DNV Launches Global Recommended Practices for Shale Gas Risk Management
The shale gas boom is in full effect, but concerns from the public over the environmental impact of developing these resources have mired the industry in controversy. DNV has a solution.
The company, which states its mission as “safeguarding life, property and the environment,” has launched a document of recommended practices (RP) for the entire lifecycle of shale gas extraction, based on risk management principles, industry best practices and standards. DNV’s objective is for the RP to form the foundation for future development of a worldwide recognized standard for safe and sustainable shale gas extraction. DNV is calling for input from industry, regulators, NGOs and other interested parties. The full RP document is available at www.dnv.com/shalegas.
“Controversy and conflict are constant themes as proponents and opponents debate the extraction of natural gas,” said Remi Eriksen, CEO of DNV Maritime and Oil & Gas. “Since the RP combines current best practices and standards in the industry with a risk-based approach, it can serve as a common reference point and help bridge the gap between parties with opposing views. Our recommended practice ensures that the contentious issues are managed in an accurate, balanced, transparent and traceable way.”
The framework was developed over an 18-month period, which included collaboration with stakeholders, as well as review of existing practices and guidelines. Multiple organizations have already developed recommendations and guidelines, yet a complete risk management framework has not existed.
DNV launched its RP guidelines Jan. 17. The company recommends a risk-based approach to health, safety and environmental issues associated with shale operations. It recommends that shale gas operations are monitored and publicly reported, thus establishing proper points of reference and consistent monitoring prior to, during and after operations. The RP also advises carrying out extensive baseline surveys prior to the commencement of any shale gas activities, with information gathered being openly disclosed to all stakeholders, including the general public.
“We believe that companies that embrace our recommended practice will earn increased trust and confidence among the general public and other stakeholders by implementing operational best practices and creating standards for industry to document how their activities are being executed in a safe and responsible manner,” Eriksen said.
The DNV recommended practice focuses on the following aspects:
- Management systems
- Safety, health and the environment
- Well integrity
- Management of water and energy
- Infrastructure and logistics
- Public engagement
- Stakeholder communication
DNV’s development of the recommended practices grew out of the company’s core mission, according to Steinar Thon, associate director with DNV, who managed the development of the guidelines.
“We could see there were certain guidelines and design standards that favored individual aspects about shale gas,” he said. “What we set out to do was to develop a more complete document to cover a wide range of risk categories. We also saw these recommended practices were in line with DNV’s engagement with the oil and gas value chain. We decided we needed to issue this document on shale gas, as we have on all the conventional methods of development.”
The RP will allow the industry to “more easily gain stakeholder acceptance, whether from regulators or the public, by implementing a best practice approach that is internationally recognized, said Lars Soerum, director of technology and services for DNV Europe and North Africa.
DNV’s role as an independent third party provides a level of trust between operators and the public, Soerum said. The practices encourage operators to be transparent to build cooperation.
“We hope to see a positive response from the public’s point of view,” he added. “We want to be able to assist the industry and alleviate some of the concerns that the public has. There’s a fundamental lack of trust on the parts of the public and the operators. By being an independent third party and developing these recommended practices, we’re verifying that the operators are doing what they say they’re doing.”
DNV’s recommended practices advocate a risk-based approach to safety, health and the environment, Thon said. Although the practices are risk-based, they are technology neutral, allowing for local differences.
“We have in various chapters different risk categories and elements, and we’ve offered a series of risk mitigation strategies that can be applied,” Thon explained. “What we do not do is set up some kind of risk assessment by a putting a value or numbers on the categories, ranking them against each other. This has to be determined from site to site and project to project.”
By having a set of recommended practices, companies operating in shale formations are better equipped to address regulatory concerns no matter where the company is based.
“Two elements benefit industry directly,” Soerum said. “In Europe, we have a political situation in different countries where they have shale resources, where the governments require companies that want to embark on exploring shale gas they have to demonstrate to the authorities that they have experience robust enough to have success. In Germany, before a company even starts to work in the country, they have to demonstrate to regulators that they have identified all the risks and show they have the governance robust enough to handle the risks. In other countries, operators have to show outside stakeholders, like the public, that they’re doing what say they are doing.”
By applying the process of independent verification and showing itself to be in compliance with recommended practices, an operator can build trust, which Soerum said is lacking “among the public and some parts of the media.” This lack of trust is mitigated through the independent verification process.
“These recommended practices are not meant to replace what is already there in terms of recommended practices and standards,” Thon added. “There are standards that are much more detailed that we do not get into. Throughout the chapters, we make reference to several others standards and guidelines.”
DNV is a global provider of knowledge for managing risk. The independent foundation’s core competency is to identify, assess and advise on risk management, helping customers safely and responsibly improve their business performance. DNV serves a range of industries, with a special focus on the energy and maritime sectors. Since 1864, DNV has balanced the needs of business and society based on its independence and integrity. Today, the Oslo-headquartered company has 12,000 employees and a global presence with a network of 300 offices in more than 100 countries.
DNV will be presenting its recommended practices throughout the year at various conferences and to different regulators around the world. Soerum hopes to spark a conversation about risk management between all stakeholders.
“Obviously, the element of communication is very important,” he said. “Having a rational conversation is one of the best risk management methods out there.”
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