- Environmental and Social Management
KAPPA has a corporate Environmental and Social Management System (ESMS) in place to address the environmental, health and safety (EHS) aspects of its operations. For each site, KAPPA has a specific Environmental Management Plan, which includes specific procedures covering aspects such as liquid and solid residues management, natural resources management, training, noise control, auditing, contingency an emergency response, monitoring programs, etc. The procedures cover exploration activities, as well as operation phases. For each site the company has EHS dedicated personnel who report and coordinate with the corporate team. Since KAPPA ESMS has been designed to comply with Colombian requirements, the company will further enhance its ESMS, as part of the IFC project, in order to ensure that its operations comply with IFC’s environmental policies and guidelines. As part of the implementation of its ESMS, KAPPA conducts periodic audits to its sub-contractors to ensure they comply with KAPPA’s established procedures. KAPPA will seek ISO 14000 certification for its operations and anticipates obtaining such certification in December 2006. The company will also develop and establish H&S procedures and programs and will evaluate the convenience of completing the OSHAS 18001 certification by the end of 2007.
KAPPA’s corporate environmental group reports directly to the General Manager. This group is in charge of overseeing the EHS performance of the operations and works closely with the operation managers, at each site, to implement sound EHS. KAPPA also contracts environmental consultant services to prepare environmental impact assessments, help in the preparation of the EHS reports required by environmental authorities, and conduct quarterly environmental audits and environmental monitoring (water, noise, and air emissions, etc.) KAPPA is committed to hire additional EHS personnel, as needed, when it expands its operations.
In addition to managing the EHS of its own exploitation and production (E&P) operations, KAPPA has been overseeing the EHS performance of its main contractor, Zigma Colombia Petroleum Services S.A. As part of this IFC project, KAPPA will accompany Zigma to enhance the EHS conditions of its operations to ensure compliance with IFC requirements.
KAPPA supports the development of communities living near its operations directly and through the Barlovento Foundation a non-profit organization that promotes and develops programs for the improvement of basic sanitary and environmental needs in its area of influence and has developed projects for reforestation and infrastructure improvement during the last two years. KAPPA employs two social specialists. The social specialists are assigned to the Abanico and Cerrito operations, which are described below, and report to the managers of these operations.
As part of this project, KAPPA will integrate social management, including the assessment and mitigation of the social impacts of the company’s operations, in an Environmental and Social Management System (ESMS). The ESMS will include procedures to avoid or mitigate the adverse social impacts of land acquisition, to protect cultural property, and to maximize local employment. KAPPA’s operations do not impact indigenous and Afro-Colombian communities. However, KAPPA is committed to develop procedures to address the needs of these communities in the event that they are impacted by future KAPPA operations.
KAPPA is committed to enhance its social programs, as well as the skills of its social staff, as it expands its operations.
- Environmental performance of industrial operations
KAPPA focuses on the exploration and production of hydrocarbons on small and medium fields not deemed viable by large multinational energy companies due to either size and/or maturity. KAPPA operations include the following sites:
- the Abanico Field with E&P operations, the Arce field in exploration stage, and the Chipalo and Guasimo Contracts in exploration/testing stages, Revancha Sur in licensing approval stage located in the Tolima Department;
- the Cerrito Field in production stage located in the Norte de Santander Department; and
- the Las Quinchas and Alhucema Contracts, in exploration/testing stage, located in the Santander and Antioquia Departments.
KAPPA has prepared Environmental Impact Assessments (EIAs) and its respective Environmental Actions Plans (EAPs) prior being granted the environmental operating license for all operation in either production or exploration stages. Currently KAPPA has conducted EIAs for the Abanico, Cerrito, Chipalo, Las Quinchas, and Guasimo and is currently working on the EIA for Alhucema.
There are no protected areas or national parks within or adjacent to the KAPPA fields; all its operations are located near urban and agricultural areas.
- Abanico Field
The Abanico field, located in the Municipality El Espinal in the Tolima Department, has 11 oil operating wells, a gas well, and a process water injection well. This field is located in a mainly rural area, where rice and cotton are cultivated. There are not natural parks or preserved areas in the field nearby area. The direct communities in the area of influence of its operations include Agua Blanca Alta, Agua Blanca Baja, La Dulce, Santana, and La Joya.
All operating wells are connected to the treatment plant which has the following installations: crude treatment stations, pump stations, generators, wastewater treatment plants, loading stations, fire prevention systems, and storage tanks.
The gas generated in the oil production is currently flared out. As part of the IFC project, KAPPA will use this gas to fuel its generators which produce the energy needed in the field for oil production, thus eliminating air emissions and making the field energy self-sufficient. It is expected that with further gas production, KAPPA will sell gas, and produce additional energy which can also be sold to the national grid.
KAPPA obtains the water for its industrial needs from the Agua Blanca Creek and has the authorization of the local authorities to do so. The company buys bottled water for domestic use. Process wastewaters are treated and tested prior being reinjected in a designated well. Drilling mud is treated to separate solid and liquids. The drilling wastewater is treated prior disposal. Domestic waters are typically disposed in septic tanks and storm waters are pre-treated, as needed, to remove any oil present prior disposal. After treatment, the wastewaters are used to irrigate internal roads and locations thus controlling generation of fugitive dust.
KAPPA conducts periodic monitoring of the treated liquid effluents to ensure compliance with applicable requirements. As part of the IFC project, KAPPA will ensure that:
- the wastewaters are in compliance with local requirements and IFC guidelines and
- all its operations have systems in place to collect and properly treat its oil-contaminated water prior to releasing them into nearby water bodies.
Details of the actions and specific locations where these improvements will be conducted will be submitted by May 2006. All sites will be in compliance with IFC requirements by December 2006.
KAPPA will ensure that existing programs to properly handle the solid wastes are fully implemented. These programs include recycling of non-hazardous waste where feasible, proper treatment and disposal of hazardous materials, and other wastes. KAPPA will continue ensuring appropriate storage areas and employee training.
As part of its commitments to compensate for the disruption/destruction of vegetal soil and green areas and usage of creek water, the local authorities have required KAPPA to compensate the loss of these areas through reforestation work equivalent in cost to 1% of the project’s. KAPPA is conducting a small reforestation to protect the basin of the Agua Blanca creek from which they take water for its operations. In addition.
- Cerrito Field
The Cerrito field, located in the Department of Norte de Santander, has two gas operating wells. The field is located approximately at 5 km of the city. The Peracos community, a one km distant from the project site, is a mainly rural area focused on artisanal coal exploration and pigs rising. The gas produced is the only source to satisfy current City of Cucuta’s gas consumption. There are not natural parks or preserved areas in the field nearby area.
Once obtained, the gas is delivered to local gas distributor (Gases del Oriente). The company has been authorized by the local authorities to obtain the water needed for its operations from the La Agua Clara Creek or bought from third parties with corresponding permits. This water is transported by truck. Process wastewaters are transported to Ecopetrol’s facilities in río Zulia field to be treated, monitored and discharged by Ecopetrol. Domestic waters are treated in septic tanks.
KAPPA sells and delivers the gas to the distribution company (Gases del Oriente) at the wellhead. The gas is transported by a gasoduct, parallel to the main road, from the Cerrito well to the city for an approximate 3 km distance; Gases del Oriente owns, operates and maintains the gas pipeline.
As part of its commitments to compensate for the disruption/destruction of vegetal soil and green areas, and usage of creek water, the local authorities have required KAPPA to compensate for the loss of these areas through reforestation work equivalent in cost to 1% of the projects. KAPPA is conducting reforestation of the basin of the La Floresta and Capachito Creeks to compensate for the native vegetation they removed to initiate operations.
All solid wastes generated are disposed in the municipal landfill as authorized by the local authorities. Recyclable and special wastes are treated separately by the municipal landfill.
- Health and Safety Programs
KAPPA has personnel in charge of the occupational health and industrial safety aspects of its operations and has established management procedures related to health and safety that are part of KAPPA’s ESMS. As part of its continuous improvement program, KAPPA will ensure that all its operations have industry-best safety measures/systems (i.e., double containment wall for storage tanks, impermeabilized floors in areas were oil is handled, leak prevention procedures, etc.) Details of the actions to be implemented will be submitted to IFC by December 2006.
KAPPA’s has training programs for its employees that are aimed at minimizing workplace accidents/incidents. Employees are provided with and required to use personal protective equipment (PPE) based on their level of exposure. KAPPA will strengthen employee training to raise workplace risks-awareness and ensure employees consistently use PPE. Details of the actions y specific locations where these improvements will be conducted will be submitted by May 2006. All sites will be in compliance with IFC requirements by December 2006.
Workplace conditions (noise, gases, etc.) are monitored twice a year to ensure that employees are not exposed to unsafe conditions. As part of the IFC project, KAPPA will continue conducting monitoring activities and will ensure the employee exposure levels are in compliance with IFC applicable requirements.
Each operating site has its own contingency and emergency response plans which identify critical areas, controls, responsible personnel, communications, and the measures to be taken in the event of a spill or accident. As part of this project, KAPPA will further enhance these plans to ensure that the fields have appropriate emergency response equipment. Specifically for the Abanico field, KAPPA will strengthen its participation in the Mutual Assistance Committee of the Petroleum industry in the Tolima Department. Upgrades to the response emergency equipment will be completed by June 2007.
KAPPA conducts internal emergency response drills. As part of the IFC project, the company will begin conducting emergency drills including relevant stakeholders (i.e., community, fire department, hospitals, nearby industries, etc.) The schedule of these emergency response drills will be submitted to IFC by May 2006.
KAPPA will implement specific actions, ensuring that the EHS aspects of its contractors are fully implemented. Details of these actions will be submitted to IFC by May 2006.
- Transport
Currently the process water and oil produced at the Abanico field are transported by truck. The water is transported to a designated injection well located within the field premises. The oil is taken to the Toldado station, in the municipality of Ortega, through a well maintained road for approximately 90km, passing approximately 3 communities. By the end of April 2006, the oil produced at Abanico will be transported through a pipeline currently being built by KAPPA. In addition, the process water, which is injected back into a designated injection well, will be also transported through a pipeline to be built also by KAPPA. The safety risks due to transport by truck will be eliminated completely when oil and water are transported by pipeline.
- Protection of cultural property
KAPPA assesses the potential impacts of its projects on cultural property as part of the environmental and social impact assessment process. None of the projects that KAPPA is implementing are located in areas where cultural resources, such as sites of archaeological value, are likely to be found. As part of this project, KAPPA will ensure that the current procedures to protect cultural property from potential adverse impacts, which are part of its ESMS, are in compliance with IFC’s Policy on Cultural Property.
- Land acquisition
KAPPA acquires land rights through direct negotiations with landowners. The company surveys commercial land values in areas of interest and uses fair market value as the basis of the negotiations with landowners. KAPPA’s projects usually require small areas and do not affect land use significantly. As part of this project, KAPPA will develop procedures to address the social impacts of land acquisition in a manner that is consistent with the requirements of IFC’s Policy on Involuntary Resettlement. Land acquisition procedures will be integrated into the company’s ESMS.
- Relations with local communities
KAPPA’s policy is to keep in close and open communications with local communities and authorities. The company supports projects to improve the quality of life in communities located within the area of influence of its operations. KAPPA’s policy is to maximize local employment and is committed to fill all unskilled employment positions with local persons and to utilize local suppliers of goods and services whenever possible. As part of this project, KAPPA will integrate social management in the ESMS, which will include procedures to assess and mitigate the adverse social impacts of the company’s operations, inform local communities about the potential impacts and risks of projects, consult with project affected people, receive and respond to grievances, evaluate the needs of communities located within the area of influence of KAPPA’s projects, develop and implement community development programs, and maximize local employment for each site where the company operates.
- Potential impacts on indigenous communities
Indigenous or Afro-Colombian communities are not present in the areas where KAPPA operates. Nevertheless, KAPPA will develop procedures to address the potential impact of future KAPPA operations on Indigenous Peoples and Afro-Colombian communities and to ensure compliance with IFC’s Policy on Indigenous Peoples. These procedures will be included in KAPPA’s ESMS.
- Security risks
KAPPA operates in areas that are relatively safe and where the company’s assets and personnel do not face significant risks (e.g., sabotage, theft, kidnapping, anti-personnel mines etc.). KAPPA’s policy is to avoid remote areas, where these risks are more likely.
- Revenue management by local municipalities
The company is making significant contributions to local municipal revenue through royalty payments that vary according to the law and range between 5% and 25% of the total production of each field. The royalties share per stakeholder may also vary according to law. The base case contribution is as follows: 12.5% to the municipal government, 47.5% to the departmental government, 32% to the National Royalties Fund (Fondo Nacional de Regalías) and 8% to port municipalities and districts. KAPPA is committed to promote professional and transparent management of municipal revenue from royalties and to support efforts in the development of projects and programs for the improvement of local needs. The municipalities can utilize royalty payments to finance health, education and basic sanitation projects.
