Gas or Grouse Study Case

Business Ethic

Presented by:
Agnes Sindhunita Kusumastuti
Deky Hapsoro Ajisantoso
Maryono
Netty Siregar
Ronny Agung Hendrawan

Outline

Stakeholder in Gas or Grouse Case

Pinedale, Wyoming area and resources
Wildlife in Pinedale and its habitat
Questar and other gas company
Bureau Land Management (BLM)
BLM Restricton at Pinedale
Advantage and Disadvantage of Drilling in Pinedale
Problem : what should BLM decide?
Innovation by Questar
New Drilling ini Winter
SEIS process
BLM Decision over SEIS and its 5 alternatives
Alternative No. 4 and explanations
Implication over the decision

Question and Answer

Conclution

Pinedale, Wyoming
Pinedale is a town in and the county seat of
Sublette County, Wyoming, United States. The
population was 2,030 at the 2010 census. Already
surrounded by hundreds of drilled wells of natural
gas.

Pinedale Mesa is 40 mile long, 300 square mile

plateau, famous gateway to the haunting,
fishing, hiking treasures of the Brigerteton
wilderness
Estimated contained of 25 trillion cubit of gas
worth billions of dollar
Pinedale Mesa in Southern Wyoming has rich
natural gas deposits trapped in sandstone. In
the 1990s industry developed techniques to
get at such deposits by fracturing the
sandstone to free the gas
Natural gas is cleaner source energy than fossil
fuels, (its simple molucular structure (CH4) burn
much cleany)

Acreage of Mesa
Privately
Owned
15%
Wyoming
5%

Federal
Gov.
80%

Wildlife & Its Habitat in Pinedale

Sage Grouse (Belibis)

Mule Deer

Sage Brush (semak-semak)

Mule Deer

Mule Deer

Wildlife & Its Habitat in Pinedale

Mule Deer

Antelope
Pronghorn

Sage brush

The largest grouse in US

Deer indigenous to western

North America

Indigeneous to interior
western and central North
America

Several
woody
and
herbaceous species of plants

Country:
Alberta,
(Canada)

Breeding cycle is important

The second
mammal

Native
to
the
American west

In 2013, GIC (Canadian

Governor
in
Council)
annexed an emergency order
for the protection of greater
sage grouse

Rut or mating season

begins in the fall as does go
into estrus for a period of a
few days and males become
more aggressive, competing
for mates

Pronghorns form mixed-sex

herds in the winter

Permanent resident, forage

on the ground, nest on the
ground under sagebrush/
grass patches

Also eat fringed sagebrush

Grouse

US,
Southern
Saskatchewan

fastest

land

North

Major food for sage grouse

Questar Corp.
& other Gas Company drilling in Pinedale

Questar Corporation is a natural gas-focused energy

company based in Salt Lake City, worth $4 billion and
operated mostly at Utah and Wyoming
Questar is the main developer of gas wells in the city
Y2008 ask BLM to delete few restriction and limit to the
company to drill 4300 more wells
First drill in Pinedale in year 1998, SEIS((Supremental
Environmental Impact Statement) is approved at 2000.
Y2004 Questar got 76 wells of 14,800 acres leased
Questar wells :
Average 13,000 feet deep, cost $2.8-$3.6 million each well
Required Pad clearing and leveling 2-4 acre for 1-2 wells
Theres access road had to be run to the pad and network of
pipes to deliver the liquid waste

Bureau of Land Management

(BLM)
An institution which responsible for deciding what was done with the
acreage on the mesa and deciding whether Questar and other
company allowed to drill and how much atop the mesa

BLM publish the SEIS (Supremental Environmental Impact Statement)

at 2000 and approved drilling up to 900 wells in federally owned on
mesa

BLM imposed drilling rules that were designed to proted wildlife and
its habitat especially Sage Grouse
Require that questar roads, wells, and other structure had to be
located a quarter mile or more from grouse breeding ground (at
least 2 miles form nesting areas during breeding season)
No driling on winter (Nov 15 May 1) except for liquid waste
delivery and completed wells allowed to pump the gas

Drilling Process by Questar

Advantages
Natural gas : Supplying
clean and environmental
friendly energy
Reduce USAs energy
reliance to foreign country
Provide jobs for local
Economic growth for local
region
Increased government
revenue from tax and royalty
(60% of state budget)

Disadvantages
Drilling operation during
winter interfere wildlife
migration route
Drilling sendiment entered
the river around mesa
Declining wildlife number
and winter survival rate
(destruction of 50% of sage
brush as their habitats)

Problem faced by BLM

BLM

Limitation towards
gas mining to
protect pinedale

Pinedale
Provide
natural Gas

SEIS Result &

alternative

Questar

May Questar drill at winter?

What is the limitation should be?
Serious
negative effect
on wildlife

Provide new
technology

Innovation brought by Questar

Traditional Drilling

1-2 wells/pad
Took 1474 acre for 156 pad
16 different roads and pipes

Directional Drilling (New)

16 wells/pad (= outstretched
tentacles on octopus)
Take 533 acre for 61 pad
1 road and pipe
Plus build a second pipe
system that would pump
liquid waste away prevent
the use of noisy truck
Cost USD 500.000 /wels ( 400
wells = usd 185 million)
Advantages:

minimize the the surface land

occupied by the wells
Reduce
roadways
&
distribution pipes

Supplemental Environmental Impact

Statement (SEIS) and its process
Timeline between Questar & BLM:
Mid 1990
1998
Mid 2000
2002 2003

: Technique fracturing sandstone & freeing gas

: Questar first test drilling on Pinedale Mesa
: Fullscale drilling await BLM statement
: BLM let Questar drills wells at single pad to study the effect on winter
deer herd
2003 2004
: idem
Early 2004
: Questar drilled 76 wells on 14.800 acres + additional 400 more wells
2005
: Shell & Ultra also drilling
Winter 05 & spring 06 : BLM meeting invite public comment
Dec 2006
: BLM finish first draft SEIS & ask for public comment
Dec 2007
: second preliminary draft SEIS was issued for public comment
Early 2008
: additional public meeting by BLM
Sept 12, 2008
: BLM issued decision on request for drilling company
2009
: Questar build, drilling through winter 2009
Oct 28,2010
: Technology Western Ecosystem announce it result

BLM Decision and its 5 alternatives

Decision Sept 12th, 2008 :
Use the new technology brought by Questar for all gas company
No

Alternatives

Continue to prohibit winter drilling and allow no additional wells

Allow winter drilling and allow 4,399 more wells on a maximum 600 drilling pads all located
within large core area in the central part of the mesa

Allow winter drilling and 4,399 wells on 600 pads plus, confine drilling to specific parts of the
core area and prohibit drilling or disturbance of winter ranges of mule deer or pronghorn
antelope or mating and nesting areas of the sage grouse

Allow winter drilling and 4,399 more wells on a maximum of 600 pads, confine drilling to
parts of the core area, prohibit drilling or disturbance of winter ranges of mule deer or
pronghorn antelope or mating and nesting areas of the sage grouse, plus prohibit drilling on
the thousands of acres (Flank area) surrounding core area where drilling was allowed
require annual review of wildlife impacts, and require the company to establish fund to
monitor wildlife and to pay the costs of mitigating any impacts on wildlife that monitoring
detected

Allow drilling only within the core area and prohibit drilling in the area around the periphery
but permit fewer than 4399 wells and less than 600 pads and limit the total acreage
devoted to wells

Alternatives No. 4 and the

implication towards
Best balance between protecting the natural
environment and allowing access to the natural gas
For attention :
If the number of mule deer or antelope decline by 15% in
any one year or if number of sage grouse decline by 30% in
any two year period the BLM was required and had the
right to take mitigation response
2009
Winter
access

New Tech

Limitation
from BLM

Annual
Fund
Prohibit
flank area

Mule Deer decline 60%

since 2001 or 28% since
2005
Decline survival rate of
female mule deer from
85% to 70%

Analysis and Conclution

There was dilemma problem between Energy Source for US consumption and
revenue versus Environment responsibility

Environment issues especially concern with winter restriction, winter range

route, and sagebrush distribution map, Questar have to develop investment
for new technology and strategy which it will cause longer payback period :

Concerning with environment impact, morally Questar must obey BLM

restrictions for their drilling operations in Pinedale Mesa. Maintain the
faunas natural habitat will protect the exist population, prevent from
extinction, facilitate them to breed.
On the other hand, to fulfill energy necessity of US, Questar should not
cease drilling operations. That ecological value can be balanced
against economic interests if Questar have awareness for environment
restriction and obey it rules (use the new drilling technology & respect
alternative 4 of BLM statement)

Question :
1.
2.

3.

4.
5.
6.

What are the systemic, corporate, and individual issues raised in this
case?
How should wildlife species like grouse or deer be valued, and how
should that value be balanced against the economic interests of
the of company like Questar ?
In light of the U.S. economys dependence on oil, and in light of the
environmental impact of Questar drilling operation, is Questar
morally obligated to cease its drilling operation on the Pinedale
Mesa? Explain !
What, if anything, should Questar be doing differently?
From an ethical point of view, was alternative 4 the best option
among those from which the BLM ? Explain !
Should the loss of species produced by the drilling operations of
Questar be considered a problem of pollution or a problem of
conservation ? Can the loss of species by evaluated as an external
cost ?

1. What are the systemic, corporate and

individual issues raised in this case?
Systemic Issue

Operational Issue

Financial Issue

New technology Issue

Jim Sims

Dru Bower

2. How should wildlife species like grouse or deer be

valued, and how should that value be balanced against
the economic interest of a society or of a company like
Questar ? What principles or rules would you propose we
use to balance the value of wildlife species against
economic interest?

We should use the ecological ethic to balance the value of

wildlife species against economic interest.

Non-human parts of the environment deserve to be preserved for their

own sake, regardless of whether this benefits human beings

At least some non humans are intrinsically valuable, we have moral duty
to refrain from harming them without a sufficiently weighty reason.

Ecological Ethics (Deep Ecology)

Supporters of Deep Ecology offer 8 tier platform to elucidate their claims:
1. The well-being and flourishing of human and nonhuman life on earth have value in themselves.
these values are independent of the usefulness of the non human world for human purposes
2. Richness and diversity of life forms contribute to the realization of these values and are also values
in themselves
3. Human have no right to reduce this richness and diversity except to satisfy vital needs
4. The flourishing of human life and culture is compatible with a substantial decrease of the human
population. The flourishing of nonhuman life requires such a decrease
5. Present human interference with the nonhuman world is excessive, and the situation is rapidly
worsening
6. Policies must therefore be changed. The changes in policies affect basic economic,
technological, ideological structures. The resulting state of affairs will be deeply different from the
present
7. The ideological change is mainly that of appreciating life quality, rather than adhering to an
increasingly higher standard of living
8. Those who subscribe to the foregoing points have an obligation directly or indirectly to
participate in the attempt to implement the necessary changes

3. In light of the fact that natural gas reduces the U.S. economys
undesirable dependence on oil and the fact that that natural gas
produces less greenhouse gases that coal, oil, and other fuels, should
Questar continue its drilling operations? Does the environmental impact
of Questar drilling operation imply that Questar morally obligated to stop
its drilling operation on the Pinedale Mesa? Explain !

Questar may continue, highlight:

1. Advantage vs. Disadvantages of drilling
2. New technology brought by questar
3. Willingness of questar obey BLM restriction
4. Fact that Questar doesnt violate simulation of alternative 4
However, morally questar should balance its drilling process with
green technology, limitation its exploration, taking care /
response/ mitigation the impact on wildlife

4. What, if anything, should Questar be doing

differently?
Yes, Questar and other companies should be doing differently, as
follows:
a) Innovation technology of drilling that reduce pollution (sound,
waste, smoke,etc) and faster the process Green environment
b) Conservation for the wildlife in Pinedale Mesa
c) Internalization of external cost

5. From an ethical point of view, was alternative (4) the best option
among
those
from
which
the
BLM
chose?
Is another alternative better from an ethical point of view? explain

Yes, the alternative 4 is the best option

Questar is confine drilling to parts of the core area, prohibit to
drilling or disturbance of winter range of mule deer or
pronghorn antelope or mating and nesting area of sage
grouse
Prohibit drilling on the Flank area surrounding the core area
where drilling was allowed
Require the companies to establish fund for monitor wildlife
and pay for the cost of mitigating any impact on wildlife
Drilling

Environment

Pollution
Management

Optimum
Conservation
Balance

6. Should the loss of species produced by the drilling operations of

Questar be considered a problem of pollution or a problem of
conservation ? Can the loss of species by evaluated as an external
cost ?

Yes.
The loss of species produced by drilling operations of Questar
be considered as :
1. Pollution problem

2.

Water pollution (caused by drilling sediments)

Land pollution (by occupying and damaging wildlife habitat,
operational vehicle/ truck traffic)
Air/Noise pollution (caused by the operation of drilling rig)

Conservation problem

BLMs effectivity and the weakness of monitoring

Yes.
Ref Utilitarian, the loss of species can evaluated as an external
cost, so it must be internalized to company cost. Private (Intenal
Cost) +External cost = Social cost.