RP takes integrated risk management approach to shale gas development

By Katie Mazerov, contributing editor

DNV, an independent foundation and global provider of risk management protocols, issued on 17 January a set of recommended practices (RP) for managing risk through the lifecycle of shale gas development, including well design, operation and decommissioning. The RP, which will serve as the foundation for development of a globally recognized standard for safe and sustainable shale gas extraction, was developed over an 18-month period and is based on general risk-management principles, industry best practices and standards. It focuses on eight key areas:

• Management systems
• Health, safety, and the environment (HSE)
• Well integrity
• Management of water and energy
• Infrastructure and logistics
• Public engagement
• Stakeholder communication
• Permitting

“Shale gas has been a game-changer in the global energy market, and the North American gas revolution has awakened many shale-gas nations around the world,” said Remi Eriksen, CEO of DNV Maritime Oil & Gas. “But, the shale gas industry is also at the center of a political debate, with public opinion polarized. Shale gas recovery can only gain widespread public acceptance by implementing operational best practices and documenting that production can be done in a safe and responsible manner.” Acknowledging that many companies and organizations have already developed recommendations and guidelines, he noted that a complete risk management framework has not existed.

The RP takes an integrated approach to risk management in an effort to bridge gaps and differences of opinion among major stakeholders, including operators, service companies and drilling contractors, suppliers, local communities, regulators, verifiers, investors and insurance companies, to ensure a sustainable approach to shale development.

“Whereas uncoordinated efforts often fail, this approach can provide a foundation for assessing and analyzing risks and create a path for mitigating those risks while monitoring performance through the lifecycle of the project,” said Richard Green, associate director of the Shale Gas RP. “We believe this new RP will provide a higher level of stakeholder confidence that risks are being considered in accordance with current industry standards and best practices.”

Communicate early and often

The RP recommends conducting baseline surveys prior to the commencement of any shale gas activity, with information disclosed openly to all stakeholders, including the general public. While the document addresses risks common to most natural gas extraction, it also examines those risks specific to shale gas production, such as high density of wells, the use of surface and high-pressure equipment for hydraulic fracturing, water, use and handling of chemicals, waste, greenhouse gas emission, handling of toxic drill cuttings, noise, dust generated during operations and seismic activity. “Seismic activity is typically very low, but it has a high profile, meaning it can be a huge business risk that companies must consider,” said Seinar Thon, associated director, Shale Gas RP.

Awareness of social and cultural practices and attitudes of the local community, understanding of regulations, which vary across nations and from state to state in the US, and respect for use of the land, which may be used for agriculture and/or recreational purposes in addition to shale development, also are important. “Communication needs to be early and frequent, and choice of the messenger is as important as the message itself,” Mr Thon said. For example, operators need to make all stakeholders aware of emergency preparedness and contingency plans.

In developing the RP, DNV collaborated with various groups worldwide, including industry, regulators and academics, and reviewed existing practices and guidelines. The foundation hopes the RP will catalyze additional dialogue and feedback to move the document forward, initially for independent verification and assessment and eventually as an industry standard. DNV also believes the RP can be applied in other unconventional markets, such as coalbed methane.