UK's Oil and Gas Authority mandates ESG reporting

This evaluation is "in light of a perceived lack of standardised metrics that are manageable, repeatable, and comparable for industry and investors”. The taskforce will report on the 'S' and 'G' aspects of ESG later in 2021.

In line with the Equator Principles and Paris Agreement goals of net-zero carbon by 2050, and based on feedback from investors in oil and gas, the OGA notes that ‘it is clear to us that lenders are focusing on the environmental performance of a company to inform their investment decisions. And while many oil and gas operators and non-operating partners in the UK have sound ESG strategies and measures to monitor environmental performance, many do not.’

Great expectations

The OGA Strategy requires operators and UK licensees to develop suitable and robust ESG practices in planning and daily operations. Operators and licensees are also expected to disclose climate-related data in their financial reports and websites, and they expect this disclosure to be quantitative and qualitative showing improvement in performance over time.

Aligning with the UK Government plan announced in November 2020, ESG disclosures will be mandatory in most UK industry sectors by 2025 and be aligned to the Task Force on Climate-Related Financial Disclosure (TCFD) requirements.

Read the OGA press release

The OGA taskforce concluded that companies should be ready to report environmental performance by Q1 2022 alongside their 2021 full-year audited financial reports. The taskforce suggested Tier 1 metrics should be reported for 2021.  Additional Tier 2 and Tier 3 metrics are expected to become important in the medium to long term, with reporting on these factors becoming mandatory from 2025.

Our experience

Our team of in-house environmental scientists, geoscientists and engineers are uniquely placed to support companies prepare and verify their environmental, social and governance reporting.

Collectively our team has has over 20 years of experience in each aspect of Tier 1, 2 and 3 requirements for oil and gas companies, including: 

• Preparation of Environmental Impact Assessments (EIA)
• Undertaking Environmental and Social Impact (ESIA) Assessments
• CO₂ emissions monitoring and verification
• Developing Environmental Management Systems (EMS) and management plans
• HSE training and audits
• Reviewing and/or developing emergency and security plans
• Modelling of air dispersion, fire and explosion oil and chemical spill trajectories, sediment transport, and biological exposure to assess risks
• Assessment and benchmarking of carbon intensity over the lifetime of oil or gas field
• ESG Strategy Development  [View case study]

RPS already has significant experience working to TCFD standards and is well placed to assist companies in preparing for these reporting requirements.  

Integrated reserves and environmental reporting

Recent updates to reserves reporting have added additional requirements that link to aspects of ESG. 

To be classed as Reserves under the PRMS 2018 (the most widely accepted Reserve reporting standard), the reporting entity needs to demonstrate a reasonable expectation that "all produced streams (e.g., oil, gas, water, CO₂) can be stored, re-injected, or otherwise appropriately disposed", that there should be evidence that inter alia "environmental, regulatory, and government approvals are in place or will be forthcoming" and that when operations cease, abandonment, decommissioning and restoration (ADR) of "the facilities have to be restored to a safe and environmentally compliant condition".

For more than 20 years, RPS has produced numerous independent Reserves Reports and Competent Person's Reports that lenders and other financial institutions use as the basis of the annual reporting by oil and gas companies.  RPS can effectively provide an independent audit of an oil company's environmental performance within the same report.  Every independent RPS report is signed-off by a Chartered Engineer or Chartered Geologist and, in future, if there is a significant environmental element also by a Chartered Environmentalist.