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17 May 2017

Benefits Outweigh Challenges of Boosting Water Infrastructure

Michael Dunkel

Michael Dunkel, vice president for CH2M, believes water management for upstream will transform over the next few years. As shale plays become more established and commodity prices begin to recover, producers are looking for more-efficient and lower-cost water solutions for the longer term. In many cases, more-effective water management is only possible with water infrastructure. Water pipelines and storage facilities bring environmental and sustainability benefits. These water systems allow for the low-cost movement of water and facilitate water reuse, the use of distant nonfresh water sources, and the potential of options for distributing water that must be injected into disposal wells. While there are challenges to building water infrastructure, there are many benefits for the producers and other stakeholders. Water sustainability is an important part of industry’s “license to operate,” and it affects community, regulatory, and investor support.

Dunkel presented his paper “Sustainability Aspects of Water Infrastructure” (SPE-184445) at the 2017 SPE Health, Safety, Environment, and Social Responsibility Conference—North America in New Orleans in April.

Sustainability Aspects of Water Infrastructure

This paper analyzes the benefits of water infrastructure in various onshore regions as it relates to stakeholders and sustainability. Company and stakeholder benefits, impediments, and other trends are discussed, as well as the sustainability aspects of water infrastructure for specific projects. Business sustainability is often defined as managing the triple bottom line—a process by which companies manage their financial, social, and environmental risks, obligations, and opportunities. These are sometimes referred to as profits, people, and planet. (Financial Times 2017.)

The evaluation process included analyzing public disclosures and interviews with oil and gas companies, regulators, service companies, and other stakeholders.

The oil and gas industry continues to move a significant percentage of water by trucks in most US basins. Discussions with leading companies suggest that more infrastructure is being planned by operators and third parties. In many cases, companies are sharing water infrastructure and planning to use infrastructure jointly. The benefits of water infrastructure include lower costs, more flexibility to use multiple sources of water, aggregation of larger volumes of produced water to allow efficient water recycling facilities, reducing community effects by reducing trucks on the road, reducing air emissions, reducing freshwater use, and reducing water disposal by the ability to recycle more effectively. Impediments to building water infrastructure include up-front capital costs, regulatory constraints, obtaining rights of way, and the planning cycle for producing companies. In spite of the impediments, successful infrastructure projects are being planned and developed. In fact, a new trend is showing multicompany projects where several producers may share the infrastructure. Specific projects are highlighted for their sustainability.

What is striking about the different regions of the US is how their water challenges vary. Key limitations and parameters include insufficient source water, limited disposal capacity, regulatory variation, amount of contiguous acreage held by companies, topography, proximity to urban centers, and availability of public roads. Additionally, variations in the targeted formation depth, rock properties, and formation fluids necessitate different hydraulic fracturing practices, which put different constraints on water-management plans. Because of these variations, generalized strategies are not practical; rather, customized solutions are best designed and engineered to meet an area’s unique and specific needs.

History of Water Management for Unconventional Oil and Gas
Unconventional shale development started in the Barnett Shale in the 1980s; however, significant drilling activity did not begin until gas prices increased in the late 1990s. Devon Energy acquired Mitchell Energy in 2002 and established itself as the leading producer from the Barnett Shale. (Railroad Commission of Texas. 2017.) From the early days, water management was normally an afterthought. Typically, water was sourced locally from groundwater or surface sources. Because water volumes were small compared with that used in today’s hydraulic fracturing, there was little or no effect on local resources. Producing companies were still determining technical and economic viability, so little emphasis was placed on long-term planning. As new shale plays were being developed from 2005 and beyond, the priority for operators was to prove a region would produce effectively.

As the US horizontal rig count climbed above 900 for the first time in 2010 (Baker Hughes 2017), sustainability became more of an issue for unconventional development. Stakeholders from Pennsylvania to Texas were increasingly concerned about groundwater contamination or use of source water for hydraulic fracturing. The Environmental Protection Agency (EPA) announced in March 2010 that it would conduct a research study of potential effects of hydraulic fracturing on drinking water resources. (Environmental Protection Agency 2017). In 2011 and 2012, both Texas and Oklahoma experienced extreme drought. (Amico 2012). State officials and stakeholders worried that water use by oil and gas was depleting critical resources. Activist investor organization Ceres published a report in 2014 documenting a link between unconventional development and water stress in parts of the US. (Freyman 2014).

Induced seismicity, often defined as earthquakes caused by human activity, was a developing concern in parts of Ohio, Arkansas, Texas, and Oklahoma. While each situation was unique, regulators and other experts often linked deep well injection of produced water as the likely cause (USGS 2016, Office of the Oklahoma Secretary of Energy and Environment 2017). In the cases of Ohio, Arkansas, and Oklahoma, the regulatory authority reduced water injection to lessen potential effects.

Some regions developed common water management practices to reuse produced water. Water reuse or recycling solves both the sourcing demand and disposal challenge. In recent years, operators in the Marcellus Shale in Pennsylvania and West Virginia pioneered large-scale water recycling technologies—an accomplishment that is good for both the environment and industry (Marcellus Shale Coalition 2017). Other regions, especially in Texas, made strides to use nonfresh water for hydraulic fracturing source water. Some of the successful efforts to manage water more effectively are documented in the Energy Water Initiative (EWI) case studies report of 2015 (Energy Water Initiative 2015). More water management examples are discussed later in this paper.

While oil and gas companies often recognized the need for long-term water considerations, new plays were being developed and the best areas to drill were being continuously refined. The lack of a consistent drilling plan in the “early days” of shale development made water management more challenging and almost impractical. The challenges of implementing water management are discussed later in this paper.

In the second half of 2014, oil prices fell from more than USD 100/bbl to less than USD 50/bbl. The price collapse had an effect on producing companies’ capital budgets overall and funding for water management initiatives.

Objectives and Benefits of Water Infrastructure for Unconventional Plays
The objectives and benefits of water management are the same. Most water managers and most companies are graded on cost-effective drilling and completions. Thus, cost is easily identified as a top priority in water management, especially when commodity prices are low, as they have been since 2014. Comparing different types of cost options can be challenging when one case requires little capital expense (local options) and another requires significant capital (water infrastructure). The dependability of the drilling forecast can become a significant uncertainty for the capital cost case; however, when the long-term drilling plans are relatively firm, water infrastructure can reduce transportation costs and allow reuse to replace local water sourcing and disposal. Having a water plan that keeps costs low is a key sustainability aspect.

Water infrastructure can make distant sourcing options viable and provide flexibility for operations. For example, brackish water is a more sustainable source than fresh water because it generally is unusable for agriculture or drinking without treatment for dissolved solids. Nevertheless, brackish water is often found only in certain areas of a play. Water pipelines conveying brackish water to areas without brackish water save the operator from using potable water. Oil and gas has tapped other nonpotable water sources, including effluent water from municipal water plants. Through an agreement between Pioneer Natural Resources and the city of Odessa, Texas, the energy company installed a water pipeline from the plant to get water closer to the well sites more easily. (Pioneer Natural Resources 2017, Paul 2016).

Water infrastructure allows low-cost aggregation of produced water for more efficient water treatment and distribution near the well site. From the earliest days in unconventional development with horizontal wells and hydraulic fracturing, water reuse was often attempted at a small scale without significant water infrastructure. One of the more notable water recycling efforts started in 2004, when Devon piloted its first water recycling project through a partnership with Calgary-based Fountain Quail Water Management in the Barnett Shale in Texas. Devon and Fountain Quail developed a recycling system that used evaporation and condensation to remove salts and other impurities so water could be reused in other well completion projects (Devon Energy 2017). In spite of Devon’s relatively long-running recycling project in Texas, most water reuse pilots and projects have been short lived because of the challenging economics of the small scale. Water infrastructure can tip the scale toward making reuse viable. The reuse of produced water is the pinnacle of sustainable development because it replaces source water demand and water disposal requirements.

Water hauling with trucks is widely considered the most visible effect of unconventional plays. Lawmakers in Texas have received more feedback from constituents about trucking than any other oil industry activity. Trucking on a large scale can contribute to traffic congestion and can adversely affect smaller roads not designed for heavy trucks. Water pipelines have not been part of the initial development in most unconventional plays for a variety of reasons discussed in the Challenges section of this paper. However, where water pipelines can be justified, the reduction of trucking can be substantial. For a 300,000-bbl well completion, a pipeline transporting water could replace approximately 2,500 truck round-trips to source water and potentially 1,250 truck round-trips to dispose of water over the life of the well. Having water sourcing and disposal pipeline connections could save approximately 113,000 miles of water hauling per well, if the average round-trip is 30 miles. Thus, water pipelines greatly reduce the effect on roads and emissions from hauling water.

Water infrastructure indirectly reduces stakeholder pressure. Stakeholders for an oil and gas producer include investors, regulators, environmental organizations, and citizens in the communities. When water infrastructure is in place, it facilitates many items that are important to these stakeholders.

Stakeholder concerns improved by water infrastructure include the following:

  • Reduces long-term water sourcing and disposal costs
  • Allows sourcing of nonpotable water that is not near the well site and saves potable water for other stakeholders
  • Allows aggregation of water to make reuse and recycling more effective and reduces the need for source water and water disposal
  • Reduces water trucked to and from well sites and tank batteries

Challenges to Reuse and Recycling of Produced Water
Cost to Transport and Treat Water for Reuse and Recycling.
Across many US unconventional plays, produced water from oil and gas operations is disposed into Class II disposal wells. This type of disposal has generally been a safe and low-cost method. Typically, the disposal wells can take large volumes of water, and, usually, minimal transportation costs are incurred because the well is near the producing wells.

For hydraulic fracturing operations to reuse produced water, the water must be transported from the tank batteries where the water is gathered to the new well site. Typically, the produced water must be treated to kill bacteria and reduce suspended solids and any scaling tendencies. Generally, the cost to transport and treat the water for reuse has been higher than the cost to dispose of the water. Thus, produced water reuse has slowly gained adoption in most regions, based on the costs and alternatives.

Because geology varies significantly across the US, some unconventional plays have more limited disposal reservoirs. Other basins may have had modest disposal costs so far, but concerns exist that higher oil prices will increase produced water production and demand for water disposal. Therefore, higher future disposal costs could tip the balance toward increased reuse and recycling.

Legal Uncertainty. In some cases, legal uncertainty in state laws has been an impediment to reuse and recycling. In some states, the ownership of the produced water, if it has value, is uncertain. Historically, the produced water from oil and gas wells has been a burden oil and gas companies must handle. Most commonly, the water has been disposed into deep underground injection wells at a cost to the operating company.

With produced water reuse, the producing company often absorbs new costs related to water treatment and conveyance. Occasionally, one producer may sell treated produced water to another company. Based on the historical and current situation with most unconventional oil and gas plays, the cost to treat and transport the water will far exceed the value of the water sold; the water sold may offset only about 25% of the costs to treat and transport, depending on many factors.

With the emphasis on water reuse, the ownership of the water has been called into question by some surface owners. Surface owners argue that, because most oil and gas leases do not include produced water, the value from selling produced water should be shared with them. Oil and gas companies, on the other hand, feel the value from the sale of water will not cover the cost of treating and transporting the water and, therefore, revenue sharing with the surface owner does not make sense. This is amplified by the fact that the surface owner does not have an obligation to pay for produced water disposal.

Regulatory and legal clarity is needed in some states so that this issue does not slow water reuse. Another legal uncertainty in some states is whether there can be a clear custody transfer if water ownership occurs in the reuse process. As produced water reuse increases, commercial water treatment facilities and their associated water pipelines are likely to become more common. It is important to have a clear legal custody and liability transfer to the commercial operator of the water infrastructure. If oil companies believe they risk being sued over a spill by the commercial plant, it would be a challenge to move ahead with such a commercial model; nevertheless, this approach is often the most effective method for multiple producing companies to operate in a given area, because overlapping water infrastructure operated by different producers is not practical.

Therefore, laws that support the legal transfer of custody of the water and the associated liability to the commercial water system operator would reduce the uncertainty of this issue. Some states have passed statutes to clarify that produced water ownership and liability can be passed to another company.

A third legal issue regarding custody of water relates to the legal classification of produced water if it is treated and transferred to another beneficial user. If desalinated produced water is transferred to a power plant, some uncertainty exists as to whether the power plant’s current permits need to be updated. In some states, the plant’s existing permits would apply and new permits or amendments are not needed. (Note: The power plant would still need to meet all of its existing discharge criteria.) Some experts are less confident that the treated produced water loses its classification when it is transferred to another user. Oil and gas producers want regulatory certainty before transferring water for beneficial reuse.

State Regulatory Challenges. As produced water reuse has evolved over the years, states’ regulations are slowly catching up to help promote environmentally sound recycling; but, unfortunately, some state regulations are still a major impediment to allowing producers to reuse produce water.

One success story occurred several years ago. The Texas Railroad Commission, the oil and gas regulator in Texas, took action allowing produced water impoundments to be permissible by rule, overriding the prior process, which required a long approval time and failed to meet the producer’s needs. The new rule allows produced water to be stored in impoundments if it meets certain criteria, and no waiting period is required to obtain a permit. Generally, impoundments are recognized as lower cost than alternatives for longer-term projects.

Other regulatory challenges affecting reuse include the need to have a recycling permit for each project and the need to track individual barrels of water.

Right-of-Way and Landowner Negotiations. Another significant and often-mentioned challenge to water reuse and recycling is right of way (ROW). Water pipelines and impoundments need authorization from surface landowners. Companies installing water infrastructure often must negotiate with numerous landowners and payments for the ROWs, which can be a time consuming and complicated. Frequently, producers’ lease agreements dictate that water must be sourced from the surface owner, with payment accordingly. Surface owners may capitalize on this economic disincentive to reuse produced water, greatly limiting the producing company’s economic options.

Federal Rules for Discharge to US Waters. Federal rules allow produced water to be treated and discharged to waterways west of the 98th meridian. National Pollutant Discharge Elimination System (NPDES) permits have been obtained from the EPA, or states granted jurisdiction, in a small number of cases for highly treated oil and gas produced water. The NPDES permits could be important in specific cases or in special economic cycles within the oil sector. If oil and gas were reusing a high percentage of produced water in the future and oil prices dropped substantially, the hydraulic fracturing reuse would diminish because of the lack of well completions, and the produced water would need an outlet. If disposal continues to be limited in a region, this sudden reduction in reuse could create an equally urgent need for NPDES permits to discharge water. The problem is that the current approval cycle for a NPDES permit is much longer than the typical time it takes for oil prices to drop and drilling to stop. Thus, shorter approval times or an easier process for obtaining a contingent permit that might be needed in the future are necessary.

Fig. 1

Trends in Water Management
According to public records, such as those found at FracFocus (www.fracfocus.org), companies are using more water per well. The reasons for higher water use per well are longer laterals and more water used per foot. The additional water and proppant are providing higher expected ultimate recoveries than earlier wells. The trend of using more water per well potentially will put more stress on available water sources, creating a sustainability challenge. Water reuse could take pressure off the water sourced from surface and aquifers. Fig. 1 shows the water used per well in the Permian Basin (including vertical and horizontal hydraulic fractured wells). Fig. 2 uses FracFocus data for Oklahoma, showing a similar trend as the Permian Basin—progressively increasing water per well.

Fig. 2

Low-capital-expense water infrastructure projects that reduce costs and have a short economic payout are another result of the low-oil-price environment. This trend has been observed when companies replace trucking of produced water with pipeline connections to a disposal well. The pipeline capital replaces the less-efficient operating costs of trucking the water. In some cases, producers are building the connecting lines to their company-operated disposal wells, and, in other cases, a third-party disposal well operator pays for the line to connect a producing company’s tank battery or wells.

Because capital budgets have been greatly reduced in recent years because of lower oil prices, few large-scale infrastructure projects have been constructed. Numerous companies are evaluating and planning larger-scale infrastructure for future development that will come with higher oil prices. The planned infrastructure may be primarily for a single company, but, increasingly, companies are evaluating how to share water infrastructure. The infrastructure allows aggregated volumes to produce economics of scale that reduce the conveyance cost and treatment costs per barrel.

Basin Comparison of Water Challenges
The various unconventional plays across the US have varying water practices and challenges based on the following:

  • Amount of easily accessible source water
  • Differences in geology for disposal wells
  • Terrain differences affecting ease of pipeline installations
  • Regulatory differences
  • Amount of produced water relative to the water volume used in completions

Table 1 is a qualitative comparison of water challenges across several oil and gas basins.

Table 1

Water infrastructure that allows more water reuse has the sustainable effects of reducing the source water needed, reducing demands for water disposal, and reducing the need for truck transport.

Examples of Infrastructure and Planned Infrastructure
Pioneer Natural Resources, with the majority of its acreage in several counties in the Midland Basin, is using its dominant position to plan efficient water infrastructure. Pioneer has commenced construction on a state-of-the-art water sourcing and distribution system in West Texas. By flowing sourced water through a pipeline system, Pioneer will reduce the amount of truck traffic on county and state roads, while minimizing transportation costs.

Fig. 3

When completed, the pipeline network will run approximately 100 miles north/south across Pioneer’s acreage, using 30- to 36-in.-diameter pipe (Fig. 3). The system will have feeder lines that connect to nonpotable water sources, such as contracted municipal wastewater plants.

Construction is expected to continue until 2019 in a phased approach. The system will consist of up to 20 water subsystems branched from the mainline, connecting 125 to 150 strategically placed, double-lined storage ponds that will support hydraulic fracturing operations and recycling efforts in the Midland Basin (Fig. 4).

Fig. 4

Pioneer has committed to purchasing 391 million bbl from the city of Odessa over the next 11 years and expects to save approximately USD 100,000 per well (McEwen 2016, Pioneer Natural Resources 2016). In December 2016, Pioneer announced an agreement that will provide USD 110 million in upgrades to the water treatment plant in Midland, Texas. In return, Midland will provide Pioneer reclaimed wastewater for reuse. The water will be transported through Pioneer’s water distribution system in the Midland Basin and used for hydraulic fracturing. Pioneer is also using the existing water network to move brackish groundwater to well sites and plans to use the system increasingly for produced water reuse.

Oklahoma has much more fractionated mineral interests compared with the key four counties where Pioneer is planning its infrastructure. In fact, most US unconventional plays have interspersed acreage ownership, making it difficult for one company to plan a large infrastructure project for water. The Oklahoma oil and gas regulator, the Oklahoma Corporation Commission, has mandated reduced water disposal in key areas in 2015 and 2016 based on seismicity that has been linked to produced water injection (Wethe and Tobbin 2016). Oklahoma’s governor appointed a committee under the Oklahoma Water Resources Board to collaborate and find ways to promote produced water reuse and recycling (Oklahoma Water Resources Board 2017). Water infrastructure is expected to be an important component, facilitating the low-cost conveyance of water from where it is produced to where it can be reused.

Fig. 5

Antero Resources announced plans to build a large water treatment facility in West Virginia (Antero Resources 2016) (Fig. 5). Veolia will design, build, operate, and maintain a 60,000 B/D advanced wastewater treatment facility under a turnkey contract for Antero in Doddridge County, West Virginia. Antero will own the USD-275-million treatment complex, which is expected to take 2 years to build. The complex will allow Antero to treat and reuse produced water rather than permanently dispose of the water in injection wells. The treatment facility will save Antero approximately USD 150,000/well on future completion costs. Combined with Antero’s existing freshwater pipeline distribution system, the advanced wastewater treatment complex creates environmentally conscious water management. Once fully operational, the facility will, on average, reduce water truck travel by more than 10 million miles annually. This nearly 50% reduction in water-related truck travel not only further reduces roadway effects but also will cut greenhouse gas emissions by an average of more than 30,000 t/a. Approximately 95% of Antero’s water will be treated at the facility, virtually eliminating the need for wastewater disposal wells. The facility will provide an additional freshwater supply of 41,000 B/D (1.7 million gal/D), which will positively offset withdrawals from West Virginia’s water resources.

Vision for Water Infrastructure Buildout
In the short history of US unconventional oil and gas development, water infrastructure and water planning have been relatively slow to develop for a variety of reasons. Chief among these reasons is the unpredictability of future drilling locations because of rapidly developing technologies. As unconventional oil and gas development evolves and more predictable planning takes place, water infrastructure becomes easier to justify and develop. Additionally, as industry demand for source water and disposal increases, water infrastructure will be a key part of the solution to allow water reuse and flexible water sourcing.

A model is developing where the most economically viable core of unconventional plays are able to justify and develop the initial water infrastructure. Over time, water pipeline additions will be added, often connecting to the initial pipelines. Where ownership is fractionated, multioperator cooperatives or third-party arrangements serving multiple operators could achieve similar sustainability and cost benefits but would bring additional commercial, water-rights, and environmental-liability challenges that framework to address is still developing.

The sustainability aspects of water infrastructure for unconventional oil and gas development are many. Over the next several decades, water pipelines are expected to be built out progressively, driven predominately by cost reduction and sustainability of sourcing and disposal of water.

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15 May 2017

Sustainability: A Business Imperative, Not a Moral Sacrifice

In recent years, sustainability has emerged as perhaps the most critical imperative of this century. As our lives are being altered by advancing technology in ways that we never imagined just a few short years ago, our awareness and understanding of the complexities in utilization of nature and the effect of the footprint that we leave behind must lead us to a fundamental shift in the way we manage our individual and professional lives.

Credit: Getty Images.

The petroleum industry, in concert with the rest of the world, is finding that sustainability presents both risks and opportunities for its business and, thus, the need for incorporating sustainability is a business imperative and not a moral sacrifice.

Within the next 30 minutes, as you are reading this article, our planet will be travelling roughly 40,000 miles in space around the sun, more than 8,000 babies will be born on this planet, and our oil and natural gas industry will supply nearly 2 million bbl of oil in response to the increasing demand for energy. The important question is how we can keep up with the many new and unique challenges posed by this fast-paced change.

The oil and gas industry faces a very challenging future. Energy demand continues to grow, while our mature fields are declining. Out of the 1.2 trillion bbl of proved oil reserves, roughly two-thirds are extremely challenging to develop and produce because of a variety of complicating problems such as depth and tight and thin formations, development and application of leading-edge technologies, and a multitude of environmental considerations and regulatory issues. Our task is to extend the life of the industry by improving the success of finding new discoveries in frontier and remote basins, increasing the ultimate recovery from existing fields, as well as the need to find ways to tap into unconventional resources. At the same time, we must intensify our focus on sustainability, which calls for meeting humanity’s needs without harming future generations. How are we to accomplish this goal of meeting energy demand in a sustainable way? Technology has always been the enabler for our industry to meet demand for the last 150 years. But now, more than ever, the need for quick development and rapid deployment of technologies in the field is paramount.

Read the full story here.

5 May 2017

OTC: Low-Price Environment Affects Safety

The new economic environment known as “lower for longer” has had no small effect on offshore safety, said a panel of experts at the 2017 Offshore Technology Conference.

Mike Drieu, environment, health, and safety adviser with Anadarko, left, and Marcelo Mafra Borges de Macedo, head of safety and environment at the Brazilian National Agency of Petroleum, Natural Gas, and Biofuels, participate in the Safety in the New Offshore World Panel on 2 May at the Offshore Technology Conference in Houston. Credit: OTC/Rodney White.

Lars Herbst, Gulf of Mexico region director for the Bureau of Safety and Environmental Enforcement (BSEE), pointed out three ways the lower-price environment could compromise safety offshore. The first was deferred maintenance. In 2017, he said, BSEE has seen a 100% increase in G-111 shut-in incidents of noncompliance compared with the previous 5 years. The G-111 form asks, “Does the lessee maintain all equipment in a safe condition to provide for the protection of the lease and associated facilities?” This increase, Herbst suggested, is a result of companies deferring maintenance because of the low-price environment.

The second effect Herbst pointed out was an increase in smaller operators that may not be well funded. “Some of the operators are not as well funded as the larger companies in the Gulf of Mexico, and their bottom lines are impacted much quicker than those larger operators,” he said. “This is exaggerated even further in the deepwater environment and the deepwater facility fields that carry higher operating costs. It is imperative that we continue to monitor these companies’ capacity to respond and mitigate consequences of incidents offshore.”

Herbst finished his list with bankruptcies. “It is quite shocking that bankruptcies seem to be more widespread, in my view, this downturn cycle than in previous downturn cycles,” he said, adding that, “Currently, nearly 25% of the facilities operated offshore were operated by financially at-risk companies.”

The concern, Herbst said, is that companies struggling near bankruptcy or recently emerging from bankruptcy may not have the funds to properly maintain their equipment. “It is quite shocking and does give us concern,” he said. “How do you keep up with the OPEX (operational expenditure) expenses around maintenance?”

Other panelists were Matt Mowrer, director of applied technology and data analytics at ABS Consulting; Mike Drieu, environment, health, and safety adviser with Anadarko; Marcelo Mafra Borges de Macedo, head of safety and environment at the Brazilian National Agency of Petroleum, Natural Gas, and Biofuels; and Sylvie Tran, general manager for safety and environment, deepwater Gulf of Mexico, at Shell.

Mowrer presented challenges and opportunities for offshore risk analysis, pushing for the collection of data as a strong way to effect safety. “More data is better,” he said.

Drieu addressed regulation as it pertains to safety, pointing out that pragmatism is more important than quality. “Of course, it’s always difficult when you’ve got a lot of regulations,” he said. “It’s not the number of regulations out there …, but it’s the pragmatic based on risk that you’re able to streamline and make those right decisions.”

Lessons learned, in all aspects of life, should lead to increased safety, Drieu said. As an example, he mentioned driving and some of the hard lessons learned over the years. “Do we really need to go back 30, 40 years ago to when you didn’t put a seat belt on when you drive down the road?” he said. The lessons learned should evolve into best practices, he said, and “good best practices ultimately lead to good regulation.”

All of the panel members agreed that sharing information and lessons learned was important for increasing safety in the industry, but none was sure how that could best be accomplished. An attendee asking what avenues existed for sharing lessons learned was met with silence until the moderator, Henrique Paula, senior vice president for strategic initiatives at ABS, mentioned that conferences were sometimes helpful.

Nonetheless, all agreed that the industry must continue to strive for safety excellence. “It is a journey that never ends, especially in this lower-for-longer world,” Tran said. “Safety is not a zero-sum game, and we must all be winners.”

3 May 2017

OTC: Risk-Based Cybersecurity Critical for Offshore Automation

By Stephen Whitfield, Senior Staff Writer, Oil and Gas Facilities

Automation is playing an increasingly vital role in oil and gas operations, including offshore assets. Operating companies can use automated systems to augment and replace human effort in dangerous locations, increasing on-site safety. However, an expert said that automated systems bring additional vulnerabilities with potential safety impacts, thus requiring an updated risk-handling approach that allows companies to better understand these risks.

John Jorgensen, Director of Cybersecurity and Software, ABS

At a presentation at the 2017 Offshore Technology Conference, John Jorgensen discussed the merits of risk-based security. Jorgensen is director of cybersecurity and software at the American Bureau of Shipping.

A risk-based approach is one where companies make a conscious effort to understand the variables that could affect assets, people, and outcomes. It involves a risk assessment that provides the basis for the prioritized application of cyber protective applications and measures.

When performing a risk assessment, Jorgensen said, companies should determine which functions of an asset are mission-critical (essential to the operational performance of the asset), business-critical (essential to the financial performance), and safety-critical. This requires an understanding of the collective requirements that link systems together into the process flows that provide input and output.

Managing assets in a risk-based security system requires a catalogue that examines the cyber complexity and business attributes of each asset along with relevant cybersecurity documentation. Jorgensen said some of the biggest vulnerabilities can be found in the interfaces between one system and another.

“We have to look very carefully to understand where those interfaces are so that we know what happens between the two,” he said. “Performance monitoring that we put on individual systems is valuable, but that only tells us so much. We learn much more when we look at the interfaces between systems and then monitor the traffic that goes between and among systems as they operate.”

Read the full story here.

26 Apr 2017

Industry Perspectives Vary on Implementing Effective Social Performance

By Chris Carpenter, JPT Technology Editor

SPE members are familiar with the application within their industry of the term “social responsibility.” But what of the term “social performance?” In the context of a globalized economy in which the decisions of multinational corporate and state actors have a more immediate effect on individual lives than ever before, social performance is the translation of an organization’s policy of responsibility into ground-level action. A growing body of work, including papers written by SPE members, explores the theoretical and practical challenges faced by the industry as it attempts to translate its obligations into effective policies. While obstacles will always exist and individual situations will always require flexibility, optimism persists that theory can become a reality that solidifies the connections between individuals, their communities, and the presence of upstream facilities.

Almost every multinational company now issues annual reports evaluating social performance, attempting to quantify such factors as proper resource investment, diversification of employment, and local sustainability. But as Luc Zandvliet of Triple R Alliance asserts, many industry leaders are still limited by a consideration of social performance “as a slightly unfamiliar topic that is unrelated to business objectives” and that they hold the inaccurate view that, because the task “only deals with people’s behavior, it is often unpredictable, if not at times outright irrational, and therefore difficult to manage.” Zandvliet, author of SPE paper 185211 (2017), “Asset-Level Social Performance in Conflict Areas and Frontier Markets: Doable or Doomsday Scenario?” proposes that companies actually have more influence over their management of risk and their role in community relationships than they often believe. An initial problem, he writes, is that too many companies entrust evaluations and analyses of regional or local conflict to specialized departments, thereby implicitly freeing other staff members—many of whom have more immediate knowledge of developing conflicts or community requests—from the responsibility of what should be a companywide effort. He points out that companies have far more international and professional resources with which to evaluate such situations than they did only a few years ago.

Zandvliet suggests that problems caused by initial faulty analysis of specific areas of contention between companies and communities are often exacerbated by fairly routine or avoidable personnel- or PR-related mistakes that, in other parts of the world, may not seem remarkable but which may be particularly sensitive in some areas long plagued by neglect or by mismanagement by multinational actors. Finally, he offers a six-step “model toward a conflict-sensitive business approach” that he argues can help facilities and communities reach common goals in a proactive style—rather than the reactive one often seen in headlines—with peaceful and mutually beneficial results, even in traditionally conflict-plagued areas.

Read the full story here.

25 Apr 2017

SPE President Presents Industry’s Responsibility to Communities

The oil and gas industry’s role in changing lives around the planet is not limited to providing energy. The lives of those living in areas where the industry operates are affected directly by those operations. During a keynote luncheon speech at the 2017 Health, Safety, Security, Environment, and Social Responsibility Conference—North America, Janeen Judah, SPE’s 2017 president, highlighted the industry’s efforts and desires to improve the lives of people in the regions in which it operates.


“Generally, when we go into a foreign country as an operator or as a joint venture, we have an obligation to provide community development,” she said.

Judah pointed out the immense effect the industry can have on a community and the responsibility that comes with that.

“When we go in and we drop a billion dollars or 5 billion dollars, or 10 billion dollars in a local economy, that place will never be the same,” she said. “We’re going to change that place for 20, 30, 50 years, and we want to be good citizens. But, we also want to be able to be sustainable in what we do.”

Working with local governments and nongovernmental organizations (NGOs), she said, is the best way to provide that sustainable development.

“Our business is not delivering health care or delivering primary education, so we need to partner with NGOs and local government to be able to make that sustainable and make a better life for the folks who live in the places where we operate,” she said.

Judah asked the audience if the industry can improve its collaborative efforts.

“Can we, as an industry, over all, partner more with NGOs and direct-aid agencies in countries where we operate? Can we do a better job of partnering with other organizations?”

Ultimately, she suggested, the industry can improve.

“I think often we can, and here’s really the reason: We’re often in countries that have little or no infrastructure,” Judah said. “We are committed to community investment.”

This commitment to investing in the community and its infrastructure, Judah pointed out, goes beyond profit.

“We really don’t have a profit motive from that,” she said. “We’re going to make money from the oil and gas we produce. It’s not like a toll road authority that might build a toll road and then try to generate revenue off that and try to pay it off. We don’t really want to make money off of it. But, we have an obligation to the country that we’re in.”

Meeting that obligation, however, often comes with its own set of challenges. Judah used the example of providing education.

“Sometimes, we have to think about creative solutions around education because, often, the ministry of education doesn’t have the ability even to pay the teachers,” she said. “So, that’s often an issue, but there is always a need everywhere we operate to have more schools.”

To read more of Judah’s thoughts on community involvement, read her recent JPT President’s Column.

24 Apr 2017

BSEE International Standards Workshop Looks at Integrity Management

“Integrity Management” will be the theme of the 2017 International Standards Workshop held by the Bureau of Safety and Environmental Enforcement (BSEE) on 5 May. The Ocean Energy Safety Institute (OESI) at the University of Houston will be the host of workshop.

Topics for the workshop will be integrity management of pipelines and risers and fatigue assessment and life extension.

The workshop will be held at Lloyd’s Register Training Center in Houston, and registration is required.

The agenda includes presentations by representatives from industry and regulatory agencies, including Norway’s Petroleum Safety Authority and the UK Health and Safety Executive.

Two breakout sessions will examine the topics of “Subsea Pipelines and Risers” and “Fatigue and Life Extension of Fixed and Floating Facilities and Mooring Systems.”

Registration will close on 1 May or once the number of reservations has reached the room capacity.

Read the agenda here (PDF).

Register here. 



20 Apr 2017

Understanding the Brain’s Social Aspects Can Help Guide Organizations

The 2017 Health, Safety, Security, Environment, and Social Responsibility Conference—North America continued into its second day with an expansion of the brain-centric discussion that started it, moving from analyzing the individual brain to analyzing brains in groups.


“We are social creatures,” said  Susan Koen, organizational psychologist and the first of two speakers at the session. “Our social brain is a key part of our survival and our thriving,” she said.

Koen spoke about the neurological aspects of social interaction, pointing out that the connections made between human beings go beyond psychology. “This is not just psychological,” she said. “This is neurological.”

Koen added that what we know about the how the brain works is changing rapidly because of advancing technology. “We now know that, literally, people will rewire their brains to a new normal to align with the others in an organization and particularly in their immediate work team.”

This rewiring, she said, has implications for leadership and company structure and performance. “Anyone in your organization who has the power to punish you, dismiss you, ostracize you, in any way negatively come down on you, is someone who your brain is going to be very attuned to,” she said. “So leaders very definitely have the power to steer the organization for right or wrong.”


Koen was followed by John Carroll, professor of management at the Massachusetts Institute of Technology’s Sloan School of Management. Carroll reiterated that our brains are social. “The brain is a conversational brain,” he said. “We are either in conversation with others or we are in conversation inside.” He then went on to praise the brain’s social aspect. “People are not the problem,” he said. “People are, in fact, the source of all the good stuff we’re talking about as well.”

Looking at the social aspects of the brain is not, however, simply academic. “We have to understand how people think …,” Carroll said, “so that we can take action to maintain and improve our organization.”

The third day’s plenary session looked at the practical applications of the ideas presented in the first two. Nada Wentzel, one of the speakers from the first day’s plenary session, was the moderator. The three speakers were Carla Santamaria, safety manager for ExxonMobil; Geoff Walter, director for environment, health, and safety for Owens Corning; and Krystal Sexton, epidemiologist for Shell.

20 Apr 2017

New Occupational Health Hazards Emerge in Unconventional E&P

In 2010, the US National Institute for Occupational Safety and Health (NIOSH) launched the Field Effort to Assess Chemical Exposures in Oil and Gas Workers to determine the chemical exposure risks workers faced during drilling, completions, and servicing operations. So far, the agency has identified a number of chemical compounds and substances that carry significant exposure risk, particularly in unconventional exploration and production (E&P).

At a presentation hosted by the SPE Gulf Coast Section’s Health, Safety, Security, Environment, and Social Responsibility (HSSE-SR) Study Group, Bradley King discussed some of these risks, as well as other research NIOSH has performed as part of the its field effort. King is an industrial hygienist at NIOSH and is a commander in the US Public Health Service.

One of the first areas NIOSH researchers examined was the exposure of respirable crystalline silica dust during hydraulic fracturing operations. The agency conducted exposure assessments at 11 hydraulic fracturing operations in five states. Full-shift exposures were found to exceed occupational exposure criteria set or recommended by the US Occupational Safety and Health Administration (OSHA), the American Conference of Governmental Industrial Hygienists (ACGIH), and NIOSH.

King said the best way for companies to limit exposure is to incorporate controls wherever possible, focusing on the sources of silica dust like thief hatches on sand movers. Onsite dust control measures may include changes in storage, handling, and delivery of proppant; the use of ceramic or coated sand proppant; dust collectors with filters; or a personal decontamination booth.

Regardless of the control, King said it was imperative for companies to ensure its reliability by examining data collected from the field.

“There are controls being developed, and our best recommendation is to do your due diligence. When looking for a type of control, make sure that whatever control you’re looking at has had the data collected to show that it’s actually doing what it says it’s doing,” King said.

Read the full story here.

19 Apr 2017

Panel Examines Methane Regulations and Opportunities

Three experts from different sectors discussed the challenges of methane and regulation at the first panel session of the 2017 SPE Health, Safety, Security, Environment, and Social Responsibility Conference—North America in New Orleans.

From left, Mark Boling, Hillary Hull, and Ramesh Narasimhan present their views on the challenges and opportunities of methane regulation. Credit: Adam Wilson/SPE.

Mark Boling, executive vice president of Southwestern Energy; Ramesh Narasimhan, a partner with Environmental Resources Management; and Hillary Hull, a senior research analyst with the Environmental Defense Fund, gathered on stage to present their perspectives on “Methane and Other Greenhouse Gases: What Do We Do Now?”

As moderator Brian Boyer pointed out at the beginning of the session, methane is not only a pollutant, it is also a product. Limiting fugitive emissions, therefore, makes not only environmental sense but also economic sense.

Hull’s talk examined the importance of research in gaining “a foundational understanding of methane emissions in oil and gas,” which is necessary to address the issue. And she pointed out that the 80/20 rule applies to methane emissions; 80% of the emissions come from 20% of sources. Many of those sources are what are known as super-emitters. Focusing on the super-emitters, she said, can have a significant effect on reducing methane releases.

A frequent theme of the talk was the uncertain regulatory environment brought about by the new US presidential administration. Narasimhan gave the example that, when the Trump administration took over from the Obama administration, the US Environmental Protection Agency was set to expand source performance standards from applying only to new or modified facilities to existing facilities. The new administration has put a halt to that.

Narasimhan said that, despite regulatory uncertainty, opportunities exist for companies looking at the issue of methane. These opportunities, he said, include chances for reduced loss of product and a boost in brand perception with stakeholders and the public. Controlling methane release also will have the added effects of reducing the release of other traditional pollutants, such as other greenhouse gases and particulate matter, and meeting additional regulations.

Narasimhan said that working to control methane also will present the opportunity of innovation, a claim reiterated by Boling.

Boling said he thought that regulation was not a solution to the problem of methane. “This will be solved by innovation, not regulation,” he said. “It’s an issue that can be solved, and it will be solved with science and innovation. And that’s what we plan to do.”

19 Apr 2017

SPE Americas HSE Conference Begins With a Blast

Airhorns blasted through the first plenary session of the 2017 SPE Health, Safety, Security, and Social Responsibility Conference—North America, interrupting the talk and surprising attendees despite the prominent warning signs outside the venue warning of the potential noise. “How many of you actually expected airhorns to be used,” asked Tom Knode, the moderator of the session. Very few people raised their hands. The surprising stunt illustrated the ways our brains can disregard clear warnings.

From left, Susan Koen, Nada Wentzel, and Tom Knode discuss the brain’s role in safety during the first plenary session of the 2017 SPE Health, Safety, Security, and Social Responsibility Conference—North America conference in New Orleans. Credit: Adam Wilson/SPE.

Enhancing safety by understanding how the brain works was the premise of the session, and the following days’ plenary sessions will build on this brain-centric analysis of safety.

Speakers Nada Wentzel and Susan Koen presented an examination of the brain and its blind spots and how they apply to safety. Wentzel is global solutions director of The Jonah Group and started the conversation by looking at how the brain works and how an understanding of this can enhance safety.

“The bulk of our behavior is based on unconscious decisions,” she said. “So, consider that the real opportunity is for us to get interested in how we make decisions so that we are actually enabling people to be safer, to be better.”

Koen continued the brain discussion by demonstrating blindspots in the brain’s ability to detect hazards. Repetitive actions and fatigue can lead to the brain failing to register important information. “People have to actually learn the skill of noticing,” she said. “It has to be taught.”

Koen expanded the theme as a speaker at the second plenary session on the second day of the conference. She was joined by John Carroll, professor  from the Massachusetts Institute of Technology’s Sloan School of Management.

The Day 2 session, “Culture Eats Strategy for Breakfast: Group Behavior and How To Reach the Culture Tipping Point,” expands the brain-centic view of safety from the individual to the group.

11 Apr 2017

2017 SPE Americas HSE Conference Focuses on Sustainability

Sustainability will be a driving concept for the 2017 SPE Health, Safety, Security, Environment, and Social Responsibility Conference—North America, which is scheduled from 18–20 April in New Orleans. Three plenary sessions and several special sessions will branch out from the theme “Sustaining Our Future Through Innovation, Collaboration, and Capital Efficiency.” A technical program will see 46 papers presented in 14 sessions.

Plenary Sessions
The conference will be anchored by three plenary sessions, one on each day.

The first, titled “What Were They Thinking? A Look at How the Brain Works and Why That Is Important to HSE Professionals,” will examine the mechanisms of the decision-making process with a view on how hazard assessment can be introduced into it. Speakers will be Nada Wentzel from The Jonah Group and Susan Koen from Round-the-Clock Resources.

Koen will also be a featured speaker for the second day’s plenary session, titled “Culture Eats Strategy for Breakfast: Group Behavior and How To Reach the Culture Tipping Point.” John Carroll from the Massachusetts Institute of Technology’s Sloan School of Management will be joining her. Their presentation will build on the brain science presented in the previous plenary session and will consider how understanding social science and human behavior in groups can lend insight into effectively shaping a desired culture.

Wentzel will wrap up the plenary sessions on the third day with a look forward to implementing the concepts presented the previous two days. The third plenary session is titled “Now What? Practical Application of the Concepts To Achieve Best-in-Class HSSE Performance.” Examples of how brain and social science concepts have been applied will be the focus of this discussion and will give attendees ideas for putting the theory into action.

Panel Sessions
In addition to the three plenary session, the conference will feature four panel sessions:

  • “Methane and Other Greenhouse Gases: Now What Do We Do?” with speakers Mark Boling from Southwestern Energy, Ramesh Narasimhan with Environmental Resources Management, and Hillary Hull from the Environmental Defense Fund
  • “Navigating the Security Kaleidoscope in a Lean Operating Environment,” with speakers Ken Keiser from Parsons Corporation, Kenneth Carter from Exxon Mobil, and Robert Ream from BHP Billiton
  • “Can Someone Help Us Understand the Proposed Environmental Rules?” with speakers Steven Roche from Cimarex Energy, Dustin Van Liew from the International Association of Geophysical Contractors, and Terri Thomas from the Bureau of Ocean Energy Management
  • “Shaping Our Industry’s Next Chapter … ,” with moderators Jack Hinton and Wendy Harris, both from Baker Hughes

Student Challenge
Returning for the third time, the student challenge gives university students interested in health, safety, security, environment, and social responsibility careers the opportunity to test their knowledge in a tournament-style quiz contest. The contest includes quick, definitive lightening-round questions and longer thought-provoking questions for each university team. Points are awarded for each correct answer, with the winning team announced at the end of the challenge. The six teams participating this year are Colorado School of Mines, Louisiana State University, Oklahoma State University, Stephen F. Austin State University, Texas Tech University, and the University of Oklahoma.

Read more about the conference here.

Register for the conference here.