Arief Budiono-03 Int.

Kemenkeu 1
Sukindar Ari Santoso-10 Team 4
BUSINESS ETHICS CASE ASSIGNMENT
“Gas or Grouse?

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

Answer:
The systemic, corporate and individual issues raised in this case are as follows:
 SYSTEMIC ETHICAL ISSUES
There are three systemic ethical issues that should be taken into consideration.
a. economic system
it gives employment opportunity, tax and royalty to government, as well as reduces the
need to import energy supplies from overseas;
b. political-social-legal system
the gas from the Pinedale Mesa reduces US’s reliance on foreign energy supplies, so it
increases international political bargaining position.
c. environmental system
drilling and transporting activities of gas wells create disturbance towards sage grouse
and other wild life in Pinedale Mesa, especially during winter migration. On the other hand,
gas is cleaner power sources compared to fossil energy sources.

 CORPORATE ETHICAL ISSUES

a. Questar and other companies
Operational drilling pad take a big space to support drilling rig in which it brings impact to
wildlife habitat. Reducing activities due to seasonal cycle raise overall cost of production
due to high cost needed for drilling activity in winter months and the cost of drilling crews
that had to be laid off at the beginning of winter, and new crews had to be hired and
retrained every spring.
b. The Bureau of Land Management (BLM)
As part of government responsible for deciding what was done with the acreage on the
mesa had to choose balanced policy between gas power sources and preserving wild life.
c. Western Ecosystems Technology
As environmentalist group, they monitored and conducted research on wildlife on the
Pinedale Mesa and felt responsible to disclose their information to public.
 INDIVIDUAL ETHICAL ISSUES
a. Jim Sims, the negotiator for the Partnership for the West
He suggested ‘funding scientific studies’ that would be designed to show that sage grouse
wasn’t endangered.

b. Dru Brower, vice president of the Petroleum Association of Wyoming

He suggested for keeping the species at Pinedale Mesa out of the ‘endangered species
list’. And for residents in Pinedale Mesa, they still welcome gas companies because they
bring them jobs opportunity, which means bringing revenue, and also boost local
economy.

2. How should wildlife species like grouse or deer be valued, and how should that value be
balanced against the economic interests of a society or of a company like Questar? What
principles or rules would you propose we use to balance the value of wildlife species against
economic interests?

Answer:
Nonhumans have intrinsic value; we humans have a duty not to harm them without a
sufficiently serious reason. Furthermore, with sage grouse status as endangered species, the
impact of harming them become more serious.

According to utilitarian human should not inflict pain to nonhumans, because they feel pain
as human do. In addition, nonutilitarian suggests that the life of every animal “itself has value”
apart from the interests of human beings.

To balance the value against the economic interest, we must measure the effect of gas drilling
operation on wildlife in Pinedale Mesa, whether the effect is small, catastrophic, or no effect
at all. If the effect is disastrous, the project must be stopped.

Suppose we did not know what had happened. We propose the maximin rule by
acknowledging the worst-case scenario (extinction) and making several options to resolve
the problem. Choose the scenario that suits the situation.

The government have authority and power by legalizing environmental laws and review
company policies in maintaining the natural range of the wildlife. It could protect the existed
population and prevent extinction to happen.
3. In light of the fact that natural gas reduces the U.S.’s undesirable dependence on foreign oil
and the fact that natural gas produces less greenhouse gases than coal, oil, and other fuels,
should Questar continue its drilling operations? Does the environmental impact of Questar’s
drilling operations imply that Questar is morally obligated to stop drilling wells on the Pinedale
Mesa? Explain.

Answer:
If we emphasis on this aspect, Questar can continue their drilling operation. Yet, they must
find drilling and transporting methods which have the minimum effect on wildlife. Bureau of
Land Management has already imposed several restrictions on Questar’s operations on the
mesa to protect the wildlife species living on the mesa especially sage grouse. The restrictions
are as follows:
 Roads, wells and other structure had to be located a quarter mile or more from grouse
breeding ground and at least 2 miles from nesting area during breeding system
 No drilling activity during winter;

So, ethically Questar Operation can operate their gas extraction in one condition: they must
obey the BLM policies for their drilling activities. By applying these restrictions combined with
their new method in minimizing drilling pad area, hopefully the effects of drilling and
transporting can balance the need of clean energy sources and the sustainability of wildlife in
Pinedale Mesa.

4. What, if anything, should Questar and the other companies be doing differently?

Answer:
a. They can apply the new method of extracting gas that was invented by Questar and
stop drilling activities during winter.
b. Another method is conducting activities to preserve the environment by establishing
nature reserves and conservation/captivity of endangered wildlife to make sure the
survivability of the grouses, antelope, and other wildlife. Suppose the extraction
activities end, the companies should release them to their natural habitat.
c. When their activities end due to gas depletion, they must close all wells or modify them
to support the wildlife.

5. From an ethical point of view, was alternative (4) the best option among those from which the
BLM chose? Is another alternative better from an ethical point of view? Explain your answer.
 Answer:
Yes, alternative (4) is the best option among all from which the BLM option. Alternative (4)
balance the need of cleaner power sources and preserving wildlife. In that option, Questar
and other companies can operate their gas extraction while minimizing the area of direct
impact because the need of land surface is smaller than previous state. It also mitigates
contingency of unexpected effect to wildlife by creating fund if there is impact that need to be
solved.

Another alternative is by doing alternative 4 plus more environmentally friendly measures for
handling other pollutions like water, air, noise and land pollution, because alternative 4
focuses less on pollution impacts other than wild animals.

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

Answer:
In our opinion, this is both pollution and conservation problem.
On the one hand, the operations of the Gas Drilling company are a source of pollution in terms
of land pollution (drilling wells and transporting gas), water pollution (caused by drilling
deposits). On the other hand, there is a conservation problem because the government (BLM)
does not provide strict rules regarding the use of land which is a habitat for sage grouse, deer,
branching antelope, and other wildlife species. Conservatism refers to saving natural
resources for future use. Thus, conservatism largely refers to the future, namely the need to
limit current consumption to be sufficient for tomorrow. Pollution control is a form of
conservatism.

The loss of species can be regarded as external cost in this case. Therefore, it must be
internalized to company cost.