As my airplane flight from Papua New Guinea’s capital of Port Moresby droned on towards the field’s main airstrip at Moro and was approaching its scheduled arrival time, I looked out the airplane window for some signs of the oil field infrastructure that I expected to see looming up. I became increasingly puzzled still to be seeing only an uninterrupted expanse of rainforest stretching between the horizons. Finally, I spotted a road, but it was only a thin cleared line about 10 yards broad through the rainforest, in many places overhung with trees growing on either side—a birdwatcher’s dream. The main practical difficulty in rainforest bird studies is that it’s hard to see birds inside the forest itself, and the best opportunities to observe them are from narrow trails where one can watch the forest from the side. Here was such a trail over 100 miles long, from the highest oil field at an altitude of nearly 6,000 feet on Mt. Moran down to the coast. On the following day, when I began walking along that pencil line of a road during my surveys, I found birds routinely flying across it, and mammals, lizards, snakes, and frogs hopping, running, or crawling across it. It turned out that the road had been designed to be just broad enough for two vehicles to pass safely in opposite directions. Initially, the seismic exploration platforms and exploration oil wells had been put in without construction of any access roads at all, and had been serviced instead just by helicopter and on foot.
My next surprise came when my plane landed at Chevron’s Moro airstrip, and again later when I flew out. Although I had already gone through baggage inspection by the Papua New Guinea Customs Department upon my arrival in the country, on both arrival and departure at Chevron’s airstrip I had to open all my bags for further inspections more thorough than on any other occasion I had experienced except when I flew to Israel’s Tel Aviv airport. What were those inspectors looking for? On the flight in, the articles absolutely forbidden were firearms or hunting equipment of any sort, drugs, and alcohol; on the flight out, animals or plants or their feathers or parts that might be smuggled. Violation of those rules results in immediate automatic expulsion from company premises, as a WWF secretary innocently but foolishly carrying a package for someone else discovered to her misfortune (because the package turned out to contain drugs).
A further surprise came the next morning, after I had walked out on the road before dawn to bird-watch and returned a few hours later. The camp safety representative summoned me to his office and told me that I had already been reported for two violations of Chevron regulations, which I was not to repeat. First, I had been noticed stepping several feet out into the roadway to observe a bird. That posed the hazard that a vehicle might hit me, or that in swerving to avoid hitting me it might crash into an oil pipeline at the side of the road and cause an oil spill. From now on, I should please stay off the road while bird-watching. Second, I had been seen bird-watching while not wearing a protective helmet, but this whole area was a hardhat area; at this point the officer gave me a hardhat, which I should henceforth please wear for my own safety while bird-watching, e.g., in case a tree fell.
That was an introduction to Chevron’s extreme concern, constantly instilled in its employees, about safety and environmental protection. I have never observed an oil spill on any of my four visits, but I do read the reports posted each month on Chevron bulletin boards about incidents and near-incidents, which are the concern of the safety representative who travels around by plane or truck to investigate each. Out of interest, I recorded the full list of 14 incidents from March 2003. The most serious near-incidents requiring scrutiny and review of safety procedures in that month were that a truck backed into a stop sign, another truck was reported with its emergency brake improperly set, a package of chemicals lacked the correct paperwork, and gas was found leaking from a compressor needle valve.
My remaining surprise came in the course of bird-watching. New Guinea has many bird and mammal species whose presence and abundance are sensitive indicators of human disturbance, because they are either large and hunted for their meat, hunted for their spectacular plumage, or else confined to the interior of undisturbed forests and absent from modified secondary habitats. They include tree kangaroos (New Guinea’s largest native mammals); cassowaries, hornbills, and large pigeons (New Guinea’s largest birds); birds of paradise, and Pesquet’s Parrot and other colorful parrots (valued for their beautiful plumage); and hundreds of species of the forest interior. When I began bird-watching in the Kutubu area, I anticipated that my main goal would be to determine how much less numerous these species were inside the area of Chevron’s oil fields, facilities, and pipeline than outside it.
Instead, I discovered to my astonishment that these species are much more numerous inside the Chevron area than anywhere else that I have visited on the island of New Guinea except for a few remote uninhabited areas. The only place that I have seen tree kangaroos in the wild in Papua New Guinea, in my 40 years there, is within a few miles of Chevron camps; elsewhere, they are the first mammal to become shot out by hunters, and those few surviving learn to be active only at night, but I saw them active during the day in the Kutubu area. Pesquet’s Parrot, the New Guinea Harpy Eagle, birds of paradise, hornbills, and large pigeons are common in the immediate vicinity of the oil camps, and I have seen Pesquet’s Parrots perching on the camp communications towers. That’s because there is an absolute prohibition against Chevron employees and contractors hunting any animal or fishing by any means in the project area, and because the forest is intact. The birds and animals sense that and become tame. In effect, the Kutubu oil field functions as by far the largest and most rigorously controlled national park in Papua New Guinea.
For months, I was greatly puzzled by these conditions in the Kutubu oil field. After all, Chevron is neither a non-profit environmental organization, nor a National Park Service. Instead, it is a for-profit oil company, owned by its shareholders. If Chevron were to spend money on environmental policies that ultimately decreased its profits from its oil operations, its shareholders would and should sue it. The company evidently decided that those policies would ultimately help it make more money from its oil operations. How do they help?
Chevron company publications refer to concern for the environment itself as a motivating factor. That is undoubtedly true. However, in conversations over the last six years with dozens of lower-level as well as senior Chevron employees, employees of other oil companies, and people outside the oil industry, I have come to realize that many other factors as well have contributed to these environmental policies.
One such factor is the importance of avoiding very expensive environmental disasters. When I asked a Chevron safety representative who happened to be a bird-watcher what had prompted these policies, his short answer was: “Exxon Valdez, Piper Alpha, and Bhopal.” He was referring to the huge oil spill from the running aground off Alaska of Exxon’s oil tanker the Exxon Valdez in 1989, the 1988 fire on Occidental Petroleum’s Piper Alpha oil platform in the North Sea that killed 167 people (Plate 33), and the 1984 escape of chemicals at Union Carbide’s Bhopal chemical plant in India that killed 4,000 people and injured 200,000 (Plate 34). These were three of the most notorious, best-publicized, and most expensive industrial accidents of recent times. Each of them cost the company responsible billions of dollars, and the Bhopal accident ultimately cost Union Carbide its existence as an independent company. My informant could also have mentioned the blowout and catastrophic oil spill at Union Oil’s Platform A in the Santa Barbara Channel off Los Angeles in 1969, serving already then as a wake-up call for the oil industry. Chevron and some of the other large international oil companies thereby realized that, by spending each year an extra few million dollars on a project, or even a few tens of millions of dollars, they would save money in the long run by minimizing the risk of losing billions of dollars in such an accident, or of having an entire project closed down and losing its whole investment. One Chevron manager explained to me that he had learned the economic value of clean environmental policies when he was resp
onsible for cleaning up oil pits in a Texas oil field and found that the cleanup cost for even a small pit averaged $100,000. That is, cleaning up pollution is usually far more expensive than preventing pollution, just as doctors usually find it far more expensive and less effective to try to cure already sick patients than to prevent diseases in the first place by cheap, simple public health measures.
In prospecting for oil and then building an oil field, an oil company makes a large initial investment in a field that remains a producing asset for between 20 and 50 years. If your environmental and safety policies reduced your risk of a big oil spill to “only” once every decade on the average, that would not be nearly good enough, because you would then have to expect between two and five big oil spills in your 20 to 50 years of operations. It’s essential to be more rigorous. I first encountered this long-range outlook of oil companies when I was contacted by the director of a London office of Royal Dutch Shell Oil Company. That office’s job is to try to predict likely alternative scenarios for the state of the world 30 years from now. The director explained to me that Shell operates that office because it expects a typical oil field to be operated for several decades, and it needs to understand the likely shape of the world several decades in the future if it is to be able to invest intelligently.
A related factor is public expectations. Unlike the toxic mine runoffs to be discussed below, oil spills tend to be highly visible, and often their occurrences are sudden and obvious (as when a pipeline, platform, or tanker breaks or blows out). The impact of the spill is also usually obvious, for instance in the form of oil-coated dead birds whose pictures saturate television screens and newspapers. Hence the public can be expected to howl at the kind of big environmental mistake most likely for an oil company.
Those considerations of public expectations and minimizing environmental damage were especially important in Papua New Guinea, a decentralized democracy with a relatively weak central government, weak police force and army, and strong voice of local communities. Because local landowners at the Kutubu oil fields relied on gardens, forests, and rivers for their subsistence, an oil spill there would impact their lives much more seriously than oil-coated seabirds impact the lives of American television viewers. As one Chevron employee explained it to me, “We recognized that in Papua New Guinea no natural resource project could be successful in the long run without the support of the local landowners and villagers. They would disrupt the project and shut it down, as they did in Bougainville [see below for explanation], if they perceived environmental harm affecting their land and food sources. The central government lacked the ability to prevent disruptions by landowners, so we needed to take prudent steps to minimize harm and maintain a good relationship with the local people.” Another Chevron employee expressed a similar idea in different words: “We were adamant at the outset that the success of the Kutubu project would depend on our ability to work with the local landowner communities, to the extent that they would believe they are better off with us there than they would be if we were gone.”
A minor aspect of that constant scrutiny of Chevron’s operations by local New Guineans is that they understand the money that can be made by pressuring entities with deep pockets, like big oil companies. They count the number of trees cut down during construction of a road, placing particular value on trees in which birds of paradise display, and then they present a bill for damages. In one case of which I was told, when New Guinean landowners learned that Chevron was contemplating constructing a road to an oil site, they rushed out and planted coffee trees along the proposed route, so that they could claim damages for each coffee tree uprooted. That’s an argument for keeping forest clearance to a minimum by making roads as narrow as possible, and by accessing drill sites by helicopter whenever possible. But the much bigger risk was that landowners angry at damage to their land might shut down the entire oil project. My informant’s mention of Bougainville refers to what had been Papua New Guinea’s biggest investment and development project, its Bougainville copper mine, which was shut down by landowners angry at environmental damage in 1989, and which has never reopened despite the efforts of the country’s minuscule police force and army that provoked a civil war. The fate of the Bougainville mine warned Chevron of the likely fate of the Kutubu oil field if it too caused environmental damage.
Another warning sign for Chevron was the Point Arguello oil field, discovered by Chevron off the coast of California in 1981, which was estimated to be the largest oil find in the U.S. since the discovery of the Prudhoe Bay field. As a result of public disenchantment with oil companies, local community opposition, and layer after onerous layer of government regulatory delays, oil production could not begin until 10 years later, and Chevron ended up with a large write-down on its investment. The Kutubu oil field gave Chevron the opportunity to refute that disenchantment by showing that it would take excellent care of the environment without being prodded by overly stringent government regulation.
In that respect the Kutubu project illustrates the value of anticipating increasingly rigorous government environmental standards. The trend throughout the world (with obvious exceptions) is for governments, as the years pass, to demand more rather than less rigorous environmental precautions. Even developing countries from which one might not at first have expected environmental concerns are becoming more and more demanding. For example, one Chevron employee working in Bahrain told me that, when he recently drilled another offshore well there, the Bahrain government for the first time required a detailed expensive environmental impact plan that provided for environmental monitoring during drilling, assessment of impacts after drilling, and minimizing effects on dugongs and on a breeding colony of cormorants. Oil companies have learned that it is far cheaper to build a clean facility incorporating environmental precautions at the outset, than to retrofit that facility later when government standards become tightened. The companies have come to expect that, if a country in which they are operating is not environmentally aware now, it is likely to become so within the lifetime of the facility.
Still a further advantage to Chevron’s environmentally clean practices is that the reputation it has thereby gained sometimes gives it a competitive advantage in obtaining contracts. For example, recently the government of Norway, a country whose people and government today are very concerned about environmental issues, solicited bids for development of an oil/gas field in the North Sea. Chevron was among the firms bidding, and it succeeded in winning the contract, probably in part because of its good environmental reputation. If that was indeed the case, then some friends within Chevron suggested to me that the Norwegian contract might have been the biggest single financial benefit to the company from its rigid environmental safeguards in the Kutubu oil fields.
A company’s audience includes not only the public, governments, and local landowners, but also its employees. An oil field poses especially complicated technological, construction, and management problems, and a large fraction of oil company employees have higher education and advanced degrees. They tend to be environmentally aware. It is expensive to train them, and their salaries are high. While most employees of the Kutubu project are resident citizens of Papua New Guinea, others are Americans or Australians who are flown out to Papua New Guinea to work there for five weeks, then are flown back home to spend five weeks with their family, and those airplane fares are also expensive. All those employees see for themselves the state of the environment in the oil fields, and they see the company’s commitment to clean environmental policies. Many Chevron employees told me that that issue of employee morale and environmental views was both a benefit of their company’s visibly clean environmental policies and also a driving force behind the adoption of those policies in the first place.
In particular, environmental concern has been one criterion used to select company executives, and Chevron’s two most recent CEOs, first Ken Derr and then David O’Reilly, have both been personally concerned about environmental issue
s. Chevron employees in several countries told me independently that every month they and every other Chevron employee around the world receive from the CEO an e-mail about the state of affairs in the company. The e-mails often talk about environment and safety issues and speak of them as being number-one priorities, and as making good economic sense for the company. Thus, employees see that environmental matters are taken seriously, and are not just window-dressing that is for public display but that is ignored within the company itself. This observation corresponds to a conclusion that Thomas Peters and Robert Waterman Jr. drew in their best-selling book on business management In Search of Excellence: Lessons from America’s Best-Run Companies. The authors found that if managers want their employees to behave in a certain way, the most effective motivation is for the employees to see the managers themselves behaving in that way.
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