As the shale revolution changes the map of oil and natural gas development and shifts the balance of production between regions, public acceptance is an increasing challenge. The unconventional resource boom has brought intensive drilling and production operations to areas often unaccustomed to these activities and frequently more populous than traditional petroleum development areas.
A variety of public concerns have assumed a high profile, including the environmental issues of water use; perceived risk to groundwater aquifers; waste disposal; truck traffic, dust, and noise; and emissions.
While the success of production from shales and other tight-rock formations draws attention nationally and globally, its future depends much on the attention and reception it receives locally. As shale drilling has surged, public eyes may be more focused on the community impacts of oil and gas operations than ever before.
Some jurisdictions have imposed moratoria or even bans on the use of hydraulic fracturing, which is an essential component of the success of shale development. The risk of similar measures and additional restrictions spreading to other areas is real. There is increasing industry recognition of the need to reach out to communities, share information, and listen to stakeholders.
Enactments such as fracturing moratoria and bans are “the single thing that can stymie more development in these unconventional resource plays,” said Clay Bretches, chief executive officer of Sendero Midstream. Formerly vice president of E&P services and minerals at Anadarko, Bretches chaired the coordinating subcommittee of the North American Resource Development Study for the National Petroleum Council’s (NPC’s) report, “Prudent Development—Realizing the Potential of North America’s Abundant Natural Gas and Oil Resources,” presented to the United States Secretary of Energy in September 2011.
For the industry, Bretches and others said, sustainable success in field development demands an increased willingness and ability to engage all stakeholders, including communities and local governments, nongovernmental organizations (NGOs), and a variety of industry-related bodies. This is in addition to higher levels of government that are customarily involved. The need for increased stakeholder engagement was emphasized in the “Prudent Development” report.
Colorado Methane Regulation
A major success in collaboration between stakeholders occurred recently in Colorado, as a result of Governor John Hickenlooper asking the state Department of Public Health and Environment and the state Oil and Gas Commission to develop regulations to detect and control fugitive-methane emissions from oil and gas operations.
This led to the state’s three largest operators, Anadarko, Noble Energy, and Encana, collaborating with a major NGO, the Environmental Defense Fund (EDF), to develop a consensus on appropriate standards—an effort that involved extensive interaction with the public, community groups, industry bodies, and regulators.
In November 2013, the governor announced an agreement representing the first state-level regulation in the US of fugitive-methane emissions from oil and natural gas facilities. The intent of the methane regulation was to reduce overall greenhouse gas (GHG) emissions and reduce methane’s contribution to surface ozone levels in metropolitan Denver, which is in nonattainment with US Clean Air Act standards. Rules under the regulation established controls on equipment and infrastructure throughout the supply chain and requirements for regular detection and repair of leaks.
The impetus for the new law reflected the favorable and unfavorable dimensions of the shale boom. It was clearly recognized that the growth in natural gas use can significantly lower GHG emissions by displacing the use of coal for electrical power generation. On the other hand, methane (the primary component of natural gas) is a GHG that the Intergovernmental Panel on Climate Change has noted is 28 to 84 times more potent than CO2in trapping energy, depending on the time horizon.
Therefore, leaks of methane at any point in the supply chain erase some of the advantages of shifting from coal to natural gas use. More research is needed to improve estimates of methane leakage throughout the supply chain.
Rules To Minimize Leaks
“When you look at an oil and gas facility, you have things like pumps, you have storage tanks, pipeline connections, and pipeline flanges, and there is an associated leak rate with those pieces of equipment and infrastructure,” said Korby Bracken, director of health, safety, and the environment for the Rocky Mountains at Anadarko. “We wanted to come up with some enhanced rules to minimize those potential leaks. It was a holistic look at it. And it not only affected upstream operations such as wellsites, but also midstream operations such as compressor stations and gas processing facilities.”
The rules extend to downstream pipeline and local distribution operations all the way to the end user.
“We sat down across the table from the state’s three leading oil and gas producers to see if we could figure out a sensible way to address the issue,” said Mark Brownstein, associate vice president and chief counsel for the US Climate and Energy Program at EDF. “We came up with a set of principles that ultimately got developed into what the government adopted.”
Stakeholder engagement is essential to making progress on key issues of public concern from an industry and environmentalist perspective, Brownstein believes.
“There is quite a bit of controversy around unconventional oil and gas development in many parts of the country,” Brownstein said. “The only way that you’re really going to understand what’s concerning people, and therefore what can be done about it, is by engaging with them. The flip side is also true. As an environmental advocate, I strongly believe that you don’t make change simply by talking with people who agree with you.
“So we put a premium on engaging with the oil and gas industry precisely because if we think there are problems, and we do, they’re only going to get solved if we engage the people that have the ability to solve them. Whatever production is going to take place in Colorado or anywhere else, it needs to be done right.”
Colorado’s process of developing regulations is more stakeholder-oriented than many other states’, in which state agencies write the regulations with limited stakeholder input. In Colorado, the process can take many months of discussion and debate among stakeholder groups outside of the formal hearings process.
A Collaborative Process
“It’s extremely collaborative,” said Brad Miller, general manager of the Rocky Mountain region at Anadarko. “You spend a lot of time, weekends and nights, white-boarding with the environmental community or people from local communities—the stakeholders that have concerns and want input. We will have long sessions trying to come up with the right answer.
“Colorado is unique, and our efforts are working here,” Miller continued. “It may be painful at times, but we’re constructively reaching solutions. It is a good process that requires the right political leadership, and I have testified to that several times at the Colorado Oil and Gas Commission.” At hearings, many of the stakeholders are present, “and it is a vigorous round of debate,” he said.
Emissions data used by Colorado to develop the new regulations included findings from a recent fugitive-methane emissions study by the University of Texas (UT) at field drilling and production sites. The study was undertaken by the EDF in partnership with nine oil and gas companies, including Anadarko and Encana.
There has been limited previous data on field methane leakage and estimates have varied widely. The UT study is one of two EDF field fugitive-methane emission studies published in a peer-reviewed scientific journal. Another 14 EDF fugitive-methane studies are in progress, all intended for peer-reviewed journal publication, Brownstein said.
Industry reaction in the state to the methane emissions regulation has been mixed. One major midstream company originally fought the proposal but chose to support it after small changes, which were broadly favored, were made in the final rule-making stage. However, some producers, particularly smaller ones, have criticized the agreement because of the added expense the rule may place upon them. For example, infrared cameras needed for monitoring leaks can cost more than USD 100,000 each. Anadarko is working through industry channels to find ways to share this equipment and reduce the burden on smaller operators, Bracken said.
Best-Practices Groups
In shale plays across the US, an important vehicle for enhancing stakeholder engagement; reducing the environmental footprint of operations; and spreading technical knowledge and innovation is the best- or recommended-practices group. A number of such groups have formed, led by industry companies active in area shale development. These include
- The Appalachian Shale Recommended Practices Group
- The South Texas Energy and Economic Roundtable
- The Eagle Ford Task Force (Texas)
- The Responsible Operators Council (Colorado)
The formation of these groups largely reflected the themes of the NPC Prudent Development report and the 2011 Secretary of Energy Advisory Board report on shale gas development. The NPC document, for example, stressed the need for regional “councils of excellence” that work with government, academics, NGOs, and other stakeholders to identify and disseminate effective environmental, health, and safety practices.
The councils would be “light on bureaucracy,” the report said, and in addition to sharing technical information from the participating stakeholders, could communicate the relevant work of industry and public-sector organizations, such as
- The Society of Petroleum Engineers
- The State Review of Oil and Natural Gas Environmental Regulations
- The Ground Water Protection Council
- The Interstate Oil and Gas Compact Commission
- The standard-setting program of the American Petroleum Institute
Regardless of whether the groups are known as councils of excellence, recommended-practices groups or something else, these bodies are positioned well to operate on a broad front, which could mean interacting with regulators, communities, and other companies and organizations.
“As technology has advanced in the oil and gas world, have regulators been able to keep up with it? This is a way to help them ensure that the rules they apply reflect today’s technology and not that of 10 years ago,” Bretches said.
Smaller companies particularly could benefit. “The councils could disseminate recommended practices to producers who may not be big enough to have a staff of environmental, health, and safety specialists,” Bretches said. “We have thousands of small producers. We don’t want them squeezed out of the game because they don’t have the same wherewithal as some of the major companies.”
Research Center Initiative
In the Bakken Shale of North Dakota, another approach to improving field performance economically and environmentally is in full swing involving a consortium of oil producers and the Energy & Environmental Research Center (EERC), a contract applied research organization at the University of North Dakota.
The Bakken Production Optimization Program is a 3-year EERC initiative in partnership with producing companies to increase well productivity and economic output, decrease environmental impacts of wellsite operations, and reduce demand for infrastructure construction and maintenance.
EERC regularly engages with North Dakota industry organizations, state agencies and the legislature, the state association of oil and gas producing counties, and the public. The center has published fact sheets on flaring, water issues, and naturally occurring radioactive material, and EERC staff often meets with civic groups to discuss the impact and management of Bakken Shale resources. One way it does so is to participate in summer Cook Fests held in small oilfield towns by the North Dakota Petroleum Council.
“These are places where the population at large can come and listen to educational talks, and we participate in those about Bakken development and the things that are going on,” said John Harju, associate director of research at EERC. “We’ve got good factual information that we continually try to push out there and we are also listening to them. I think that collectively all of these things we do really make a positive difference.”
Ensuring safe, responsible, and environmentally acceptable production and delivery of oil and gas is essential, if the public is to continue to benefit from the development of these resources. To meet this standard requires the engagement of multiple stakeholders, the industry, regulators, communities, and NGOs, in a common and sustained effort.