, significantly lessening the risk of humans (Griffin et al. 2014). Mitigating the risk in the industry of oil and gas could be the disparity between the oil rig that is been well-managed and a disaster of large scale.
Management of ethical risk in the oil and gas industry is crucial to the economy that businesses provide secure and vigorous working stipulation, therefore, the ethics course depends on the nucleus ethics of respect, accountability and consummate behavior and covers a number of focus area. When the human right issues are not addressed properly and the initiatives go in vain through corruption and non-compliance to the existing law forces can be dealt with certain concepts thus creating an impression of unaccountability and non- credibility of the organizations. The risks that BP, Faxxon and the fracking industry faces during the provision of adequate energy supply are the followings;
The disorder, instability and the risks that are associated within the oil and gas industry would be enduring and becoming extremely complicated in modeling the constraint, making wise decisions that are generally been based on the reasonable amount of conviction. However, proper decision making and success is not purely found on the modeling of risk of indecision examination. The thing that separates the leading oil and gas companies from the other organizations in the same industry or in that matter with the other industries is the human component, human capital and in more specific sense, the skills of the leadership and management (Akinremi, et al. 2015). If one focuses on the organizations that are global leaders, they have one thing familiar- highly efficient human leadership and skills of the management.
It really does not matter on the superiority of the tools being used, as if one is not being able to pull his team together and stimulate the same in attaining greater accomplishments during times when there is increase in the risks and challenges, the company under question might lose out.
Industry leaders who have been focusing on driving the competence and operational brilliance have been feeling a bigger sense of exigency striving hard in maintaining the margins of profit regardless of oil prices diminution of more than 50 per cen (Raufflet, Cruz and Bres 2014)t. The oil and gas clients frequently speaks about the significance of mounting a culture with the agility in managing modifications and driving growth under conditions that are dynamic in nature. Leadership within the oil and gas industry takes in more than the unadulterated skills in engineering. It also takes into account being a risk manager. Although skills of technical ability are critical in nature, these leaders are anticipated in tackling the uncertainty within the economy, a diversified workforce, changes within the demography, regulatory issues and disruptions of supply driving volatility in the prices of oil and gas. One of the core competencies of the oil and gas companies is the requirement of their leaders is the suppleness in managing certain ambiguity.
Ethical leadership assists risk management through helping the environmental risk with organizations like IPIECA. Having a responsible organization that has the capability of standing up and speaking for the issues faced by the workers in the oil and gas industry, highly favorable in gaining trust from the general public (Sharma et al. 2017). British Petroleum (BP) is a multinational company and the world leader within the industry of oil and gas. BP did spend millions of amounts in promoting the CSR in augmenting the image of the organization in the environmental and social responsibility; nonetheless, lack in the ethics segment destroyed the good image. The tarnishing of its good image was due to the operational failure for number of times like the Texas refinery explosion and the oil spills in Alaska. During that time, under the leadership of John Brown, the Group Chief Executive, the organization decided in cutting the redundant risk in the safety management for saving the operational cost. As a result of this, the organization lost around $15 billion in paying claims for compensation for the Deep Horizon explosion in the Mexican gulf, killing almost 11 workers and radically destroying the environment. This incident proves the fact that Brown lacked any sort of ethical leadership as his inappropriate decision making effected on losing out of property and negative image of company. Safety has always been one of the ethical values of BP stating that they are mostly committed towards the safety and improvement of their people along with the societies and communities within which it operates. BP failed miserably I upholding their core value.
Bob Dudley, the current Group Executive has been trying to build on the trust from the stakeholders of the company along with the public through promotion of the CSR. It announced the code of conduct like to be one of the trusted organizations that works year after year towards gaining consistency and setting of higher standards and pursue them in everything they do or say, every day and everywhere they operate. It can be stated that ethical leadership impacts significantly on both the organization and individual. Therefore, it is the duty of the manager or a leader in organizing the company under proper code of ethics and code of conduct. It is up to the manager or the leader in conducting the leadership training programs within the organization in making sure that the employees of the next generation would be behaving in an ethical fashion.
Conclusion:
It can e concluded that the gas and oil industry if full of risk, where workers face certain life threatening issues on regular basis. Therefore, the safety management of the workforce becomes way more important as for any organization their workforce is their biggest asset. There has been several mishaps within the oil and gas industry, and the organizations should come together in setting certain norms and regulations and set up the appropriate safety measures for the people involved with it. Ethical and effective leadership is the need of the hour for the oil and gas industry organizations where every decision making should be as per the code of conduct. The organizations should be able to establish the ethical value based on the worst-case scenario that might happen and the ways of dealing with such a situation. (Ferrell and Fraedrich 2015) Developing of CSR is important for managers or leaders along with meeting the stakeholder’s expectation.
Reference:
Akinremi, T.A., Anderson, R., Olomolaiye, A. and Adigun, L., 2015, November. Risk Management as an Essential Tool for Successful Project Execution in the Upstream Oil Industry. In Abu Dhabi International Petroleum Exhibition and Conference. Society of Petroleum Engineers.
Badiru, A.B. and Osisanya, S.O., 2016. Project management for the oil and gas industry: a world system approach. CRC Press.
Bergh, L.I.V., Hinna, S., Leka, S. and Jain, A., 2014. Developing a performance indicator for psychosocial risk in the oil and gas industry. Safety science, 62, pp.98-106.
Ferrell, O.C. and Fraedrich, J., 2015. Business ethics: Ethical decision making & cases. Nelson Education.
Griffin, M.A., Hodkiewicz, M.R., Dunster, J., Kanse, L., Parkes, K.R., Finnerty, D., Cordery, J.L. and Unsworth, K.L., 2014. A conceptual framework and practical guide for assessing fitness-to-operate in the offshore oil and gas industry. Accident Analysis & Prevention, 68, pp.156-171.
Heizer, J., 2016. Operations Management, 11/e. Pearson Education India.
Lam, J., 2014. Enterprise risk management: from incentives to controls. John Wiley & Sons.
Raufflet, E., Cruz, L.B. and Bres, L., 2014. An assessment of corporate social responsibility practices in the mining and oil and gas industries. Journal of Cleaner production, 84, pp.256-270.
Roncoroni, A., Fusai, G. and Cummins, M., 2015. Handbook of multi-commodity markets and products: structuring, trading and risk management. John Wiley & Sons.
Sharma, P., Hamedifar, H., Brown, A. and Green, R., 2017, May. The Dawn of the New Age of the Industrial Internet and How it can Radically Transform the Offshore Oil and Gas Industry. In Offshore Technology Conference. Offshore Technology Conference.
Silvestre, B.S. and Gimenes, F.A.P., 2017. A sustainability paradox? Sustainable operations in the offshore oil and gas industry: The case of Petrobras. Journal of Cleaner Production, 142, pp.360-370.
Smalley, P.C. and Chebotar, K., 2016. Event-based risk management for subsurface risks: an approach to protect value generation from oil and gas fields. AAPG Bulletin, (20,161,221)
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