Water concerns could limit US oil, gas development, speakers say

The oil and gas industry needs to respond more effectively to public concerns about safe water supplies if it expects to realize US unconventional resources’ full potential, speakers at Deloitte LLP’s 2014 Washington Energy Conference warned.

Hydraulic fracturing and horizontal drilling successfully changed the US from a net natural gas importer to exporter, noted Karen A. Harbert, president of the US Chamber of Commerce’s Institute for 21st Century Energy, in her May 13 remarks.

“But this is not a given,” she continued. “Emotions are running high. Opponents with scare stories want those resources to stay in the ground. Colorado is at ‘Ground Zero’ with a ballot initiative that would ban all fracing and place setbacks so far that production would be uneconomic.”

Following his speech about water’s growing importance in any manufacturer’s plans, Gregory J. Koch, Coca Cola Co.’s global water stewardship director, said, “Your data and government permit aren’t enough anymore. Not everyone is at the environmental impact table, but everyone cares about water. You have to convince them their supplies won’t be hurt by your operations.”

A combination of industry expertise and favorable policies will be necessary, suggested BP American Inc. Chairman John C. Mingé. “Companies must be thoughtful about what they go after, and recognize that none of them can do it alone,” he said. “Good relationships with partners, contractors, and governments at all levels will be essential, along with strong public support.”

Work on public image

Deloitte officials also warned against expecting immediate public acceptance of proposed projects at the 2-day conference. “Clearly, the industry needs to work on its public image,” said John England, who leads the financial service company’s US oil and gas practice. During a press luncheon, he said, “The amount of coal that’s been replaced by gas is one story that needs to be told more often.”

Branko Terzik, executive director of Deloitte’s Center for Energy Solutions, meanwhile, said, “An industry that was fully understood in its Texas home didn’t realize it might not be in places like rural Pennsylvania. That was its biggest mistake.”

Harbert said the question for federal policymakers and regulators is whether the US will have policies that match its opportunities. “We’ve seen boom-and-bust cycles in Texas and Alaska,” she noted. “These are opportunities spread across a country that needs to create 20 million more jobs in the next decade. The shale gale could create 3.9 million jobs by 2025. That would be a pretty good down payment.”

The US needs a regulatory process that as fair as what exists in many states, she maintained. “We need to bring forward what’s happening in places like North Dakota and Pennsylvania,” Harbert said. “Governors are the best spokesmen for this because they see what’s happening in their communities.”

She said, “We can’t afford to get this wrong. We could see manufacturing challenged and not investing as aggressively if we do. We need a permitting process that lets us build more pipeline and string more power lines so we can fully use this opportunity.”

Contact Nick Snow at nicks@pennwell.com.

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