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Evaluation of 'Code of Conduct for Gas Production from Small Fields'

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In 2017, the Dutch gas sector signed the Code of Conduct for Gas Production from Small Fields. The Code of Conduct was drafted in close consultation with stakeholders in our project environment and sets out general guidelines for carefully engaging with stakeholders in oil and gas projects in onshore small fields. The development and publication of this Code of Conduct was not an end goal in itself but rather a starting point. We periodically review the Code of Conduct and make changes, as necessary. This ensures it remains in line with the prevailing wishes of those involved and local residents. NOGEPA carried out an evaluation in the period from late 2018 to early 2019. A description of the key findings from the evaluation and how NOGEPA will incorporate them into the Code of Conduct is provided below.
Code of Conduct 1.0
The Code {a}{em}of Conduct for Gas Extraction from Small Fields, launched by NOGEPA in September 2017, is designed to provide clarity and certainty to the communities (i.e. local stakeholders) in which we operate about the development process of a gas production project and to contribute to those communities as a fellow member of the community. The Code is therefore aimed in particular at local residents and businesses as well as the relevant municipalities and provincial authorities, drinking water companies, water boards and nature and environmental organisations. The Code is an initiative by our extractive industry to provide insight into how we work, and how we can collaborate with local stakeholders to give a positive impetus to locally important topics.

As already mentioned, the Code of Conduct is a document that is updated periodically to remain relevant and to match – as far as possible – the expectations of stakeholders and local residents. In the consultation process, we listened to a number of stakeholders in gas production projects, including their experiences with the Code of Conduct and the conduct of our sector. Discussions were held with the municipalities of Westerveld and Dongeradeel, residents' associations in Heerenveen and Westerveld, the Ministry of Economic Affairs and Climate Policy and the State Supervision of Mines. A key outcome of this evaluation is that all stakeholders indicated that the Code of Conduct and the ideas behind it are fundamentally sound, but there are certainly also areas for improvement. For example, there were aspects that proved unworkable for the operator or stakeholders in practice, or that did not lead to an improvement in communication between the two. The new National Approach to Processing Mining Damage Claims ('Landelijke Aanpak Afhandeling Mijnbouwschade') will also change things in the area of claims handling. The evaluation and this new approach to claims handling will lead to changes to the Code. The updated version will be published once the Minister of Economic Affairs and Climate Policy has formalised the claims handling arrangements. The objective of the Code of Conduct remains intact. The Dutch Oil and Gas industry wishes to carry out its activities in the most harmonious relationship possible with the environment in which the activities are carried out. Listening to local stakeholders and local residents and taking their questions and doubts seriously lies at the heart of this.

Gas production in the Netherlands
How much natural gas is produced in the Netherlands is a decision for the government. The Netherlands is going through an energy transition which will see our energy system converted into a zero-emissions energy supply by 2050. Natural gas will therefore eventually be phased out and replaced by other, cleaner forms of energy. This is not something that happens overnight, and natural gas will still have a role to play in the current energy policy as we transition to a carbon-free energy mix in the coming decades. Not least because Dutch natural gas is the cleanest fossil fuel, compared to coal and oil, with relatively low CO2 emissions.

During the discussions with stakeholders and local residents, the utility and necessity of gas production from small fields were not up for discussion. The Dutch gas sector wants to help as much as it can to accelerate the energy transition. Nevertheless, the gas sector as we now know it in the Netherlands will disappear and its role going forward will change. All discussion partners endorsed this role and see an opportunity for operators to contribute to the acceleration by investing locally in the energy transition.

Compromises on voluntary nature of the code
The Code of Conduct was described in the discussions as too non-committal. No hard actions are prescribed if an operator does not comply with its own rules, for instance. For NOGEPA, the Code of Conduct is binding on the sector and actors in the sector. It was drafted and signed by the members of NOGEPA and is intended for the members of NOGEPA. In order to respond to the criticism of its non-committal nature, NOGEPA will include a procedure for members that fail to comply with the rules. In the first instance, NOGEPA will address the relevant operator at the management level, specifying the areas for improvement. If this does not lead to improvements, the complaint will be discussed at NOGEPA'S own board meeting. As an association, this is the instrument available to NOGEPA.

Claims processing
The upcoming publication of the second version of the Code of Conduct is taking longer than anticipated. This has to a large extent to do with the development of the national claims settlement process by means of the aforementioned national claims protocol. NOGEPA is in favour of an independent claims protocol for mining damage. A protocol that provides for transparent and swift claims settlement for victims which is subject to independent and expert assessment. In this way, we can ensure that the claims settlement is uniform for all residents in the Netherlands and especially for the local residents in the area of a mining project. It is our conviction that the approach – in which those affected are compensated and the operators are kept at arm's length – is important to enable operations for the extractive industries. For this reason, mining companies are keen to cooperate with the transfer of their claims settlement procedures to an independent commission.

Custom solutions
The development of the Code of Conduct and the evaluation consultations showed that custom solutions are always necessary. Not least because every environment in which our operators find themselves is different. Specific agreements can be reached by talking to stakeholders and local residents at an early stage. Under the previous version of the Code of Conduct, project alignment programmes were set up to describe how the Code of Conduct would be interpreted and implemented at the local level. The evaluation showed that the local set-up and application of a project alignment programme is considered to be too restrictive. Although the core of the custom solutions initiative remains in place, tailored to the local environment, the instrument as such has been replaced.

Engaging more actively with the environment
It is not always easy for companies in the extractive industries to work more intensively with the stakeholders and local residents. The benefits of gas production are mainly felt at the national level, while local stakeholders and residents experience the potential burdens that may occur. What's more, different parties have their own unique role in the various phases of a gas production project. Years of experience with such projects has taught us that local stakeholders expect open and honest communication about the risks. The evaluation shows that so far the sector itself rarely communicates about the existence of the Code of Conduct or about the aspects it describes. This is unfortunate and a missed opportunity, especially given the positive attitude of the consulted parties regarding the purpose of the Code of Conduct and the basic principles and starting points that it sets out. Local residents and stakeholders should be informed at an earlier stage about the Code of Conduct and this information should be more explicit. NOGEPA will regularly remind its members of this to ensure explicit messaging about the fact that operators work in accordance with the rules of conduct. NOGEPA and its members are convinced that this will contribute to the open nature of the relationship between operators and stakeholders and local residents.

Distribution of benefits and burdens
The aforementioned skewed relationship between the benefits and burdens continues to be an important topic. Discussions are still ongoing with the national government on this. During the evaluation consultations, accelerating or improving the local energy transition was seen by operators as a sensible gesture to the environment. For this reason, the chapter entitled ‘Quality of the living environment’ focuses more on that goal and less on making an economic contribution. The involvement of local businesses in implementing the activities is still a work in progress, but above all opportunities are being sought to contribute to the energy transition in the local area. This will require the involvement of the national government. NOGEPA wants to work together with the various authorities and the local community to ensure the further development of {em}local arrangements{/em}. These arrangements, recommended by the Technical Subsidence Committee ('Technische Commissie Bodembeweging'), specify the conditions under which a project can be carried out, who has what role in that process, how implementation will take place, and how the benefits and the burdens will be distributed among the stakeholders and local residents.

Concluding remarks
This review of the Code of Conduct envisages ongoing updates and improvements to the Code to ensure its content continues to correspond to the prevailing wishes of stakeholders and local residents in the periphery of our projects. The new version of the Code of Conduct will be published once agreement has been reached on the damage claims protocol. If you also have ideas that may help improve the Code of Conduct, or if you would like to join in the discussion, please let us know by contacting NOGEPA. 


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