IFRS Foundation

Oil & Gas – Services

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Current language: English
Oil and gas services entities drill under contract, manufacture equipment, or provide support services. Drilling and drilling-support entities drill for oil and natural gas on-shore and off-shore on a contract basis for oil and natural gas exploration and production (E&P) entities. For on-shore exploration and production, entities in the oilfield services segment manufacture equipment used in the extraction, storage and transportation of oil and natural gas. For off-shore, entities in this segment may manufacture jack-up rigs, semisubmersible rigs, drill ships and a range of other exploration equipment. They also provide support services such as seismic surveying, equipment rental, well cementing and well monitoring. These services commonly are provided on a contractual basis, and the customer purchases or leases the materials and equipment from the service provider. Service entities also may provide personnel or subject matter expertise as part of their scope of service. The contractual relationship between oil and gas services entities and their customers plays a significant role in determining the material impacts of their sustainability performance. Besides the rates charged, entities compete based on their operational and safety performance, technology and process offerings, project management performance, and reputation.

Relevant Issues (8 of 26)

Why are some issues greyed out? The SASB Standards vary by industry based on the different sustainability-related risks and opportunities within an industry. The issues in grey were not identified during the standard-setting process as the most likely to be useful to investors, so they are not included in the Standard. Over time, as the ISSB continues to receive market feedback, some issues may be added or removed from the Standard. Each company determines which sustainability-related risks and opportunities are relevant to its business. The Standard is designed for the typical company in an industry, but individual companies may choose to report on different sustainability-related risks and opportunities based on their unique business model.

Disclosure Topics

What is the relationship between General Issue Category and Disclosure Topics? The General Issue Category is an industry-agnostic version of the Disclosure Topics that appear in each SASB Standard. Disclosure topics represent the industry-specific impacts of General Issue Categories. The industry-specific Disclosure Topics ensure each SASB Standard is tailored to the industry, while the General Issue Categories enable comparability across industries. For example, Health & Nutrition is a disclosure topic in the Non-Alcoholic Beverages industry, representing an industry-specific measure of the general issue of Customer Welfare. The issue of Customer Welfare, however, manifests as the Counterfeit Drugs disclosure topic in the Biotechnology & Pharmaceuticals industry.
General Issue Category
(Industry agnostic)

Disclosure Topics (Industry specific) for: Oil & Gas – Services

GHG Emissions
  • Emissions Reduction Services & Fuels Management

    Although direct greenhouse gas (GHG) emissions and associated regulatory risks are relatively low for oil and gas services providers relative to other industries, emissions from the operations of their customers—the oil and gas exploration and production (E&P) entities—can be significant. Emissions include GHGs that can contribute to climate change as well as other air pollutants that can have significant localised human health and environmental impacts. Increasing regulation and high costs of fuels associated with these emissions present substantial risk to E&P entities. Entities are seeking ways to lower their emissions, including converting pumps and engines to run on natural gas and electricity instead of diesel fuel. Oil and gas services entities compete for contracts partly based on providing innovative, efficient technologies that can help E&P entities reduce operating costs and improve process efficiencies. Services entities can gain a competitive advantage, grow revenue and secure market share by providing customers with services and equipment to reduce GHG, fugitive and flared emissions and fuel consumption.
Water & Wastewater Management
  • Water Management Services

    Oil and gas development often requires large quantities of water, exposing producers to the risks of water scarcity, water use regulations and related cost increases, particularly in water-stressed regions. Producers also must manage wastewater disposal risks and costs. As such, service entities that develop superior technologies and processes, such as closed-loop water recycling systems to reduce customers’ water consumption and disposal costs, may gain market share and increase revenue, because drilling and wastewater management can be a significant competitive factor for their customers.
Waste & Hazardous Materials Management
  • Chemicals Management

    Oil and Gas - Services entities produce oilfield chemicals as well as drilling and hydraulic fracturing fluids based on demand from Exploration & Production (E&P) entities. While the risk of leaks from a properly drilled and completed well is low, contamination of local water resources can result from contact with hydraulic fracturing fluids and produced water, and may arise from issues related to well integrity. Concerns about certain chemicals used in hydraulic fracturing fluids have led to fracturing bans, regulation, and legislative proposals to mandate disclosure of chemicals used in some regions, both in the U.S. and abroad. The exact chemical composition of hydraulic fracturing fluids is often proprietary information, and entities compete to create the most effective formulas. In the U.S., some entities are voluntarily disclosing information about the hydraulic fracturing chemicals they use through an industry registry, FracFocus. Due to public and regulatory attention to the potential hazards of drilling fluids, entities that are able to manage issues related to well development and integrity, the production and use of produce effective non-hazardous fracking fluids, and the reduction of the volumes of drilling fluids used per well, may increase their market share and revenues and lower the risk that regulations affect demand for their products.
Ecological Impacts
  • Ecological Impact Management

    Oil and gas exploration and development activities, and associated services and support activities, can have significant impacts on biodiversity and ecosystems, particularly when entities operate in ecologically sensitive areas or are characterised by highly resource-intensive operations. These can occur through disposal of drilling and associated wastes, well decommissioning, land use, and fuel spills. Producers face regulatory risks from legislation and permitting to protect ecosystems in the U.S. and abroad, and from regulations specifically related to well decommissioning or underground waste injection. Oil and gas services entities that are able to offer cost-effective and efficient production and decommissioning technologies that mitigate impacts on biodiversity by reducing land use, drilling wastes, and spills can lower associated risks for their customers and gain a competitive advantage.
Employee Health & Safety
  • Workforce Health & Safety

    Workers in the  industry face significant health and safety risks due to the harsh working environments and hazards of handling oil and gas. In addition to acute impacts resulting from accidents, workers may develop chronic health conditions, including those caused by silica or dust inhalation, as well as mental health problems. A significant proportion of the workforce at oil and gas drilling sites consists of temporary workers and employees of oil and gas services entities. Health impacts on, and the safety performance of, such workers can affect Services entities directly by influencing worker productivity and costs. Services entities compete on the basis of their reputation and ability to perform activities on a consistently safe basis. Customers evaluate instances of accidents, spills, injuries, and fatalities when considering awarding contracts to services entities.
Business Ethics
  • Business Ethics & Payments Transparency

    With operations across the globe, oil and gas services entities interact with many government and local officials, either directly or through agents, in order to secure contracts with state-owned oil entities and multinational corporations. Bribery and corruption are common in some regions, and in others, to the transparency of payments to governments may be a significant issue. The emergence of several anti-corruption, anti-bribery, and payments-transparency laws and initiatives create regulatory mechanisms to reduce certain risks. Violations of these could lead to significant one-time costs or higher ongoing compliance costs, whereas successful compliance with such regulations could provide risk mitigation opportunities and avoid adverse outcomes. Oil and gas services entities are under pressure to ensure that their governance structures and practices can address corruption, willful or unintentional participation in illegal or unethical payments and gifts to government officials or private persons, or the risk of otherwise unfairly influencing these individuals, especially in areas of heightened risk.
Management of the Legal & Regulatory Environment
  • Management of the Legal & Regulatory Environment

    The  industry is subject to numerous sustainability-related regulations and an often rapidly changing regulatory environment. Changes to the legal and regulatory environment may result in material impacts on shareholder value. Entities in the industry regularly participate in the regulatory and legislative process on a wide variety of environmental and societal issues, and may do so directly or through representation by an industry association. Such engagement can result from entities seeking to ensure industry views are represented in the development of regulations impacting the industry as well as to represent shareholder interests. At the same time, such engagement to influence environmental laws and regulations may adversely affect entities’ reputations with stakeholders and ultimately impact the entity’s social license to operate. Entities that are able to balance these viewpoints may be better positioned to respond to medium- to long-term regulatory developments.
Critical Incident Risk Management
  • Critical Incident Risk Management

    Services entities are subject to significant risks associated with low-probability, high-consequence events associated with oil and gas exploration, development, and production activities. Such events may result in multiple fatalities, significant property damage, or a significant adverse impact to the environment. Services entities may be affected indirectly through the impacts that safety incidents or emergencies can have on their Exploration & Production (E&P) customers. Additionally, significant incidents can have wide-ranging negative social and environmental consequences, for which both E&P and service entities may be held liable. Services entities compete on the basis of their reputation and ability to perform activities on a consistently safe basis. In addition to implementing effective process safety management practices, entities frequently prioritise developing a strong culture of safety in order to reduce the probability that accidents and other health and safety incidents will occur. If accidents and other emergencies do occur, entities with a strong safety culture are often able to more effectively detect and respond to such incidents. A culture that engages and empowers employees and contractors to work with management and E&P entities in order to safeguard their own health, safety, and well-being and to prevent accidents is likely to help services entities reduce risks to financial value.

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Current Industry: Oil & Gas – Services

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