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DNV Unveils New Recommended Practice for Shale Gas Risk Management

DNV unveiled its new recommended practice (RP) for shale gas risk management which DNV intends to serve as the foundation for the future development of a globally recognized standard for safe and sustainable shale gas development.

DNV unveiled its new recommended practice (RP) for shale gas risk management which DNV intends to serve as the foundation for the future development of a globally recognized standard for safe and sustainable shale gas development.

The foundation's risk-based, integrated approach to risk management includes monitoring operations and publicly reporting data, which establishes 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 activity, with information gathered being openly disclosed to all stakeholders, including the general public.

DNV decided to establish the RP after seeing a lack of uniform approach to policymaking towards shale gas across countries worldwide. Multiple organizations have already developed recommendations and guidelines, yet a complete risk management framework has not existed.

The decision also stems from incidents that occur from less than optimal shale practices and seeing volatile public opinion on shale gas.

"Shale gas is a controversial topic, and DNV is used to dealing with controversial topics," said Remi Eriksen, CEO of DNV Maritime and Oil & Gas, at a Thursday presentation in Houston.

While shale gas exploration and production is a mature industry in the United States, shale gas exploration is just getting underway internationally. But even in the United States, hydraulic fracturing, which is used to produce shale resources, has become the center of a political debate in which public opinion is polarized.

"Industry can only glean public acceptance by implementing operating best practices to show that extraction can be done in a safe and responsible manner," said Eriksen.

"Our objective is not to take a stand against shale gas development," said Erikson. "What we bring is a system based on risk management principles, combined with an objective third party view that combines the current and best practices and standards to bridge the gap towards opposing views."

The RP, which was developed over an 18-month period, will cover the entire life cycle of shale gas extraction. DNV is calling for input from industry, regulators, non-government organizations and other interested parties for the RP.

The RP focuses on:

    Management systems
    Safety, health and the environment
    Well integrity
    Management of water and energy
    Infrastructure and logistics
    Public engagement
    Stakeholder communication

The risk-based approach allows for new technology and solutions, local natural variations, different legislative structures and stakeholder issues. The RP will allow for the safeguarding of health and safety in terms of the density of wells and well pads, density of infrastructure, injecting frac fluid with chemicals at horsepower, logistics needs, planning and design, competence, awareness and training, chemicals and personal protective equipment.

Through the RP, companies will be able to manage environmental aspects of shale exploration and production, including impact assessment, mitigation measures, emergency preparedness, and monitoring and reporting. It will set standards for ensuring well integrity, including standards for well barriers, geological risks, contingency planning, well design, drilling operations, hydraulic fracturing, production operation and abandonment.

Additionally, the RP lays out guidelines for managing water and energy resources; infrastructure and logistics, including use of land and local communities. It also provides standards for companies' communications with stakeholders, which DNV said should be early, frequent, transparent and consistent. Finally, the RP companies should approach the permitting process, including lack of legislation, dealing with multiple layers of authoritative bodies, and litigation with landowners.

To sum up, DNV noted that the largest risks are on the surface, and that the risks of shale gas exploration and production are not significantly different from those related to conventional gas. Monitoring also remains a must for oil and gas companies, who must also answer the question of how to get their message that shale exploration is safe to the non-technical public.

DNV, an independent foundation that safeguards life, property and the environment headquartered in Oslo, Norway, has 10, 400 employees working in 300 offices in 100 countries. The organization's presence has grown in North America, with 1,600 employees in the United States, Canada and Mexico.

DNV currently has 68 RPs for the oil and gas industry based on joint industry projects or cooperation with the industry. One in three of all classed floating production, storage and offloading vessels and 38 percent of drillships are to DNV class standards. DNV also is involved in 30 percent of the world's liquefied natural gas (LNG) terminal projects.

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