A Social License To Operate: Overcoming the Culture Clash

The takeover of a public park in Turkey to build a shopping mall. The raising of the public bus fare in Brazil. The government closing Greece’s major newspaper. What do these events have in common with the Keystone XL pipeline proposal? The authorities in these situations made a decision to impose a project solution without talking with the people who would be affected by the decision.

The Turkish government decided to take over a small public park to build a shopping mall without seeking input/feedback from the community. In Brazil, raising the bus fares (mostly affecting poor people) seemed to be a reasonable approach to raise revenues for the upcoming 2016 Summer Olympic Games. In Greece, the shutdown of the government newspaper and the firing of a couple of dozen workers were done to demonstrate austerity to the European Union.

In the United States, the route of the Keystone pipeline, proposed to carry tar sand oil from Alberta, Canada, to Houston for refining, was planned to run across Nebraska’s Ogallala aquifer and sandhills, which are sacred cultural icons.

The problem? These decisions were made from the top-down on the basis of internal considerations, revealing a lack of capacity for dealing with emerging social realities across the globe. The decision makers neglected to understand that citizen engagement is a key to business success in today’s volatile world, where people are insisting on managing, predicting, and controlling their environments.

Small acts that seem inconsequential to government and industry can spark revolts and reactions that, in the cases of Turkey, Brazil, and Greece, have the potential to bring down the governments. The Keystone project could be lost because of the groundswell against the project stimulated by the routing mistake.

Ten years ago, in a more formally structured world, these decisions would not have mattered. These days, when citizen resistance and mobilization are becoming routine and global, these decisions matter.

The JKA (James Kent Associates) Group has been tracking this emerging global trend for 30 years and has termed it “citizen-based stewardship.” It refers to citizens who claim ownership of geographic places and take it upon themselves, with or without government or corporate partners, to ensure that their families and communities are healthy and safe.

Transmission line corridors, alternative energy sites, and the proliferation of oil and gas development have improved our energy outlook, but have also affected people across the US. In particular, the hydrofracturing of wells for natural gas production has caused concerns in recent years. It is not difficult for a concerned public to find cause for alarm. The fracturing issue has now fused in national perception and become widespread throughout hydrofracturing areas, while also spreading turmoil to more traditional oil and gas activities.

Resistance has developed because much of the hydrofracturing is being done in geographic areas where citizens are not familiar with fossil fuel development. Their cultural experience and practices have done little to prepare them for the onslaught of drilling activity. When people have no mechanism in their daily lives to deal with intrusive change, their only avenue for relief is reaction and resistance. Studies such as the one cited earlier add fuel to the fire when the development company has no citizen connections or engagements to rely on for interpretation of the findings. With no mechanism for communicating, the company is vulnerable not only to local resistance, but also to national groups that will use these studies to benefit their causes.

The top-down approach to project design is still in place. Projects are designed by engineers from locations miles away from the site. It is common practice to expend extensive engineering effort early in a project during the front-end engineering and design (FEED) phase. This design process leads to only the technical issues being addressed. The engineering culture wants the design firmly in place, with all the technical details worked out, before going public for review.

Companies prefer to hold their cards close to their chests to avoid revealing information to residents who they fear could stimulate conflict. For example, the people who negotiate the rights-of-way for projects have an incentive to keep things quiet while they interact with landowners. Public relations personnel recognize that failure to be transparent invites suspicion and mistrust, yet they are constrained by corporate cultures that emphasize control of the development process.

Such approaches are no longer productive or profitable. Corporate neglect of citizen engagement is a costly affair for everyone.

Clash of Two Cultures

The situations described illustrate cultural clashes between the communities’ horizontally organized systems vs. the corporations’ vertically organized authority—clashes of perceptions and practices. The community is oriented to caretaking and survival, and the industry is oriented to economic gain.

In this article, we show that the cultural clash is not inevitable. The two systems must come into harmony if the oil and gas industry is to remain productive and profitable. When dealing with communities, it is essential to recognize that the adage “one size fits all” is not applicable. Just as each project is technically different, each community is different—with different histories, beliefs, and issues.

In any cultural system, life is predictable through routines and language. As change occurs, people need time to adjust within their cultural settings. People continually deal with emerging issues and solve them. It is when there is intrusion, without recognition of how the culture has previously handled change, that projects are at risk.

The old (traditional) approach is to design in isolation, propose the design, and then defend it against opposition. This approach is depicted as a wedge into the community, fostering disruption and mistrust, and creating local issues. If these issues go unresolved, they offer outside groups the opportunity to take advantage of unresolved citizen issues in the pursuit of their own agendas, leading to formal opposition groups such as occurred with the Keystone XL pipeline project.

The new model gives residents a voice and emotional ownership, which, in turn, gives the company a social license to operate. If intentional efforts are made to resolve legitimate citizen issues early in the design stage and to optimize the local benefits of a project, citizen ownership through absorption will serve as a buffer for the project against outside forces.

Preventing the Escalation of Emerging Issues

The key to understanding culture from a practical point is to learn about the issues that are currently present in the community or that the project may create. Community issues do not begin as uncontrollable events that are guaranteed to stop projects. Instead, they emerge as legitimate questions that citizens have about a proposed project.

It is not the case that the local community has formed a steadfast or universal opinion. Rather, people are simply seeking answers to basic questions, including: What will this project do to my property value? Will it increase traffic? How will it affect air and water quality? How many people will be hired locally? Will the project enhance the growth of local businesses? Will community- based training programs or college curriculums be offered to prepare our citizens and youth for employment and advancement opportunities? Will the company ensure local benefits from the project, such as reduced electric rates? Will there be assistance for establishing businesses to service the project?

When the basic questions are not addressed, emerging issues can easily escalate to actual ones. By this point, people have formed their own opinions, and the community dialogue changes from seeking information to developing positions. The questions turn to negative statements, such as: This project will ruin our property values. The traffic and noise from this project will be unbearable. Children and seniors with asthma will suffer, and the incidence of cancer will increase. They will not be contracting or hiring locally. Local businesses will not benefit from this project and may actually lose revenue. The skills necessary for employment are beyond most of our citizens. The company just wants to exploit our community for profits.

These sentiments may not be based on facts, but, without community engagement, perception becomes reality.

If the actual issues are not addressed effectively, events will only become worse. Community opposition is often joined by opportunistic ideological groups, followed by political positioning. Polarized positions are taken toward the project, and the opposition quickly moves it into a disruption. By this point, the project proponent has virtually lost the ability to resolve the individual and community issues. The issues that could have been resolved, had the citizens been engaged in the early phases, are taken over by outside forces who oppose development at anytime, anywhere.

The Solution: The Social Ecology Approach

The social ecology approach involves attention to the community on three concepts: a descriptive approach for understanding informal networks and their routines; understanding human geography, or the ways that residents relate to their neighborhood and community areas; and issue management, which creates alignment between citizen interests and company interests. Social ecology is a science of community based on cultural processes operating in any geographic area or in any resource company.

The following five rules help in gaining an understanding of local cultural issues:

  1. You, as a project proponent and an outsider and guest of the community, have a responsibility to learn about the community before acting.
  2. People know more about their environment than anyone else. It is the job of the project manager to bring forward this knowledge and perception to make use of it.
  3. The project proponent must ensure that citizens can predict, control, and manage changes in their environment so that the effects of the project are absorbed into the fabric of the community and the benefits are optimized.
  4. People trust day-to-day and face-to-face communication, which is essential if the project is going to fit the community.
  5. Whoever understands the human and physical geography that creates the community’s sense of place controls the project outcome.

Procedures to implement the five rules of culture change are:

  • Contact and engage with citizens early to avoid surprises. Community engagement must be at parity with technical disciplines in tactical and strategic project decision making. For example, extensive technical work during FEED should be accompanied by extensive community engagement.
  • The objective of early engagement with the community should be learning. Learn the informal networks of a community and its communication patterns as the basis for engagement. Learn the language that people use to communicate on a routine basis and use that in project development language.
  • Engage the affected people directly. Do not rely on formal groups or stakeholders in understanding community interests. Do not use public meetings as a means of initial citizen contact. Use the gathering places of a community to foster effective project communication and as a means to become an insider to the culture.
  • Understand human geographic mapping systems that reflect cultural boundaries, or the ways that people identify and relate with their landscape, to foster responsive siting of facility and corridor projects.
  • Deal with citizen issues at the emerging stage of development when the costs of time and resources are lowest, rather than allowing issues to reach the disruptive stages.
  • Make use of local company staff, when possible, at the design and implementation stages and provide management support in assisting them to create an approach from the bottom to the top.


The social risk to project success has become too great for the oil and gas industry not to recognize formally and systematically act upon the underlying causes of how citizens’ participation often moves from support to active opposition. Whether the project is on public or private land, it deserves this level of attention.

Because community relations are now linked to project success, upfront engineering should include upfront community assessment and the establishment of an informal word-of-mouth communication system. Knowing about culture and its influences on citizen behavior presents a creative and successful way for industry leaders to steer their projects around pitfalls and other surprises that cause delays or stop projects altogether.

Understanding the culture of a community facilitates collaboration in a manner that directly benefits the citizens and keeps a project on schedule, saving time and money. The true currency of the present and future is the sustained goodwill that a project creates and maintains with the communities it affects.

Fuel Fix | 27 August 2013

Hold the Water: Some Firms Fracture Without It

The use of one precious fluid—water—to recover another—oil—chafes in dry country. Rivers and groundwater are receding in Texas for lack of rain and overpumping just when the demand for water in new oil and gas fields is growing.

Now, one exploration and production company in San Antonio is fracturing its wells mostly without water, using gas liquids instead, in a practice that is beginning to spread.

Fracturing, or fracking, refers to using fluid under pressure to create fissures held open by sand. Oil or gas flow back through these channels and up through a well.

BlackBrush Oil & Gas is using a butane-rich mix for fracturing after being confounded by many of the same obstacles other energy companies face in buying, moving, and disposing of large amounts of water.

“Ranchers don’t want to give up their water,” said Jasen Walshak, production manager at BlackBrush.

Forbes | 6 August 2013

Why No One Trusts Oil Companies on Fracking

When I speak to energy industry groups, I am most frequently asked variations on these two questions:

1) Why does the oil industry have such a bad reputation with the public and

2) What can be done about it?

One answer is that the industry needs to stop acting like it has something to hide. On the debate over hydraulic fracturing, in particular, the industry ceded its chance to lead the public discourse because it retreated to its usual posture of denial and opacity rather than transparency. In recent years, some companies have tried to change that, but the seeds of doubt have already been sown in the public’s mind.

And then, companies do things like this. Mother Jones reports that landowners in Pennsylvania recently settled a dispute with Range Resources for USD 750,000 that related to alleged health and environmental damages from hydraulic fracturing on their land. As part of the deal, Range’s attorneys required the company agree to a gag order that prevents the family from commenting “in any fashion whatsoever” on fracturing activities.

Endangered Species & Wetlands Report | 16 July 2013

Report Urges Comprehensive Study of Deepwater Horizon Effects

While numerous studies are under way to determine the effects of the Deepwater Horizon oil spill on the Gulf of Mexico, the extent and severity of these effects and the value of the resulting losses cannot fully be measured without considering the goods and services provided by the Gulf, says a new report from the National Research Council. The congressionally mandated report offers an approach that could establish a more comprehensive understanding of the effects and help inform options for restoration activities.


OilVoice | 1 July 2013

BP Canada and BP Foundation Donate USD 450,000 to Flood Relief

BP Canada is donating USD 250,000 and the BP Foundation is providing an additional USD 200,000 to the Canadian Red Cross to assist in Southern Alberta flood relief efforts. The BP Foundation is a separate legal entity from BP and has donated more than USD 200 million since 2006 in North America.

“The amazing efforts of first responders, the City of Calgary, and people stepping up to help friends, family, and strangers only reinforces how fortunate we are to live in such a strong and proud community,” said Christina Verchere, president of BP Canada. “This donation underscores our commitment to helping in the flood relief efforts underway in our city and throughout Southern Alberta.”

Marathon Oil | 1 July 2013

Marathon Outlines Human Rights Commitment

“Marathon Oil strives to conduct our operations safely and responsibly, and to respect the human, cultural and legal rights of individuals and communities where we operate. We respect human rights within our workforce, across our value chain and throughout our business relationships. This commitment stems from the United Nations Universal Declaration of Human Rights (UDHR) and the International Labor Organization’s Declaration on Fundamental Principles and Rights at Work.

“Our commitment to the UDHR is underscored through our participation in the Voluntary Principles on Security and Human Rights since 2005. This international initiative guides extractive companies in maintaining the safety and security of their operations globally within a framework that ensures respect for human rights and fundamental freedoms. Marathon Oil implements the voluntary principles in locations where we have operating responsibility and identified risks. We have developed specific implementation guidelines for conducting risk assessments, interacting with public security and managing contract security. In non-operated locations, Marathon Oil works with business partners to promote awareness of the voluntary principles.”

18 June 2013

SPE Holds First HSE Conference in Latin America

SPE is holding the first Latin American conference on HSE 26–27 June in Lima, Peru. The SPE Latin American and Caribbean Health, Safety, Social Responsibility, and Environmental Conference will bring together experts from two geographic locations to share best practices, technological advances, and new ideas for HSE.

Experts from Latin America and the Caribbean will conduct more than 50 technical and poster presentations that showcase the latest technological advances and innovative applications in HSE. The opening plenary session, “How to Address and Obtain a License To Operate in Sensitive Areas,” features an in‐depth discussion on social and safety risks, control and transportation of hazardous materials, wastewater treatment, and more.

The second day’s plenary session, “Measures and Improvements After Industry Accidents,” addresses the lessons learned from previous accidents and the latest measures and improvements in managing the prevention and response of oil spills.

“This conference is important to the Latin American and Caribbean regions,” said Carlos Arturo Rosas Mota, conference program committee chairman and HSE manager for Schlumberger Peru. “It is a great opportunity to share best practices and case histories and to learn from each other’s experience. Doing so will help us in our efforts to improve HSE performance for the betterment of the entire industry and all its stakeholders.”

Technical sessions, which will have simultaneous translation in English and Spanish, fall into five categories.

  • Environment: Topics include “Designing an Optimal Offshore Pipeline Route To Minimize Impacts on Coastal and Marine Biodiversity,” “The New Structure for International Oil Spill and Preparedness & Response,” and “The Challenges for the Treatment of Drilling Fluid Wastes Generated by E&P Industry in Brazil.”
  • HSE Management: Topics include “The Human Chain—A Different Approach to Behavior Safety Program Through the Use of Social Marketing Concepts,” “Assessing Risks and Regulating Safety Standards in the Oil and Gas Industry: The Peruvian Experience,” and “Building Strong Stakeholder Relations and Minimizing Operational Risks in the Oil and Gas Industry Through Market‐Based Certification.”
  • Social Responsibility: Topics include “The Social Side of Unconventional Oil and Gas in Latin America,” “Innovative Ways to Inspire New Employees to Embrace an HSE Culture,” and “Social Responsibility: A Comparative Study of Oil Majors—Who is the Best?”
  • Safety: Topics include “Integrity Management System Based on Risk Analysis: A Tool to Prevent Failures on Pipelines Which Cross Amazonian Jungles and the Andes,” and “A Study of Rollover Occupant Injury Mitigation Using Dynamic Testing To Evaluate Alternative Protection Systems.”
  • Health: Topics include “Improving the Health of the Workforce May Improve Work Performance,” “Cardiovascular Risk Impact in the Oil Industry,” and “Obesity in the Oil and Gas Industry Population.”

The conference includes an exhibition that will showcase some of the latest developments and trends in HSE.

Shale Energy Insider | 3 May 2013

Report Says Hydraulic Fracturing Is Depleting Water Resources

The Western Organization of Research Councils has published a report titled “Gone for Good: Fracking and Water Loss in the West” on the issue of depleting water resources caused by hydraulic fracturing. The report focuses on the states of Colorado, Montana, North Dakota, and Wyoming.

According to the report, 87 billion-174 billion gallons of water were used for hydraulic fracturing in the country last year and this “level of water use for oil and gas production simply cannot be sustained.”

The report also said that the data and processes used to track water used for hydraulic fracturing are not sufficient.

Defending the use of fracking to extract shale oil and gas, North Dakota Petroleum Council spokeswoman Tessa Sandstrom said that shale well consumption accounted for 0.3% of freshwater used in the US in 2011, compared to 0.5% used by golf courses.



McGuireWoods via Mondaq | 30 April 2013

West Virginia Judge Recognizes Trespass By Hydraulic Fracturing

The notion that an oil and gas producer can commit a trespass by engaging in hydraulic fracturing gained traction on 9 April, when US District Judge John Preston Bailey of the Northern District of West Virginia denied a motion for summary judgment filed by oil and gas producer defendants Chesapeake Appalachia, Statoil USA Onshore Properties, and Jamestown Resources in Stone v. Chesapeake Appalachia. In this case, Chesapeake Appalachia drilled a horizontal Marcellus Shale well with a vertical well bore within 200 feet of the plaintiffs’ property and a horizontal well bore within “tens of feet” of the plaintiffs’ property. Although Chesapeake Appalachia maintains a lease for the oil and gas underlying the plaintiffs’ property, plaintiffs’ lease does not authorize pooling or unitization of the Marcellus formation.


Oil and Gas Facilities

Why It Is Time to Get Serious About Public Communication

The oil and gas industry is no stranger to controversy. As with other hot button issues, how one views the industry is a good indicator of where one falls on the political spectrum.

From the Exxon Valdez oil spill in 1989 to the Macondo blowout in 2010, the industry has had to face intense public scrutiny and develop effective communication and public relations strategies.

Making meaningful public engagement happen is tricky. A lot depends on context, a community’s previous experiences with extractive industries and its political allegiances, and the economics and leadership (or lack thereof) in a particular area. Yet public engagement is becoming more necessary.

Read the full column here (PDF).


Reed Smith

Oil and Gas Companies Team With Environmental Groups To Develop Performance Standards

The Center for Sustainable Shale Development (CSSD), an environmental organization in Pittsburgh, Pennsylvania, has announced a program of performance standards that has been mutually agreed to by a number of environmental groups and oil and gas companies. The program is voluntary and does not create any new requirements or restrictions for oil and gas companies. However, it is possible that state regulators will look to the performance standards when drafting new regulations and permitting requirements or that the performance standards will become unofficial best practices in the industry.

Currently, the program is directed toward states in the Marcellus and Utica shales, including Pennsylvania, West Virginia, Ohio, and New York. The participants include Shell, Chevron Appalachia, EQT Corporation, and Consol Energy, as well as the Environmental Defense Fund, the Clean Air Task Force, and the Pennsylvania Environmental Council. The program will be overseen by a 12-member board. Four seats on the board are reserved for the oil and gas industry, four are reserved for environmental groups, and the last four are reserved for various independent individuals, such as former Environmental Protection Agency Administrator Christine Todd Whitman and former Treasury Secretary Paul O’Neill.


Companies Team Up To Examine Responsible Arctic Development

Arc-00009 (1)In a joint report prepared for the Offshore Northern Seas Conference in 2012, Det Norske Veritas and the Fridtjof Nansen Institute study crucial risk-management issues related to Arctic operations. Their report concluded that, in order to safely develop Arctic resources, there is a need for improved technology, oil spill preparedness, and close cooperation between the authorities, industry, and society.

The report tackles crucial questions, such as

• What are the distinctive features of the Arctic and what kind of risks emanate from them?

• What international framework exists for the regulation of economic activity?

• What type of management system is most relevant?

• How can companies manage risk in the region?