6.1.7Environmental Reporting

Offshore

The environmental and process safety offshore performance reporting scope is comprised of 14 offshore units that use the following reporting boundaries:

• Units in the Company’s fleet producing and/or storing hydrocarbons under lease and operate contracts during 2016
• Units in which the Company exercises full operational management control
• Units in which the Company has full ownership or participates in a Joint Venture (JV) partnership, where the Company controls 50% or more of the shares

The environmental and process safety performance of the Company is reported by region: Brazil, Angola, North America & Equatorial Guinea and Asia. Based on the criteria stated above, SBM Offshore reports on the environmental performance for the following 14 vessels:

• Brazil – FPSO Espirito Santo, FPSO Capixaba, FPSO Cidade de Paraty, FPSO Cidade de Anchieta, FPSO Cidade de Ilhabela, FPSO Cidade de Marica, FPSO Cidade de Saquarema
• Angola – FPSO Mondo, FPSO Saxi Batuque and N’Goma FPSO
• North America & Equatorial Guinea – FPSO Aseng, MOPU Deep Panuke, FPSO Turritella
• Asia - FSO Yetagun

The environmental offshore performance reporting methodology was chosen according to the performance indicators relative to GRI and IOGP guidelines. This includes:

• Greenhouse Gases, referred to as GHG which are N₂O (Nitrous Oxide), CH₄ (Methane) and CO₂ (Carbon Dioxide)
• GHG emissions per hydrocarbon production from flaring and energy generation
• Non Greenhouse Gases which are CO (Carbon Monoxide), NO_x (Nitrogen Oxides), SO₂ (Sulphur Dioxide) and VOCs (Volatile Organic Compounds)
• Gas flared per hydrocarbon production, including gas flared on SBM Offshore account
• Energy consumption per hydrocarbon production
• Oil in Produced Water per hydrocarbon production

SBM Offshore reports some of its indicators as a weighted average, calculated pro rata over the volume of hydrocarbon production per region. This is in line with the IOGP Environmental Performance Indicators.

Onshore

SBM Offshore reports on its onshore scope 1 and 2 emissions¹ by operational control and discloses on the following locations; Netherlands, Monaco, Malaysia, United States of America, Brazil, Switerland and Canada. Efforts are being made to extend the reporting scope to include all shore bases. SBM Offshore does not have absolute targets as the Company is focused on the maturity of its data collection.

For the onshore energy usage, the Company uses the World Resources Institute Greenhouse Gas Protocol (GHG Protocol) method to calculate CO₂ equivalents. CO₂ equivalency is a quantity that describes, for a given mixture and amount of greenhouse gas, the amount of CO₂ that would have the same global warming potential (GWP), when measured over a specified timescale (generally, 100 years).

Construction Yards environmental data, specifically emissions, energy and water usage have not been included in scope. SBM Offshore is aware that the construction yards may have a large impact on the environment and have identified this as part of its licence to grow under the initiative ‘Manage Environmental Impact’.

ATMOSPHERIC EMISSIONS

The calculation of air emissions from offshore operations units uses the method as described in the EEMS-Atmospheric Emissions Calculations (Issue 1.810a) recommended by Oil & Gas UK (OGUKA). SBM Offshore uses the GHG Global Warming Potentials from the Second Assessment Report issues by Intergovernmental Panel on Climate Change (IPCC).

Emissions reported in the Company’s emissions records include:

• GHG emissions for the production of energy. Records of GHG emissions from steam boilers, gas turbines and diesel engines used by the operating units.
• GHG emissions from gas flared. Records of the volume of gas flared below the limit defined by the Client, above the limit attributable to SBM Offshore account or at the request of the client to optimize production.

Offshore Energy Consumption

The energy used to produce oil and gas covers a range of activities, including:

• Driving pumps producing the hydrocarbons or re-injecting produced water
• Heating produced oil for separation
• Producing steam
• Powering compressors to re-inject produced gas
• Driving turbines to generate electricity needed for operational activities.

The main source of energy consumption of offshore units is Fuel Gas and Marine Gas Oil.

Oil in Produced Water Discharges

Produced water is a high volume liquid discharge generated during the production of oil and gas. After extraction, produced water is separated and treated (de-oiled) before discharge to surface water. The quality of produced water is most widely expressed in terms of its oil content. Limits are imposed on the concentration of oil in the effluent discharge stream (generally expressed in the range of 15-30 ppm) or discharge is limited where re-injection is permitted back into the reservoir. The overall efficiency of the oil in water treatment and as applicable reinjection can be expressed as tonnes of oil discharged per million tonnes of hydrocarbon produced.

Incidental environmental releases to air, water or land from the offshore operations units are reported using the data recorded in the Single Reporting System (SRS) database. SBM Offshore has embedded a methodology for calculating the estimated discharge and subsequent classification within the SRS tool.

Waste

In line with the GRI requirements, SBM Offshore reports on hazardous and non-hazardous waste outputs. The reporting methodology is detailed in each Unit’s Waste Management procedure which is part of Environmental Management System Manual. Collected information is based on manifests issued by the installations in compliance with Client requirements.

ReVISED DATA

The Environmental data reported in 2015 have been revised for the two following reasons:

• Improved methodology : one of the recommendations taken from the CO₂ Challenge was to update the oil and gas densities by using the most up-to date information provided by either independent gas analysis reports or offshore daily reports. This appears to be a more realistic approach as the oil and gas properties will change overtime and follow the well evolution. This change has been applied in environmental emissions reporting for 2016 but also for 2015 to be able to compare this year’s data with 2015. The actual energy and emissions data in 2015 were approximately 9% lower than the figures reported in the Annual Report 2015.
• Increased internal controls : data consolidation and calculations have been automated resulting in the identification of inconsistencies in some of the 2015 reported environmental data. This inconsistency was already present in the 2014 reported data hence the change does not impact the view on performance. Using the previous methodology, the following figures should have been reported in the Annual Report 2015:

• ¹ These figures do not take the new oil and gas densities into account (hence differs from the ones reported in section 6.2.2 Environment.