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Seminar Focuses on Legal Issues, ESG

LEFT to RIGHT: Dan Connelly, Baker Hughes; Carlos Tamez, Fugro; Grace Han, Baker Hughes; and Carlo Cotrone, Baker Hughes

LEFT to RIGHT: Dan Connelly, Baker Hughes; Carlos Tamez, Fugro; Grace Han, Baker Hughes; and Carlo Cotrone, Baker Hughes

The PESA Legal Committee held a seminar on September 19 that included panel discussions on legal issues facing the oilfield service and equipment sector and why environmental, social and governance (ESG) reporting is vital to companies in the oil and gas industry. PESA was able to offer continuing legal education (CLE) credits to attendees.

The first panel featured Grace Han, Global Counsel for Labor and Employment, Baker Hughes; Carlo Cotrone, Senior IP Counsel, Baker Hughes; and Carlos Tamez, Head of Legal, Americas, Fugro.

The panel began with integration issues, focusing on Baker Hughes experience with legal challenges during the merger with GE, including the utilization of legacy contractors. Mergers can create companies with very different business models within their structures, very often supported by legal teams. The panel encouraged attendees to rely on their contract terms and conditions in order to find ways to continue these relationships with legacy contractors.

The discussion then turned to immigration and visa issues impacting global oil and gas companies. The varying interpretations of regulations at different borders has created challenges for globe-hopping executives. This unpredictability was not seen just a few years ago, but global changes have forced many legal teams to become visa experts.

DATA ISSUES
There is also increasing pressure on companies to release wage data that many believe will be used to develop specific regulations. Drug use and the legalization of marijuana in some states and countries has greatly affected the ability of companies to drug test employees. In some instances, companies cannot test for marijuana.

Moving employee data has also become a challenge as countries change requirements regarding employee communication. In Canada, a company must notify employees if any personal information is moved across country borders, including payroll information. Some nations won’t allow employee information to be moved out of their respective country, requiring global companies to establish human resource offices in different locations.
Companies are also struggling with the growth in the importance of data analytics, including data sharing across a customer base.

A weakened patent system and the Trump tariffs are also significant issues for OFS legal teams, as well as modifications in tax laws. What might appear to be a small change in a tax law can greatly affect a company’s margins.
The panel recommended companies have a robust program to manage risk, including processes and procedures to manage incidents. Managers based in the U.S. must know and understand regulations of countries where operations are managed.

According to the panel, the biggest legal risks facing the sector are the safety of employees, FCBA (Fair Credit Billing Act) issues, social unrest and the challenge of evacuating employees when in danger.

ENVIRONMENTAL, SOCIAL & GOVERNANCE PANEL
The second panel focused on ESG and included Samantha Blons, Legal Counsel, Corporate, Schlumberger and PESA ESG Committee Co-Chair Valerie Banner, Senior VP, General Counsel & Executive Secretary, Exterran.

LEFT to RIGHT: Tim Tarpley, PESA; Valerie Banner, Exterran; and Samantha Blons, Schlumberger

LEFT to RIGHT: Tim Tarpley, PESA; Valerie Banner, Exterran; and Samantha Blons, Schlumberger

When addressing ESG, the panel recommended beginning with an internal assessment of current operations. They suggested companies analyze what efforts are currently underway to address ESG concerns. In many instances, these issues are already being addressed through existing programs. For instance, if a company already has an HSE program, sustainability is already being addressed.

The panel also stated that in order for investors and others to know and understand a company’s ESG efforts, information should be easily accessible on the company website. The panel encouraged attendees to look at peer groups online to get ideas on what data and metrics to post. Companies should also look at rating agencies to help establish a framework for collection and posting of information.

The panel agreed that gaining buy-in from investor relations is key, as access to capital is difficult for companies not actively addressing ESG. Establishing these guidelines will help the entire supply chain understand that ESG must be addressed and provide a framework for establishing programs.

As for a checklist of what to include, the panel suggested posting the company’s list of core values along with a code of conduct for not only employees, but contractors. They cautioned that statements about contractors should not guarantee certain actions will be taken by these companies. Certain conduct measures should be included in contracts and then alluded to in the website’s ESG information. The panel recommended noting alignment, goals and vision; however, warned against stating specific metrics as there is no guarantee that these will be met.

The panelists recommended a review ofc current metrics sought after by rating agencies and focus on those areas when developing the ESG portion of a company’s website. It was also suggested that companies monitor data published by rating agencies on their specific companies as sometimes, the information is incorrect and must be amended.

Discussion also centered around the question of how a company decides which rating agencies to monitor. The panelists discussed several options including ISS, CDP, GRI and SustainAbility, but each recommended that a company choose one agency, instead of trying to do all at once. Since several require a fee, it can get costly very quickly if trying to monitor each one.

The panelists encouraged attendees to tout the great work servicing and equipment companies are doing in the oil and gas industry. In many cases, the servicing companies are managing efforts at the well site that support operator metrics of reducing the carbon footprint of the drilling process. The panel agreed that the sector should do a better job sharing this important story.

PESA will host an ESG-specific seminar on October 31 to explore many of these issues in additional detail.

 

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