Rachael Seeley
Special Projects*
The newfound abundance of oil and gas unlocked by the shale revolution has yielded increased public scrutiny of the oil and gas industry in the US, bringing with it a host of new challenges and opportunities for constructive collaboration.
A Gallup poll conducted in 2012 found that nearly two thirds of Americans hold a negative view of the oil and gas industry.
Public disdain is palatable. "Fracking" is now a household term with a connotation of vulgarity. Hydraulic fracturing bans are proposed in Michigan, Nevada, Maryland, Massachusetts, and Connecticut and there's no end in sight to a de-facto moratorium in New York state.
In this atmosphere of public animosity, maintaining a social license to operate is critical.
A growing number of companies are demonstrating leadership in this area by working with stakeholders to develop policies that address environmental concerns.
Finding solutions together
In Colorado, Noble Energy Corp., Anadarko Petroleum Corp., and Encana Corp. collaborated with state regulators and the Environmental Defense Fund to write rules that reduce the emissions of methane and volatile organic compounds (VOCs) through the cycle of oil and gas drilling, production, and transportation.
The rules, adopted in February, require operators to routinely inspect for and repair methane leaks and install technology to capture 95% of emissions of VOCs and methane.
In North Dakota, an industry-led taskforce drafted a plan to cut gas flaring to 5% of state-wide production by 2020 from the current 30%.
Ron Ness, president of the North Dakota Petroleum Council, said producers and midstream providers that are ordinarily fierce competitors had to work together to meet the challenge, ultimately realizing. "If we all don't work together and find a solution then we're all going to be in the penalty box," he said. The state adopted the task force's recommendations in March.
Tighter environmental protection standards are likely to follow in more states and when these rules are drafted it's best to have a seat at the table. Fostering a cooperative working relationship with community leaders and government officials is paramount.
Trouble brewing in Oklahoma
Now controversy is brewing in Oklahoma where studies have linked an increase in seismic activity to fluid injection into a handful of wastewater disposal wells. The state has experienced a string of earthquakes in recent years. The largest was a magnitude 5.7 quake that struck near Prague, Okla., in November 2011 and ranked as the most powerful ever recorded in the state.
Danielle Sumy, coauthor of a study published by the US Geological Survey and researcher with the Seismicity Consortium at the University of Southern California, has suggested a method for reducing the risk of triggering seismic activity.
Researchers could more easily identify a link between seismic activity and an injection well if daily, and even hourly, information on the volume and rate of water injection was made available to researchers, Sumy said.
Only two or three of the more than 4,000 wastewater injection wells in Oklahoma have been linked to earthquakes. Combining real-time data collection with seismic monitoring could be used to create an early warning system that would alert wastewater well operators when unusual seismic activity is triggered.
One thing is certain: The oil industry will receive the crux of blame if Oklahoma seismic activity worsens. Demonstrating leadership now is critical.
Lemons into lemonade
Innovations devised by the oil and gas industry have already rendered the impossible possible, reversing a trend of declining US oil and gas production into a bounty.
US households now pay about one third of what their European counterparts pay for natural gas, and billions of investment dollars are pouring into gas-intensive industries in the US. Plans for LNG import facilities have been scrapped in favor of export facilities, and rising oil production is creating calls for easing restrictions on the exportation of US-produced crude.
The ingenuity and tenacity of the oil industry fueled the shale revolution. Now, that same ingenuity and tenacity is needed to safeguard the environment and ensure that this newfound energy abundance is lasting.
The world is watching.
*Rachael Seeley is editor of OGJ's Unconventional Oil & Gas Report.
