Earlier this month I attended an interesting conference here in London. The subject: "Shale and Unconventional Gas - their role in responsibly delivering a future low carbon economy". The programme contained a good mix of presentations by industry, academics, and scientific organisations, which made it informative and challenging at the same time.

Despite being fairly low key, less than 150 attendees, it was not without some controversy: an organisation campaigning against hydraulic fracturing in the UK had found out about the event and decided to stage a protest outside the building where we were gathered. That episode made the topics covered in the conference all the more poignant, as a large proportion of the panel discussions were around the steps that the industry should take in order to build trust in and address the concerns around unconventional activities. In this blog post I will expand on some of the presentations around this subject.

Bursting myths associated with Shale Gas activities Several presenters touched on this topic and have offered various examples of facts that are regularly misrepresented by the media. In the UK, one of the main fears surrounding unconventional activities is in relation to the possible occurrence of seismic events. For this reason, I found of great interest the presentation given by Dr. Nick Riley from the British Geological Survey; he offered a clear explanation of how seismicity is measured in the UK and showed us a map marking all the seismic events that took place in the country from 1382 until 2012. The map distinguished natural seismicity from mining-induced seismicity and showed that the country is very prone to natural seismic events.

Dr. Riley further explained the mechanics of seismicity and the steps that companies could take in the event of such occurrence. He took some time to talk about the case of Cuadrilla's activities at Preese Hall, near Blackpool, explaining that the seismicity registered in the Bowland Basin ranked very low in the European Macroseismic Scale (EMS) constituting "minor seismic events" where almost no energy was released. This is a very different story to that portrayed by some UK media (e.g. "Man-made earthquake strikes Blackpool" The Daily Mail on 1 June 2011; "Blackpool earthquake halts shale gas drilling" Channel 4 news 2 June 2011). In order to avoid the build up of myths around unconventional activities, the panellists were of the view that the industry should work harder at ensuring that the scientific facts are widely communicated in order to counterbalance all the misinformation that abounds.

Social Licence to Operate This point is very much related to the one mentioned above, and it is largely related to the responsibility that companies have to communicate more effectively with the communities impacted by their activities. If not, the organisations campaigning against unconventional exploration and production will be the only voices they hear. Operators need the support and the consent from the local community. Trust needs to be built on the back of consultation and regular two-way communication, followed by clear action plans addressing key concerns and looking to improve overall performance.

Many speakers, such as Dr. Dougal Goodman from the Foundation for Science and Technology, mentioned the need for companies to adopt "independent verification" at different stages of the E&P project as a way to secure early social support. Others called for measures to ensure communities partake in the benefits associated with unconventional activities; this is particularly important in those countries where landowners do not receive royalties for the activities carried out in their land.

Several operators presented on their current programmes to engage with the communities, which included actions such as hosting events, distributing newsletters, setting up information lines and putting together training programmes, but recognised that more needs to be done on this front. More than ever before, there is a need for the industry to engage proactively with all stakeholders in order to identify the right approach to enable the best possible operational, environmental and community outcomes.

EU - More regulation or voluntary standards? One of the sessions centred around the regulation of shale gas in Europe and the conclusion drawn by all the presenters was quite unanimous: not much is required in terms of additional government regulation. The EU and the different member states already have in place comprehensive environmental and hydrocarbon rules, a topic that we have covered in depth in our Petroleum Economics and Policy Solutions (PEPS) service.

However, despite there being agreement that existing EU regulation is adequate, there seems to be room for the adoption of stricter voluntary standards. Lars Sorum, from Det Norske Veritas (DNV), presented a set of "Recommended Practice" for the entire life cycle of shale gas extraction, based on risk management principles. DNV envisions this document to act as a reference for the independent verification of shale gas projects and would like it to become a globally recognised standard for safe and sustainable shale gas extraction. The document, which has not been officially launched yet, was developed following consultations with a large number of companies as well as European and US authorities and it aims to help promote public acceptance for shale gas projects. The "Recommended Practice" document, among other things, recommends that shale gas operations are monitored and publicly reported; it further identifies practices to minimise environmental and social impacts. It is still early days for this project, but it is likely that it will play an important part in the future of shale gas activity, possibly even shaping future regulation on the matter

Ultimately, the implementation of voluntary standards (either company-specific or industry-sponsored) which are centred around key areas of concern (shale gas well integrity, the handling of water, chemicals and waste, and issues associated with infrastructure and logistics) will likely help companies in the process of acquiring the social licence to operate as they will be able to show, very clearly, that they are taking important steps to prevent the occurrence of environmental damage and to protect the health and safety of their employees and the community in which they operate.

This article was published by S&P Global Commodity Insights and not by S&P Global Ratings, which is a separately managed division of S&P Global.