Environment and Engineering:<br/>A Powerful Marriage

Environment and Engineering:
A Powerful Marriage

How Peru LNG is addressing biodiversity challenges through monitoring, restorations, and innovative partnerships
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© Peru LNG
Environment and Engineering:
A Powerful Marriage

Mark Cutifani

General Manager, Hunt LNG Operating Company,
Peru LNG

Senior Environmental Specialist, Oil, Gas, and Mining Group,
IFC

Ask any climate scientist and they will tell you: biodiversity matters! Ecosystem protection has also become a core concern for extractive companies—and not just because of concerns over global warming. Local communities quickly pass judgment on whether they believe a company is doing enough, a judgment that can make or break a company’s reputation. As this interview highlights, it is critical for oil, gas, and mining companies to develop proactive strategies for ecosystem preservation and restoration.

Many companies think of biodiversity as an expense. Why is it a good investment?

We have spent a significant amount of time and money to avoid sensitive environmental, social, and archeological issues—roughly a quarter of our environmental budget goes toward protecting and monitoring biodiversity. But, that way, we have directly benefited by avoiding impacts and potential conflicts with communities that would cost us more money or even block the project. In addition, biodiversity also means opportunity: to do things well, to create net positive value, and to demonstrate that conservation and development are interchangeable.

Have you received any pressure from civil society to address biodiversity issues?

Our project is in the Andes rather than the rainforest, so it did not attract much attention from government, NGOs and other stakeholders. However, the Andes represent a diverse, rich, and fragile environment that needs protection. It is a remote location where people rely on the land to survive, so any impact on biodiversity can have a major effect on their lives.

What kind of mitigation efforts have you pursued?

We began by selecting routes for the pipeline that minimize environmental disruption. Then we sought to mitigate our impact during the construction phase, before moving on to restoration. Where we are not able to establish 100% native conditions, we offset our impacts with improvements in other areas. And we use “adaptive management feedback” (including walking every foot of the pipeline to give us the information we need) to modify our plans in real time.

What kind of results has that delivered?

One specific example is the Pati tree (Eriotheca sp.), an endangered species we encountered during pipeline construction. We brought in specialists to learn what we can do to help this endemic species proliferate. This is outside our core expertise, but we can tap into our knowledge and resources for conservation projects—which is exciting.

How do you ensure your biodiversity program is implemented fully?

We have an Integrated Management System (IMS) which includes our Sustainability Policy, the Environmental Impact assessment process, and a series of business and management practices. But we work with thousands of contractors and subcontractors, so it is critical that our plans are communicated in a way everybody understands. We create a recipe that is very specific when it comes to digging a trench or what to do if you come into contact with a tree. Then we incorporate that into the contract so the contractor has to not just build the project on time and to budget –but also meet biodiversity requirements.

Are international standards on biodiversity helpful to you and if yes, how?

Our approach followed the guidelines of the global oil and gas industry association for environmental and social issues (IPIECA) on how to set a Biodiversity Action Plan (BAP). This involved utilizing a phased approach beginning during project planning, continuing through assessment, construction, and now operations. The BAP evolved through an adaptive management approach and is aligned with IFC’s Performance Standards and industry Best Practices.

How important are partnerships like your collaboration with the Smithsonian Conservation Biology Institute?

A broad base of experts participates in this program, giving us real-time feedback. Our partnership approach—working with third party institutions like the Smithsonian—provides transparency and gives us the confidence that we’re getting objective feedback.

What makes your efforts unique and innovative?

We created a model through which environmental and social specialists work hand in hand with project engineers and construction staff to make sure all environmental standards are met and that a mitigation hierarchy is adopted. This model comes with tough challenges:

  • Translation:  Making sure engineers and biologists speak the same language;
  • Alignment:  Matching timeframes, deadlines, and deliverables (i.e. monitoring reports with business timeframes); and
  • Spreading the word: Adequately communicating the findings of the monitoring to locals.

Tens of thousands of people come together to construct this megaproject and our ability to make biodiversity a priority for them is key to our success. How you define and reward success in a contract is key.

What advice would you give to other extractive companies addressing similar environmental/biodiversity challenges?

The earlier, the better. This gives you a business advantage when operating in complex environments like ours (our projects span four macro regions, 14 ecological landscape units, 13 rivers and a wide range of areas from 0 to over 4.700 meters above sea level). Biodiversity monitoring from the outset is key to obtaining data in a timely manner to feed decision making.

Having support from senior leadership within the company also promotes a proactive approach. That sounds easy, but when you are talking about major projects like this one, there are many stops and starts, so it is easy to drop biodiversity off the priority list. To be successful, you must maintain awareness across the different ranks of the company and make sure biodiversity considerations are embedded in every aspect of the business.

About Peru LNG and IFC:
IFC provided a $300 million loan to PLNG in 2008. Since then, PLNG and IFC have jointly implemented several advisory programs: (a) to strengthen SMEs that provide goods and services to PLNG through trainings, (b) to increase the ability of municipalities to better manage revenues received from PLNG’s project and benefit local communities, and (c) to provide local stakeholders with an opportunity to evaluate PLNG’s environmental and social performance.

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