Environmental liabilities materialize through a number of mechanisms that vary across industries. In the oil and gas industry, for example, a long-term environmental liability may result from the release of regulated hazardous materials, such as gasoline or diesel fuel. Over time, an industrial operator may experience many such incidents, each contributing to regulatory scrutiny and long-term environmental liabilities or remediation obligations. Collectively, these liabilities can represent a significant financial burden on the operator and can bring about regulatory, technical and social complexities that increase risk and potentially reduce the operator’s asset value.

Generally, an operator chooses to manage its grouping of environmental liabilities as a portfolio. However, each environmental liability within that portfolio is different; therefore, every regulatory strategy and remediation approach must be tailored to address the unique issues or challenges associated with a given site. A portfolio typically becomes increasingly complex as it grows across asset types and regulatory jurisdictions and operators can become primarily focused on production, losing sight of what’s most important to achieve closure on issues. 

This is understandable since even one complex, contentious site can dominate the portfolio balance sheet. However, when you can develop a regulatory and technology-based strategy at the portfolio level, operators can unlock significant value within a mature remediation program. A company can reduce overall costs, minimize environmental risk and optimize resources with a dedicated capital spend and technical resources that are focused on regulatory strategies and innovative remediation approaches to solve the wide range of legacy site issues or recent incidents that exist.

When tackling large, complex initiatives like a remediation portfolio, a top-down program management mindset is essential. It provides the accountability, data-driven decision-making and strategic perspective necessary to achieve success. By integrating teams to coordinate project planning, design, construction, and operations and maintenance services at all stages, companies can remain focused on their core business while the portfolio management team is focused on the minimizing long-term environmental liabilities.

When executed appropriately, a program management mindset focuses resources where they are most needed within the remediation portfolio, eliminating the loss of time and funds caused by ineffective implementation. The discipline and tools offered by an experienced program management firm with an integrated remediation design and construction history can help teams deliver a solution that addresses every project component, including planning, design, construction, contracts, safety programming, agency coordination and public relations.

The perspective gained from addressing an entire remediation portfolio allows companies to minimize reactive measures that conform to regulatory interpretations and move beyond textbook solutions while reducing costs. A single source of accountability facilitates strategic approaches to environmental liability risk management and supports consistent liability reduction strategies. This management approach also organizes portfolios by sites with common characteristics or geographic location to streamline resources.

The uncertainty inherent to complex contaminated sites has been a consistent challenge in portfolio management. Ultimately, complex sites require tailored solutions that deliver predictable results and regulatory approval. This lowers cost and expedites delivery. Yet companies often spend money for years without achieving any remediation objectives or reducing their liability. Whether a result of an impulse solution based on a regulation or a remedy selection centered on a conceptual site model with too many uncertainties, companies can be overwhelmed by underperforming remedial actions with costs that compound over time. This can lead companies to focus exclusively on the technical aspects of individual sites, diverting attention away from the overall objectives of the portfolio.

Another unintended consequence of narrow technical solutions is that the remediation process can undermine effective negotiation of regulatory settlements with state or federal agencies. Developing remediation strategies exclusively through a technical lens can lead to solutions that are too expensive and not necessarily effective in the longer term. To avoid common mistakes that increase regulatory obligations, a remediation portfolio should be managed by a company that has deep experience working with various agencies and regulatory jurisdictions, but also with a legal mindset and capability that digs into the regulatory details and develops an effective negotiation strategy.

An environmental program management approach to remediation portfolios can bring all of this together without losing production flexibility, technical perspective and regulatory detail. The value of a remediation portfolio can truly be maximized when the appropriate strategies and tactics that balance cost savings, liability reduction and technical execution are effectively developed and implemented. This balance is necessary to satisfy regulatory requirements and allows companies to invest additional resources elsewhere.

 

Whether your environmentally impacted site is in the early stages of site assessment or ready for remediation, an integrated team can deliver safe, cost-efficient solutions that deliver predictable results.

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Joel Farrier, PE, ENV SP, is the regional manager of environmental services for Burns & McDonnell in the Western U.S. He has spent much of his more than 25-year career working in management roles and building teams from multiple engineering, scientific and technical disciplines to address complex infrastructure, development and construction issues. Joel’s work primarily has been focused on studies, design and design-build projects in Los Angeles and Orange counties in Southern California.