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Oiling the wheels of sustainability

In conversation with Fatima de la Cerna of Climate Control Middle East, Dr Waddah Ghanem, Executive Director for EHSSQ & Corporate Affairs at Emirates National Oil Company (ENOC), discusses the company’s adoption of an Efficiency & Resource Management policy and the initiatives it has undertaken to become a sustainable organisation. He also comments on the UAE’s introduction of fuel subsidy reforms, as well as its commitment to diversifying its energy mix.

| | Apr 21, 2016 | 1:24 pm
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Dr Eng Waddah Ghanem, Executive Director for EHSSQ & Corporate Affairs at Emirates National Oil Company (ENOC)

Dr Waddah Ghanem, Executive Director for EHSSQ & Corporate Affairs at Emirates National Oil Company (ENOC)

In December, ENOC organised a seminar focusing on energy efficiency and resource management, during which, it was mentioned that ENOC has adopted an Efficiency and Resource Management (E&RM) policy. Could you share details about the policy and what its adoption means for ENOC’s operations and ventures? How is the policy helping ENOC align itself with national goals to reduce energy demand?

At ENOC, we’ve been thinking about efficiency for quite some time. In 2008, we started conceptualising the [E&RM] policy and system manual. A year later, in 2009, the Dubai Supreme Council of Energy was established, but by then, we’d already drafted the manual, which we circulated for consultation within the ENOC Group on June 24. In 2010, the document was approved and issued for implementation. Around the same time, the Dubai Supreme Council of Energy started looking to develop the Dubai Integrated Energy Strategy 2030 (DIES 2030) and introduce the idea of quick wins. We even received a letter from His Highness Sheikh Ahmed bin Saeed Al Maktoum, the Chairman of the Council, informing us that we needed to start implementing quick wins, like changing light bulbs and water heaters, things like that.

DIES 2030 was actually launched in 2011, the year we expanded our audit scope and the year ISO 50001 standard was released. We, including our managers, underwent training on ISO 50001 around the beginning of 2012, to make sure that we were benchmarked against international standards. That same year, we also set up the Steering and Technical Committees, based on the idea that the Steering Committee, made up of managers from different parts of the organisation, would be responsible for upgrading and endorsing the policy and standard. The Technical Committee, meanwhile, would work on the implementation and reporting. The focus of the two committees – then and now – is, of course, energy and resource management, because we believe it’s important and very much aligned with the overall goals of Dubai and the UAE.

Earth buildings_SSBy 2013, we’d already audited 16 or 17 of our business units, and so we started revising the benchmark. The difficult thing about auditing a company as diverse as ENOC is comparing the performance of different business units. For example, how can you compare the performance of the retail business to that of a refinery? There’s a big difference; refinery has a much bigger scope for energy savings. But we were trying to measure the performance of the company according to a management system score, so we devised a system that would allow us to compare the performance of every business that we have. Even the performance of the three buildings we have in the ENOC headquarters is also measured. We’re looking for them to become LEED Gold certified in the next six to 12 months, which is not easy to achieve, because we’re talking about relatively old buildings – around 22 years old.

Is that part of the retrofitting initiative of Dubai Municipality?

To be honest, we didn’t do it because they asked us to do it. We actually installed BMS and put in E&RM drivers in these buildings even before the Green Building Regulations and Specifications came out. So we’ve been on that journey for a while, but we are aligning ourselves with what the Dubai government wants us to do, because it makes business sense. I mean, I don’t want to say that we’re doing what we’re doing for purely noble reasons. We’re not. It all makes business sense. By saving on your energy bill, you’re saving money. We’re a business, after all, whose focus is on our triple bottom line, one being economic.

Speaking of ENOC’s vision talks about marrying profitability with social responsibility, what initiatives has it undertaken to bring its vision to reality?

The whole concept of sustainability in business means that you need to sustain your ability to continue to be profitable and operational, so I don’t think that there’s any conflict. I think they’re very much complementary. You see, in the past, it was all regulation-based, and a lot of the regulations then were prescriptive in nature, with the focus being on compliance for the sake of compliance. More progressive organisations definitely don’t look at it that way.

The energy sector, the oil & gas in particular, is nearly self-regulating, because it’s an industry of competencies. We run complex operations, so the regulator doesn’t really interfere too much, except when it comes to high-level strategies, so as an industry, we’re trained to look at ambitious goals and objectives and align ourselves with them. This is important because the energy sector serves the energy needs of Dubai, so it has to be sustainable. And sustainability means different things and can be achieved in different ways. It can come with having systems that aren’t obsolete, and having competent and sufficiently trained human resources. Sustainability, therefore, is a holistic goal.

The vendors come and do that for free, because they realise that if the trials succeed, they have a shot at landing 20 customers in one go

Last year, we released the first edition of our energy and efficiency report. In it is an interview with our CFO, where he basically speaks about how resource management is part and parcel of being a profitable organisation because of the savings it offers. In the same report, there’s also a section that talks about how much ENOC saved by making its buildings more efficient (see “Quotable efficiency”). The savings mentioned in the report are for 2014, but we have carried them on, and even came out with an estimate for 2015. At the moment, we’re still trying to decide if we want to release another E&RM report or if we’ll just include it in a sustainability report, since we recently created a Sustainability Office for ENOC.

How young is the Sustainability Office?

It’s only a few months old. The work on sustainability has, of course, been going on for many years, but we’ve realised that there’s a need to have an office with that particular function, and it actually reports to my segment.

We’ve had all these sustainability projects undertaken by different business units, but they didn’t come together under one umbrella. So, that’s the role of the Sustainability Office – to look at all the different projects and draw similarities among them; to identify areas where efficiencies can be raised; and, ultimately, to ensure that all are aligned with the bigger goals and standards being set by the Dubai Supreme Council of Energy and other organisations.

You spoke about ENOC’s plan of earning LEED Gold certification for its buildings. Considering that they are occupied buildings, how are you going about achieving that?

We’ve already started implementing changes. In fact, a lot of the initiatives we’ve implemented have been going on for the last seven years. We’ve been upgrading our systems, and every time we do, we go for more energy-efficient solutions and better standards for building materials.

When we upgraded our bathrooms, for example, we switched to sensor-activated taps and waterless urinals. And having BMS installed means automated and effective climate control inside the buildings. The temperature settings are demand-led and change automatically. During the day, they will stay at about 24 degrees C, but from around 4 pm until 6.30 am, the buildings will be kept at about 27 degrees C.

What challenges or difficulties has ENOC encountered in the implementation of its E&RM policy or green initiatives?

I think CNG is going to be very good for Dubai, particularly since it’s rapidly becoming densely populated

We’ve had many challenges. A lot of the business units have been operating within the ENOC Group since the 1970s or 1980s, and they’ve grown accustomed to a certain way of life. When it comes to energy management, what many people don’t realise is that it’s not only a technical challenge. The technical aspects even tend to be the easiest to deal with. What’s hard is implementing a change in management, in the culture.

Our Steering and Technical Committees, for instance, have quite a number of members. So in the beginning, we had to appoint segment level representatives, especially since a lot of &RM issues came from the womb of EHS compliance. That was definitely a challenge at first, and one reason why we had to do some restructuring, because when it comes to sustainability, the drive has to be from within. How do you get people from inside to drive it? You need to understand that you are not only moving them from being managers to being leaders but also to becoming stewards. That’s a big jump, and one of the key steps is a cultural shift. We had to educate them on what E&RM meant for their business, because that’s what they care about.

We’ve been using different approaches to address the issue, with communication and education playing big roles. Being a member of the Steering and Technical Committees, in itself, is educational, since during our meetings, we have discussions and presentations of case studies. We also invite consultants to attend, and we have vendors coming to us, saying: ‘I can install some device on your motor and save you 20% of your energy bill.’ So we ask them to show us how they’ll do it, and if things go well, we propose doing a trial and ask for volunteer companies from our members.

Quotable efficiency

Petri Pentti, Chief Financial Officer, ENOC:

“The financial impact of our quick-win efforts has been quite encouraging. A meagre investment of AED 600,000 has yielded in savings of almost three times that amount. In terms of business plans, the expected annual savings is USD 9.6 million, with a payback period of two short years.

“The E&RM strategy emphasises ENOC’s vision to be a leading, highly profitable and socially responsible integrated oil and gas group. We recognise that strategically it is not possible to achieve our goal without unwavering commitment to energy efficiency and sustainability that will also excite our core resource – our employees – while addressing the expectations of our other stakeholders.”¹

Khalifa Al Qaizi, Senior Manager for Admin Services & Facilities Management, ENOC:

“The accomplishments of ENOC’s determination are truly exhibited in the forecasted savings. During the procurement of the sustainable equipment, the suppliers estimated that the organisation would be able to save about six per cent of energy; however, the organisation defied this projection and managed to attain savings of 11%, which is almost double the initial estimate. Overall, the annual savings attained were AED 381,134 for the year 2014. In light of this success, AS&FM (Admin Services & Facilities Management) aims for savings of about AED 377,000 (10%) for the year 2015.”²

The vendors come and do that for free, because they realise that if the trials succeed, they have a shot at landing 20 customers in one go. In the past, vendors here were purely salesmen, but now, vendors bring their technical people. We actually tell them not to bring their sales people to the meetings, because if the person talking does not have the technical credentials, and all he can present is his sales pitch, I’ll have no problem telling him to leave. Most of those in the Technical Committee are not the final decision-makers anyway, so he’ll be preaching to the wrong people. But if you as a vendor bring a technical person who can answer our questions, it will give us confidence to conduct a trial with you. And we’ve done a number of trials with passive systems, like reflective paints and coatings, and with active systems like variable frequency drives.

Since we’re on the topic of challenges, could you describe ENOC’s state of health, and how it has been affected by the dip in oil prices?

From a purely oil-price perspective, 2015 was not a good year, but here’s the thing, ENOC’s performance is a bit unique. We are now fully integrated; we’ve got it right from upstream to downstream, so our performance sort of balances itself out. When oil prices are high,  upstream exploration in trading is perhaps better; and when prices are between USD 40 and 60 a barrel, refining margins are quite healthy. If oil prices are lower and commodities are cheaper, the retail business or the downstream side become less profitable, not because of oil prices but because service price and energy costs go down. So though we’re talking about a thinner margin and a dip in profitability, it must be noted that your cost is also lower. Like I said, it all balances out.

ENOC is now in a relatively fortunate position, because – as I said – its business units cover everything from upstream to downstream, and also because “rationalisation” has been introduced. You know people call it deregulation of oil prices, but I call it “rationalisation” because I’m truly for sustainability. If you subsidise anything, you do not get its true value. When something is subsidised, people tend to not use it in a rational way, but as soon as you sell it for its real price, people will start using or consuming that resource in a more rational manner, because now they’re paying the real price for it.

Tariff reform is actually one of the highlights of the INDC (Intended Nationally Determined Contribution) that the UAE submitted for COP 21 in Paris, with another being the country’s energy mix. The INDC  specifically identifies plans to increase the  country’s “clean energy contribution to the total energy mix from 0.2% in 2014 to 24% by 2021”. How do you see that pledge affecting ENOC? And what is the company’s position on Compressed Natural Gas (CNG), which is also mentioned in the INDC?

There are different targets now, with the government talking about increased generation in clean energy. And there are different classifications of clean energy. There’s alternative energy, which is primarily solar power. Most of the contribution is coming from the Mohammed bin Rashid Al Maktoum Solar Park, and then there’s the proliferation of solar power within ordinary households, but that is taking some time because the regulations and standard surrounding that have been complex – more of a regulatory challenge than a technical one.

The UAE obviously wants to look at clean energy for many reasons, including reducing its dependence on fossil fuels and diversifying its energy mix, which is why Dubai will be sourcing from the nuclear plants that will, hopefully, be running by 2017 and why DEWA has looked into investing in clean coal. As for CNG, that’s something ENOC has been supporting through its subsidiary, Emirates Gas. We’re the first company in the world to convert traditional boats – the abras – to CNG from diesel, thereby lowering their emissions and noise levels and improving their overall efficiency. There were some issues with that though, because the people driving the abras had concerns about safety. Also, considerable research and development was required to improve the performance of the engine. But still, we went and invested in some prototype.

We’ve also been working on a major trial on CNG cars with the Dubai International Airport. They’re interested in talking with us about it, especially now because of the rationalisation of the gasoline price. And we’re looking at transport fleets and talking with Emirates Transport. We build the infrastructure for them and train them how to use it, so everything’s more efficient.

Basically, when it comes to CNG, there are a couple of issues that need to be addressed. First is the need to educate people about safety. They think that CNG is more dangerous than gasoline, but CNG is extremely safe. Second, there’s a small investment required. To convert a regular car to CNG, one must invest AED 7,000 to AED 10,000. But I’m happy that the Dubai Supreme Council of Energy recently came out with an initiative to promote electrical and hybrid vehicles, because I think that we can make a signification contribution in the latter. Like I said, we can help develop the infrastructure, and at the moment, we’re also working with Dubai Municipality on a very exciting project. We’re converting waste from the sewage treatment plants into bio-methane, and then converting that into CNG.

I think CNG is going to be very good for Dubai, particularly since it’s rapidly becoming densely populated. There are more and more cars on the road now, and I would imagine that a significant percentage of air pollution is from transport-related activities.

So you’re saying that the government’s plan to pursue clean energy will, in fact, benefit ENOC?

First off, I doubt if there’ll be a complete redundancy of gasoline, because the UAE government did not say that it is getting rid of gasoline. It’s saying that there should be diversity, and diversity translates to energy security and environmental stability. It’ll also mean positive socio-economic changes, because diversification of industry brings in more investments and creates new jobs, competencies and capacities that can be built within the country. If you carefully look at the short-term goals that the UAE has identified, you’ll see that they are cleverly aimed at socio-economic development. Today, doing environmental projects makes economic sense. Even initiatives related to carbon management were developed to create an economic motivator. They were all created when the government felt that there was not enough economic motivation to get people moving in a certain direction.


References:

(1) Pentti, Petri. “Efficiency in the Book.” ENOC Energy & Efficiency: The Story so Far First Edition (2015): 26-28.

(2) Al Qaizi, Khalifa. “The Building Blocks of Efficient Buildings.” ENOC Energy & Efficiency: The Story so Far First Edition (2015): 33-34.


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