BACHELOR OF QUANTITY SURVEYING (HONS.

)
FACULTY OF ARCHITECTURE, PLANNING, AND SURVEYING
UNIVERSITI TEKNOLOGI MARA
CAWANGAN SARAWAK
KAMPUS SAMARAHAN

SEMESTER MARCH - JULY 2021

BQS667
OIL & GAS: TECHNOLOGY & MANAGEMENT

TASK 3: PROJECT REPORT

ENVIRONMENTAL MANAGEMENT IN THE OIL & GAS EXPLORATION & PRODUCTION
IN PM 03 CAA

PREPARED BY : ALLISA ANAK SAJAT (2019892858)

: SITI AISYAH BINTI MOHMAD ILEYES (2019695808)
: IMANINA SOFIYA BINTI HASNOL (2019850416)
: ESSE TEMI ANAK RICKY LAWAT (2019468134)
: ALDRINNE ANAK CYRIL (2019695634)
: KHAIRUL NIZAM BIN FOURZAN (2019814444)
: MUHD AFIQ QAYYUM BIN LATIF (2019630662)

GROUP : AP224 6A

PREPARED FOR : Sr Dr. HAJAH NORAZIAH BINTI HAJI WAHI

DATE OF SUBMISSION
9TH JULY 2021
 TABLE OF CONTENTS

LIST OF FIGURES……………………………………………………………………………….. v

1.0 CHAPTER 1…………………………………………………………………. ………………. 1

1.1 INTRODUCTION…………………………………………………………………….. 1

1.2 AIM OF RESEARCH………………………………………………………………... 2

1.3 RESEARCH OBJECTIVES………………………………………………………… 3

1.4 PROBLEM STATEMENT …………………………………………………………... 3

1.5 SCOPE OF RESEARCH…………………………………………………………… 4

1.6 RESEARCH METHODOLOGY……………………………………………………. 4

1.6.1 INTRODUCTION……………………………………………………………… 4

1.6.2 RESEARCH DATA COLLECTION…………………………………………. 5

1.6.3 DATA COLLECTION………………………………………………………… 6

2.0 CHAPTER 2…………………………………………………………………………………... 7

2.1 INTRODUCTION……………………………………………………………..……… 7

2.2 LITERATURE REVIEW…………………………………………………………….. 9

2.2.1 OIL AND GAS INDUSTRY IN MALAYSIA………………………………… 9

2.2.1.1 DRILLING AND COMPLETION……………………………………… 11

2.2.1.2 DEVELOPMENT AND PRODUCTION……………………… ……… 13

2.2.1.3 DECOMMISIONING AND SITE RESTORATION…………..……… 14

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 2.2.2 ENVIRONMENTAL MANAGEMENT IMPACT TO OIL AND GAS

EXPLORATION AND PRODUCTION………………………………………. 16

2.2.2.1 OIL SPILLAGE…………………………………………………………. 16

2.2.2.2 AIR POLLUTION………………………………………………. ……… 17

2.2.2.3 LOSE OF BIODIVERSITY……………………………………. ……… 18

2.2.2.4 DISEASE AND HEALTH IMPACT…………………………...……… 19

2.2.3 EFFECT OF ENVIRONMENTAL MANAGEMENT IN OIL AND GAS

EXPLORATION AND PRODUCTION………………………………………. 21

2.2.3.1 OIL SPILLAGE AND WATER POLLUTION…………………………21

2.2.3.2 PIPELINE EXPLOSION……………………………………………….. 24

2.2.3.3 AIR POLLUTION………………………………………………. ……… 25

2.2.3.4 LOSE OF BIODIVERSITY…………………………………………….. 26

2.2.3.5 HEALTH RELATED ISSUES………………………………............... 27

2.2.4 CORE ELEMENTS OF ENVIRONMENTAL MANAGEMENT IN

OIL AND GAS EXPLORATION AND PRODUCTION…………………….. 28

2.2.4.1 POLICY………………………………………………………………….. 28

2.2.4.2 PLANNING……………………………………………………... ……… 28

2.2.4.3 IMPLEMENTATION AND MONITORING…………………………… 29

3.0 CHAPTER 3: CASE STUDY OF PM-3 (CAA) PHASE 2 AND 3………………. ……… 31

3.1 BACKGROUND OF PROJECT…………………………………………… ……… 31

3.1.1 PROJECT DEVELOPMENT………………………………………....……… 32

3.1.2 PROJECT EXPORT………………………………………………………….. 33

3.2 PARTIES INVOLVED………………………………………………………. ……… 35

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 3.3 ISSUES AND PROBLEM ENCOUNTER DURING THE OPERATION OF

PM 03 CAA (ABSTRACTED FROM THE 2008 CORPORATE

RESPONSIBILITY REPORT)……………………………………………............... 37

3.3.1 SAFETY AND HEALTH……………………………………………...……… 37

3.3.2 EMISSION……………………………………………………………………... 37

3.3.3 ENVIRONMENT………………………………………………………………. 38

3.4 ENVIRONMENTAL POLICY AND LEGISLATION……………………... ……… 39

3.4.1 APPLICATION OF LEGISLATION…………………………………………. 41

4.0 CHAPTER 4: RESEARCH FINDINGS AND DISCUSSION…………………………….. 42

4.1 OBJECTIVE 1: THREAT OF OIL AND GAS EXPLORATION AND

PRODUCTION TOWARDS THE ENVIRONMENT……………………………... 42
4.2 OBJECTIVE 2: TO EXPLORE THE IMPACT OF IMPLEMENTING

ENVIRONMENTAL MANAGEMENT IN OIL AND GAS

EXPLORATION AND PRODUCTION…………………………………………….. 46

4.3 OBJECTIVE 3: TO STUDY THE CHARACTERISTICS OF

ENVIRONMENTAL MANAGEMENT IN OIL AND GAS EXPLORATION
AND PRODUCTION………………………………………………………... ……… 49

5.0 CHAPTER 5: CONCLUSION AND RECOMMENDATION……………………………… 55

5.1 INTRODUCTION…………………………………………………………………….. 55

5.2 CONCLUSION………………………………………………………………. ……… 55

5.2.1 OBJECTIVE 1: THREAT OF OIL AND GAS EXPLORATION

AND PRODUCTION TOWARDS THE
ENVIRONMENT …………………………………………................. 56

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 5.2.2 OBJECTIVE 2: TO EXPLORE THE IMPACT OF IMPLEMENTING

ENVIRONMENTAL MANAGEMENT IN OIL AND GAS

EXPLORATION AND PRODUCTION……………………............... 57

5.2.3 OBJECTIVE 3: TO STUDY THE CHARACTERISTICS OF

ENVIRONMENTAL MANAGEMENT IN OIL AND GAS
EXPLORATION AND PRODUCTION……………………………... 58
5.3 RECOMMENDATION……………………………………………………….……… 59

REFERENCES……………………………………………………………………………………. 61

iv
 LIST OF FIGURES

Figure 2.1.1(a): Production and consumption in Malaysia

Figure 2.1.1 (b): Value chain of oil and gas sector

Figure 2.1.3.1: Picture show the transportation process flow from upstream

Figure 2.3.1 (a): Cleaning offshore oil spillage – method

Figure 2.3.1(b): Cleaning offshore oil spillage – method 2

Figure 2.3.2: Pipeline leaking detection system

Figure 2.3.4: Directional drilling

Figure 3.1: The first phase of oil production began in July 1997

Figure 3.1.1: The first floatover perform and first operation for Tai An Kou

Figure 3.1.2: PM-3 CAA Project will extract oil and gas from six different

offshores field.

Figure 3.4: Petroleum Act 1974

v
 CHAPTER 1: INTRODUCTION

1.1 INTRODUCTION

In general, oil and natural gas are key sectors in the energy sector, and as the world's
principal fuel sources, as they have a significant impact on the global economy. The processes
and systems involved in producing and delivering oil and gas are extremely complicated, capital-
intensive, and need cutting-edge technology. Besides, Burclaff (2015) added that the industry
is often classified into three segments: upstream (oil and gas exploration and production);
Midstream (transportation and storage); and downstream (refining and marketing).

In addition, as mentioned by Frost (2007) the extractive business such as oil and gas
are often regarded as one of the most ecologically hazardous businesses. Despite all that, oil
and gas operations still are genuinely worldwide, with operations taking place in every corner of
the planet, from Alaska to Australia, Peru to China, and in every ecosystem, from the Arctic to
desert, tropical rainforest to temperature woods, mangrove to offshore. For the foreseeable
future, the global society continues to rely largely on oil and gas supply. Oil and gas hold account
for 63% of global energy, with coal accounting for 27%, nuclear energy accounting for 7%, and
hydroelectric energy accounting for 3%. Hence, the issue is to fulfill global energy demand while
limiting environmental effects by adhering to existing best practices.

According to Borthwick et. al. (2010), the extraction of oil and gas deposits has not
always been without environmental consequences. Oil spills destroyed land, accidents, and
fires, and air and water pollution disasters have all been documented at various times and
locations. However, lately the environmental rising concerns, and industrial sectors have been
compelled to pay closer attention to the environmental consequences of their operations. De
Burgos-Jimenez et al. and Muhammad (2015) explored organizational environmental
tendencies and their potential effects on financial performance improvements. A substantial
quantity of research has been produced to identify and assess the link between environmental
activities and organizational performance.

Moreover, according to Borthwick et. al. (2010), the vast environmental concerns
confronting the oil and gas exploration and production sector reveal themselves on both a local
and global scale. They include habitat conservation, biodiversity, air pollution, discharged
marine and freshwater, incidents and oil spills, and soil and groundwater contamination. The
industry had reacted to these concerns. However, the task at hand is still to ensure that all
operations adhere to current best practices.

1
 Despite all that, IOGP (2014) suggested that paying attention to ISO 14001 standards
and International Association of Oil and Gas Producers (IOGP) recommendations is critical in
the correct execution of oil and gas engineering, procurement, and construction (EPC)
contracts, and contractors should follow the contract provisions through a Health, Safety, and
Environmental (HSE) Plan. The IOGP suggested that oil and gas companies/contractors meet
HSE-MS criteria while under contract. Management of HSE in a business setting where a client
and one or more contractors collaborate necessitates cooperation from all parties and a clear
description of each party's obligations and responsibilities at various stages of the project. On
this premise, the provisions that have direct financial consequences for the project are critical.

Apart from that, the control measures and preventative techniques, according to Rao
and Holt (2005), might help businesses to save significantly on costs. Darnall and Edwards
(2006), on the other hand, asserted that environmental rules impose additional expenses on
businesses and that they must reduce the various effect of their operations to comply with
international norms and norms. Clearly, in the long run, compliance with these standards will
reduce the total cost of associated firms in the long term. Much research on project cost
estimating methodologies has been conducted. Several conceptual frameworks, such as Life
Cycle Assessment (LCA), Environmental Cost Accounting (ECA), and Full Cost Accounting
(FCA), have been presented to date to determine the various costs associated with waste and
pollution.

Therefore, this mini research pertaining to the environmental management in oil and gas
exploration and production is crucial to present an overview of environmental concerns in the
oil and gas exploration and production business, as well as the best techniques to attaining high
environmental performance in all areas of the world. However, it should be emphasized that the
discussion will only cover exploration and production operations and does not go into detail on
large-scale storage and transportation difficulties or downstream processing.

1.2 AIM OF RESEARCH

To ascertain the impact of environmental management and gas exploration/production

in the case study at PM 03 CAA platform.

2
1.3 RESEARCH OBJECTIVES

The research objectives are:

 To identify the potential threat of oil and gas exploration and production towards
theenvironment.
 To explore the effects of implementing environmental management in oil and gas
exploration and production.
 To study the characteristics of environmental management in oil and gas exploration
and production.

1.4 PROBLEM STATEMENT

Exploration and production in the oil and gas industry have the potential to have wide
impacts on the environment. The nature of the environmental impacts was determined based
on the stages of the process, size, and scope of the projects and the effectiveness of planning,
pollution reduction mitigation, and control technique.

The industry has created a proper management system, operational practices,

and engineering technology that can help in minimizing the environmental impacts but
still, there are several potential impacts concerning the environmental component that
had to affect the source and operational activity in the oil and gasindustry. The exploration
and production of oil and gas had given a big impact on the economic, social, and cultural
changes especially for those who are still living a traditional lifestyle. The key changes might
be on the land use pattern, socio-economic system due to employment opportunities, a socio-
cultural system where the changes are influenced by foreigners.

Besides, there are also atmospheric impacts that are caused by exploration and
production in the oil and gas industry. The atmospheric issues had increased the interestfrom the
oil and gas industry and government authorities. The emissions from flaring, venting, and
purging gases; combustion processes and fugitives’ gases from loading operations and
tankage, and losses from process equipment in oil and gas operations are the primary sources
of atmospheric emissions. the volume of emissions usually will be increased during the
production process compared to during exploration activities.

Next are the aquatic impacts. the high pH value and salt content in some drilling fluids
that are being used during the exploration and production process give potential impacts to
freshwater sources. Besides, if there are leakages and discharges of drainage water thus it
results in pollution of ground and surface waters. Other than that, the potential effect that will

3
cause terrestrial impacts usually will arise from three basic sources which are physical
disturbance that results from the construction process, conterminous resulting from spillage and
leakage or solid waste disposal, and impact from the openingaccess and social change.

Decommissioning is usually the final stage of an offshore installation. It is a process of

removal of platform and facilities and the compartment will be abandoned and the sea floors
are cleared and the waste produced from decommissioning is identified. Malaysia is one of the
countries in the world without a comprehensive waste managementstrategy for offshore
platform installation. Oil and gas operators in Malaysia need to follow the legal and regulation
framework for waste management for the decommissioning procedure in the industry.

Challenges are being faced by the operators if the waste management were not
implemented properly as it will give an impact on the environment and the worker's health
during the decommissioning of the offshore installation process. If the decommissioning waste
was not being handled properly; the reputation of oil operators will be affected. In terms of the
economy, higher costs are needed during the transportation of waste from offshore to onshore.

1.5 SCOPE OF RESEARCH

The scope of research is important as it will define what is going to be cover and what
willbe focusing on. The scope of research is as follows:

A) Location analysis
B) Process of oil and gas exploration and production
C) Environment analysis
D) Economic analysis
E) Management analysis

1.6 RESEARCH METHODOLOGY

1.6.1 introduction

This process indicates more than just the individual skills but also relates to their way of
thinking and the way they analyze from different aspects with the extreme understanding level on
the certain research field. The scientific method is decided to operate a set to come out with a
solution and produce a new research outcome that is proper. (Grinnell, 1993). Besides,
research also defines as certain and systematic research that helps to search to find the
answer to a problem (Burns,1997). Having any sort of problem will create a research topic
4
easier by undergoing the process of collecting data, analyzing, and interpreting the information
to be the research result and solution to the problem that occurred. Research is usually related to
the changes from one point of view to another point of view. Whereas the changes structured
the effort to gain new results (Redman and Mory, 1923).

1.6.2 Research data collection

Literature Review

The primary data collected for this research is the literature review. The literature review
is the information that has been characterized, collected, and recorded by others and
is accessible from different sources. The reason for getting auxiliary information is to
get any extra information to bolster the investigation. Once the information is gotten, it
is fundamental to extricate and survey once more and once more to guarantee
that it relates to the investigate theme. The literature review is a comprehensive review
of thegeneral topic related to the research (Denney and Tewksbury, 2013).

Article and journal

Journals and articles were used from various data sources such as the internet and
google scholar. Journal is defined as a regularly published magazine or newspaper
mainly focusing on the subject of experts (Cambridge, 2003). The scope of the search
will be based on SCM and IBS.

Books
For this study, reference books related to the Industrialised Building System, Supply
Chain Management, Strategy, People, and Process, e.g., Construction Research
Institute of Malaysia.

Database
By using the library search provided by the University, in this case, authors used various
databases which were provided by UiTM, e.g., Science Direct, and Emerald Insight.

Previous dissertation/ thesis

The previous thesis was completed by others and has been approved by the
university.The only relevant thesis can be taken for additional information.

5
1.6.3 Data collection

An effective method of data collection is needed so that more reliable data will cover all
the details which are relevant to the research questions. There are few different methods to
collect data for research (Al Kilani et al., 2016). There are six sources for data collecting which
are, documentation, archival records, focus group interviews, direct observation, participant
observation, and physical artifacts. Al Kilani et al. (2016) stated that there are three common
methods of data collection which are interviews, documentation, and questionnaire. For this
research, we are only using one (1) type of data collection which is the documentation for
literature review.

6
 CHAPTER 2: LITERATURE REVIEW

2.1 INTRODUCTION

Petroleum industry is one of the sectors which contribute to the global economy (Taylor,
n.d.). Majority of the energy in present day involve with the burning of fossil fuels and future is
depending on the petroleum industry. Crude oil obtain from drilling platform will refine into fuel
such as kerosene, diesel, petrol and gasoline to provide energy. Vehicles are very depending
on the fuel to operate their functions as mode of transportation. Amount of petroleum occur
entirely within the sedimentary rocks (Dawe, 2001). The availability of hydrocarbon can be
found underground of the rock reservoir. A porous rock formation can allow the permeable
flowing of hydrocarbon on surface. Crude oil can either exist on shore or offshore.

According to Darko (2014), main activities involved in the oil and gas industry are
upstream, midstream and downstream. Upstream section is carrying out the exploration and
production of gas. It is the part where raw materials extract through drilling to obtain the crude
oil on platform. Midstream is where the delivering of raw materials to the refinery for processing
the oil. In this section the oil may deliver through pipelines. Lastly, the downstream is where
the refineries take place. It processes the oil to remove any impurities and convert it into gas
products which can be used by the publics.

Huge volume of the gas product have cause generation of waste to damage the
environment when not handle properly (Danso-boateng & Achaw, 2014). Extraction and
production of crude oil can create harm towards the environment. Oil and gas industry have
possibilities that can affect the condition of environment since drilling involve huge
development. During the production of oil and gas, the environment can be affected when
extraction of crude oil. Refining of the oil consume huge amount of energy and release harmful
gases during the process (Sheydai, Nykyforuk, Berezhnytska, Melnychuk, & Mandryk, 2021).

The impacts on the ground surface can occur during the site clearance and drilling
operation for exploration and production of gas. According to Danso-boateng & Achaw (2014),
leakages and spillage of oil during process of oil production can cause major problem to the
environment. Possibility of climate change can occur when combustion of gases release to
the air during flaring. Environmental impact is getting worsen if not properly manage and
reduced.

Environmental management is important to give protection on the environment and

make improvement towards the environment. Environmental hazard due to the oil and gas
industry is control and minimize when the environmental management applied (Danso-
7
boateng & Achaw, 2014). Technology is often being used when there are threats toward
environment and mitigate the effects. The impacts on environment are list to describe the
nature of impact and creating plans which can reduce the impact towards environment (Ellis,
Clark, Rouse, & Lamarche, 2017). Therefore, environmental management can benefit the
industry by reducing the impact of environment.

Environmental management can provide a long-term profit towards the environment

when the criteria of the management being followed. Lesinski (2001) mentioned that there are
components in environmental management such as identification of environment impacts, the
policy, consultation and improvement need to be taken. These are informed in the
environmental management to develop plan which can reduce the environment risk.
Environmental management applied throughout the project phases starting before the
construction until completion of the projects (Baby, 2011). Thus, management are plan
throughout the project lifecycle to ensure the environment always being monitored.

8
2.2 LITERATURE REVIEW

2.2.1 OIL AND GAS INDUSTRY IN MALAYSIA

Malaysia is a vital oil and gas hub, having increased its market dramatically since Royal
Dutch Shell (Shell) found and drilled the country’s first oil well on Canada Hill in Miri, Sarawak
in 1910. Following Malaysian independence from the UK in 1957, the oil and gas industry
became subject to the Petroleum Mining Act 1966 (Act 95). (Act 95). This legislation
established a concession structure for the sector’s upstream activities, in which multinational
companies (MNCs) such as Shell and Exxon were given exclusive rights to explore and
produce resources. In return, these corporations were compelled to pay royalties and taxes to
the government. (Mustapa et al., 2010).

As Malaysia witnessed economic growth following the New Economic Policy

announced in 1971, the government saw the favourable nature of establishing State control
over oil and gas development. Consequently, the Petroleum Development Act 1974 was
adopted and Malaysia’s national oil firm, Petroliam Nasional Berhad (PETRONAS) was
created. The Petroleum Development Act granted PETRONAS exclusive ownership rights to
all oil and gas resources in Malaysia and establishes the company as the principal regulatory
authority for all upstream activity in the industry. The Malaysian oil and gas sector and
PETRONAS itself have subsequently witnessed substantial development, with both having
developed into a major global player. As a consequence, the Malaysian government
recognized oil and gas as a major industry for economic development under the Economic
Transformation Programme (ETP) established in 2010. Despite the problematic low oil-price
situation at now, and among other associated industry objectives, the ETP wants to support
yearly growth for the sector at a pace of five per cent until 2020. (Rahuman et al., 2014).

Oil and Gas Malaysia Timeline

1910 First oil well in Miri, Sarawak in 1910.

1914 First oil refinery.

1963 Discovery of Sarawak’s first offshore field, Baram.

1966 Petroleum Mining Act 1966.

1968 First offshore oil field in Malaysia is brought on-stream.

1974 Incorporation of PETRONAS under the Petroleum Development Act.

2010 Creation of the Economic Transformation Programme.

9
 Malaysia is the second-largest oil and natural gas producer in Southeast Asia and is
the fifth-largest exporter of liquefied natural gas (LNG) in the world, as of 2019. It is ideally
placed on vital routes for seaborne energy commerce. Malaysia’s energy business is a key
sector of growth for the economy. The government has focused on increasing hydrocarbon
production through upstream investment and exploration as a driver of economic growth, but
pursuing this strategy has become increasingly challenging because production has been
declining as a result of maturing fields and a lack of developed new fields. (Lejla et al., 2017).

PETRONAS has adopted the risk sharing contracts (RSCs) approach as an alternative
to the PSC regime in developing marginal fields. Marginal fields are those with reserves of
less than 30 million barrels of recoverable oil or oil equivalent. In RSC, PETRONAS retains
ownership and control of the reserves. The contractor bears all the exploration costs and the
associated risks and is compensated when a commercial discovery is made. The contractor
is also entitled to a share of the profits and not a share of the production. (Abdul & Liwan,
2012)

Malaysia has over 400 oil and gas fields and is Southeast Asia's second largest oil
producer. The country also has Asia's fourth-largest oil reserves and was the world's second-
largest supplier of liquefied natural gas until 2014. (LNG). With oil and gas accounting for over
20% of Malaysia's gross domestic product, this well-established ecosystem is one of the
driving forces behind the country's economic progress (GDP).

Despite the fact that the oil and gas industry has had to deal with a difficult worldwide
climate in recent years as a result of the 2014 oil price drop, the country's gas production has
consistently increased over the last decade. This has been fueled in large part by a series of
high-profile discoveries and huge projects that began in 2013 and are helping to keep gas
output on the rise. Despite the industry's vast proven oil and gas reserves, the dwindling
discovery of oil in mature fields after nearly three decades of production has pushed it into
innovative exploration and production technologies.

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2.2.1.1 Drilling and completion

A value chain is the sequential collection of actions conducted on a raw material

leading it to develop value at each succeeding action and finally become a consumable
product for end consumers. In the oil and gas sector, oil and gas are the raw material. The
value chain in the oil and gas sector turns crude oil and gas into numerous end products such
as gasoline and natural gas. Upstream operations involve the exploration, development and
production of hydrocarbon resources. Activities in the downstream section include refinement of
crude oil, conversion of gas into different marketable products, marketing, trading and delivery
of final goods to customers.(Longwell, 2002).

Figure 2.1.1(a): Production and consumption in Malaysia.

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 Figure 2.1.1 (b): Value chain of oil and gas sector.

The upstream section of the value chain encompasses the discovery, development,
and production of hydrocarbons which might be oil or gas or the combination of both.
Exploration for oil and gas is carried out in a designated exploration region or ‘block’ which is
generally offshore. Development and production operations subsequently follow following
finding of commercial quantities of hydrocarbon. Downstream activities include refinement of
crude oil, processing of gas, marketing, trading and distribution of finished goods to customers in
domestic or worldwide markets. End products are refined products of crude oil, processed
natural gas, and petrochemical compounds whose source material are crude oil or natural gas
(Chima, 2011).

12
2.2.1.2 Development and production

Drilling appraisal wells to determine the size and commerciality of the find is an
important part of the development process. Following that, wells are drilled for full-scale
production, and infrastructure and facilities, as well as a connecting network, are built at the
production and refinery or processing sites to make hydrocarbon production, processing, and
transportation more efficient. After the well has been bored, the operation of production begins.
Hydrocarbons are extracted from a reservoir beneath the earth's surface and brought to the
surface to be processed. Oil and gas are generated from several wells and delivered to the
surface through platforms in offshore production. Before being delivered onshore to storage
facilities, refineries, or processing plants, the hydrocarbon mixture is processed on the
platforms to remove water and impurities, as well as separate gas and condensate from oil
(Mustapa et al., 2010).

According to the Oil & Gas Journal (OGJ), Malaysia held proved oil reserves of 3.6
billion barrels as of January 2020, the fourth-largest reserves in Asia Pacific after China, India,
and Vietnam.6 Nearly all of Malaysia's oil comes from offshore fields. Malaysia produces a
number of different crude oil blends, which are mainly medium to light, sweet blends.
Malaysia’s Tapis blend, which is extracted from the Tapis field located offshore in the Malay
Basin, generally commands a relatively strong price premium to other crude oils on the market
because it is considered high quality. Total liquid fuels production in 2019 was an estimated
712,000 barrels per day (b/d), of which about 600,000 b/d was crude oil. Total liquid fuels
production has declined after reaching a high point of 762,000 b/d for the decade in 2016.

13
2.2.1.3 Decommissioning and site restoration

i) Transportation
The transportation process is divided into two stages. The first is crude oil and natural
gas transportation from the production site, and the second is end-product transportation in the
downstream phase. Pipelines, vehicles, and railways on land, as well as barges and tankers
on the water, are all possible modes of transportation.

Crude oil is delivered to a storage facility and refinery via pipes from the production site.
Tankers are the most common means of transport for crude oil export to foreign markets.
Natural gas is transported through pipelines from the production site to the processing plant
and customers. Pipelines transfer refined oil to storage facilities. Pipelines, railways, and roads
are commonly utilized to distribute finished goods in domestic markets, while tankers are
utilized to reach customers over international borders.

Malaysia's oil pipeline network is small, therefore the country relies on tankers and
trucks to transport goods ashore. From the Dumai oil refinery in Indonesia to the Melaka oil
refinery in Melaka City, Malaysia, an oil product pipeline runs. From the Melaka refinery,
through Shell's Port Dickson refinery, to the Klang Valley airport and the Klang oil distribution
hub, an interconnecting oil-products pipeline runs. ets.

Figure 2.1.3.1: Picture show the transportation process flow from upstream.

14
ii) Storage

Storage is required to balance supply and demand changes and to maintain a

consistent and secure supply of energy markets at all times. After production, a large amount of
crude oil is stored. A large quantity of refined products is also kept on hand. Storage facilities are
frequently built near refineries and are linked to pipeline networks to allow product shipping when
demand is high. Storage containers exist in a variety of shapes, sizes, and styles. The
utilization of old tankers and barges for offshore storage has been modified. At large-capacity
storage facilities, special tanks are employed. Malaysia aims to enhance its oil storage
capacity to meet the growing demand for oil storage in the area as crude oil trading grows.
Singapore also has capacity limits in terms of oil storage, which Malaysia hopes to exploit by
becoming a regional alternative provider of oil storage.

15
2.2.2 ENVIRONMENTAL MANAGEMENT IMPACT TO OIL AND GAS EXPLORATION AND

PRODUCTION

The refinery separates crude oil into various petroleum products through a series of
physical and chemical separation technologies. These technologies include fractionation,
cracking, hydroprocessing, combination/mixing processes, and manufacturing and
transportation. The refining industry supplies a variety of widely used daily products, including
petroleum gas, kerosene, diesel, motor oil, asphalt and wax.

Most of the environment impact from the oil and gas are from their toxicity. Toxicity
refers to the ability of certain materials to cause harm or death to organisms. Any chemical in
sufficient quantities can be toxic. For example, when a person drinks too much water too fast,
water intoxication occurs. The individual's kidneys cannot handle large amounts of water,
which leads to death. Therefore, toxicity depends on the dose or quantity of the chemical that
the organism is exposed to. The same dose of chemicals can affect different people in different
ways, depending on the person's genetics, weight, age, and gender. The presence of certain
chemicals is measured by their concentration in air or water.

2.2.2.1 Oil spillage

Oil and gas development will also lead to unplanned oil or chemical spills. Most
accidental leaks in the world are of course a smaller oil spill. The most common cause the
accident is equipment failure, the error is caused by staff and extreme environmental
conditions. This when accidental discharge occurs near the coast or in remote areas, the
environmental consequences are particularly serious.

The worst case scenario is a large uncontrolled blowout. This is the uncontrolledrelease
of oil or natural gas during drilling or production. Oil or natural gas begins to flow into the
wellbore and upwards into the annulus and/or inside the drill pipe. If this situation escalates,the
result will be a blowout and oil and gas will surface. The blowout can cause huge damageto the
drilling platform, harm the personnel of the drilling platform, and cause environmental
disasters.

Systemic oil spills may severely damage the function of marine ecosystems because
the chemical composition of water and its physical properties (transparency, temperature, etc.)
deteriorate, and petroleum products penetrate the ocean surface to cause biological death.
Skin and feathers are forced to change migration routes, moult, build nests, and lay eggs.

16
2.2.2.2 Air pollution

Air pollutants are produced by burn oil and natural gas. In addition, pollutants can
leaking storage tank during the oil and gas period production and distribution. Different types of
oil the amount of pollutants depends on the oil content. For example, when oil burns electricity,
sulfur dioxide, mercury compounds, and nitrogen oxide is produce. Average 12 pounds of
sulphur dioxide, and four pounds every megawatt-hour of electricity produced by burning
petroleum emits nitrogen oxides.

Natural gas has fewer impurities than petroleum or petroleum. For example, compared
with oil, natural gas releases less sulphur dioxide and nitrogen oxide emissions. Natural gas is
mainly composed of methane, which is a colourless, odourless, non-toxic, and flammable gas,
and is the main component of natural gas. Methane may also leak from storage tanks. Natural
gas power generation emits 0.1 pounds of sulphur dioxide per megawatt hour (MWh) and 1.7
pounds of nitrogen oxides per MWh.

Different stages of oil and gas development emit air pollution, including:

 Condensation tanks are used to store hydrocarbons that change from gas to liquid during
the natural gas production process. The U.S. Occupational Safety and Health
Administration (OSHA) sets the maximum benzene exposure level of oil and gas workers
to 1 ppm (parts per million) in eight hours.

 Engines, including diesel engines and gasoline engines, are used to power oil and natural
gas production during drilling, trucking, and oil rig work. Exhaust emissions from burning
gasoline and diesel fuel include nitrogen oxides and carbon monoxide.

 Gas leaks can occur when seals, pipes, or pipes rupture or rupture, or when the covers
and covers on the equipment are not sufficiently tightened. A gas leak will release
methane and volatile organic compounds (VOC) into the air.

 The pit is used to store produced water, waste water, and the return flow left after natural
gas extraction. This polluted water stored in the pit will emit air pollution, depending on
the type of waste injected into the pit. Benzene, hydrogen sulphide, and volatile organic
compounds can be released into the air from pits with certain wastes.

17
2.2.2.3 Lose of biodiversity

Major risks to biodiversity are dwelling area misfortune, invasion via way of means of exciting
species and pathogens, and cli- mate alter, all essentially pushed via way of means of human
exercises. In spite of the truth that fossil fuel (FF) extraction has typically been visible as a beat
rary and spatially restrained annoyance to eco- frameworks, certainly close by or restrained
biodiversity misfortune will have massive cascade influences on eco- framework paintings and
efficiency (N.Butt, H.L Beyer, et al, 2017).

Consumption of FF (oil, herbal fueloline, and coal) grew from 26,2 hundred million barrels of
oil equivalent (MBOE) in 1965 to 80, three hundred MBOE in 2012. By 2035, oil call for is
projected to boom through over 30%, herbal fuel line through 53%, and coal through 50%. It is
frequently assumed that legally mandated recuperation after extraction (which incorporates
drilling and all varieties of min- ing) will go back a place to shut to its pre- disturbance state.
Extraction sports have consequently been taken into consideration trivial disruptors of herbal
structures in evaluation with different human sports, which includes agricultural land clearing
(N.Butt, H.L Beyer, et al, 2017).

Ecosystem disturbance and degradation attributable to direct or oblique outcomes of

extraction, however, have profound and enduring influences on structures at wider spatial
scales. Direct outcomes encompass nearby habitat destruction and fragmentation, visible and
noise disturbance, and pollution. Indirect outcomes can make bigger many kilometres from the
extraction supply and encompass human expansion into formerly wild areas, advent of
invasive species and pathogens, soil erosion, water pollution, and unlawful hunting. Combined,
those elements result in populace declines and adjustments in network composition. Gas andoil
transportation also can be environmentally damaging, specially in nations with susceptible
governance, and may result in deforestation, water contamination, and soil erosion. Spills in
marine environments may have extreme environmental influences over extensive areas(N.Butt,
H.L Beyer, et al, 2017).

18
2.2.2.4 Disease and health impact

Workplace fitness risks normally fluctuate from the ones determined with inside the
standard environment. Furthermore, due to the fact people are regularly uncovered in limited
spaces, publicity stages to administrative center risks are regularly a whole lot better than
exposures to risks with inside the standard environment. In growing countries, people can be
uncovered concurrently to administrative center risks, to an hazardous housing environment,
and a polluted standard environment. Occupational Health Hazards are widely divided into
Physical, Chemical, Biological, Behavioral, Psychosocial, and Mechanical/Ergonomics (R.M
Manoj Kumar, R.B Karthick, 2017).

Physical Hazards: Physical risks are regularly stated to be much less crucial than
chemical risks however this isn't so. They can and do purpose numerous fitness problems,
accidents or maybe death. The nature of bodily sellers is extensive and have to now no longerbe
underrated however the essential ones able to inflicting occupational problems and accidents
are:

1. Noise

2. Illumination

3. Vibration

4. Radiation (ionizing and non-ionizing)

5. Microclimatic situations with inside the case of severe warmth and cold.

Health effect consist of steel poisoning, harm to the important frightened device and
liver (as a result of publicity to solvents), pesticide poisoning, dermal and respiration allergies,
dermatoses, cancers and reproductive disorders. In a few growing countries, extra than 1/2 of of
the people uncovered to dust-containing silica in positive high-threat industries (inclusive of
mining and metallurgy) are mentioned to reveal scientific symptoms and symptoms of silicosisor
different kinds of pneumoconiosis (R.M Manoj Kumar, R.B Karthick, 2017).

About 300–350 materials had been diagnosed as occupational carcinogens. They

consist of chemical materials inclusive of benzene, chromium, nitrosamines and asbestos,
bodily risks inclusive of ultraviolet radiation (UVR) and ionizing radiation, and organic risks
inclusive of viruses. In the European Union alone, about sixteen million humans are uncoveredto
carcinogenic retailers at work. The maximum not unusual place cancers attributable to those
exposures are cancers of the lung, bladder, skin, mesothelium, liver, haematopoietic tissue,
bone and gentle connective tissue. Among positive occupational groups, inclusive of asbestos

19
sprayers, occupational most cancers can be the main thing in ill-fitness and mortality. Due to
the random individual of effect, the most effective powerful manage approach is number one
prevention that gets rid of publicity completely, or that successfully isolates the employee from
carcinogenic publicity (R.M Manoj Kumar, R.B Karthick, 2017).

20
2.2.3 EFFECT OF ENVIRONMENTAL MANAGEMENT IN OIL AND GAS EXPLORATION
AND PRODUCTION

2.2.3.1 Oil and spillage

Tank discharge, equipment failure, oil spills and carelessness from operator can pollute
water near oil and gas production zones and their surrounding (Ibem-Ezera, V., 2010). Over
time, oil that spilled on waterways will dissolve into the offshore environment (Ibem-Ezera, V.,
2010). The processes of oil spillage will include spreading, evaporation, dispersion,
emulsification and dissolution (Ibem-Ezera, V., 2010). All of the processes will occur if there
are presence of oxygen, sunlight, tide, ocean, oil viscosity and volatility (Ibem- Ezera, V.,
2010).

Mechanical clean-up is the method that will be used cure the spill of oil on water
volatility (Ibem-Ezera, V., 2010). If mechanical clean-up is not possible to be used then
chemical dispersant method will be applied to cure the spillage of oil (Ibem-Ezera, V.,
2010). Chemical dispersant is basically a method where chemical will be used to to speed up
the natural dispersion of oil. The usage of dispersant will reduce the surface tension between
the oil and water by forming a smaller oil droplet for fast reaction (Ibem-Ezera, V., 2010).

The usage of workboats, vessel spraying, shoreline application and aerial spraying will
be applied in the chemical dispersant method (Ibem-Ezera, V., 2010).

Figure 2.3.1 (a): Cleaning offshore oil spillage – method 1.

21
 Besides using mechanical clean up method. The other technique is through burning
(Ibem-Ezera, V., 2010). In this method, the oil will be burnt at the spilled area or at he nearby
location (Ibem-Ezera, V., 2010). The process involved will be the aerial ignition, exothermic
combustion and the sinking of heavy leftovers to the bottom part of the sea (Ibem-Ezera, V.,
2010).

Figure 2.3.1(b): Cleaning offshore oil spillage – method 2.

Both mechanical and burning is a challenging method thus further monitoring from the
marine taskforce by using satellite imaginary technology (Ibem-Ezera, V., 2010). Although
difficult, this can be accomplished by utilising satellite photography technology while
prosecuting those who discharge their tanks and effluent into the sea (Ibem-Ezera, V., 2010).

According to Daniels Insurance, Inc (2018), by improving the spill reporting policies and
learn more on where and how the spill can occur also can help in reducing the spills. Spills can
also be avoided by better managing the fluids at a well's surface, and regulators should focus
on decreasing the hazards of well leaks through improved well design, according to the
research by Daniels Insurance, Inc (2018).

The oil and gas water management has to be upgraded (Daniels Insurance, Inc, 2018).
Drought and intensely localised water consumption impose significant threats to fresh water
resources, but rushing to alternatives we don't fully understand is risky and might introduce
additional concerns to our health and the environment (Daniels Insurance, Inc, 2018).

22
 Solidifiers, which are dry, granular, hydrophobic polymers that react with oil to generate a
floating, cohesive, solidified mass, are another chemical approach for oil spill cleaning (Ko, J.
Y., & Day, J. W., 2004). The oil-contaminated substance may be simply removed once it has
set, leaving very little trace behind (Ko, J. Y., & Day, J. W., 2004). DeLaune et al (1999),looked
into the effectiveness of utilising a solidifier to clean up spilt oil and found that it removed more
than 70% of the oil in open water after a spill in coastal wetlands.

23
2.2.3.2 Pipeline explosion

Pipeline explosion usually occur when there is faulty of equipment and rupture. Most of
the equipment used in oil and gas industry is old and some of are as old as the century and still
be used in the oil and gas facilities. When old equipment is being used, there is possibilities of
explosion underwater will occur (Ibem-Ezera, V., 2010). With the slightest contact to acidity, the
old and rupture equipment becomes more fragile and prone to corrosion (Ibem-Ezera, V., 2010).
Thus, by changing the old equipment to new equipment will reduce the possibilities of pipeline
explosion (Ibem-Ezera, V., 2010). The corrosion of pipe can be reduced by preventing flaring
from occur. The flaring will produce acid rains which will make the pipe corrode.

First of all, it I important for the oil and gas workers to learn how to carry out the duties in
related to quality control and quality assurance on the pipeline facilities. The maintenance is
needed to be done properly so that the result of the Integrity report is not poor. The integrity
report needs to be done by someone who works at the E&P companies.

According to Board, M., & National Research Council (1994), to detect the wide range of
leaking, pipeline operator should apply the combination of leak detection method. To detect
relatively big leaks quickly, setpoint-limit control systems should be employed when possible.
Visual surveillance should be utilised on a regular basis (with a time delay of 1 hour to 2 weeks)to
discover extremely minor leaks and those that have gone undetected by other means. By
being able to detect the minor leaking on the pipeline, it can prevent pipeline explosion from
happening. Board, M., & National Research Council (1994 also stated that the best way to
prevent vessels and pipes from colliding is to bury the pipeline with enough weight coating to
hold them in place.

Figure 2.3.2: Pipeline leaking detection system

24
 Last but not least, additional monitoring as well as modifications in operations, will be
required in the event of an explosion (Staff, E. P. E., 2019). Monitoring can detect explosive
gas mixtures of air and methane, and operations can regulate pressure transients to reduce
temperature rises that might cause flammable gas explosions (Staff, E. P. E., 2019). Due to the
complicated links between pressure transients and explosions, these last proposals are likely
the most difficult and costly to implement (Staff, E. P. E., 2019).

2.2.3.3 Air pollution

Explosions, flaring, and chemical occur from drilling and production is the main source of
air pollution in oil and gas exploration and production. Dust particles and solid waste also can
be source of air pollution (Reis, 1996). To reduce air pollution and its effect to environment, it is
important to reduce the amount of flaring and exploring during E&P process (Ibem-Ezera, V.,
2010). Besides, by reducing the chemicals and volatile compound used in oil and gas
production will help to mitigate the negative effects if contaminated air (Ibem-Ezera, V., 2010).
Usually, the chemical is colourless and odourless so when it is release to the environment it is
hard to be realised (Ibem-Ezera, V., 2010). The substance will cause harm to human
respiratory system. To minimise the related health and environmental hazards, chemicals
and/or volatile compounds, as well as their excessive dissipation, should be substituted (Ibem-
Ezera, V., 2010).

Air pollution control requires site assessment, and pollution control requirements are
often specific to emissions types (Lamont, E., 2018). There are also important metrics to
consider, such as the lower explosive limit (LEL) and effectiveness of certain types of pollution
control equipment and procedures relative to the expected volume of air pollution created and
measured (Lamont, E., 2018). Controlling this type of emissions is necessary because air
pollution can have a number of negative impacts on human, animal and plant health (Lamont,
E., 2018). With careful planning, a practical and affordable technique for controlling and
eliminating many forms of industrial emissions can be developed (Lamont, E., 2018).

25
2.2.3.4 Lose of biodiversity

First, to reduce the biodiversity it is important for the E&P companies to study about the
area including the plants and animal that are living there including their succession pattern
(Ibem-Ezera, V., 2010). These species may then be relocated to a new location where they
may thrive. Reduced manufacturing footprint is another strategy to protect biodiversity
substituted (Ibem-Ezera, V., 2010). The smaller the footprint, the less of an effect on
biodiversity it has on the environment (Ibem-Ezera, V., 2010). Companies should constantly
use sophisticated E&P technology, such as Horizontal Directional Drilling, to reduce their E&P
footprint (HDD). HDD reduces the number of wells drilled while increasing production efficiency
(Ibem-Ezera, V., 2010). This eventually will reduce the footprints and reduce the impact to lose
of biodiversity (Ibem-Ezera, V., 2010).

Figure 2.3.4: Directional drilling

Directional drilling basically has two key advantages (Miszewski, A., 2017). The first
advantages is more effective reservoir draining and the second advantages is less water and
gas coning (Miszewski, A., 2017). Horizontal drilling increases reservoir drainage by increasing
the quantity of reservoir that is exposed to the wellbore (Miszewski, A., 2017). This is also the
reason for the slower water and gas coning: a horizontal well requires less drawdown pressure
for a given production rate, therefore the water and gas coning will be slower (Miszewski, A.,
2017).

26
2.2.3.5 Health related issues

Workers in oil and gas industry are widely exposed to chemical hazards, physical
hazards, biological hazards, ergonomic hazards and psychosocial hazards which can cause a
variety health problem. At first, occupational safety and health risk management need to be
done to detect the current workplace safety and health concerns as well as to develop the
suitable control and procedures. Risk management is also important in order to identify the
risk, evaluating the risk and provide safety measure to control the risk.

Besides, the implementation of occupational safety and health management system is

one of the important components that verifies operational safety in the oil and gas exploration
and production. The benefits of this implementation are that is allows oil and gas industry to
identify hazards, analyse risks and adopt various management. It also ensures the well-being of
employees which will make staff feel more motivated and productive. By having regular risk
assessment will make it easier to track and monitor the safety and health indicators on regular
basis. By having occupational safety and health management system, the cost related with
accidents and incidents also can be reduced.

OSHMS not only helps define strategies for implementing control actions, performance
substantiation, resource mapping, and competency management, but it also provides a
systematic and coordinated proactive approach to controlling occupational health and safety
issues. Furthermore, in today's competitive environment, it aids in the enhancement of an
organization's brand image.

27
2.2.4 CORE ELEMENTS OF ENVIRONMENTAL MANAGEMENT IN OIL AND GAS
EXPLORATION AND PRODUCTION

2.2.4.1 Policy

The policy should be publicised internally and externally at all times, and it should be
thoroughly executed (Peterson, 2020). The underlying tenet is commitment. The commitment to
constant improvement, pollution minimisation, and compliance with laws and regulations must
be recorded, applied, and maintained (TWI Global, 2019). Policies must be enacted, held, and
conveyed to workers and the general public. The created policy must fulfil the ISO 14000
standards.

ISO 14000 is a set of standards for creating, implementing, and optimising an

environmental management system for enterprises and organisations. ISO, which stands for
the International Organization for Standardization, is the organisation responsible for
developing and implementing standards for a wide range of private, industrial, and commercial
uses (Juru, Henshall, & Murtaza, 2020).

2.2.4.2 Planning

With precise, thorough planning, organisations access all operations' environmental

impact (Peterson, 2020). The publications and standards describe significant aspects of the
process, such as the environmental profile, impact and risk assessment, consultation, waste
management, and broader environmental management concerns (UNEP, 2020). Contingency
planning and emergency response are covered in other documents. Programmes for
accomplishing objectives and targets, including assigning duties, methods, and time frames for
achievement, must be maintained (TWI Global, 2019).

Below are the environmental planning principles:

 Prepare environmental profile.

 Conduct impact assessment.
 Evaluate risk.
 Integrate environment with design.
 Prepare project environmental plans.
 Formulate compliance programmes.
 Establish monitoring programmes.
28
  Specify contractors' obligations.

Environmental issues can be both direct and indirect, such as those employed during
manufacturing. This evaluation aims to assist the establishment in establishing its
environmental objectives, goals, and targets, which should preferably be measurable; it assists
in the development of control and management procedures and processes; and it outlines any
relevant legal requirements, which can then be implemented into the policy (Preteshbiswas,
2021).

Environmental management also set internal standards and targets such as:

 Consultation and communication.

 Construction and infrastructure.
 Pollution prevention and control procedures.
 Waste management.
 Performance standards and targets.
 Contingency and emergency response.
 Monitoring.
 Compliance.
 Decommissioning and rehabilitation.

2.2.4.3 Implementation and monitoring

This phase will also include modifications and, in some instances, the development of
new procedures to respond to changing requirements. It is critical that organisations properly
establish, record, and explain their training and compliance contingency protocols (Peterson,
2020). Processes that are well-documented make it easier to alter them. Training requirements
for people who are employed may have a substantial influence on the environment must be
identified. (TWI Global, 2019). Procedures must be in place to educate employees on the
importance of policy compliance, roles and duties, emergency preparations, and response
needs.

The possibility of accidents and crises must be detected to reduce the environmental
damage associated with them (TWI Global, 2019). An evaluation of emergency readiness and
response protocols must be carried out and, when practical, tested regularly. Communication
and engagement at all levels of the organisation, notably upper management, are critical
29
components of implementation. The efficiency of environmental management is dependent on
all employees actively participating (Preteshbiswas, 2021).

Monitoring will guarantee that obligations are followed. This might include direct
measurements and records. It may consist of direct measurement and recording of quantitative
data, such as the volumes and concentrations of discharges, missions, and wastes (UNEP,
2020). Monitoring may entail socioeconomic involvement via local liaison activities or even
complaint evaluation.

The primary monitoring goals are to ensure that outcomes are forecasted at the planning
stage rather than to discover the cause and execute corrective action. The second objectives
can be as follows below:

 Verify the effectiveness of planning decisions.

 Measure effectiveness of operational procedures.
 Confirm statutory and corporate compliance.
 Identify unexpected changes.

30
 CHAPTER 3: CASE STUDY OF PM-3 COMMERCIAL ARRANGEMENT AREA (CAA)
PHASE 2 AND 3

3.1 BACKGROUND OF PROJECT

In general, Tanjung Offshore Works (TOS) has obtained a letter of award from Repsol's
Malaysian affiliate for the performance of maintenance, construction, and modification services
on the PM3-CAA offshore licences. Thus, the project for this case study is PM-3 CAA Phase 2
and 3. Initially, according to Offshore Technology (2020) the first phase of oil production began
in July 1997. This is followed by Phases 2 and 3 reached their peak output in early 2004.
Occasionally, the two phases which are Phases 2 and 3 of the PM-3 Commercial Arrangement
Area (CAA) project are underway off the coasts of Malaysia and Vietnam.

The PM-3 CAA project would derived oil and gas from six separate offshore resources
spread across a 1,350km2 region in Malaysia and Vietnam's overlapping zone. The project
entails developing the fields of West Bunga Kekwa, East Bunga Kekwa-Cai Nuoc, East Bunga
Raya, West Bunga Raya, NW Bunga Raya, and Bunga Seroja, which are located in the block's
southeast corner.

Figure 3.1: The first phase of oil production began in July 1997.

31
 Besides, Talisman Malaysia, with a 41.44 percent stake in the PM-3 CAA project, is the
project's operator. Petronas Carigali owns 46.06 percent of the company, while PetroVietnam
Investment & Development Company owns 12.5 percent. The unitized East Bunga Kekwa –
Cai Nuoc field extends into Vietnam Block 46-Cai Nuoc. Talisman Vietnam is the operator, with
a 33.15 percent stake in Block 46-Cai Nuoc.

3.1.1 Project development

Figure 3.1.1: The first floatover perform and first operation for Tai An Kou.

In term of development, the project entails the construction of four new wellhead
platforms, a central processing platform, a compression annexe platform, a floating storage
offloading vessel, and inter-field pipelines. As a result, these facilities have enabled the
development to produce 60,000bbls/d of oil and 270mmcf/d of gas. In addition, according to
Offshore Energy (2020) MSE completed the modification of the 98,567dwt oil tanker into a
Floating Storage and Offloading (FSO). On August 23, 2003, the finished yacht sailed away.
To improve storage, the vessel's hull length was expanded from 231.6m to 246.5m. The cargo
tank capacity has been raised from 688,728 to 853,853 barrels.

Apart from that, the Raya Bunga Raya A which allocated next to the current Bunga
Raya B platform is a 9,000t central processing platform. The topsides were erected utilising the
COSCO Class 2 dynamically positioned (DP) Heavy Lift Vessel (HLV) Tai An Kou in a unique
floatover operation. This was the vessel's first floatover employing DP control, as well as the
first of its kind. This work was carried out as part of the EPCI (engineering, procurement,

32
construction, and installation) contract granted to Hyundai Heavy Industries by field operator
Talisman Malaysia (HHI). Noble Denton assisted with engineering and supervision. NMA-
COSCO furnished the vessel as part of a separate subcontract. Noble Denton also provided
NMA-COSCO with engineering help and supervision on the Tai An Kou and her sister ship, the
Kang Shen Kou.

In fact, the Tai An Kou was manoeuvred carefully astern between the jacket legs until
the surge fenders made contact with the pre-installed elastomeric fenders on each side of the
jacket. Receiver cones comprising an elastomeric ‘spring’ absorbed the initial impact energy as
the topside was lowered. The final 100mm gap was closed by releasing sand from the sandjacks
built into the bottoms of the Leg Mating Units (Offshore Technology, 2020).

3.1.2 Project export

Figure 3.1.2 PM-3 CAA Project will extract oil and gas from six different offshores field

On a daily basis, according to Offshore Technology (2020) the Gas will be sold at the
wellhead to Petronas and PetroVietnam under a long-term contract. Petronas Carigali was in
charge of constructing a new 170km, 24in gas pipeline from PM-3 CAA to the Resak Platform.
PetroVietnam is constructing a 330-kilometer-long gas pipeline from PM-3 CAA to Ca Mau in
southern Vietnam. The Ca Mau project is now undergoing engineering design and
procurement processes, with initial gas exports to Vietnam scheduled for 2005-2006. Petronas
will purchase the total amount of sales gas until the Ca Mau project is ready to absorb gas.

33
 Despite all that, the Bunga Orkid/Bunga Pakma gas field complex, located at the
northern end of Block PM-3 CAA, will be required to fulfil long-term gas sales agreements and is
scheduled to be developed in 2007. During 2003, a successful exploration well and two
successful appraisal wells were drilled in this region (Offshore Technology, 2020).

34
3.2 PARTIES INVOLVED

Talisman has started producing oil from the PM-3 Commercial Arrangement Area
(CAA) Phase 2 and 3 projects, which is located off the coasts of Malaysia and Vietnam. The
PM-3 CAA project is the largest petroleum development by a Canadian corporation in Asia,
extracting oil and gas from six offshore fields spread across a 1,350-square-kilometer area in
the Malaysia-Vietnam overlapping zone.

The PM-3 CAA project, which is in the southeast corner of the block, involves the
development of the West Bunga Kekwa, East Bunga Kekwa-Cai Nuoc, East Bunga Raya,
West Bunga Raya, NW Bunga Raya, and Bunga Seroja fields. The offshore facilities were
designed and built starting in 2000. Drilling for development began in October 2002, and one-
third of the projected 60-well program has been completed to date. Drilling for development is
expected to continue into 2004. There have been four new wellhead platforms installed, as well
as a central processing platform, compression annex platform, floating storage offloading
vessel, and inter-field pipelines.

The parties involved in following block are:

1) Block PM-3 CAA

Company Name Interest holders

Talisman Malaysia (PM3) Limited (Operator) 41.44%
Petronas CariGali Sdn. Bhd. 46.06%
o is the exploration and production
subsidiary of Malaysia's state-owned
Petronas
PetroVietnam Investment & Development 12.50%
o is a subsidiary of PetroVietnam, the
national oil company of Vietnam

2) East Bungaa Kekwa- Block 46-Cai Nuoc

Talisman Vietnam Limited (Operator) 33.15%

Petronas CariGali (Vietnam) Sdn. Bhd. 36.85%
PetroVietnam Investment & Development 30.00%

35
3) Contractors

• MMCOG:
o Detailed Design of Bunga Kekwa 'C' (BK-C) Annex Topside
o Detailed Design of Bunga Kekwa 'C' (BK-C) Annex Substructure
• Hyundai Heavy Industries: Phase 2 Topside
• FoundOcean: Bunga Raya 'A'
• MMHE:
o B. Raya E - Jacket
o Conversion of FSO Orkid
• SDE: Bunga Raya E - Deck, Topside
• Kavin Engineering: TML Bunga RAYA-A (BR-A) Platform, Sand Cleaning System
• Petrofac RNZ: Bunga Tulip “A” Development
• Bluewater: External Turret Mooring system for FSO Orkid
• BC Petrochemical: Chemical Injection System
• ICON Engineering:
o Conceptual design & installation engineering, followed by the structural &
geotechnical detailed design for the BR-A Annexe Monopods
o Bunga Kekwa C Annexe Platform, Conceptual Design and Installation

Petroliam Nasional Berhad (PETRONAS) and Vietnam Oiland Gas Group

(PETROVIETNAM) are pleased to announce a ten-year extension of the Production Sharing
Contract (PSC) for the PM3 Commercial Arrangement Area (CAA) with Talisman Malaysia Ltd,
Talisman Malaysia (PM3) Limited (Talisman), PETRONAS Carigali Sdn. Bhd. (PCSB) and
PetroVietnam Exploration Production Corporation Limited (PVEP) in their press media
released on 9 May 2016.

Talisman will retain a 35 percent equity interest in Block PM3 CAA under the provisions of
the PSC, while PVEP will control 30 percent of the stock and PCSB will own the remaining 35
percent. The contract renewal will ensure that output from the Bunga Orkid, Bunga Kekwa,
Bunga Raya, Bunga Tulip, and Bunga Saroja fields is maintained. Further development of
identified fields within the Malaysia-Vietnam offshore Commercial Arrangement Area is one
among the other activities. The partners have agreed to spend an additional minimum of
USD500 million on near-field exploration, brownfield development, and studies on Enhanced
Oil Recovery (EOR). The PSC for the prolonged operation of Block PM3 CAA until 2027 was
signed on April 6, 2016.

36
3.3 ISSUES AND PROBLEM ENCOUNTER DURING THE OPERATION OF PM 03 CAA
(ABSTRACTED FROM THE 2008 CORPORATE RESPONSIBILITY REPORT)

3.3.1 Safety and health

In September 2008, while working on the roof of a building under construction in

Indonesia, a contractor tragically fell and died. Procedures for conducting danger
assessments, overseeing work, and material control were identified as three key areas for
corrective actions following a thorough investigation and root cause analysis. All the identified
actions are in progress and was completed in early 2009 (Report, 2008).

In October 2008, a contractor succumbed to head injuries while removing a flowline

clamp in Malaysia. Following a thorough investigation into the incident, several
recommendations and action plans were developed, including evaluating alternative
engineering solutions, ensuring that all training and work instructions are conducted in
languages appropriate for the workforce, risk awareness and near-miss reporting training, and
more rigorous monitoring and auditing of asset integrity and process safety management. Five
key actions have been completed, while the remaining items are currently being implemented or
will be implemented in early 2009 (Report, 2008).

In 2008, Talisman had a lost time injury frequency of 0.74 in Southeast Asia. One of
Talisman's most common health and safety hazards is hand and finger injuries. The
Company's HANDSAFE initiative began in December 2006, spearheaded by offshore
coordinators and fabrication yard safety workers. The various activities of the program are
tailored to the current activities at each worksite. Talisman saw a 50% reduction in the number of
reported hand and finger injuries in Malaysia from 2007 to 2008 (Report, 2008).

3.3.2 Emission

Talisman's PM-3 CAA project, which is located off the coasts of Malaysia and Vietnam,
continues to be a substantial source of the company's global greenhouse gas emissions,
contributing for 59 percent of total emissions in 2008. Petroleum reservoirs in Thailand,
Malaysia, Indonesia, Vietnam, and China can be very CO2-rich, and CO2 venting is typical
industry practice in the region (Report, 2008).

The Company recognizes that this growing volume of is a significant issue. Talisman
has looked examined the possibility of injecting CO2 into exhausted gas reservoirs near
existing plants. Reinjection is both technically difficult and economically unviable without large
money from carbon credits. Although present fiscal and regulatory systems in the region do not
37
allow for CO2 reinjection, Talisman believes that under the still-developing international climate
change framework, Southeast Asia CO2 reinjection projects could qualify as Clean
Development Mechanism (CDM) projects. CDM projects create a significant number of
Certified Emission Reduction (CER) credits, which can be sold or utilized to satisfy regulatory
obligations in other places. A possible CDM project is complicated by several issues that are
always changing. There is also skepticism about the market value and long-term viability of
CER credits after Kyoto Phase II. There is currently no geologic sequestration protocol in the
Kyoto CDM framework. The governments of Malaysia and Vietnam would have to approve to
any Talisman CDM project at PM-3 CAA. Talisman continues to assess carbon sequestration
options to manage PM-3 CAA emissions as well as an expected emission increase resulting
from the startup of the remainder of the Northern Fields development. The Company will also
continue to monitor the developments within the CDM framework (Report, 2008).

3.3.3 Environment

In July 2008, the Northern Fields in Malaysia produced their first gas. Several zones
produced increased levels of mercury during this early production phase, which occurs naturally
in part of the gas and oil produced from the Malay Basin. Talisman created and implemented
an upgraded mercury management plan that includes tight operating procedures,monitoring
measures, and training to address this issue. As part of the overall environmental management
plan, aquatic and sea life monitoring programs near production platforms will continue. The
comprehensive design for mercury removal facilities for the Bunga Raya and Bunga Orkid
production platforms is currently being completed by Talisman. This year, equipment will be
ordered, with installation scheduled for 2010. Talisman continues to watch mercury removal
research in the oil and gas industry to develop its own mercury removal procedures (Report,
2008).

As part of the operating permit for seismic operations off the coast of Sulawesi, a third-
party consultant conducted a review of the current environmental conditions. The assessment
involved mapping present environmental conditions and estimating the seismic program's
possible environmental impact. The government regulator approved an environmental
management and monitoring program associated to the seismic operation based on this
assessment. Prior to the exploration drilling planned for 2010, a complete environmental
baseline investigation will be completed in 2009 (Report, 2008).

38
3.4 ENVIRONMENTAL POLICY AND LEGISLATION

Figure 3.4: Petroleum Act 1974.

Malaysia's overarching environmental policy is to guarantee that, to the greatest extent

feasible, all human activities are in harmony with the environment. In order to achieve this goal,
rules and regulations have been enacted to assure safe environmental conditions as a result of
offshore oil and gas exploration. However, PETRONAS' dual status as a custodian and a
contractor may be incompatible. As a result, the role of the National Petroleum Advisory Council
should be important, either pooling of experts in the scope of petroleum pollution to work with
the Department of Environment in faster formulation of rules and regulations to ensure that our
environment is not contaminated. The longer the rules and regulations are delayed, the more
the environment is battered, possibly to a point of no return (Md. Yassin, 1988).

Besides, according to Md. Yassin (1988).rules and regulations alone are insufficient to
provide control; monitoring, that is, adhering to the rules and regulations, is essential. Again,
entrusting PETRONAS with the duty of a watch dog may clash with its dual mission, thus the
Department of Environment (DOE), together with other agencies such as the Marine
Department, the Marine Police, and the Navy, should be urged to monitor. Monitoring include
not just monitoring to see if the rules are being followed, but also researching the long-term
effects of pollution on the environment and determining if the present regulations are sufficientto
ensure minimum changes to the ecosystem. As a comparison, a baseline research should be
conducted to serve as a guideline for future circumstances (Md. Yassin, 1988).

39
Despite all that, Malaysia's National Contingency Plan is largely aimed to address pollution
caused by seaborne vessels;

i. Merchant shipping Ordinance, 1963, allows for control and prevention of pollution from
offshore installation.
ii. Continental Shelf Act, 1966 (revised 1972) Part 6F provides for control of pollution of
the territorial waters of Malaysia.
iii. Petroleum Mining Act, 1966 (revised 1972) Part 12 (1) E provides for control of effluent
in the vicinity of the exploration area.
iv. Water Enactment. Section 7A provides for control of pollution rivers.
v. Environmental Quality Act, 1974 is the most comprehensive legislation for the control
of pollution of inland waters and air. Control can be by way of licence with attached
conditions or by way of limits for discharge or emission. Two sets of regulations apply;
Environmental Quality (Clean Air) Regulations 1978 and Environmental Quality
(Sewage and Industrial) Regulations, 1979. Section 27 also relates to control of
discharge of oily mixture while Section 29 deals with discharge of wastes into the
Malaysia territorial water. No set of regulation is available.
vi. Exclusive Economic Zone Act, 1984. Section 10 provides for control pollution of the
water 200 miles off the territorial waters of Malaysia. The effluents limit is 100 ppm for
offshore waters.
vii. Petroleum Development Act, 1974 is the legislative in instrument vesting in
PETRONAS the entire ownership, exclusive rights, powers, liberties and previlages of
exploring, exploiting and obtaining petroleum in the country. Through the Production
Sharing Contract, the contractors should take necessary precautions for the prevention
of pollution in accordance with existing standards or guidelines designated by
PE'FRONAS.
viii. Intergovernmental Maritime Consultative Organisation Treaty implements international
standards and regulations for safety of shipping and environmental protection.
ix. Local Government Act, 1976. Provision in Part Vill for control of pollution of streams
within local authority areas.

40
3.4.1 APPLICATION OF LEGISLATION

Initially, according to Md. Yassin (1988) Land-based facilities, such as crude oil
terminals, are covered by a plethora of rules, most notably the Environmental Quality Acts on
Ocean Air Regulations and the Sewerage and Industrial Regulations. Long-term dumping of
oil-containing wastewater into the environment would have an impact on the surrounding
ecosystem in terms of water life and plant development. There are no rules or regulations
created later to the primary law for offshore-based installations. A variety of laws and
regulations are being developed to limit the discharge of oily mixtures and solid trash into
Malaysian waterways.

The many Acts are interconnected, and the execution of rules and regulations, when
they exist, should be coordinated to guarantee consistency. Although there is no legal need for
a specified oil content level in wastewater disposed of offshore, PETRONAS has adopted and
applied normal industry practise in other parts of the world. Because of the limited platform space
and dilution factor on the open sea, the regulatory requirements for effluent quality are often
more liberal offshore than onshore (Md. Yassin, 1988).

The ultimate goal is to lower these criteria to reflect advancements in treating

tecbnologyar. Implemented rules and regulations should be consistent with those in
neighbouring nations. There is no physical barrier that prevents pollution from one nation from
infiltrating neighbouring ones. Regional collaboration should be strengthened in order to
establish standard norms and regulations (Md. Yassin, 1988).

41
 CHAPTER 4: FINDING AND DISCUSSION

4.1 OBJECTIVE 1: THREAT OF OIL AND GAS EXPLORATION AND PRODUCTION

TOWARDS THE ENVIRONMENT

4.1.1 AIR POLLUTION

Oil and gas production are among the main culprits of air pollution – one of the
world’s biggest killers according to the United Nations. Petroleum processing plants are a
significant wellspring of unsafe and poisonous air contaminations, for example, BTEX
compounds (benzene, toluene, ethylbenzene, and xylene). A portion of the synthetic substances
delivered are known or suspected disease-causing agents, responsible for formative and
regenerative issues. Alongside the conceivable wellbeing impacts from openness to these
synthetic compounds, these synthetic compounds may cause stress and dread among
occupants of surrounding communities.

Natural gas is mainly composed of methane, which is a colourless, odourless, non-toxic,

and flammable gas, and is the main component of natural gas. Methane may also leak from
storage tanks. Natural gas power generation emits 0.1 pounds of sulphur dioxide per megawatt
hour (MWh) and 1.7 pounds of nitrogen oxides per MWh. Diesel discharges from trucks and
hefty gear and synthetics in boring muds utilized during the penetrating of the wells can expand
air pollutant levels in the boring stage (McCalwey & M, 2013). Flowback has been associated
with some of the largest air emissions of volatile organic compounds (VOCs) (McKenzie et al,
2012). Air pollutants associated with UOGD have been suggested as the basis for health effects
such as fatigue, migraines, chronic rhinosinusitis, asthma, adverse birth outcomes, congenital
heart defects, and acute lymphocytic leukemia (Casey et al, 2016).

Air pollutants are produced by burn oil and natural gas. In addition, pollutants can leak
storage tank during the oil and gas period production and distribution. Different types of oil the
number of pollutants depends on the oil content. For example, when oil burns electricity, sulfur
dioxide, mercury compounds, and nitrogen oxide is produced. Average 12 pounds of sulphur
dioxide, and four pounds every megawatt-hour of electricity produced by burning petroleum
emits nitrogen oxides. Natural gas has fewer impurities than petroleum or petroleum. For
example, compared with oil, natural gas releases less sulphur dioxide and nitrogen oxide
emissions.

42
 There is expanding proof that emission associated with the creation of oil and gas are
causing corruption in air quality, including expanding ozone development, and at times, ozone
non-attainment in rustic regions (T. M. Thompson et al, 2017). While numerous states and
government offices are centered around the effects of oil and gas improvement to fulfillment of
the public encompassing air quality norms, the National Park Service (NPS) is likewise worried
about effects on air contamination delicate assets, called air quality related qualities (AQRVs).

4.1.2 WATER POLLUTION

Oil and gas development will also lead to unplanned oil or chemical spills. Most
accidental leaks in the world are of course a smaller oil spill. The most common cause the
accident is equipment failure, the error is caused by staff and extreme environmental conditions.
This when accidental discharge occurs near the coast or in remote areas, the environmental
consequences are particularly serious. The worst-case scenario is a large uncontrolled blowout.
This is the uncontrolled release of oil or natural gas during drilling or production. Oil or natural
gas begins to flow into the well bore and upwards into the annulus and/or inside the drill pipe. If
this situation escalates, the result will be a blowout and oil and gas will surface. The blowout can
cause huge damage to the drilling platform, harm the personnel of the drilling platform, and
cause environmental disasters.

Systemic oil spills may severely damage the function of marine ecosystems because the
chemical composition of water and its physical properties (transparency, temperature, etc.)
deteriorate, and petroleum products penetrate the ocean surface to cause biological death. Skin
and feathers are forced to change migration routes, moult, build nests, and lay eggs. Natural gas
development can pollute drinking water sources during penetrating, deep earth drilling, refining,
or discarding wastewater without measures to secure water assets. Methane and different gases
can spill into drinking water sources, and however methane isn't connected to genuine wellbeing
impacts, it is combustible and can combust at levels of 5% or more. Methane and volatile organic
chemicals can penetrate groundwater sources near natural gas well if the wells are poorly
constructed and broken.

43
4.1.3 LOSE OF BIODIVERSITY

Marine habitats are all known to have suffered impacts from exposure to crude oil
contaminants (Burns et al., 1993; Chung et al., 2004; de la Huz et al., 2005; Guzman and Holst,
1993; Ite et al., 2013; Macinnis-Ng and Ralph, 2003). A developing number of oil boring and
shipping operation in regions encountering unforgiving climate and broad ocean ice raises
worries about oil-related accidents. Energy development is one of the leading threats to
biodiversity and ecosystem services worldwide (Allred et al., 2015; Butt et al., 2013; Naugle,
2010).

Across the globe, the Energy industry has been noted to have widespread effects on
terrestrial biodiversity from songbirds, large mammals, and ecosystem productivity (Bayne and
Dale, 2010; Butt et al., 2013; Naugle, 2010; Northrup and Wittemyer, 2013). Fossil fuel (FF)
extraction has traditionally been seen as a temporary and spatially limited perturbation to eco-
systems. Direct impacts incorporate nearby habitat obliteration and fracture, visual and
commotion aggravation, and contamination. Unconventional sources, such as coal seam gas
and shale oil, will threaten currently undeveloped regions that are biodiverse and represent
important centers of endemism (J. M. Northrup et al 2013).

Potential impacts from oil and gas extraction in this region include deforestation,
contamination, and wastewater discharge (N. Butt et al, 2014). Expanded openness to
beforehand distant regions by means of oil industry streets and pipeline courses is one of the
essential drivers of living space fragmentation and works with additional logging, chasing, and
deforestation (M. Finer et al, 2008). In Papua New Guinea, terrestrial oil and gas development
will likely be accompanied by maritime extraction and transport of oil and gas posing increasing
risk to globally important mangroves and possibly compounding existing threats to coral reefs
(M. Lewis et al, 2011).

An oil well disappointment closely resembling the Deepwater Horizon spill or a big hauler
spill practically identical to that of the Exxon Valdez could have decimating consequences for
biodiversity in the Gulf of Papua (N. Butt et al, 2014). Ecosystem disturbance and degradation
resulting from direct or indirect effects of extraction, however, have profound and enduring
impacts on systems at wider spatial scales (IUCN et al, 2004).

44
4.1.4 DISEASE AND HEALTH

In case study on PM-3 Commercial Arrangement Area (CAA) Phase 2 and 3, the oil may
contain mercury from the drilling process. The mercury need to separated from the oil to obtain
the product. Too much exposure of mercury can harm brain, heart, lungs, kidney and immune
system to the workers. Worker need to check their body before back from the platform.

Workplace fitness risks normally fluctuate from the ones determined with inside the
standard environment. Furthermore, due to the fact people are regularly uncovered in limited
spaces, publicity stages to administrative center risks are regularly a whole lot better than
exposures to risks with inside the standard environment. In growing countries, people can be
uncovered concurrently to administrative center risks, to an hazardous housing environment, and
a polluted standard environment. Occupational Health Hazards are widely divided into Physical,
Chemical, Biological, Behavioral, Psychosocial, and Mechanical/Ergonomics (R.M Manoj Kumar,
R.B Karthick, 2017).

The safe and orderly processing of crude oil into flammable gases and liquids at high
temperatures and pressures using vessels, equipment, and piping subjected to stress and
corrosion requires considerable knowledge, control, and expertise (R. M. Manoj Kumar et al,
2017). When fossil fuels are burned by power plants, automobiles and industrial facilities, they
generate toxic gases. Breathing this air can trigger respiratory problems such as asthma,
cardiovascular diseases, developmental issues and even cancer. The drilling method of
“fracking” is known for contaminating drinking water sources with chemicals that lead to cancer,
birth defects and liver damage.

45
4.2 OBJECTIVE 2: TO EXPLORE THE IMPACT OF IMPLEMENTING ENVIRONMENTAL
MANAGEMENT IN OIL AND GAS EXPLORATION AND PRODUCTION

Environmental management is critical for environmental and public health protection.

Environmental management is concerned with how an organization's operations affect the
environment. It aids in the development of objectives, methods, and procedures that will
enhance the company's environmental and public health impact (Minne, 2020). An organization
may continuously enhance its environmental performance by changing processes and
procedures by applying environmental management. These environmental management
strategies can also handle non-regulated concerns like energy saving and improve operational
control (Minne, 2020).

The impact of implementing environmental management in oil and gas exploration and
production are:

Changes in water, air, and soil quality, as well as disturbance from noise, external light, and
changes in vegetation cover, can all have a direct impact on plant and animal populations (Oil
Industry International Exploration, & Production Forum, 1997). Such changes might have a direct
impact on ecology, such as habitat, food and nutrient supplies, breeding regions, migration
routes, predator susceptibility, or changes in herbivore grazing patterns, which could have a
secondary impact on predators. Ecological integrity may be harmed by soil disturbance and plant
loss, as well as secondary impacts such as erosion and siltation. They may have indirect effects
on the soil by disrupting nitrogen balances and microbial activity (Oil Industry International
Exploration, & Production Forum, 1997). Loss of habitat, which affects both fauna and flora, as
well as changes in species composition and primary production cycles, might be a long-term
consequence if not adequately regulated.

Other direct anthropogenic factors like as fires, increased hunting, and fishing, and
potentially poaching might have an ecological impact if restrictions are not successful (Oil
Industry International Exploration, & Production Forum, 1997). It is vital to examine how changes
in the biological environment influence local people and indigenous communities, in addition to
affecting animal habitats. In the relation of the case study PM3 CAA, one of the rules can be
implement is by checking each employees’ body who are on board after working and before
getting off the platform. This is because, harmful chemicals like mercury in the oil may be in
contact to the employees’ skin. The impact of this implementation of this rule will ensure the
health and safety of their employees and the surrounding.

46
4.2.1 EXPLORATION AND APPRAISAL DRILLING

Using environmental assessment to identify protected zones or sensitives during

exploration and appraisal drilling. It is recommended that operations be scheduled during the
least sensitive times and that the least sensitive site within the bottom drilling envelope be
chosen (Oil Industry International Exploration & Production Forum, 1997). The use of a
previously cleared or low ecological value site should be evaluated to minimize impacts on water
supplies, conservation interest, settlement, agriculture, historical and archaeological sites, and
landscape. (Oil Industry International Exploration, & Production Forum, 1997). The location's
characteristics, which include wave, wind, and currents, must be thoroughly analyzed. The
chosen site and equipment in coastal regions must minimize disruption, noise, light, and visual
intrusion.

To comply with local, national, and international consents, all aqueous discharges, oily
water from deck washing, and drainage systems should be treated before release. To fulfil local
and international requirements, the sewage must be adequately treated before being discharged.
The majority of spills and leaks occur during transfer activities, so ensuring all of the necessary
precautions and have a spill contingency plan in place. (Oil Industry International Exploration, &
Production Forum, 1997).

In the case of solid wastes, ensuring that the waste treatment and disposal needs stated
throughout the planning phase are satisfied. All domestic waste must be collected and
compacted for onshore disposal, with adequate paperwork and onshore reception and disposal
in accordance with local regulations (Oil Industry International Exploration, & Production Forum,
1997). From the rig or supply boats, no debris or garbage is to be thrown overboard.

47
4.2.2 DEVELOPMENT AND PRODUCTION

Long-term use of locations, including supply and support bases, throughout development
and production would necessitate a thorough evaluation of environmental consequences,
particularly when resource use conflicts emerge, and economically significant species are at risk
(Oil Industry International Exploration, & Production Forum, 1997). Separating construction and
drilling activities and their implications from operating activities, as well as maximizing the
utilization of the central processing facility, satellite, and cluster wells to reduce footprint. The
necessity to integrate an oily water system for both produced water and contaminated water
treatment, as well as a sewage treatment system, to fulfill local, national, and international
discharge limitations, especially if close to shore. Onshore treatment and disposal of solid, toxic,
and hazardous wastes need careful planning, especially if local infrastructure is restricted.

48
4.3 OBJECTIVE 3: TO STUDY THE CHARACTERISTICS OF ENVIRONMENTAL
MANAGEMENT IN OIL AND GAS EXPLORATION AND PRODUCTION

4.3.1 POLICY
At all times, the policy should be widely publicized both internally and externally, and it
should be rigorously implemented (Peterson, 2020). Commitment is the essential tenet. The
dedication to continuous improvement, pollution reduction, and adherence to laws and
regulations must be documented, implemented, and maintained (TWI Global, 2019). Policies
must be enacted, implemented, and communicated to employees and the wider public. ISO
14000 standards must be met by the policy that is developed. ISO 14000 is a set of guidelines
for developing, implementing, and improving an environmental management system for
businesses and organizations. ISO (International Organization for Standardization) is the
organization in charge of defining and implementing standards for a wide range of private,
industrial, and commercial applications (Juru, Henshall, & Murtaza, 2020).

Most companies must identify and document their health, safety, and environmental
policies, as well as their strategic objectives, to ensure that such policies are consistent,
relevant, and of equal priority to other corporate policies and objectives. The underlying
commitment is to design and implement company strategies targeted at protecting individuals'
and the environment's health and safety. It also contains a promise to respond to community
issues and form relationships with stakeholders. In a business, policies must be applied and
maintained, as well as conveyed to employees and the public. As a result, should commit to
meeting or exceeding all necessary regulatory and legislative obligations, as well as applying
responsible standards in the absence of laws and regulations. Each organization agrees to
establishing HSE targets and to making continual efforts to enhance performance, including
reducing risks and hazards to health, safety, and the environment to as low as reasonably
practical levels.(International Investor, 2015). In the relation of the case study PM3 CAA, the
policy implemented to make sure the worker safety and health regarding the issue on the
mercury spillage during the drilling phase based on standard HSE procedure.

REPSOL company policy is also to provide protection to their worker. PPE and medical
surveillance are provided to limit the mercury exposure towards their workers and to monitor
the actual exposures respectively. PPE was provided at the platform for the workers. It is to be
used as one of the protections for PM3-CAA workers against mercury exposed. Medical
surveillance examination is listed as one of the important aspect in the company policy of PM3-
CAA. This medical examination usually will cover up few aspects such as programmed
participation, biological monitoring consideration, medical removal provision, and emergency
exposure provision. it is an end of duty examination which will include urine/blood sampling,
49
exposure history information, diet history, and entrance and exit criteria. If there are workers on
platform who are contaminated exposed with high frequency of mercury level, few actions that
are suggested by medical personnel on platform is to wash their eyes if they were affected,
removed their contaminated clothing and quickly go through appropriate checking to quantity of
exposure.

4.3.2 ORGANIZATION, RESOURCE AND DOCUMENTATION

The organizational structure and resource distribution are critical components of every
management system. It recognizes environmental management as a line of business
responsibility. It is critical that the roles, duties, authorities, and relationships necessary to
undertake environmental management are explicitly defined, recorded, and communicated from
the start of field activities. Line employees must be assigned environmental responsibility and
authority in all parts of operational activity within their domains of control, and must be competent
to perform their jobs efficiently (PDB Annual Report, 2017). This needs adequate and suitable
training of corporate employees, contractors, and any external parties involved in the activity, as
well as periodic review. Environmental training should be a critical component of a person's
awareness of professional, social, and cultural concerns and should ensure that they are
capable of fulfilling their designated position and job requirements. Individual accountability for
the environmental performance of project management should be emphasized by a review of
applicable statutory requirements, comprehensive processes, and work instructions.(Ibem-
Ezera, 2010).

Below are the environmental training principles:

 Policy, plans and managements

 Objectives, target and performance
 Issues, global and national
 Legislation, consent and compliance
 Operational procedure
 Pollution prevention
 Chemical usage and waste controls
 Contingency and emergency response
 Reporting

50
4.3.3 PLANNING

Organizations can assess the environmental impact of all operations with precise, complete
planning (Peterson, O. (2020). Significant components of the process are described in the
publications and standards, including the environmental profile, impact and risk assessment,
consultation, waste management, and broader environmental management concerns (UNEP,
2020). Other documents address contingency planning and disaster response. Programs for
achieving objectives and targets must be maintained, including assignment of responsibilities,
procedures, and time limits for achievement (TWI Global, 2019). Environmental concerns
might be direct or indirect, such as those caused by manufacturing processes. This evaluation
aims to assist the establishment in establishing its environmental objectives, goals, and
targets, which should preferably be quantifiable; in developing control and management
procedures and processes; and in outlining any applicable legal requirements, which can then
be incorporated into the policy (Preteshbiswas, 2021). Based on PM3 CAA, the management
take great care on the mercury issue that require them to split the crude oil from mercury with
great planning require the process involving safety and health of the worker to be taken lightly.

By combining the findings of assessments, project-specific environmental plans and

compliance programs are established. These plans and programs should provide extensive
guidance on strategies to prevent or mitigate unfavorable impacts and maximize possible
beneficial outcomes. Implement internal waste management standards and targets, identify site-
specific operating procedures, and establish consultation and communication programs to
ensure compliance with legislative requirements. Frequently, the site manual contains all
pertinent environmental information. The implications should be considered at the project's
inception, and a complete decommissioning and restoration plan should be prepared prior to the
project's completion (Mustafa et al., 2012). Commissioning is described in detail in the numerous
guidance documents. Below are the environmental planning principles:

 Consultation and Communication

 Construction and Infrastructure
 Pollution prevention and control procedure
 Waste Management
 Performance standards and targets
 Contingency and Emergency Response
 Monitoring
 Compliance
 Decommissioning and Rehabilitation

51
4.3.4 EVALUATION AND RISK MANAGEMENT

A business should have systems in place to detect dangers and impacts that may arise
from its activities and the materials used in them in a methodical manner. The identification
should cover all phases of the project, from conception to decommissioning. An environmental
impact assessment is a fundamental tool for determining the ramifications (EIA). Although
variances exist, the EIA process has gotten more formalized over time. The extent to which each
step is taken is situation dependent. Preliminary screening and scoping activities will assist in
determining the level of detail required. While some businesses continue to view EIA primarily as
a regulatory burden, it has the potential to be a beneficial tool for streamlining operations. Its full
potential in this regard is reached only if it is initiated early in the project cycle.(Mustafa et al.,
2012).
PM3 CAA case study state that the environmental management evaluation in pre- project
planning stage, feasibility study was not expected there will be a mercury spillage and there a
few cases on safety such as worker fell and died during work and contractor succumbed head
injuries while removing flowline clamp. But the great risk management is required to counter this
problem into solution and try to minimise the opportunity for accident to happen.
Risk assessment is widely regarded as a necessary condition for tackling the issue of
sustainable development, both within and outside the sector. Investment, management, and
control decisions should be made using the most up-to-date scientific data and risk analysis
available. Risk and value perception must also be included in the evaluation, as various groups
will see risk and value differently. Risk management is the process of deciding whether to accept
a known or evaluated risk action to mitigate its repercussions and likelihood of occurrence.
Without legal constraints, it will effectively make a large number of risk management decisions
and will require appropriate acceptance criteria(Olsgard & Gray, 1995). The following are the
principles for risk assessment and management:

 Description of project
 Hazard identification
 Identification of consequences
 Magnitude of consequences
 Probability of consequences
 Risk Management

52
4.3.5 IMPLEMENTATION AND MONITORING

Additionally, this phase will include adjustments and, in some cases, the development
of new procedures to address changing requirements. It is vital for organizations to design,
document, and communicate their training and compliance contingency processes
appropriately. (O. Petersen (2020). Well-documented processes make it easier to modify them.
Training needs for individuals whose jobs may have a significant impact on the environment
must be established. (Source: TWI Global (2019). Employees must be educated on the
importance of policy compliance, their roles and responsibilities, emergency preparedness,
and response requirements.

Accidents and crises must be anticipated to mitigate the environmental damage they
cause (TWI Global, 2019). Emergency preparedness and response processes must be
evaluated and, where possible, tested on a regular basis. Implementation requires
communication and engagement at all levels of the organization, most notably high
management. Environmental management is only effective when all employees participate
actively (Preteshbiswas, 2021). Monitoring will ensure that responsibilities are adhered to. This
may contain both direct and indirect measurements and records. It may involve the collection
and recording of quantitative data directly, such as the volumes and concentrations of
discharges, missions, and wastes (UNEP, 2020). Monitoring may require socioeconomic
involvement through liaison efforts with local governments or even the processing of
complaints. The primary monitoring goals are to ensure that outcomes are forecasted at the
planningstage rather than to discover the cause and execute corrective action. In the relation of
the case study PM3 CAA, the tight operating procedures and monitoring procedure measures
and training pertaining the issue on increasing level of mercury production at early phase.
Talisman continues to watch mercury removal research in the oil and gas industry to develop
its own mercury removal procedures.

The second objectives can be as follows below:

 Verify the effectiveness of planning decisions.

 Measure effectiveness of operational procedures.
 Confirm statutory and corporate compliance.
 Identify unexpected changes

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4.3.6 AUDIT AND REVIEW

Auditing and reviewing is a fundamental management technique. However, its

implementation at the operational level is critical for verifying and reporting on an organization's
system's effectiveness and environmental performance. Audits are used to verify the monitoring
program's effectiveness and compliance, ensuring that the site's procedures, standards, and
policies are both effective and fit for purpose. Additionally, auditing benefits include increasing
internal and external awareness, communication, and credibility regarding a company's
environmental actions by demonstrating dedication to responsible environmental management
(UNEP, 2020).

Apart from management and compliance audits, technical or process audits may also be
done. As part of the broader management audit, waste emission, energy audit, emergency
response, and worker health are all included. Companies are increasingly required to publish
reports on their environmental performance for a broad public audience, including shareholders
and financial institutions. A critical audience is also the company's employees, who benefit from
having the company's environmental position and activities articulated in a way that enables
them to act as an ambassador for the company in general (UNEP, 2020).

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 CHAPTER 5: CONCLUSION AND RECOMMENDATION

5.1 INTRODUCTION

This section summaries the conclusion based on the findings from the case study of
Environmental Management in Oil and Gas Exploration and Production in PM 03 CAA. The
findings are based on the objectives of the case study and literature review. In the end, the
recommendations are established to make further improvements and future references for future
researchers.

5.2 CONCLUSION

According to the findings on the case study and literature review, it can be concluded that
all three objectives were achieved. In this case, firstly, the potential threat of oil and gas
exploration and production towards the environment are identified. Secondly, the impacts of
implementing environmental management in oil and gas exploration and production are also
explored. Lastly, the characteristics of environmental management in oil and gas exploration and
production were concluded. It can be concluded that there is still much environmental
management that needs to be concerned and take action to make sure the operation can be
handle at best practices.

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5.2.1 Objective 1: To identify the potential threat of oil and gas exploration and production
towards the environment.

The exploration and production in oil and gas operations always have its environmental
consequences that cannot be avoided. Such as air pollution where the flaming and burning can
affect the air quality. All the gases produced and released with different type of compounds and
impurities according to the oil content. The side effects can cause the difficulty of breathing and
to the skins. During the drilling process, the leakage from the failure of the equipment can cause
oil spillage. Oil spillage can cause environmental disasters and drinking water can be polluted.
Marine habitats can be affected. The wastage and the effect of the deforestation can be potential
threat to the oil and gas operation. In the worst part, the failure of the equipment and oil spillage
can cause huge fire burning since the particles of water and oil cannot be mix. Water and air
pollution can cause toxicity where the substances and chemicals itself can cause harm to the
livings and environment and it can be measured through its concentration in the water and air. In
the case study of PM-03 CAA, the process of drilling oil where there is presence of mercury is
one of the major threat to the oil and gas exploration and production towards the environment.

56
5.2.2 Objective 2: To explore the impacts of implementing environmental management in
oil and gas exploration and production.

Implementing the environmental management have significant with the organization

performance. The environmental management can be changed within times according to the
organization’s procedure to make sure its performance can be tracked and audited. The impact
of implementing environmental management to the exploration and production may be varies
such as the changes in the quality of the water, air, and oil, to the biodiversity and marine life but
it is impossible to avoid the noise disturbance since there is no study on using the technological
advancement to improve. The case only provided with the preventive ways to solve it by using
earplugs or earmuffs, for example. These impacts can be directly and indirectly. The exploration
and production process may not be followed the scheduled to take place because the process
itself are continuously. However, by studying the ecological systems may help to minimize the
impact on the failure of the equipment and foreseen risk. The wastage from the sewage plants
must be treated properly to avoid from disturbing the ecosystem of marine life. In the case study
of PM-03 CAA where the workers are inspected after their shift finished or they off from the
platform to make sure there is no mercury substances on their body where the organization have
set it up as a mandatory.

57
5.2.3 Objective 3: To study the characteristics of environmental management in oil and
gas exploration and production.

Policy is a principle of action for the organization to follow the goals and objectives to
receive the desired outcomes. Policy regarding the exploration and production in oil and gas
operations must be publicized to have a better improvement. It must follow the ISO 14000
guidelines that can pertain the business in the organization. Therefore, the policies must be
applied and maintains. The policies also must be introduced to the employees as well to have a
clear image for them to apply in the working environment. The organization developed all roles
and duties to undertake the environmental management. Thus, it is important for the
organization to support and push the employee to undergo training to fulfil the designable
positions and job requirements. The assessment of environmental impact can be planned. It is
good for one organization to identify the unforeseen risk and develop further emergency plan in
solving the risk and problems that might occur. The assessment on the implications must be
covered from the site inception until decommissioning, where the risk management can be
developed in every stage and level. The changes of procedure and requirements can be
adjusted to implement new management. Monitoring phase required the whole organization to
take part to forecast the planning stages and to identify and measure the effectiveness of the
goals. Audit is important to monitor the effectiveness to increase the awareness in the
organization on what context and element that need to be improved. In the case study of PM-03
CAA, risk management that have been practiced on the organization where the workers on the
platform is required to check their body after their shift or they are off from platform to make sure
their safety is top priority to the organization to monitor and avoid any unforeseen risk in the
future to the workers and to the organization as well. A REPSOL company itself has regulated
for the workers to use PPE as a protection if any of the workers are exposed to the mercury
substances. The follow up check ups and inspections on the workers who are exposed to the
chemical are done for further action on the workers’ safety.

58
5.3 RECOMMENDATION

Oil and gas exploration and production can create threats towards the environment since
oil industry involve complex processes. Environment is one of the aspects which need to
emphasize in the oil industry while protecting the ecosystem. So, environmental management in
the oil and gas industry can ensure the environment will always be protected whilst oil and gas
exploration and production.

Threats toward the environment can happens during the oil and gas exploration and
production. Air pollutions exist when air pollutants like sulphur dioxide, mercury compounds and
nitrogen oxide are produced during the burning of oil and natural gas. Oil and gas production can
cause an unplanned oil spills when there are leaks and involved during drilling operations. It may
cause extreme harm and damage the marine ecosystems. The contaminants which exist in the
sea give impact to the marine habitats by causing disturbance to the ecosystem and degradation
like exposing risk to coral reef and mangroves. Pollution led to disease and health problems
such as asthma, developmental issues and cardiovascular disease when toxics gases being
breathes in. Potential threats which happened during the oil and gas exploration and production
at PM 03 CAA platform can be mitigated through environmental management plan. Thus,
environmental management in oil and gas industry is recommended to implement for
identification of the possible risks.

Implementation of the environmental management for oil and gas exploration ensure
environmental performance being enhanced through necessary process and procedures.
Changes in biological environment being investigated to identify its impact towards local pupils,
indigenous communities and animal habitats. Environmental management include identifying
protected zones during exploration and appraisal of drilling to allow scheduled for least sensitive
times and site preparation. Environmental management in PM 03 CAA platform being
implemented to protect the environment and reduce impact on the living creatures. A thorough
evaluation of environmental consequences provide long term of use of the location including
supply and support bases during development and production.

Characteristics which contain in the environmental management provide an efficiency for

the management plan. One of the characteristics is policy where necessary regulatory and
legislative will be following the set of standards required. Competent employees to perform their
jobs efficiently on the environment responsibilities will be assigned in the operational activities.
Planning in environmental management provide guidance on making the prevention and
mitigating measures. Evaluation on the environmental may begin early in the pre-project
planning stage to assess the risk and provide a sustainable development. Besides, monitoring

59
ensures the activities are forecasted during the planning stage to achieve the objectives of
environmental management. Environmental management in PM 03 CAA platform need to follow
with the standard procedures and criteria to provide efficiency of the management. Efficiency of
the of the management techniques will go through audit and review to make necessary
improvements.

The environmental management in oil and gas exploration and production is recommend
to conserve environment. Environmental management can implement to reduce the
environmental risk and harms the living creatures. It is an important technique to provide
protection to the environment from getting worsen. Actions concerning the environmental
management should be taken to provide best practices in protecting the environment. Detail
explanation of the environmental management in oil and gas industry can further identify through
professionals who have experience in environmental management in the industry.

60
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