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Shell Endorses Transparency, Frack Chemical Disclosure

A U.S. arm of Royal Dutch Shell plc, which holds more than three million acres of unconventional leasehold in North America, on Wednesday said it would be more transparent in its tight/shale oil and gas operations and released a set of "rigorous" rules that it uses in drilling operations. In addition, the oil major said it supported disclosing the chemicals that are used in hydraulic fracturing (fracking) operations.

The rules were unveiled at the 2011 Aspen Ideas Festival in Aspen, CO. Shell long has been a big player in North America's onshore and today has a leasehold that extends across about 3.6 million acres. Last year Shell paid $4.7 billion to acquire East Resources Inc., which gave it a substantial foothold in the Marcellus and Eagle Ford shales (see Daily GPI, June 1, 2010). In addition to a tight gas position in the Pinedale Anticline in Wyoming, Shell also operates in the Haynesville Shale in Texas and Louisiana, and in Western Canada through the 2008 acquisition of Duvernay Oil Corp. (see Daily GPI, July 15, 2008).

Shell said it was "openly sharing these operating principles to address public concern about tight/shale oil and gas development -- especially regarding hydraulic fracturing" -- to encourage feedback from its stakeholders.

"We understand there is concern around the development of shale gas, and we must give the public more knowledge of how we operate," said Shell Oil Co. President Marvin Odum. "People have asked the industry for transparency; we have listened and are responding."

Because fracking's effect on water supplies "has attracted a great deal of attention in recent months," Shell describes how it mandates well construction to reduce the risk of contamination.

Shell also said it supported disclosing the chemicals used in fracking fluids, as well as monitoring groundwater and reducing the amount of water used to drill wells. It noted, for example, that in the Marcellus Shale it recycles "almost 100% of produced fluids, substantially reducing our fluid waste and reducing the amount of water volumes needed for hydraulic fracturing."

Shell pointed to the "abundance of natural gas" and the estimated 250-year supply estimated by the International Energy Agency (IEA), which said about half is contained in shales, tight sandstones and coal beds. More than one-third of the global gas production increase, forecasted by the IEA over the next 25 years, could come from these sources, the oil major noted.

"If the innumerable benefits of natural gas are to be realized, we must address the concerns of citizens and share the principles that we hold ourselves to at Shell," said Odum. "These principles manage the risk we know exists when producing energy, but just as importantly, they demonstrate our operational integrity and focus on collaboration, underpinning our belief that natural gas can be produced safely and responsibly."

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