OTC panel: Cross-learning can improve deepwater, unconventional businesses

Posted on 12 May 2014

By Linda Hsieh, managing editor

The industry should not rely on the argument that hydraulic fracturing has been performed safely for 65 years but rather engage people in the issues that directly concern them, Shell’s Greg Guidry said at the 2014 OTC in Houston last week.

The industry should not rely on the argument that hydraulic fracturing has been performed safely for 65 years but rather engage people in the issues that directly concern them, Shell’s Greg Guidry said at the 2014 OTC in Houston last week.

The unconventional resources revolution continues to change the global energy landscape, with its impact reaching the offshore segment as well. In a panel session at the 2014 Offshore Technology Conference in Houston last week, a Statoil executive noted that more cross-learning could take place between the unconventional plays and deepwater projects, while an expert from Shell highlighted the reputational impact that one segment has on the other.

Statoil, which has historically been primarily an offshore operator, in recent years has invested significantly in the US onshore – the Marcellus, the Eagle Ford and the Bakken. “My view is that we can take a lot of good learnings from the offshore business to the onshore activities,” Torstein Hole, Senior VP, US Onshore for Statoil North America, said. While the technologies and challenges differ between the two businesses, he noted the same underlying factors in many of the incidents and near-misses onshore and offshore.

“It has to do with risk understanding and managing the risk. It relates to competence in the workforce,” he said. “It also has a lot to do with cooperation at all levels, especially between operator, contractor and subcontractor to make sure we are working toward the same standards.” Mr Hole noted that Statoil has taken its systematic approach to safety from its offshore experience and applied it to its onshore business. “I’m seeing very good results of that so far and no reduction in efficiency.”

The industry can take good learnings from the offshore business to the onshore activities, Statoil North America’s Torstein Hole said during a panel session at OTC last week.

The industry can take good learnings from the offshore business to its onshore activities, Statoil North America’s Torstein Hole said during a panel session at OTC last week.

He noted that a huge task for the entire industry is to become more efficient in the use of its resources, “both to compete for capital and to deliver the long-term mission to respond to the world’s energy needs… The more we can cross-learn between the two segments, the faster we can improve.”

Mr Hole noted the significant amount of experience Statoil has already built up from its North American operations – experience the company can use to develop unconventional resources in other parts of the world. “We have exploration positions in Australia and Russia now, and these would not have been available to us unless we could use the skills and competence we have acquired by building up the North American unconventionals.”

Greg Guidry, Shell Executive VP, Upstream Americas Unconventionals, shared a different perspective that focused on engagement with the public, noting that he sees more overlap between the unconventionals and deepwater in terms of public acceptance than in terms of technology. “If we don’t get it right in terms of the acceptance of our activity, then it gets very tough for the technology to have the opportunity to work,” he said.

“On the reputational side, I can’t think of any major incident in deepwater that wouldn’t have a dramatic impact on what we do in the onshore, and I can think of a number of incidents we could have on the onshore that would have an impact on the acceptance of what we do offshore,” Mr Guidry commented.

The two segments do have different risk profiles, he continued, where onshore incidents typically have lower consequence but higher frequency. “A rancher cares about how you treat their land in a very particular way. There’s a much greater chance of upsetting that landowner than it is having a high-impact industry event.”

However, the principles associated with a company’s willingness to be transparent and to engage with stakeholders applies equally onshore or in deepwater. “I think there’s a substantial overlap on reputational or license to operate elements that we need to continue to mature and advance,” Mr Guidry said.

He cited a 2011 report released by the Natural Gas Subcommittee of the Secretary of Energy Advisory Board, which found that the industry will not succeed with stakeholders using the argument that hydraulic fracturing has been performed safely for decades. “We can’t just rely on the kinds of approaches we’ve had in the past even though fracking has been around for 65 years,” he emphasized.

One example of the efforts that Shell is undertaking to communicate to and engage with the public is the Rational Middle Energy Series, which are educational videos that are intended to generate discussion of the energy business. “Let’s create some information so that we can have a much more rational dialogue around seeking a win-win for an activity that actually fulfills the needs of the community and of society but also allows economic development to take place,” Mr Guidry said.

So far, 21 films have been generated, such as “Realities of Drilling” and “Shale Gas 101.” “Anyone can use these because they’re free. You can pull them right off the website, and you can use these to actually create a dialogue with those who are uncertain about whether they like or dislike the activity,” he said. “You’re not going to appeal to the bottom 10% who are campaigners or who absolutely will never accept it, but what we found is it creates quite an interesting dialogue with those who are influenceable one way or the other.”

The Rational Middle Energy Series can be found online here.

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