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The project was screened A/0, requiring an Environmental Impact Assessment
(EIA) and associated public consultation. Environmental investigations were
undertaken by firms of independent consultants and compiled by SEIC ("the
Company"). In addition, the Bank required external expert opinions on the
project and on specific areas of concern: oil-spill modelling, birds, fish,
marine mammals, and public consultation. The Bank's consultants evaluated the
adequacy of the EIA and made specific recommendations to the Bank on how it
should be improved. The original draft EIA prepared by the company in January
1997 was modified to reflect comments made by the Bank's consultants and by
the public. A number of additional studies were undertaken, including detailed
oil-spill modelling and coastal sensitivity analysis, prior to the EIA being
reissued in September 1997 for public comment.
In addition to the EIA, some eight background reports and 11 detailed
procedural manuals were reviewed by the lenders. Additional procedures and
plans were developed as part of an Environmental Action Plan agreed between
the lenders and the Company. The Company has covenanted to implement the
Environmental Action Plan (EAP) under the terms of its loan agreement with the
lenders.
Standards
The Production Sharing Agreement commits the Company to the environmental
standards generally accepted by the international oil and gas industry. The
Environmental Action Plan specifies that the Company will meet or exceed World
Bank and Russian environmental standards, and that USA offshore environmental
guidelines specific to offshore oil and gas operations in Alaska were
originally used to develop commitments for the project. Since 1997, the
Russian Federation has developed requirements, and in many cases, these are
more stringent than the international standards.
The Company completed its environmental impact assessment according to Russian
law and submitted it to the Russian authorities in December 1997, for the
environmental expert review (i.e., the "Expertisa" review); approval was
received in March 1998.
Another EIA was prepared in 2001 in relation to the drilling for water
injection wells, which is known as Phase 1A. The major change in this EIA was
the use of oil-based drilling muds on an intermittent basis, where required by
geological conditions. All oil-based muds will be recirculated, where
possible, and wastes and cuttings cleaned and reinjected into the formation.
No oil-based muds or cuttings will be discharged to the sea. Water-based muds
will also be reinjected into the formation, where feasible.
Key Environmental/health and safety issues and mitigation
The operation involves the establishment of a significant new oil field using
a drilling and production unit in the Sea of Okhotsk, some 18 km off the
north-east coast of Sakhalin Island. The following potential environmental
impacts could result from the project. Mitigation measures are shown in
italics.
a) Location and climate: The Molikpaq was originally operated as a drilling
platform in the Beaufort Sea in North America, where ice conditions are more
severe than offshore Sakhalin Island. The Bank's independent technical and
environmental experts agreed that the design issues associated with the
Molikpaq refurbishment were robust for the pack ice, temperatures, and wave
strength requirements of the conditions in the Sea of Okhotsk.
b) Adaptation to processing facility: The Molikpaq required substantial
modification to convert from a drilling platform to a drilling and processing
platform. Refurbishment works were undertaken in a shipyard in South Korea.
The addition of processing facilities was reviewed by the lenders for safety
considerations due to the proximity to living quarters, and certified by
independent certification authorities prior to installation and operation.
c) FSO: The floating, storage, and off-loading facility (FSO) is a leased oil
tanker (135,000 ton dwt), which was certified under international standards
for its class of vessel, such as those of the International Convention for the
Prevention of Pollution from Ships (MARPOL) and the International Maritime
Organisation (IMO). The vessel is a newly built, double-hulled ice class oil
tanker, and in accordance with international shipping standards. The FSO is
disconnected from the pipeline during the ice season and rough weather. Lease
agreements with the FSO document environmental and safety obligations. The
Company has representatives on board during all mooring and loading procedures.
d) Air emissions: Air emissions can be associated with produced gas. The
Company originally planned to separate gas from oil at the platform, and to
compress and reinject all produced gas into the formation (whilst retaining a
small allowance for operational flaring only). Due to problems with the
compressor train, this objective was not met in full until 2005 when the
Company adopted a policy to reduce production if it could not reinject all of
the gas. The platform also has a flare for emergency and maintenance use.
e) Risks associated with seismic activity: Off-shore Sakhalin Island is in
seismic zone 1 to 1.6. In comparison, on-shore Sakhalin is in zone 2 and Japan
is in the highly seismic zone 5. Off-shore Sakhalin is more comparable to the
North Sea, which is zone 1. Seismicity issues appear to be one of the main
public concerns associated with the development of the Sakhalin Shelf. The
EBRD's independent engineers are satisfied that, in the event of an
earthquake, limited environmental damage would occur because of the automatic
shut-off valves, which would stop production at the sea floor, even if the
platform was damaged. The Bank's engineers also confirmed that the Molikpaq
has been designed in excess of international industry requirements for
seismicity risk.
f) Oil-spill modelling: The Far Eastern Regional Hydrometeorological Research
Institute (FERHRI) undertook a detailed and extensive oil-spill modelling
according to international standards and Russian requirements, which models
oil-spill trajectories for four different spill scenarios and takes into
account an extensive number of criteria (such as meteorological conditions off
Sakhalin Island). Independent oil-spill experts hired by the Bank confirmed
that the oil-spill modelling performed by FERHRI had been prepared in
accordance with best industry practice.
The modelling shows that, under some conditions, an oil spill could have an
impact on the coast of Sakhalin Island. Coastal sensitivity studies were
undertaken to determine sensitive environments and habitat to be taken into
account in the oil-spill contingency plan.
g) Oil-spill prevention, mitigation, and response: Significant studies were
done on the potential for accidental spillage/release of crude oil in water or
on ice during the production phase and during trans-shipment of oil between
the FSO tanker and transport tankers, and the resulting impact on environment.
The production facilities have been constructed with state-of-the-art
automatic shut-off valves, which will shut down the oil flow from each well in
the event of an emergency or pressure loss. This is aimed at preventing a
catastrophic oil spill in the event that the platform is damaged, for example,
in a major earthquake. In addition to the shut-off valves, the flow line from
the FSO to the tanker contains periodic break-away couplings. In the event
that the flow line breaks, these special safety couplings close immediately
and flow ceases at once. The amount of oil lost into the environment would be
minimal. An Exclusion Zone has been established around the platform, pipeline,
and FSO, so that fishing vessels will not be in direct proximity to the
facility, particularly during loading times.
The Company has prepared an oil-spill contingency plan, which describes
oil-spill response procedures and strategies, taking into account, among other
factors, the type of spill, its volume as well as an analysis of sensitive
areas along the coastline. The plan also lists Tier I, II and III response
equipment and resources available at the Company, on the Island and
internationally. The plan was reviewed by the lenders' independent oil-spill
experts for adequacy in scope and depth prior to drilling and has been subject
to routine monitoring and reporting.
h) Marine mammals: Disturbance to marine fauna during the construction and
operation phases of the project. The EIA states that there are some 32 species
of marine mammals that have been observed in the greater Sea of Okhotsk,
including several endangered species. A key species of concern in the project
area is the Western North Pacific or Okhotsk-Korean population (Korean) gray
whale, which is on the 2000 IUCN (International Union for the Conservation of
Nature and Natural Resources) list of critically endangered species. The
Company is co-sponsoring an extensive research and monitoring programme for
gray whales in the Sea of Okhotsk. The programme involves sea surveys, aerial
surveys, photographic and acoustic surveys. The Company has developed a gray
whale protection plan, which includes prevention and mitigation measures in
relation to potential environmental impacts and monitoring and reporting
activities.
i) Birds: Disturbance to sea birds during the construction and operation
phases of the project. The EIA concludes that impacts to sea birds are not
likely to be significant. The Company has supported a field study of bird
populations in the Chaivo Bay area and continues to support on-going
monitoring.
j) Fish: Although the EIA provides information on catches in the Sea of
Okhotsk, there is limited information available on fish stocks and catches in
the project area; unofficial data show that while the Sea of Okhotsk is
abundant in fish, the Molikpaq area is not significant. The primary species in
the area is pollock. No significant environmental impacts were predicted or
have been identified from the construction and operation. No fishing will be
allowed from the facility. Impacts to the local fishing industry would be due
to either the loss of fishing in the exclusion zone, or in the event of an
incident, such as an oil spill. The Bank's independent consultants on
fisheries concluded that significant impacts on fisheries were not
anticipated, but suggested that additional baseline information on fisheries
dynamics should be collected. The Company has agreed to use official and
non-official sources to establish baseline abundance data for the area, and to
monitor trends of fish catches in the area on an annual basis.
The company has negotiated compensation for the establishment of the safety
exclusion zone around the Molikpaq and FSO Tanker traffic schedules will be
published in the fisheries institutes. The Company maintains contact with
representatives of indigenous groups on the island, including indigenous
fisheries. Furthering its original commitment in the Environmental Action Plan
(EAP) to establish a Fisheries Liaison Officer post, the Company has since
2003 established an island wide network of community liaison officers who are
located within key project-affected communities and have responsibility for
liaison with local and indigenous fisheries groups.
j) Dredging impacts: Limited dredging of substrate under the Molikpaq was
undertaken to provide a more stable sand base. Sand was also dredged to put
into the core of the Molikpaq. Due to the type of sand in the vicinity of the
site, it is unsuitable for use as core material. A separate sea floor area was
dredged and the sand placed in the core of the Molikpaq and condensed. Two
seabed surveys were undertaken to assess environmental impacts. Loss of
habitat was not significant.
k) On-shore facilities: On-shore facilities include living accommodation for
personnel in Yuzhno-Sakhalinsk, a small transit accommodation near the airport
in Nogliki, and a warehouse facility at Kholmsk, including fuel storage. The
housing development uses local electricity and has a back-up generator and
small sewage treatment plant. All have been built in accordance with Russian
regulations and in accordance with good practice.
l) Waste disposal: Treatment and disposal of drilling muds, cuttings, produced
water, deck runoff and domestic and sanitary wastes from the Molikpaq and FSO
tanker are handled in accordance with good industry practice and in line with
World Bank and Russian requirements. No oil-based muds or cuttings will be
discharged into the sea. Water-based muds will be reinjected into the
formation where technically feasible.
m) Noise: Noise was generated by seismic sounding and explosives were used to
condense sand in the Molikpaq core during installation; these noises were
significant for a limited period of time. The Company developed guidelines to
refrain from such activities in the event that whales are in the vicinity, and
during limited visibility. Representatives from the gray whale study group
were present on the seismic boats to search for whales in the vicinity prior
to initiating seismic activities.
n) Decommissioning phase: At the end of the full field development (30+
years), the Molikpaq will have the core sand pumped out and will be floated to
a shipyard or mooring point. Options for its disposal/fate include selling for
use in another oil field development project, dismantling for scrap, etc.
Studies will be conducted well ahead of decommissioning to determine the most
appropriate options.
Summary of Environmental Action Plan
The Environmental Action Plan (EAP) details specific standard requirements for
waste streams and outlines the various programmes under the environmental,
health and safety (EHS) programme. In addition to an EHS programme, detailed
operational Environmental Protection Plans have been prepared and reviewed to
the lenders' satisfaction for drilling, seismic studies, dredging, production,
on-shore construction, FSO deployment (including ice management), tanker
procedures, cuttings and mud management, chemical usage, sewage, solid and
hazardous waste, produced water, and small spill response. In addition, hazard
analyses have been conducted on the process system and the drainage system,
and other studies are being conducted on loss prevention and pipeline
inspection. The Company has obtained coastal survey data, including sensitive
areas of the north-east coast of Sakhalin Island for inclusion in a
Geographical Information System.
The EAP provides an audit programme schedule, including an independent
environmental audit every two years for the duration of the involvement with
the Company. Monitoring programmes have been included into the EAP. The EAP
also provides a health and safety programme and a commitment to ongoing public
consultation and community programmes.
Public consultation
As an 'A' level project, the operation was subject to the requirements of the
Bank's Public Information Disclosure Policy (1996) and Russian Law pertaining
to environmental impact assessments.
a) Availability of information: The public was involved in the meetings on the
environmental issues associated with the project for the original feasibility
study in 1992. A press release announcing the proposed development of the
Astokh feature using the Molikpaq, fulfilling the Bank's notification
requirement, was made on 26 July 1996. A first draft of the EIA was made
available on Sakhalin Island on 18 January 1997 and the Company's offices in
Moscow on 24 January 1997 for a 60-day period. The availability of the
documents and contact information for comments were published in the press on
Sakhalin Island (18 January) and in Moscow (31 January).
A revised EIA was produced in September 1997, which incorporates the results
of the work and studies completed since January 1997 as well as comments
received from the public during the initial display of the EIA. The revised
EIA was made available by the Company in four locations on Sakhalin Island, in
Moscow as well as in two locations in the United States on 3 October 1997. The
availability of the revised EIA was also announced through the press.
b) EBRD: The first draft EIA document was placed in the EBRD Business
Information Centre in London and in the EBRD Resident Office in Moscow on 24
January 1997 and its availability was posted on the Bank's Web site on the
Internet. The Executive Summary of the draft EIA was circulated to the EBRD
Board of Directors on 24 January 1997. The September 1997 EIA was placed in
the EBRD Business Information Centre and in the EBRD Resident Office in Moscow
in early October 1997 where it is permanently available for review.
c) Meetings: Since the original feasibility study in 1992, the Company has met
with the Congress of Indigenous Peoples on the Island and with different
fisheries regarding the Phase I project and the larger Sakhalin II
development. They have also discussed the project with representatives of
international non-governmental organisations on numerous occasions. Public
meetings were held in six cities on the Island in October 1997:
Yuzhno-Sakhalinsk, Okha, Nogliki, Korsakov, Kholmsk, and Poronaysk. In
addition to the EIA being available for public review prior to the meetings,
over 20 handouts were prepared on key issues, which contained contact
information for the company for public comments or questions.
d) Public consultation programme: The Company developed a public information
programme, which is monitored by the Bank. A significant amount of
information on the project, including environmental, safety, and social
issues, is found on the SEIC website.
There is an Environmental Impact Assesment available for this project.
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