Evaluating the impact of international environmental laws on oil/gas production

AROIL Petroleum (AP) a Russian oil company based in Australia has been granted a license to build a controversial new oil pipeline that would cross the country from the centre to the coast to transport shale oil to the Port for exportation. The company owns several million acres of land in the Arckaringa Basin in South Australia that is believed to contain between 133 billion and 233 billion barrels of shale oil trapped in the region’s rocks.
Shale oil is more costly to extract than conventional crude oil and involves the controversial process of hydraulic fracturing, commonly known as fracking. Building the pipeline would involve transcending indigenous tribal lands, heritage sites, farmlands, and the natural habitat of some endangered species of birds and other wildlife.
AROIL Petroleum has already been involved in offshore drilling off the coast of Australia. A recent oil spill from one of its oil platforms affected the Australian coastline raising opposition from many groups in and around Australia. A local pressure group from a community near the coast is threatening to file a lawsuit against the company for environmental damages related to the recent oil spill.

News of a new project by the same company has therefore angered many environmental and community groups in the country.
The controversy surrounding AP exploring for shale oil inland is opposed on environmental grounds. Opponents argue that the fracking process to extract the oil could imperil indigenous habitat and wildlife. There are also concerns that the company may sacrifice standards especially as the price of oil has fallen. Supporters of this project however, say the pipeline would stimulate economic activity, generate local jobs/income and meet the energy needs of the country and its neighbours.

Concerns are raised by community groups as to the safety of the new proposed venture. The community’s concern centres on the protection of environment, conserving biological diversity and maintaining ecological processes as well as protecting the natural habitat of the indigenous people that live in the area where the pipeline will traverse. Other concerns centre around the effect the pipeline could have on the Australian coastline and systems of the coral reefs and continental shelf once installed. An oil spill in the ocean could have devastating effects not just for the Australian environment but for other coastal regions in proximity of Australia.

Australia’s marine environment is special in many ways – it covers an enormous area, over one and a half times larger than Australia’s land surface. It extends from the tropics to Antarctica. It includes extensive submarine environments including sea grass beds and unique coral reef systems which support an array of marine creatures from whales, dugongs,

dolphins and seals to thousands of species of fish, shellfish, and a myriad of microscopic organisms.

In the last year AP has experienced declining profits party due to the payment made for clean-up of the last oil spill as well as the declining oil price. There is some concern by members of the senior management and the Board that this new

project could further aggravate the problem and may not be one that the company should engage in at this time. Other members of the Board see this as a great opportunity for the company to advance its operation and thereby improve its reputation within the country. This could also improve the strained relationship between Russia and Australia since the

imposition of sanctions on Russia after its annexation of Crimea.

You are a Senior Manager of AP and have been asked by the Managing Director to prepare a Board Paper for presentation at the next board meeting. You are required to provide an evaluation of the situation and present a proposal for a successful implementation of this project. There is very strong interest in this project going ahead. Failure to launch the project could have some negative effects on the company and the future of Australian-Russian relationship.

Required:
Write a Board Paper addressed to the Board of Directors of AROIL Petroleum (AP) providing an analysis and advice for the implementation of this new pipeline.

Provide an action plan for the company as a part of the Board Paper.
Your proposal should take into account the following issues:

• Application of the principles of international environmental law such as
o the principle of common but differentiated responsibilities
o the precautionary principle,
o Sustainable development,
o The Polluter-Pays Principle and the prevention of Transboundary Principle
o The use/exploitation of environmental resources
• Assess the implications on biodiversity, sustainability and health
• Critically evaluate implications of this pipeline project on the local and international environment
• Critically Analyse the regulatory framework and the impact of this project on (national, local, regional and international) compliance standards
• Develop a step-by-step approach to implementing the proposed project giving consideration to opposing views from the local community

Your analysis and recommendations should also consider the benefits and potential barriers to successful implementation of this project and measures to be adopted to ensure that the project contributes positively to sustainable development.

Further information:

Format: Board Paper using the standard Template provided in moodle. The assignment should be submitted as ONE WORD

DOCUMENT file saved as Surname-FirstNamesInitial-M026LON-BP. Use Arial or New Times Romans, font of size 11 or 12 and include page numbers. Assignments submitted in pdf will not be marked.
• Word Limit: The word limit for this assignment is 2000 words. The marks of any student who exceeds the word limit by more than 10% (2200 words) will be reduced by 10%. There is not penalty for writing less than 2200 words.
• Referencing: Your assignment should include in-text citations and supported with a full List of References at the end of the assignment. You are expected to use the CULC’s Harvard Referencing Style available in moodle).
• Submission: When you submit your assignment in moodle, you need to include your Student ID Number and the Title of the

Assignment (in the Submission Title box)
Assessing the Regular Assessment

Your assignment will be assessed using a rubric (marking criteria). This can be found in the Module Guide for M026LON

International Environmental Law. The following interpretations of the learning outcomes will be applied:
LO1 Demonstrate a critical understanding of the rules and principles of international environmental law and policy in the

context of the oil and gas industry (20 marks)
• The need for and the development of environmental laws, the factors behind the law: what issues are there to legislate

against? What are the compliance standards?
• The principles are linked to key national and international policies/strategies and laws (‘hard’ and ‘soft’) relating to

the type of oil/gas production activity under study.
• Disclosures: Should information on policy and law be made available to the public?
• What is the role of non-state actors in shaping international environmental law?
LO3 Analyse and critically evaluate the different mechanisms available to regulators for protecting the international

environment within a jurisprudential context (15 marks)
• The need for (an independent) regulator and/or regulatory institution(s)
• Key legislative frameworks (which encapsulate the mechanisms) are fully considered
• The justification of the process of enforcing/implementing environmental laws (e.g. National/international courts,

environmental protection agencies, etc)
LO4 Critically evaluate some of the current challenges that governments face in implementing international environmental

law and policy (15 marks)
• Comment on responsibilities and obligations of the State (as against other States and relevant stakeholders) with

regards to implementation of national and international legal frameworks relating to the impact of the project on the

environment.
• Mention the challenge faced in balancing strategic national interest against regional and international obligations. Is

there a conflict? What about the interest of the local population?
LO5 Appreciate and critically evaluate the wide range of social, economic and political impacts of the oil and gas

industry and the tools needed to manage them (15 marks)
• The impact of oil and gas production on the environment: biodiversity, health, waste, water resources, nuclear energy,

climate change.
• The strategies used by oil and gas companies to manage the environmental effects of their oil/gas activities: are there

lessons to be learnt from existing approaches?
LO6 Critically review the future development of laws and policies governing the international environment (10 marks)
• The circumstances under which a country should implement national as against international laws when dealing with

current environmental issues
• The limitations of existing ‘hard’ and ‘soft’ environmental laws: are there precedents that can inform current oil/gas

production standards and practices to guard against future environmental damage?

Section B (15 Marks): This component is explained on the marking rubric.

Section C (10 Marks): The component parts of this section are explained on the marking rubric and students were constantly

being reminded about their level of attendance and class participation. For class participation, in addition to

‘voluntary’ contributions (e.g. Lectures and Seminars) students were assigned specific tasks which they have to complete

and present to the rest of the class (e.g. Seminars and Group Activity sessions)