SPE 86588

ESIA Experiences and Lessons in China

Luo Huaisheng, SPE, Shell China Exploration and Production Co. Ltd.

Copyright 2004, Society of Petroleum Engineers Inc.

This paper was prepared for presentation at The Seventh SPE International Conference on
Health, Safety, and Environment in Oil and Gas Exploration and Production held in Calgary,
Alberta, Canada, 29–31 March 2004.
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Abstract
Since China re-opened its doors to multi-nationals in the
1980s, Shell has developed its oil and gas activities in the
country. In the past 10 years, Shell has conducted near twenty
environmental and social impact assessments (ESIAs) in
China, ranging from offshore&onshore seismic survey,
exploration drilling, gas field development, pipeline, coal
gasification plant, to petrochemical complex. The
implementation of EIA Law in September 2003 is a milestone
in strengthening the environmental impact assessment process
for development projects in China.
The learnings from these ESIAs are shared, notably in
respect of the practicalities of conducting them to international
expectations, and the importance of JV partners supports/buy-
in to their successful implementation.
definition of “major” in oil and gas EP industry indicates that
the “major” development projects include field developments,
the construction of long-distance pipelines, construction of
major storage facilities etc but exclusive of seismic survey or
exploration drilling activities.
For those EIA studies required approval from Chinese
government, the main contractor must be the EIA institute
with the EIA certificate (Grade A or B) issued by the Chinese
government.
The implementation of EIA Law in China in September
2003 is a milestone in strengthening the environmental impact
assessment process for development projects including the
new requirements on regional or sectoral planning programs
and more requirements on the public consultations during the
environmental impact assessment process.
However, there is not policy/guidances on social impact
assessments except for resettlement issues.
2. Description of ESIA Projects in China
Based on the requirement of “project life-cycle ESIA” of
the Company, ESIAs undertaken in China are ranged from
offshore&onshore seismic survey, exploration drilling, gas
field development, pipeline, coal gasification plant, to
petrochemical complex studies. Following is the list of those
ESIAs.

1. Briefing on Chinese Legal Requirements on ESIA for onshore 2D seismic survey in Jiangsu
Environmental Impact Assessment for Oil/gas industry Province, 1993
In China, there exists a framework of environmental laws, ESIA for offshore 3D seismic survey in Bohai Bay,
regulations and standards to define the legal requirements of 2002
environmental impact assessments for development projects. ESIA for offshore 2D seismic survey in East China
The core laws and regulations include Environmental Sea, 2003
Protection Law(1989), Marine Environment Protection Law ESIA for onshore exploration drilling in Jiangsu
(1982), Environmental impact assessment (EIA) Law (2003), Province, 1995
Regulation on Environmental Protection for Development ESIA for onshore exploration drilling in Liaoning
Projects (1998), Management Measures of Environmental Province, 1997
Impact Assessment on Marine Oil and Gas Development ESIA for onshore exploration drilling in Shaanxi
Construction (1993) and Technical Guidelines for Province, 2001
Environmental Impact Assessment (1993). In these legal ESIA for offshore exploration drilling in South China
documents, it is clearly stated that an environmental impact Sea, 1997
assessment study must be undertaken for “major” ESIA for offshore exploration drilling in South China
development projects following the respective technical Sea, 2002
guidelines and approved by the government. The explanations ESIA for onshore gas field development, Shaanxi
from the relevant administrative authorities about the Province, 2001
2 SPE 86588
ESIA for onshore gas field development (W2E
Project, upstream), Xinjiang, 2002-2003
ESIA for onshore natural gas pipeline project (W2E
Project, midstream), 2002
Social impact assessment for onshore natural gas
pipeline project (W2E Project, midstream), 2002
High-level health impact assessment for onshore
natural gas pipeline project (W2E project,
midstream), 2002
ESIA for urban gas pipeline network project,
Zhejiang Province, 2003
ESIA for coal gasification plant, Hunan Province,
2001
ESIA for petrochemical complex, Guangdong
Province, 2001-2002
2.1 An ESIA Case in China
In 1999, the Company signed PSC with its Chinese
business partner for developing a gas field in north-
western China. In this PSC contract, the Company was
required to prepare an ESIA report before the submission
of Overall Development Plan (ODP) to the Chinese
government.
In November 2000, the Company issued the
“invitation for tenders” and then a short list of 3
internatonal consultancies and 2 Chinese EIA consultants
was prepared. After a series of discussion, an ESIA
contract was sign with one of Chinese EIA consultants
and one international sub-contractor in early 2001.
The scoping report was prepared by consultants in
April 2001 and reviewed by the government in May 2001.
To prepare the scoping report, one sampling program
was conducted for air, soil and water to understand local
environmental baselines.
In July-August, the draft ESIA report was prepared
and reviewed by the Company and Shell EP
environmental advisors.
The ESIA report was reviewed and accepted by a
expert panel selected by the State Environmental
Protection Administration (SEPA) in later September
2001.
The Overall Development Plan for the gas field was
reviewed in November 2001.
The Company’s ESIA for Changbei Project is the first
document of its kind to meet national and international
standards in China and received one of the seven top
prizes of the Oil/Gas Industry Steering Committee of
China National Association of Engineering Consulting
(CNAEC) in 2002.
This is the first time for CNAEC to issue the first
prize to an ESIA report.
3. Learnings from the past
3.1 Making an agreement on international ESIA
Expectations in JV
It is fundamental to make an agreement with the
(potential) business partners in JV before conducting any
real ESIA study in that the business partner’s
supports/assistances in conducting such international
ESIAs are indispensable with regards to project
information access, site access and governmental
coordination and governmental approval in some special
process such as social-economic survey.
3.2 Integration of environmental and social
impact assessment
In China, it is relatively difficult to integrate the
social elements with environmental assessment processes
due to the lack of clear legal requirements and technical
guidelines. Therefore, the information on social baseline
and impact assessments are usually weak. To meet
international expectations, Shell always tries to integrate
environmental impact assessment process with social
impact studies under one umbrella contract to effectively
manage the ESIA project and bring in the technical know-
how of social impact assessment to local environmental
assessment professionals.
For huge oil/gas projects, it may be necessary to
conduct a separate social or resettlement study in addition
to an integrated ESIA process to identify and evaluate the
key issues related to project. For instance, Shell
contracted UNDP China Mission to conduct a social
impact assessment in which over 10,000 project related
people were interviewed and more than 100 governments,
organizations, institutes were consulted. In Petrochemical
Complex project, a separated resettlement study was
conducted including delivering a resettlement action plan
(RAP) according to the World Bank’s policy/guidelines
on resettlement.
The future trends is to conduct an integrated
environmental, social and health impact assessment
(ESHIA) for major oil/gas projects such as Shell’s efforts
made in the gas field development of China West to East
Gas Project.
3.3 Gap analysis
To conduct a gap analysis between PRC EIA
documents (if it existed before) and international ESIA
expectations can help to identify the key work areas in
future ESIA and understand the work scope of future work
as well as make a reasonable judgment on all key project
management issues such as manpower required,
scheduling, and budget required.
3.4 Development of appropriate contracting
strategy
To develop an appropriate contracting strategy for
each ESIA Study is important especially for those which is
required the legal approval from the government. China
requires EIAs for major projects to be conducted by
Chinese licensed EIA institute as a main contractor.
To achieve an internationally acceptable ESIA,
international consultancy needs to be introduced to provide
necessary knowledge and skills. To blending international
consultancies and local ESIA professional teams can also
SPE 86588
help international professionals to understand local
regulatory requirements, natural and social conditions,
knowledges as well as help locals to access international
experiences/knowledge.
In this situation, how to form an effective and efficient
working mechanism is one of key factors to achieve a
successful ESIA study. The back to back contract between
local contractor and international contractor should be
discussed and considered case by case.
3.5 Risk-based assessment
There are some significant differences between
international common practices and Chinese EIA practices
in ESIA study. In China, numerical standards for
discharge/emission of pollutants are the most important
criteria in assessing envieonmental impacts from the
industry. As a common practice in international ESIA
study, the sensitivity of receptors are also under
consideration when an environmental impact is assessed
i.e. to identify the “real” threats to emvironment and
human being.
3.6 Information access
It is recognized that there are somewhat limitations in
information access during each ESIA in China. If no JV
contract signed before ESIA works start, it is obviously to
see such barriers for international company to undertake an
ESIA study.
3.7 Biodiversity and ESIA process
To integrate biodiversity issues into ESIA process is
quite new in China as well as it is also recognized that the
local nature reserve mangers and technical professional do
not have sufficient capacities in Nature Reserve
management.
Shell, therefore, made a great efforts to transfer
international expertises to locals through ESIA process and
workshops. On the other hand, many local technical
professionals are experts in local environment and flora
and fauna information so it is necessary to bring locals to
participate in the ESIA process and their recommendations
should be considered during the ESIA processes to
mitigate any impacts on biodiversity and improve the site
restoration after the construction phase of the project.
3.8 Social and health assessment
To identify and assess social/health impacts in ESIA
is a weak aspect in Chinese EIA practices due to the
traditional approach to conduct environmental assessment
as well as lack of sufficient social and health professionals
knowledgeable with impact assessment frameworks and
approaches. As mentioned above, limited access to social-
economic information and health information is one of key
barriers for international players to conduct a social and
health impact assessment.
3
3.9 Involvement of third parties
Third parties provide independence and credibility to
studies, assessments and plans, both within the host
country and international community. Bringing in
international experts can be sensitive from perceptions of
cost and insensitivity to the local environment. But, they
also offer huge potential for know-how exchange and local
capacity building, amongst business partners, local
institutes and NGOs.
3.10 Encourage broad consultation
Engaging in dialogue with a broad set of stakeholders
and encouraging public participation is standard practice
for many foreign companies, but it must be recognized that
this approach is new and sometimes uncomfortable for
many Chinese partners. Expectations should be managed
accordingly.
3.11 Language issues
There are always some difficulties to review English
ESIA report prepared by Chinese environmental
professionals. Therefore, double-check and cross-reference
between Chinese version and English version are quite
important for the quality of final deliverables.
3.12 Supervision and management of ESIA
In major projects such as overall gas filed
development, long-distance pipeline, the inclusion of the
Company environmental/social staffs is critical to
successfully undertake an internationally acceptable ESIA
study within the time schedule and approved budget. To
co-ordinate international consultants and local consultants
is one of key roles for the Company environmental/social
staffs.
3.13 Company staff to prepare ESIA
Some ESIA reports were prepared by Company
environmental advisors. It was proved as practical and
time-efficient and qualified for operation requirements.
However, this approach should be well justified with
the consideration of project scale, project schedule, and
availability of local baseline information. This approach is
a practical way to provide environmental assurance for
those small scale projects with the tight time schedule.
4. Summary of good practices in ESIA
To make an agreement with JV partners on ESIA
expectations before conducting ESIA and obtain JV
partners supports/assistances during the ESIA process.
To integrate international ESIA standards with
Chinese legal requirements within one ESIA report is
practical and can be achieved in China.
4 SPE 86588
To conduct ESIAs study for seismic survey and
exploration drilling provides environmental assurance
and demonstrates the Company’s commitment on
environment protection even it is not legally required
by PRC government.
To select different contracting strategies in different
ESIA projects.
To strengthen social and health aspects in ESHIA
study.
To widely consult stakeholders during the ESIA
process to demonstrate the openness and transparency
of the ESIA study.
To involve the Company environmental/social
professionals during the ESIA process
5. Conclusions
All companies investing or operating in China have
the potential to make an important contribution to
sustainable development and conservation, through
partnership with their JV partners, Government
entities, NGOs and the public.
A rigorous approach to conducting ESIAs, ensuring
stakeholder consultation, and leveraging use of both
international and local expertise is essential to define
environmental protection needs, identify conservation
opportunities and develop social programs. Moreover,
it is key to ensure an audit program is developed to
provide assurance that standards are being
implemented on the ground.
Protected areas in China face increasing pressures
from development, local communities and lack of
funding. Whilst the private sector cannot solve all of
these problems, we do see some significant
opportunities where corporate companies might
support innovative, responsible approaches to
environmental and social management in partnership
with others. This could include assistance to reserve
management via know-how exchange programs,
capacity building, complimentary research &
conservation study, and support to regulatory
development.
Activities aimed at offsetting impacts need to be
identified and principles for establishing a Social
Investment / Sustainable Development fund need to be
agreed. The latter cannot, however, be progressed
until such time as negotiations for the project are
successful and Joint Venture contracts signed.
Acknowledgement
The authors would like to thank Mike Seymour, HSE
manager of SCEPCo. for his encouragement and supports in
preparing this paper. These thanks are also extended to those
colleagues, international and domestic consultants
contributing their knowledge and experiences for these ESIA
studies.
References
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Baseline Survey in Subei Area, September 1993.
2. Murray G. Jones, Environmental Statement for
Environmental Impact Assessment in East Subei Area
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3. Environmental Resources Management,
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5. Li Qi, Preliminary Environmental and Social
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Environmental, Social and Health Management Plan
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22. Environmental Resources Management,
Environmental and Social Impact Assessment for
West to East Pipeline Project- China. November
2002
SPE 86588 5

23. Environmental Resources Management,

Environmental and Social management plan for West
to East Pipeline Project- China. November 2002
24. UNDP China Country Office, The Social Impact
Assessment Survey Report of the China West-East
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