The following environment, health and safety and social aspects of the project were analyzed during appraisal:
- social and environmental assessment and environmental, social, and health and safety management systems;
- procedures for the acquisition of land use rights;
- labor and working conditions (including occupational health and safety);
- pollution prevention and abatement (including emissions to air and water and management of hazardous materials and wastes);
- community health, safety and security.
The sponsor has presented plans to address these impacts to ensure that the proposed project will upon implementation of the specific agreed measures, comply with the environmental and social requirements - the host country laws and regulations and the World Bank/IFC environment and social policies and the environmental, health and safety guidelines. Mitigation measures about how these potential impacts will be addressed by the sponsor/project are identified and incorporated into the attached Environmental and Social Action Plan (ESAP).
- PS1: Social and Environmental Assessment and Management Systems
E&S Assessment:
In accordance with Chinese legislation, FEEC has provided copies of the following Environmental Impact Assessment (EIA) documents, each of which has been submitted to the relevant provincial Environmental Protection Agency:
- EIA for exploratory phase of coal-bed gas of Qinnan Region, Shanxi Province (September 2006)
- EIA for exploratory phase of coal-bed gas of Shouyang Region, Shanxi Province (October 2006)
- EIA for Yunnan Enhong-Laochang CBM exploration, Yunnan Province (December 2006)
A meeting with a senior representative of the Shanxi Provincial EPA indicated satisfaction with the EIA reports and strong approval for company’s proposed operations, given the local, provincial and national demand for cleaner energy supplies.
FEEC will provide IFC with copies of all EIA approvals and other clearance documents.
E&S Management and Organization:
Due to the modest scale of operational activity to date, FEEC has operated an informal environmental, social, health and safety (ESMS) management system, reliant on direct and regular communication between the company’s senior management and experienced drillers and other field staff overseeing local contractor teams. Active operations have also tended to be single site, with one well being sunk at a time.
On social aspects (e.g. managing compensation payments for land), company has maintained comprehensive records of payments and has endeavored to work in accordance with government law and community wishes. FEEC employs a staff member whose principal responsibility is to manage the process by which the company secures land, including mapping of land use rights and subsequent negotiations with village heads. The procedures include accounting audits, proof of receipt of compensation payments to individuals and more regular oversight by company personnel.
As FEEC operations expand, it will need to move from an informal ESHS management system, based on personal contact to a formalized, scalable system where responsible personnel can obtain the instruction they need to implement the requirements of the ESMS in a consistent manner.
FEEC has committed to this action, including the hiring of additional staff and/or consultants to support the process. As the direct environmental impacts and health and safety risks and mitigation measures from well drilling and operation are well understood, this is likely to remain a line management function. FEEC will be adding capacity on the community engagement components of the ESHS management system.
Action Plan:
The following aspects of the ESHS management system will be appropriately assigned, implemented, monitored and reviewed to ensure the desired system outcomes:
- Clear reporting lines and communication protocols between FEEC staff or contractors with environmental, health and safety and social responsibilities and senior management,
- Agreed, transparent procedures for acquisition of land use rights and site access (including improvements to existing infrastructure such as roads),
- Environmental, health and safety aspects of well drilling,
- Environmental, health and safety aspects of well operation,
- Environmental, health and safety aspects of well closure,
- Community health and safety,
- Effective liaison between FEEC and/or its contractors and local communities, local governments and other significant stakeholders. This may include the scheduling of public meetings in close cooperation with the local government to keep the public informed about major events taking place in the company such as land acquisition, drilling projects and employment opportunities,
- A stakeholder commitments register, so that commitments FEEC has made are easily identified, sourced and verified
- An appropriate grievance mechanism for complaints from communities or other key stakeholder groups,
- Prompt reporting to FEEC’s responsible officer/officers at all levels and local state Environmental Protection Bureau of any environmental incidents,
- Prompt reporting to FEEC’s responsible officer/officers at all levels of any community concerns or protest stemming from compensation payments, company commitments or negative impacts from company operations.
FEEC will undertake these actions in accordance with the timetable presented in the Environmental and Social Action Plan (ESAP) attached to this ESRS.
- PS2: Labor and Working Conditions
FEEC currently has 31 full time employees. 35% of these staff are based in Houston or ex-patriate positions in China. There are currently 20 Chinese staff, of which 80% are office based. Drilling teams are sourced from well known, established specialty contracting companies, with oversight from FEEC drilling supervisors.
Human Resources Policy:
FEEC will be developing a detailed Human Resource (HR) Policy and Manual to meet all PS2 requirements on labor and working conditions, including:
- establishing, maintaining and improving employee-management relations;
- promoting fair treatment, non-discrimination and equal opportunity of workers;
- ensuring compliance with national labor and employment laws;
- promoting safe and healthy working conditions; and
- protecting and promoting the health of workers.
A draft of the HR policies and procedures will be submitted to IFC for review in accordance with the timetable presented in the Environmental and Social Action Plan (ESAP) attached to this ESRS. The policy will establish a mechanism that allows employee grievances to be articulated and addressed, as well as procedures to cover retrenchment, as and when it may occur. FEEC has confirmed that it will not employ child labor or forced labor.
Environmental, health and safety during well drilling is jointly managed by FEEC and its contractors. Contractor terms of hire include specific environmental, health and safety (EHS) provisions. FEEC assigns to its Contractors the responsibility to comply with the EHS policies of FEEC. Field locations are supervised by FEEC management or consultants to assure compliance with FEEC policies. Appropriate personal protective equipment (PPE) is provided to all personnel entering a well site. Safety drills are conducted on a regular basis. To date there are been no lost time accidents.
- PS3: Pollution Prevention and Abatement
Pollution Prevention:
The principal impacts from operations to date – and from the proposed next phase include air emissions and noise pollution from generator sets, treatment and disposal of water pumped from the well (‘dewatering’), disposal of cuttings, storage and use of drilling fluids and polymers and protection of groundwater supplies.
The company has been provided with a copy of the Guidance Note ‘Environmental, Health and Safety Guidelines for Onshore Oil and Gas Development’ (April 2007) and has committed to use this as a reference and performance benchmark for its ESMS.
Waste:
For present operations, FEEC treats produced water in retention ponds where it is subject to regular monitoring prior to discharge. The company holds the relevant permits to discharge to surface waters, but evaporation and disposal to municipal treatment centers are other options (the latter relevant if COD exceeds 150mg/l, which can occur if polymers have been used in the drilling process). The majority of produced water is of high quality and the company is considering the option of making it available for agricultural use (subject to government approval).
Non-target groundwater supplies (i.e. those not in the coal seam itself) are protected as appropriate by cement casing of the well. Where drinking water aquifers overlie or underlie coal seams that FEEC is drilling, the company has committed to undertake baseline analysis of the drinking water aquifer to ensure that FEEC operations are not impacting quality.
Cuttings are retained on site unless rich in coal, when they are made available to adjacent communities for fuel.
Any gas flowing from current wells is currently flared. Only small quantities have been produced to date. As extracted gas grows to commercial volumes, FEEC will need to consider options for its transportation. Local compression and bottling is a potential interim measure prior to pipeline connection. In both cases, FEEC will need to conduct the appropriate ESHS impact assessment and as a consequence, develop an appropriate management and mitigation plan. This is referenced in the Environmental and Social Action Plan (ESAP) attached to this ESRS.
Emergency Preparedness and Response:
As part of its ESHS management system, FEEC has confirmed that it will prepare an emergency preparedness and response plan (EPRP) for their facilities; including gas spills contingency plans and fire fighting protocols. The EPRP will be based on a comprehensive risk assessment and analysis. Submission of a draft EPRP acceptable to IFC is included in the ESAP.
- PS4: Community Health, Safety and Security
FEEC’s concession sites are surrounded by numerous local communities, and FEEC has taken precautions by fencing the perimeter of its facilities. The EPRP discussed in the previous section will include policies and procedures to ensure community well being in case of a serious incident at a well site, operations camp or during transportation.
FEEC employs wardens at each well site. Wardens are not armed and act as caretakers, with a primary responsibility of safety (ensuring individuals do not stray onto the site) and maintenance. Their presence and role is therefore considered appropriate, proportionate and compliant with the security personnel requirements of PS4.
- PS5: Land Acquisition and Involuntary Resettlement
Exploration Concession Fields:
FEEC commenced its exploration activities in China in 2002 and obtained the concession rights to three areas in two provinces. As of July 2007, FEEC had 18 exploration wells and plans to drill many more by the end of 2008.
Initially, each horizontal well requires approximately 2 hectares (30 Mu) of land, which is then scaled back to 1 hectare (15 Mu) once the well is operational. For its vertical wells, FEEC has used 1 hectare (15 Mu) or less for each well. Access to well sites may also require additional land.
Compensation and Benefits for Affected People:
FEEC has maintained comprehensive records of each negotiation it has completed for land use rights. The company has entered Land Acquisition and Compensation Agreements with the local governmental agencies, who are then responsible for distributing the compensation funds to eligible farmers via village head with an expectation that proof of receipt from each affected land rights owner will be collected.
Physical Displacement:
There has been no physical displacement in the past and it is expected that there will be no physical relocation during the current exploration stage.
Economic Displacement:
All three concession sites are located in typical Chinese rural areas where most of the land is for agricultural use, so any land acquisition would result in economic displacement. As of July 2007, a total of approximately 15 hectares of land were acquired for the project on a temporary basis, which affected an estimated 200 rural households. No individual household has been fully displaced from farm land (typical area of displacement is 10-30%).
FEEC will formalize the procedures for land acquisition and compensation into a Land Acquisition and Compensation Framework Plan (LACP) to form part of the overall ESMS, which will incorporate the Government of China’s regulations and IFC’s PS5 on Land Acquisition and Involuntary Resettlement. The LACP will be used for future land acquisition during the exploration stage and could also be expanded into a more comprehensive plan for land acquisition in the operational stage.
Consultation and grievance mechanism:
FEEC personnel, EIA consultants and operations contractors have held meetings and discussions with local leaders of each of the areas under the FEEC PSCs. The LACP will include a grievance mechanism for on-going consultation with key stakeholders.
