Pecten - Mokoko

completed

- 3 - International Finance CorporationA Member of the World Bank GroupInternational Finance CorporationA Member of the World Bank GroupEnvironmental Review Summary (ERS)Project Name Cameroon: Pecten MokokoRegion Sub-Saharan AfricaSector Oil and GasProject No. 008498 FINAL1. Pecten Cameroon Company (Pecten), the sponsor, is a Delaware registered corporation that has been involved in the exploration for and production of hydrocarbons in the Republic of Cameroon since 1974. Pecten is owned eighty percent by Pecten Producing Company and twenty percent by Société Nationale des Hydrocarbures (Cameroon’s national oil company). Pecten Producing Company is wholly owned by Shell Oil Company. Pecten currently, operates in the Lokélé permit area approximately 45 kilometers offshore (89 miles from Douala) in the Rio del Rey Basin; Gulf of Guinea. Infrastructure includes twelve platforms (200 wells), including a central production facility, and a ten inch, 10,200 meter subsea pipeline to the Moudi offshore tanker loading facility. Production averages 25,000 to 28,000 bpd. Production wells are in shallow water (average of forty five meters) and production is from depths of 1,000 to 2,000 meters. Pecten is also involved in offshore developments in the Rio del Rey permit area operated by Elf Serepca (Elf). Elf’s production in this permit area is approximately 80,000 bpd from 33 platforms. IFC is to provide a long term (10 to 13 years) revolving credit facility of up to US$250 million to Pecten to support its ongoing oil field development in the Lokélé and Rio del Rey permit areas. These funds will be used to drill additional wells, rehabilitate existing wells, install platforms, construct additional production facilities and finance other development activities.2. This is a category B project according to IFC’s environmental review procedure because a limited number of specific impacts may result which can be avoided or mitigated by adhering to generally recognized performance standards, guidelines or design criteria. The environmental review of this project consisted of IFC’s experience to date with Pecten (IFC has three previous investments in Pecten (with Board approvals in 1991, 1994, and February 1997), the review of the project’s Environmental Management Plan (EMP), and a site visit by an environmental specialist from IFC’s Technical and Environment Department. The following potential environmental, health and safety impacts were key issues addressed during IFC’s environmental review: existing environmental conditions/practices, operational discharges to sea, the management of produced gas, oil spills and occupational health and safety monitoring. Information on how these potential impacts will be addressed is summarized in the paragraphs that follow.3. An environmental impact assessment (EIA) was prepared by Pecten as a requirement of IFC’s first loan (which was a category A project). This assessment examined the impact of existing, planned and anticipated operations. The EIA was broad in nature so as to address in general the impact of Pecten’s operations on the Gulf of Guinea environment. The EIA concluded that drilling and production operations, conducted in accordance with Government of the Republic of Cameroon environmental requirements and Pecten’s “Environmental Policies and Procedures” (October 1991) will have little, if any, adverse effect on the environment. The EIA concluded that a major uncontrolled oil spill could produce significant impacts to the shoreline of the Republic of Cameroon which hosts significant biological resources (mangroves, estuarine marshes, fishery, etc.). The EIA concluded that Pecten’s oil spill prevention measures were more than adequate to prevent impacts to these biological resources. Experience to date has confirmed the conclusions of the EIA and the project area (the Gulf of Guinea) has not been negatively impacted by Pecten’s and Elf’s ongoing drilling and operations.4. Routine operational discharges to the sea from offshore drilling and producing operations may consist of water based drilling and completion fluids and cuttings (Pecten’s policy prohibits the discharge of oil based drilling fluids and cuttings), produced water, domestic sewage, etc. Pecten’s “Environmental Policies and Procedures” place clear limits on the composition of these discharges.5. The operators have made significant strides in reducing gas flaring. In 1997, average daily flare gas from Pecten operated facilities was 7.5 mmcf/d, compared to an average of 10.5 mmcf/d in 1996, an improvement of about 29%. Between 1993 and 1996, Elf Serepca reduced flared gas by about 14% from 77 mmcf/d to 66 mmcf/d. Pecten and Elf Serepca continue to look for ways of utilizing produced gas, thereby reducing the amount flared.6. Pecten recognizes that the most important line of defense against oil spills is prevention. Its policies and programs are designed to accomplish this goal. In 1994, Pecten developed its Erosion/Corrosion Failure Contingency Plan (E/CFCP), which defined responsibilities, reporting, response and availability of materials and suppliers in the event of erosion/corrosion failure to topside facilities and underwater pipelines (saline water and not H2S or CO2 is the prime erosion/corrosion concern). The intent of the plan is to service a failure and return to production. This E/CFCP is reviewed and updated annually and is a supplement to the Oil Spill Response Plan (OSRP). The OSRP describes the oil spill contingency procedures that will be initiated in the event of an oil spill incident as a result of Pecten operations. The OSRP covers policy, organization, national and international authorities, response strategies, roles and responsibilities of the Pecten Oil Spill Response Team (OSRT) and practical response guidelines. The first line of defense is the utilization of dispersants and the last line is the use of the world class oil spill equipment from the Oil Spill Response Limited (OSRL) facility, Southampton, England. 7. Environmental performance monitoring is a cornerstone of Pecten’s “Environmental Policies and Procedures”. Managers and supervisors at all levels establish annual goals for environmental performance and conduct personal audits to ensure that activities and facilities under their control are being carried out and operated in a sound environmental manner. In addition, the Health, Safety and Environment (HS&E) Department conducts environmental compliance audits (ECA). The ECA has five components: entrance interview, record review, facility visit, exit review, final report. Quarterly environmental performance reports are submitted to Shell Oil Company, The Hague. Pecten employs regular monitoring of routine operational discharges to the sea as well as of erosion/corrosion in the Lokélé permit area.8. The project includes a comprehensive EMP including the above. The EMP covers both Pecten’s and Elf’s operations. The EMP demonstrates that there is close coordination of environmental management between Pecten and Elf Serepca.9. IFC will monitor ongoing compliance with World Bank environmental, health and safety policies and guidelines during the lifetime of the project by evaluating reports submitted annually to IFC by Pecten and by conducting periodic supervision.10. Based on its review of available information regarding potential environmental impacts and proposed mitigation measures, IFC concludes that Pecten’s proposed project will meet World Bank environmental, health and safety policies and guidelines and host country requirements.L:\WPEU\RON\CAMEROON\PECTEN\ERS2.DOCJanuary 29, 1998 2:40 PM