BE Gas or Grouse Study Case - FINAL

8/17/2019 BE Gas or Grouse Study Case - FINAL

1/23

Gas or Grouse Study CaseBusiness Ethic

Presented by:

Agnes Sindhunita KusumastutiDeky Hapsoro AjisantosoMaryonoNetty SiregarRonny Agung Hendrawan


2/23

Outline• Stakeholder in Gas or Grouse Case

–

Pinedale, Wyoming area and resources – Wildlife in Pinedale and its habitat

– Questar and other gas company

– Bureau Land Management (BLM)

• BLM Restricton at Pinedale

•

Advantage and Disadvantage of Drilling in Pinedale• Problem : what should BLM decide?

– Innovation by Questar

– New Drilling ini Winter

– SEIS process

–BLM Decision over SEIS and its 5 alternatives

– Alternative No. 4 and explanations

– Implication over the decision

• Question and Answer

• Conclution


3/23

Pinedale, Wyoming

Pinedale is a town in and the county seat ofSublette County, Wyoming, United States. Thepopulation was 2,030 at the 2010 census. Alreadysurrounded by hundreds of drilled wells of naturalgas.

•

Pinedale Mesa is 40 mile long, 300 square mileplateau, famous gateway to the haunting,fishing, hiking treasures of the Brigertetonwilderness

• Estimated contained of 25 trillion cubit of gasworth billions of dollar

• Pinedale Mesa in Southern Wyoming has richnatural gas deposits trapped in sandstone. Inthe 1990s industry developed techniques toget at such deposits by fracturing thesandstone to free the gas

• Natural gas is cleaner source energy than fossilfuels, (its simple molucular structure (CH4) burn

much cleany)

Federal

Gov.

80%

Wyoming

5%

Privately

Owned

15%

Acreage of Mesa


4/23

Wildlife & Its Habitat in Pinedale

Sage Grouse (Belibis)

Mule Deer Mule DeerMule Deer

Sage Brush (semak-semak)


5/23

Wildlife & Its Habitat in PinedaleGrouse Mule Deer Antelope

Pronghorn

Sage brush

The largest grouse in US Deer indigenous to westernNorth America

Indigeneous to interiorwestern and central North

America

Several woody andherbaceous species of plants

Country: US, Southern

Alberta, Saskatchewan

(Canada)

Breeding cycle is important The second fastest land

mammal

Native to the North

American west

In 2013, GIC (Canadian

Governor in Council)

annexed an emergency order

for the protection of greater

sage grouse

Rut or mating season

begins in the fall as does go

into estrus for a period of a

few days and males become

more aggressive, competing

for mates

Pronghorns form mixed-sex

herds in the winter

Major food for sage grouse

Permanent resident, forage

on the ground, nest on the

ground under sagebrush/

grass patches

Also eat fringed sagebrush

http://c/Users/212452983/Downloads/Gas%20or%20Grouse.mp4


6/23

Questar Corp.

& other Gas Company drilling in Pinedale

• Questar Corporation is a natural gas-focused energycompany based in Salt Lake City, worth $4 billion andoperated mostly at Utah and Wyoming

• Questar is the main developer of gas wells in the city• Y2008 ask BLM to delete few restriction and limit to the

company to drill 4300 more wells

• First drill in Pinedale in year 1998, SEIS((SuprementalEnvironmental Impact Statement) is approved at 2000.Y2004 Questar got 76 wells of 14,800 acres leased

Questar wells :• Average 13,000 feet deep, cost $2.8-$3.6 million each well• Required “Pad” – clearing and leveling 2-4 acre for 1-2 wells• There’s access road had to be run to the pad and network of

pipes to deliver the liquid waste

http://c/Users/212452983/Downloads/Gas%20or%20Grouse.mp4


7/23

Bureau of Land Management

(BLM)An institution which responsible for deciding what was done with theacreage on the mesa and deciding whether Questar and othercompany allowed to drill and how much atop the mesa

• BLM publish the SEIS (Supremental Environmental Impact Statement)

at 2000 and approved drilling up to 900 wells in federally owned onmesa

• BLM imposed drilling rules that were designed to proted wildlife andits habitat especially Sage Grouse

– Require that questar roads, wells, and other structure had to belocated a quarter mile or more from grouse breeding ground (atleast 2 miles form nesting areas during breeding season)

– No driling on winter (Nov 15 – May 1) except for liquid wastedelivery and completed wells allowed to pump the gas


8/23

Drilling Process by Questar

Advantages

• Natural gas : Supplyingclean and environmentalfriendly energy

• Reduce USA’s energyreliance to foreign country

• Provide jobs for local

• Economic growth for local

region• Increased government

revenue from tax and royalty(60% of state budget)

Disadvantages

• Drilling operation duringwinter interfere wildlifemigration route

• Drilling sendiment enteredthe river around mesa

• Declining wildlife numberand winter survival rate(destruction of 50% of sagebrush as their habitats)


9/23

Problem faced by BLM

BLM

QuestarPinedale

SEIS Result &alternative

Limitation towardsgas mining to

protect pinedale

Seriousnegative effect

on wildlife

Providenatural Gas

Provide newtechnology

May Questar drill at winter?

What is the limitation should be?


10/23

Innovation brought by Questar

Traditional Drilling

• 1-2 wells/pad

• Took 1474 acre for 156 pad

• 16 different roads and pipes

Directional Drilling (New)

• 16 wells/pad (= outstretchedtentacles on octopus)

• Take 533 acre for 61 pad•

1 road and pipe• Plus build a second pipe

system that would pumpliquid waste away preventthe use of noisy truck

• Cost USD 500.000 /wels ( 400wells = usd 185 million)

• Advantages: – minimize the the surface land

occupied by the wells – Reduce roadways &

distribution pipes


11/23

Supplemental Environmental Impact

Statement (SEIS) and its processTimeline between Questar & BLM:

Mid 1990 : Technique fracturing sandstone & freeing gas

1998 : Questar first test drilling on Pinedale Mesa

Mid 2000 : Fullscale drilling await BLM statement

2002 – 2003 : BLM let Questar drills wells at single pad to study the effect on winter

deer herd

2003 – 2004 : idem

Early 2004 : Questar drilled 76 wells on 14.800 acres + additional 400 more wells

2005 : Shell & Ultra also drilling

Winter 05 & spring 06 : BLM meeting invite public comment

Dec 2006 : BLM finish first draft SEIS & ask for public comment

Dec 2007 : second preliminary draft SEIS was issued for public commentEarly 2008 : additional public meeting by BLM

Sept 12, 2008 : BLM issued decision on request for drilling company

2009 : Questar build, drilling through winter 2009

Oct 28,2010 : Technology Western Ecosystem announce it result


12/23

BLM Decision and its 5 alternatives

No Alternatives

1 Continue to prohibit winter drilling and allow no additional wells

2 Allow winter drilling and allow 4,399 more wells on a maximum 600 drilling pads all locatedwithin large “core area” in the central part of the mesa

3 Allow winter drilling and 4,399 wells on 600 pads plus, confine drilling to specific parts of the“core area” and prohibit drilling or disturbance of winter ranges of mule deer or pronghornantelope or mating and nesting areas of the sage grouse

4 Allow winter drilling and 4,399 more wells on a maximum of 600 pads, confine drilling toparts of the core area, prohibit drilling or disturbance of winter ranges of mule deer orpronghorn antelope or mating and nesting areas of the sage grouse, plus prohibit drilling on

the thousands of acres (Flank area) surrounding core area where drilling was allowedrequire annual review of wildlife impacts, and require the company to establish fund tomonitor wildlife and to pay the costs of mitigating any impacts on wildlife that monitoringdetected

5 Allow drilling only within the core area and prohibit drilling in the area around the peripherybut permit fewer than 4399 wells and less than 600 pads and limit the total acreagedevoted to wells

Decision Sept 12th, 2008 :

Use the new technology brought by Questar for all gas company


13/23

Alternatives No. 4 and theimplication towards

• Best balance between protecting the naturalenvironment and allowing access to the natural gas

• For attention :

– If the number of mule deer or antelope decline by 15% inany one year or if number of sage grouse decline by 30% inany two year period the BLM was required and had theright to take mitigation response

Winteraccess

New Tech

Limitationfrom BLM

AnnualFund

Prohibitflank area

2009

Mule Deer decline 60%since 2001 or 28% since

2005

Decline survival rate offemale mule deer from

85% to 70%


14/23

Analysis and Conclution

• There was dilemma problem between Energy Source for US consumption andrevenue versus Environment responsibility

• Environment issues especially concern with winter restriction, winter rangeroute, and sagebrush distribution map, Questar have to develop investmentfor new technology and strategy which it will cause longer payback period :

Concerning with environment impact, morally Questar must obey BLMrestrictions for their drilling operations in Pinedale Mesa. Maintain thefauna’s natural habitat will protect the exist population, prevent fromextinction, facilitate them to breed.

On the other hand, to fulfill energy necessity of US, Questar should notcease drilling operations. That ecological value can be balancedagainst economic interests if Questar have awareness for environmentrestriction and obey it rules (use the new drilling technology & respectalternative 4 of BLM statement)


15/23

Question :

1. What are the systemic, corporate, and individual issues raised in thiscase?

2. How should wildlife species like grouse or deer be valued, and howshould that value be balanced against the economic interests ofthe of company like Questar ?

3. In light of the U.S. economy’s dependence on oil, and in light of theenvironmental impact of Questar drilling operation, is Questarmorally obligated to cease its drilling operation on the PinedaleMesa? Explain !

4. What, if anything, should Questar be doing differently?

5. From an ethical point of view, was alternative 4 the best optionamong those from which the BLM ? Explain !

6. Should the loss of species produced by the drilling operations ofQuestar be considered a problem of pollution or a problem ofconservation ? Can the loss of species by evaluated as an “externalcost” ?


16/23

1. What are the systemic, corporate andindividual issues raised in this case?

Systemic Issue


17/23

Operational Issue

Financial Issue

New technology Issue

Dru Bower

Jim Sims


18/23

2. How should wildlife species like grouse or deer bevalued, and how should that value be balanced againstthe economic interest of a society or of a company likeQuestar ? What principles or rules would you propose we

use to balance the value of wildlife species againsteconomic interest?

We should use the ecological ethic to balance the value of

wildlife species against economic interest.

• Non-human parts of the environment deserve to be preserved for theirown sake, regardless of whether this benefits human beings

• At least some non humans are intrinsically valuable, we have moral duty

to refrain from harming them without a sufficiently weighty reason.


19/23

Ecological Ethics (Deep Ecology)

Supporters of Deep Ecology offer 8 tier platform to elucidate their claims:

1. The well-being and flourishing of human and nonhuman life on earth have value in themselves.these values are independent of the usefulness of the non human world for human purposes

2. Richness and diversity of life forms contribute to the realization of these values and are also valuesin themselves

3. Human have no right to reduce this richness and diversity except to satisfy vital needs

4. The flourishing of human life and culture is compatible with a substantial decrease of the humanpopulation. The flourishing of nonhuman life requires such a decrease

5. Present human interference with the nonhuman world is excessive, and the situation is rapidlyworsening

6. Policies must therefore be changed. The changes in policies affect basic economic,technological, ideological structures. The resulting state of affairs will be deeply different from the

present7. The ideological change is mainly that of appreciating life quality, rather than adhering to anincreasingly higher standard of living

8. Those who subscribe to the foregoing points have an obligation directly or indirectly toparticipate in the attempt to implement the necessary changes


20/23

3. In light of the fact that natural gas reduces the U.S. economy’s undesirable dependence on oil and the fact that that natural gasproduces less greenhouse gases that coal, oil, and other fuels, shouldQuestar continue its drilling operations? Does the environmental impactof Questar drilling operation imply that Questar morally obligated to stopits drilling operation on the Pinedale Mesa? Explain !

Questar may continue, highlight:

1. Advantage vs. Disadvantages of drilling2. New technology brought by questar

3. Willingness of questar obey BLM restriction

4. Fact that Questar doesn’t violate simulation of alternative 4

However, morally questar should balance its drilling process withgreen technology, limitation its exploration, taking care /response/ mitigation the impact on wildlife


21/23

4. What, if anything, should Questar be doingdifferently?

Yes, Questar and other companies should be doing differently, asfollows:

a) Innovation technology of drilling that reduce pollution (sound,waste, smoke,etc) and faster the process Green environment

b) Conservation for the wildlife in Pinedale Mesa

c) Internalization of external cost


22/23

5. From an ethical point of view, was alternative (4) the best optionamong those from which the BLM chose?Is another alternative better from an ethical point of view? explain

• Yes, the alternative 4 is the best option

• Questar is confine drilling to parts of the core area, prohibit todrilling or disturbance of winter range of mule deer orpronghorn antelope or mating and nesting area of sagegrouse

• Prohibit drilling on the Flank area surrounding the core areawhere drilling was allowed

• Require the companies to establish fund for monitor wildlifeand pay for the cost of mitigating any impact on wildlife

Drilling Environment

Pollution

Management

Optimum

Conservation

Balance


23/23

6. Should the loss of species produced by the drilling operations ofQuestar be considered a problem of pollution or a problem ofconservation ? Can the loss of species by evaluated as an “external cost” ?

Yes.The loss of species produced by drilling operations of Questarbe considered as :1. Pollution problem

Water pollution (caused by drilling sediments)Land pollution (by occupying and damaging wildlife habitat,operational vehicle/ truck traffic)Air/Noise pollution (caused by the operation of drilling rig)

2. Conservation problemBLM’s effectivity and the weakness of monitoring

Yes.Ref Utilitarian, the loss of species can evaluated as an externalcost, so it must be internalized to company cost. Private (IntenalCost) +External cost = Social cost.

BE Gas or Grouse Study Case - FINAL

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