Mearl Oil Company established new Environmental Impact Targets (EITs) in 2003 to standardize environmental policies globally. However, Mearl Canada objected to applying the EITs for water effluent management at its facilities, as they already met Canadian regulatory standards. This highlighted a disagreement between Mearl's central leadership and a subsidiary over whether global standards should apply equally to developed countries with strong existing regulations.

1. MEARL OIL COMPANY : ENVIRONMENTAL
IMPACT TARGETS (A)
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Yuliana Irmina
Vanessa Fitri
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Wisnumurti Raharjo
Albertus Harvid
Imam Mashari

2. Mearl Plant
• In Indonesia, many industrial facilities in the area
were discharging wastewater into open ditches,
which could present a serious environmental and
health hazard
• Many Australian industrial plants had been accused
of moving to Indonesia in order to take advantage of
the lower environmental standards
• To ensure that its plans located in Indonesia weren’t
accused of this, Mearl Oil Company issued a Water
Effluent Management memo
• Mearl established a new policy in May 2003, called
Mearl Environmental Impact Targets (EITs)

3. The Oil and Gas Industry
• The oil and gas industry was the largest in the
world, valued between US$ 2 triilion and US$ 5
trillion.
• The United Nations’ Environment Programme’s
Intergovernmental Panel on Climate Change
reported in 2001 that during the 20th century,
the global average surface temperature
increased by 0,6oC and the global average sea
level rose between 0.1 and 0.2 meters.
• The substantial scientific evidence for global
warming had oil and gas companies exploring
new means to create green energy while
carefully managing public opinion around their
current fossil fuel operations.
• Oil and gas companies were increasingly
cognizant of the need for a public license to
operate and carefully managed their reputation
to preserve an enhance this social license.

4. Environmental Impacts of the Oil and
Gas Industry
• The environmental
impacts on the air of the
oil and gas industry split
into two types :
⁻ Risk of explosions and
fires
⁻ Emissions
Emissions had a much
greater impact and had
been the focus of public
and political attention
such as through the
Kyoto Protocol.

5. • Air Emissions included :
‐ Sulfur Dioxide (SO2)
‐ Nitrous Oxides (NOx)
‐ Hydrogen Sulphide
‐ Hydrocarbons (HCs)
‐ Benzene
‐ Carbon Monoxide (CO)
‐ Carbon Dioxide (CO2)
‐ Mercaptans
‐ Toxic organic
compounds
‐ Odors

6. • Emissions could have
damaging effects on the
environment, through acid
rain and global warming.
• The oil and gas industry
also affected water quality
through the use of cooling
and emissions.
• Water emissions included
hydrocarbons, mercaptans,
caustics, oil,phenols,
chromium and efflusnt
from gas scrubbers.

7. • Two motivations for firms to reduce
environmental impacts :
⁻ Managing risk
⁻ Creating opportunity through
innovation
• Risk management included complying
with current regulations and foreseeing
legislative changes.
• Risk management motivated most
companies to reduce impacts, many
Reducing firm had gained a competitive
advantage by finding innovative ways to
Impacts reduce their environmental footprint.

8. • The most common way of achieving this
was through reduced resource consumption
and thus lower costs.
• A challenge for multinationals was that
different juridictions measured discharges
in different ways, which caused difficulties
conforming to a baseline global
environmental performance standard.
Reducing
Impacts (cont)

9. MEARL OIL COMPANY CORPORATE
PROFILE
• Founded in 1947
• 2003 revenue of $210 billion
• Had more than 200 major subsidiaries, joint
ventures, and affiliates
• Employed more than 250.000
• Partnered with over 8.000 supplier companies
• Operations in 30 countries

10. Renewable Energy Division
• Created in 1994
• Explore the company’s various option for
hedging against the end of the fossil fuel era
• Started with a modest budget of $100 million
• In 2003, the division budget was $1.4 billion

11. • 2002 ROACE proves that all Mearl team members
are pushing together into a greener, more
profitable future

12. MEARL’S ENVIRONMENTAL POLICY
• Environmental values were
first developed in the late
1970s and were refined in
Mearl’s Environmental Policy
in 1993
• Ore tightly defined standards
needed to be imposed on
Mearl operations worldwide

13. ENVIRONMENTAL IMPACT TARGETS
• The Mearl Support System, Environmental,
was formed in 1995
• Built to provide direction, guidance, service
and support to Mearl operations through
implementation of the Mearl Environmental
Policy
• The Mearl EITs were established in 2003 to
supplement legal requirements, and any
other local or regional Mearl environmental
requirements.

14. ENVIRONMENTAL IMPACT TARGETS
• Mearl had an environmental management
system in place and was moving its facilities
to the ISO 14001 standard.
• In May 2003, the EITs were finalized and
communicated throughout Mearl

15. INTERNATIONAL ENVIRONMENT
GROUP
• Mearl International Environment
Group (IEG) was established in
January 2004
• The objective:
– To address common facility
environmental issues that affect
Mearl operations worldwide
– Develop common global
strategies and recommendations
consistent with Mearl’s
Environmental Policy
– The IEG consisted of
representatives of Mearl
operations from around the
globe

16. MEARL CANADA LIMITED
• Canada’s largest producer of
crude oil and natural gas
• Had 27 extracting facilities, as
well as five refineries and
many marketing offices
• Mearlcan employed
approximately 15.000 people
• Had the capacity to extract 60
million barrels of oil per year,
which 75% was shipped to the
United States

17. The Path Forward
• Mearlcan specific concern was
associated with one of its
manufacturing operations that
did not conform to the
effluent requirements in the
Water Effluent Management
• The effluent quality of the
process wastewater met all
sewer use by law limits
• The plant have to install its
own biological treatment plant
for sanitary waste

18. The Path Forward
• Capital and operating costs
associated with the biological
sanitary treatment plant
would make it difficult fot the
plant to reach its business
goals
• Milne strongly supported the
performance requirements in
the water effluent
management EIT and believed
its applicability should include
Mearlcan operations
• Milne have to prepare the
application of the uniform,
global environmental impact
targets in next meeting

19. Main Problem
• The Mearl Oil Company central had given its
Mearl EITs for Water Effluent Management to
Mearl’s global operations. . MearlCan said
that EITs for Water Effluent Managment was
only make sense to the operations in
developing countries.
• MearlCan had met the high environmental
standard in Canada. So EITs would affect in
increasing the capital cost or administrative
burden on its operation. It would only cause
competitive disadvantage to MearlCan if the
EITs was going to be an obligatory to global
Mearl operations .

20. Main Problem
• The central Mearl Oil Company wanted
to standardize the environmental policy
for global operation of Mearl company,
that was EITs, but MearlCan said that it
was only make sense for Mearl
operations in developing countries not
in countries with extensive regulatory
and legislative control for
environmental standard
• The difference of point of view from the
central Mearl company and MearlCan
in executing the Mearl EIT for Water
Effluent Management

21. LESSON LEARNED
• Companies should be proactive on processing
their waste to avoid the negative impact for the
environment
• Standard must be made for each companies, and
the standard must meet the national’s standard
• Companies must consider their environment cost
as their main cost to avoid the inability to pay for
waste processing cost