In a post-Macondo, shale-gale world, the problem of how to reconcile regulatory and public concerns with the ability to unlock the full economic potential and energy security of vast new oil and gas reserves looms large. Companies struggle to implement principles to protect the environment, the community and their own reputations, while regulatory agencies struggle to adapt policy to keep up with the evolution of oil and gas technology.

“I would say things change in our natural gas business almost on a monthly basis,” said Katharine A. Fredriksen, vice president, environmental strategy and regulatory affairs at Pittsburgh-based Consol Energy Inc. “As the regulatory agencies have struggled to keep [up] with that, we have done what we’ve done in order to manage our risks—our operational risks, our environmental risks and the social risks in order to have that license to operate, those permits that we get and the acceptance by the community to go in and develop natural gas.”

Fredriksen was talking about the company- wide standards the Marcellus player has implemented in order to minimize risk of all kinds—standards addressing surface and subsurface impact, water management, reducing emissions and informing the public. She spoke during a recent KPMG webinar, “Enhancing the credibility of shale-gas operations through implementation of the Golden Rules.”

The Golden Rules are a set of steps suggested by the International Energy Agency in a 2012 report. They identify leading sustainability practices in the industry, define the business case for implementing the initiatives proposed and aim to accelerate the process of demonstrating that environmental and social risks are being properly addressed.

The Golden Rules are: to treat water responsibly, watch where you drill and isolate wells and prevent leaks. They’re also to eliminate venting, flaring and other emissions, ensure a high level of environmental performance and isolate wells and prevent leaks. Measure, disclose and engage is yet another rule, as is to be ready to think big.

But implementation of the Golden Rules isn’t just good from a safety and environmental point of view, said Barend van Bergen, a partner with KPMG The Netherlands. It’s good for business as well.

“We would see accelerated global expansion of shale gas due to increased public confidence and acceptance,” van Bergen said. He added that shale-gas production would go up by 570% by 2035, compared to 40% under a business-as-usual scenario. The share of gas in the global energy mix would increase to 25% and overtake coal by 2035.

“From a macro point of view, from a sector point of view, this would make [total] sense,” he said.

Problems arise when it comes to implementation, however.

“Although the Golden Rules are pretty straightforward, at the same time, they’re not very concrete,” van Bergen said. “In practice, they need to be operationalized and tailored per company.”

Fredriksen said Consol has implemented sweeping policy akin to the Golden Rules to minimize its environmental impact. Standards range from pad drainage to water management (Consol requires 100% water recycle from shale development operations) to noise studies. It’s hard work, but it pays off, Fredriksen said. The company drilled 64 Marcellus and eight Utica wells last year, requiring 640 permits.

Consol is also a founding member of the Center for Sustainable Shale Development, which is committed to the environmentally protective development of shale resources. The center has published 15 initial standards against which participants must gain certification.

The policies, which place safety at the top of the values chain for the company, have also helped Consol run more efficiently in terms of human capital.

“Our natural gas division has remained at zero for safety,” Fredriksen said. “Meaning, we have more than 5 million man-hours with no lost-time incidents.”

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