An Analytic Hierarchy Process Application to Oil Sands Environmental Compliance Risk Management

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International Journal of the Analytic Hierarchy

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In 2013, oil companies in Alberta, Canada invested $32 billion in new oil-sands projects. Despite the size of this investment, there is a demonstrable deficiency in the uniformity and understanding of environmental legislation requirements that translate into increased project compliance risks. In this paper, we applied the Analytic Hierarchy Process (AHP) to develop a priority list of environmental regulatory compliance risk criteria for oil-sands projects. AHP belongs to the family of multicriteria decision-making (MCDM) techniques that utilizes a pairwise comparison matrix solicited from subject matter experts (SMEs) in the field as input. The overall methodology itself consisted of 4 phases: (1) identification of the initial list of N potential environmental compliance risk criteria and verification of these criteria via a pilot survey; (2) formation of a pairwise comparison survey in the form of an N(N-1)/2 comparison matrix based on the verified criteria; (3) administration of the pairwise comparison matrix to a sample of 16 industry-specific SME’s; and (4) the application of the AHP method using SuperDecisions as a tool on the collected sample to rank the identified risk criteria. Our demonstrated results can potentially inform Alberta oil sands industry leaders about the ranking and utility of specific compliance risks as understood by experts and enable a more focused environmental compliance action to help increase legislative and public trust.