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Transparency Cited as Image Issue for Industry

The Environmental Defense Fund's (EDF) Mark Brownstein held up an oil and gas company's magazine advertisement touting "responsible" energy development. "The point is, I don't really know if it's true. In fact, no one really knows if it's true.

"No one trusts you," EDF's energy program deputy director told attendees at Bentek Energy LLC's Benposium in Houston Thursday, taking care not to impugn the "good character...high integrity" of the oil and gas audience members.

"The problem that you have right now is that these people [the public] do not have enough information about what you are doing and how you are doing it to reach a conclusion that what you are doing is safe for the public health and the environment." Brownstein's remedy for the oil and gas industry's image problem in the shale patch is disclosure -- in substantial detail on multiple fronts.

Among panelists at the conference who reacted to Brownstein's call for transparency was Schlumberger's Valerie Jochen, technical director for production of unconventional resources. If the industry were to unload all the data on the public that watchdogs want, there's a risk of information overload -- particularly considering how technical drilling and well completions are, Jochen pointed out.

"Full transparency implies that the people who are going to be enlightened are going to take the time to understand what we are doing," she said. "You have to have a listener that is qualified to listen to what you are saying...When it seems like I'm not being transparent, it's like when I'm trying to explain calculus to my 12-year-old. She just doesn't get it, but it doesn't mean that calculus doesn't work."

With regard to fracking fluids, all chemicals should be disclosed, not just those regulated by the U.S. Occupational Safety and Health Administration, Brownstein said. Trade secrets need to be protected, he allowed, but landowners and others must have the ability to challenge trade secret status. "This is a feature of the frack fluid disclosure legislation that was just passed by the Texas legislature," Brownstein said. "If Texas can do this, everyone can do this."

The Texas Legislature late last month passed a bill to require frack chemical disclosures but Gov. Rick Perry has yet to sign it into law (see Daily GPI, June 1).

With regard to air emissions, methane leaks from natural gas infrastructure need to be assessed by the industry and then disclosed, Brownstein said. Ditto for the release of volatile organic compounds.

Flowback and produced water disclosures need to include details on chemicals put down wells that are coming back up, as well as information about geological material coming from the well, particularly that which might be radioactive, he said.

Such comprehensive disclosure entails risks for the industry, said Chuck Watson, chairman of Twin Eagle Resource Management.

"If you become totally transparent and some of these [environmental] organizations get the information, they're going to misuse it," Watson said. "They've done it in the past, and they're going to do it again...Once you've been bitten a couple of times you get a little concerned."

According to Brownstein, appropriate regulation and enforcement also is needed and would be a benefit to the industry as it would serve to level the playing field among companies, Brownstein said. While numerous state budgets are stretched, resources for regulation and enforcement are being cut, Brownstein noted. The regulation without enforcement just doesn't work, he said. "If you want an example of that, that's called China."

Even under the best circumstances, having third-party eyes on every well site just isn't possible, he said. "It really comes back to you all in terms of an industry." Best practices need to be established, but continuous improvement must also be embraced, he said.

"If your management already believes that you adhere to best practice...what's better than best?...That sometimes cuts off the thought process that can lead to innovation," he said.

That applies to all companies, large and small, Brownstein said. "There's a theory out there that as the industry consolidates, this will all just get better...You only need to look at the Macondo well incident [last summer in the Gulf of Mexico] to know that the big guys can screw up. It's not about the size of the company; it's about the quality of management of that company.

"Natural gas can play a role in our nation's transition to a low-carbon clean energy future, but the environmental value that natural gas can provide is not inherent to natural gas. The environmental benefit is won or lost in regard to how this product is produced."

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