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E&P Plus

Editor's note: The full version of this article originally appeared in the April issue of E&P Plus.
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If you want answers to ESG in oil and gas, be prepared to join the search party. The answers are hard to decipher, mainly because ESG in oil and gas remains something far from a black-and-white issue with unquestioned solutions. Collectively, the work is being done; it’s just that there isn’t really one right way, one right measurement or one all-encompassing goal between all three prongs of ESG—as of yet.

“There’s a different answer between the E, the S and the G,” admits Sean O’Donnell, managing director with Quantum Energy Partners, one of the largest private equity investors in oil and gas. “Private equity has always had the ‘G’ figured out pretty well in terms of ownership, alignment and control. You’re seeing the conversation in the public market change to catching up on having ESG-oriented scorecards.”

So, the money wants ESG to be a big part of the oil and gas industry. That’s a well-documented fact that satisfies why producers and oilfield service (OFS) providers are scrambling to get their ESG-friendly operations and reporting in order. Just take a look at these articles featured in various Hart Energy media:

But the what and the how remain the enigma. That’s not to say there hasn’t been progress toward finding the right solutions, particularly in the area that has dominated headlines, politics and Wall Street for the last couple of years.

“The real push over the last 24 months for the industry has been a step-function kind of change on the E,” O’Donnell said. “It’s on methane, in particular.”

O’Donnell pointed out the green shoots of metrics for measuring methane mitigation as a catalyst for progress.

“The technology and the operational protocols are now well understood and available,” he said. “There’s also been a refinement of reporting that upstream companies should be focused on. Three years ago, four years ago, there were 1,100 different measurements for ESG.”

That thought probably makes your head spin. Clearly, that’s too daunting of a task for any large major to figure out, let alone a small independent oil and gas E&P. However, O’Donnell said the metrics that matter most have come to the forefront over the last two years.

“The technology and the ability to capture those data, and the ability to quality control those data, and the ability to have meaningful baselines that are common across companies that—in the last 12 months—have been what’s really started to develop,” O’Donnell said. “Investors can start to make relative value decisions.”

Click here to read the full ESG cover story,

featuring in-depth interviews with Schlumberger and US Well Services, in the April issue of E&P Plus.

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