It may have occurred in the deepwater Gulf of Mexico, miles away from the U.S. onshore, but last April's Macondo well blowout contaminated the image of natural gas and oil producers onshore as well, the CEO of Pioneer Natural Resources Co. said Wednesday.
Scott Sheffield shared a panel discussion in Houston on the third day of CERAWeek 2011, sponsored by IHS Cambridge Energy Research Institute (IHS CERA). He said the massive offshore spill destroyed the industry's selling point that it was a leader in developing cutting-edge technology.
"We were telling Congress and the administration how great our technology was," Sheffield told the audience. However, "the biggest damage that we had was that the technology failed in the deepwater Gulf of Mexico, for whatever reason."
Even before the massive well blowout, onshore producers were taking criticism in some quarters for allegedly contaminating water supplies through the use of hydraulic fracturing (hydrofracking) when they were drilling in shale formations. The industry was working overtime to assure regulators and lawmakers nationwide that the industry could drill for shale gas safely.
However, since the deepwater tragedy, "it is hard for them to believe us," Sheffield said of shale drilling critics. "We have to address the technology issue and convince Congress that we still have great technology and that you're not going to have contamination" through hydrofracking.
Nexen Inc. President Marvin Romanow said the industry is prepared to safely conduct drilling, but it has been ill-prepared to deal with adverse publicity. "We were not an industry that was really required to have a public face," Romanow told the audience. For instance, when critics of oilsands producers, including Nexen, raised environmental concerns, "we were totally unprepared for the set of questions we were getting."
The industry is "getting much better at that," he said. However, "we're still struggling to get the facts out on our industry."
The gas industry has to counter the backlash against hydrofracking, Romanow said. And it has to convince power industry honchos that gas is cheap, abundant and emits fewer pollutants, he added. Attempting to assuage the public's opinion about safe drilling practices won't be easy, Romanow said. The industry to date has been "outmatched" in explaining that hydrofracking won't taint drinking water supplies.
Spectra Energy's Guy Buckley, vice president of corporate development, said historically the industry has not been "adept" in educating stakeholders.
Take Pennsylvania, for instance.
"When you bring in 100 rigs in a state that hasn't had them in a long time, it does get some attention," said the Spectra executive. The industry has to be able to effectively counter that it brings lots of jobs -- and an improved economy.
The backlash against the gas industry isn't nationwide, said Samson Investment Co. CEO Stacy Schusterman.
"I think the bulk of the [criticism] is happening in states like Pennsylvania and New York, where the amount of drilling growth is something they haven't seen before," Schusterman said. "The system is not really set up to handle the volume of activity from the public's perspective."
In Texas and Louisiana, meanwhile, most residents are used to seeing drilling rigs as they drive down the highways. In states where activity has been ongoing for decades, "the industry can have a debate, because people know it's jobs, it's income taxes, and it's severance taxes."
©Copyright 2011 Intelligence Press Inc. All rights reserved. The preceding news report may not be republished or redistributed, in whole or in part, in any form, without prior written consent of Intelligence Press, Inc.