DNV GL has launched a comprehensive, tailor-made independent verification service based on the provisions of its Recommended Practice for Risk Management of Shale Gas Developments and Operations (DNV GL RP U-301), regulatory requirements and other publicly available standards. DNV GL offers the only global third-party verification service with comprehensive coverage of shale project operational risks.

Recommended practice development

In early 2013 DNV GL released the recommended practice (RP) to provide stakeholders with a comprehensive understanding of potential risks and the best practices to mitigate them. The RP was originally shaped as a risk primer for gaining a license to operate for new shale developments and to assure existing shale projects, especially in North America, could be sustainably operated. The RP is the foundation for DNV GL’s newly launched verification service. The RP was developed because there wasn’t a single compendium of risk descriptions and mitigation practices. The idea was to provide assistance to stakeholders such as governments, operators or local communities to create more factual dialogues about risks. In the U.S., the need for best practices is more centered on cost control and optimization and, for some stakeholders, whether or not unconventional oil and gas development is sustainable in business, technology, infrastructure and environmental terms.

Verification purpose

The verification service will use the RP best practice provisions to help assure stakeholders that an independent assessment can assist in preventing incidents, reducing operational costs and limiting the environmental footprint of shale developments. Best practices measured in the verification process include environmental, occupational and process safety; resource use; human factors; well integrity; logistics; permitting stakeholder engagement; and other elements that may help address day-to-day operational risks and the low-probability, high-consequence incidents under scrutiny today such as transport of shale liquids.

There is a fair amount of public concern about the potential consequences of shale developments and hydraulic fracturing in particular. One of the things the RP verification process will do is help stakeholders differentiate between perceived risks and actual risks, keeping the discussion grounded in engineering and science.

Stakeholder benefits

As shale gas and liquids development are experiencing exponential growth in North America, a wide range of operational risks have been realized, including gas flaring, fugitive emissions, rail transport incidents, water management, fracking chemicals, explosions, fires, infrastructure limitations, occupational risks and asset integrity issues. The industry can gain stakeholder acceptance only by implementing best practices and proactive risk management. Operators need to demonstrate that their development activities can be executed in a safe, responsible and sustainable manner.

For this purpose, the verification process determines whether a comprehensive, transparent risk-management approach related to risk identification and mitigation has been implemented to allow sustainable shale gas project development or expansion. The verification service may be used by operators, regulators, insurance companies, banks, and other oil and gas stakeholders to frame the risk dialogue based on international approaches to risk identification, mitigation and monitoring best practices.

Global variations

Around the world, most organizations define risk as the product of the frequency with which an event can occur multiplied by the gravity of its consequences. However, sometimes the definition of risk can be more focused on potential consequences. The regulatory framework in the U.S. on both the state and federal level has strong links to historic consequences, and as a result the regulatory frame is less performance-based than in other parts of the world. Institutions seeking to operate in the U.S. must navigate through a myriad of federal, state, county and municipal regulations. From a risk standpoint, a company can get along reasonably well in the U.S. as long as it complies with all of the regulations applying to its particular operation and obtains the necessary operating permits. Following the specific regulatory requirements is absolutely essential. However, there may be some shale risks that are not fully addressed through existing laws and regulations or perhaps not in the most efficient or risk-based way. That is where the DNV GL RP Verification Tool can assist organizations; its foundation is tied to ISO 31000.

Stakeholder concerns
The verification service can address one or more elements of the RP or risk points. For example, the RP recommends that environmental risks be identified through baseline studies and/or environmental impact studies prior to operations. Ideally, these studies would be conducted by an independent organization. A number of other risks to shale project operations also fall under the environmental umbrella, including storage, handling and disclosure of chemicals used; handling of drill cuttings and other wastes; greenhouse gas emissions via fugitive emissions and flaring; odors, dust, noise and lighting impacts; energy efficiency, logistics and infrastructure demands; emergency preparedness planning; environmental monitoring; and post-operations impact analysis. Understanding water resources and management is especially pertinent right now for fracturing in terms of water acquisition from surface, groundwater, reservoir and other water supplies as well as treatment and disposal options that have considerable cost variations. DNV GL is initiating a joint industry project (JIP) to relook at formation water, flowback water and produced water with an aim toward creating a better water treatment regime. Hopefully a means can be found to reduce transportation, treatment and/or deep well disposal costs and achieve nearer a 100% recycle rate of water.

Expanding the library

The RP and the associated verification service are not static initiatives. Together they are intended to be an industry “harbor” for best practices. One way DNV GL codevelops new best practices is through JIPs. This year five JIPs will be launched to solve specific technical issues. In addition to the zero water discharge management activity noted above, the four others include development of a decision analysis tool for operational optimization, analysis of well cement failures, quantification of fracking risk (FRISK) and a decision model for selecting water treatment options. In these particular JIP projects, DNV GL hopes to join academia, service companies, producers, regulators and other stakeholders to help reduce the cost of water management for hydraulic fracturing operations, optimize operations and demonstrate that FRISK can be quantified to better assure stakeholders.

In the case of the water management JIP, there are opportunities for companies to reduce the amount of descalers, biocides and friction reducers used and reduce the environmental footprint of the operations. That would be both a reduction in operating expense and an environmental benefit. These are win-win situations where the reduction in the operational costs come together with the environmental improvements.

Next steps
In 2014 DNV GL will concentrate on testing the verification process in the marketplace and soliciting additional best-practice inputs through industry contacts and other forums to attract stakeholders interested in safely developing this vast energy resource. The RP can be downloaded from dnvgl.com. Search: shale.

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