By Jesse Maldonado, associate editor
Maintaining the industry’s social license to operate is among the biggest threats to the sustained success of the shale-driven energy boom in North America, Doug Suttles, President and CEO of Encana Corp, said on the opening day of the 2014 IADC/SPE Drilling Conference in Fort Worth, Texas. “The true potential of this boom can only be realized if we make immediate and meaningful strides in maintaining our ongoing and important social license to operate,” he said. “We have a role to play in this, aligning innovation with social license, acting beyond regulations in order to minimize risk and impact, and engaging with key stakeholders.”
This engagement is particularly important because shale E&P is not confined to remote areas where operations are out of sight. “We are an industry that operates literally in people’s backyards, in farmers’ fields, in and around neighborhoods or in places where people play, hike, ski and fish,” Mr Suttles said. “We use their roadways and their infrastructure to access our sites and to move our products.”
When operations take place so close to people’s daily lives, economic benefits may not be enough to sway public opinion on perceived risks. Therefore, although technology and innovation have made resource plays viable, it’s equally important that we use the same capability for technology and innovation to carefully balance benefits and risks and, ultimately, maintain our license to operate, Mr Suttles said. “We measure our impact on the environment not to defend our record but so we can find ways to improve our operations. We need to align our innovation and efficiency improvements with our social license to operate to ensure we fully realize the potential of these resource plays,” he urged.
He listed three main areas on which the industry should focus: water management, drilling improvements and participation in regulations. With water management, for example, Encana recognizes that reuse and recycling have become significant issues for many communities, even though the energy industry uses only a small portion of total water consumption. “We need to always strive to improve our processes,” he said, citing water-handling solutions that use pipelines to reduce truck traffic and water-recycling technologies that allow companies to use non-potable sources for their operations.
He also noted that Encana recently applied for a water license in Canada that requested less water than the company predicted it would need. “We did this intentionally to incentivize our teams to find ways to reduce the amount of water we need in our operations.” Further, in the Piceance Basin in western Colorado, Encana recycles 90% of its water, he stated. “The impact is that we have reduced 950,000 truck trips per year in those operations. This is having a significant impact in reducing both in our impact on the community and our water use.”
Improvements in drilling efficiency also can have a major impact on the industry’s social license to operate. The continued growth of pad drilling across the industry has helped to reduce environmental footprints while simultaneously increasing efficiency and lowering costs. “Recently we were able to drill a well in the DJ Basin in Colorado in just in 8.5 days. That’s 4.5 days less than our average well in 2013. If we can achieve that repeatedly on a 10-well pad, that would mean we would reduce the time the people in the area have to live next to that drilling rig by over six weeks, while at the same time increasing the economics of play,” he said.
In terms of regulations, Mr Suttles urged that “we must get to the table when it comes to regulations of our industry.” He pointed to Colorado’s new emission-reduction strategy, commonly know as Reg7, as a possible model for future regulation development. Recognizing the potential impacts of such regulations, Encana went into a proactive collaboration with Anadarko Petroleum, Noble Energy, the Environmental Defense Fund and the state of Colorado. What resulted were strict regulations designed to have maximum impact at the lowest cost while also encouraging innovations. “It’s a tough rule, but it’s a rule that was developed in a smart way. Hopefully it’s a new way of writing regulations,” he said.