A call to action

KEITH W. LYNCH, Global Completions Chief, ConocoPhillips Company

Last year at this time, I used this forum to present a case for the oil and gas industry to take even more action to improve its image. The vast majority of the world’s energy consumers still do not fully appreciate the connection between cost-effective energy, and their present and future living conditions. Our industry continues setting a fine example through responsible development; however, we are not gaining ground quickly enough with respect to better understanding by the public of affordable energy’s contributions to society. The industry must foster that understanding, to solidify foundational support for further progressing development.

State of public perception. Over the past year, it seemed that some of the emotionally charged rhetoric regarding hydraulic fracturing had started to subside. I began hearing more conversations about pertinent issues, like well integrity and its impact on the safety of oil and gas development. Unfortunately, we’re now seeing more communities enact resolutions against, or moratoria on, hydraulic fracturing, if not ordinances codifying outright bans. Many of these actions occurred outside areas of active development, as even non-impacted communities were still inspired to send a message to the industry.

In October, I came across a commentary on an investment advice website entitled, “Fracking Poses New Threat to Homeowners.” I read the article and watched the accompanying video. The author was alerting readers to a “growing, but little-known practice” of some real estate developers retaining the mineral interests on land sold to homebuyers in their developments. Oil and gas companies then lease these mineral interests for potential exploitation using hydraulic fracturing.

Despite the article’s allegations, this is not a “growing, but little-known practice.” Severed mineral interest dates from the early English monarchy, with the advent of the “royal mine” concept in English Common Law. Initially focused on gold and silver mining, this allowed the Crown to control development of any precious mineral. The same concept was applied in the U.S. under the Stock-Raising Homestead Act of 1916 that only conveyed surface ownership, without mineral interest, to the homesteader. This was a major change from the Homestead Act of 1862 and the Enlarged Homestead Act of 1909, both of which transferred undivided ownership.

To the public’s credit, the few comments posted in response all pointed out the error in the basic premise. Indeed, severed mineral interest is nothing new and was not created to promote hydraulic fracturing. With that said, the article still left me believing we must do more to promote more complete understanding of our business. With the importance of hydraulic fracturing to the continued development of both unconventional and conventional resources, we need to re-double our efforts to help people understand the process.

Hydraulic fracturing has visible, temporary impacts at the surface. The industry must continue monitoring and responding to actual impacts, as well as public concerns and perceptions. Our actions send the strongest message possible that we are responsibly managing our business. Assurance to the public with respect to the subsurface process is equally important.

What can you do? How do we get people comfortable with a process that they cannot see, that has already been demonized in the media? For all concerned, I suggest you review George King’s paper, SPE 152596, “Hydraulic Fracturing 101: What every representative, environmentalist, regulator, investor, university researcher, neighbor and engineer should know about estimating frac risk and improving frac performance in unconventional gas and oil wells.” (Available via OnePetro at http://www.onepetro.org or on the FracFocus website at http://fracfocus.org/; other great resources are also available on the FracFocus website.)

Mr. King did an excellent job with comprehensive coverage of the subject. You should also watch an overview presentation of this material via an on-demand version of a webinar that Mr. King did for SPE (see: http://eo2.commpartners.com/users/spe/session.php?id=11601). There are many great resources for overview material, like API’s website (see: http://www.api.org/) and  IPAA’s website, “Energy In Depth” (see: http://energyindepth.org/).

Also, many operators are doing their part. For example, ConocoPhillips has a website dedicated to education on energy, the development process and hydraulic fracturing, “Power in Cooperation” (see: http://www.powerincooperation.com). Plenty of quality information is available, but just making it available is not enough. We need to encourage our people to use it while making active connections with the public. This will effectively counter the erroneous sound bites pervasive in the popular media. I would also suggest that most of you review “Extracting the facts: An investor guide to disclosing risks from hydraulic fracturing operations,” by Richard A. Liroff (see: http://www.iehn.org/publications.reports.frackguidance.php). Mr. Liroff succinctly summarized the types of concerns held by many in the investment community, and the public, regarding the practice of hydraulic fracturing.

To establish trust with the public and regulators, the industry needs to speak with a consistent voice, and reinforce its efforts to provide public education on the oil and natural gas development process and its benefits, as well as its potential impacts. We must be informed advocates. We must arm ourselves with the facts and prepare for the detailed discussion that we owe our customers and fellow citizens. If we hear fewer and fewer public references to hydraulic fracturing as a drilling technique, then this will be a clear sign of progress in this effort.