Getting it Right
During CERA Week, one of the world's largest annual energy industry conferences, several oil and gas CEOs, including Voser and Exxon Mobil Corp.'s (IW 500/1) Rex Tillerson, touted their companies' participation in the online FracFocus registry as evidence they're embracing transparency.
Companies participating in FracFocus disclose the chemicals used in the hydraulic fracturing process. FracFocus is managed by the Interstate Oil and Gas Compact Commission and the nonprofit Ground Water Protection Council.
Part of Mueller's social contract involves gaining a better understanding of how much a company's activities impact neighborhoods, including the negative. Shale fields are much larger than traditional oil and gas sites. In the past, a large field might include 100 wells.
By comparison, Houston-based Southwestern has approximately 2,500 wells in Arkansas, and Mueller expects the industry to continue drilling in the region for about 30 years.
"The size of an unconventional play is so large; you're there for a much, much longer period of time, and it does wear on a community," Mueller tells IndustryWeek.
Companies operating in these communities must have workers living in the towns so they can relate to the residents and quickly address any issues, Mueller says.
"You have to tell them what you're going to do, what some of the issues are they're going to face -- and live in the community," Mueller says. "You have to be there suffering the same thing they are or gaining the same benefits they are."
In Arkansas, Southwestern's top-producing area, the company has approximately 1,100 of its 2,000 employees living and working near drilling sites. The company began operations in Pennsylvania last year and already has 100 people living near drilling activity, Mueller says.
Another key component of the social contract is to engage in activities that clearly provide benefits to both the company and consumer. Southwestern is trying to address this aspect by putting more compressed natural gas, or CNG, vehicles on the ground.
In October, the company started a program that provides incentives for employees to either purchase CNG vehicles or convert their existing cars or trucks.
The program goal is to help 10% of the workforce convert to CNG vehicles. Why 10%?
"If you just took 10% of the taxable vehicles in the country, two things would happen: People would pay $1.60 per gallon less in gas, and you'd add 4 bcf (billion cubic feet) a day in demand," Mueller remarked during CERA Week.
In other words, the industry profits while helping consumers cut costs, a break from the current model that relies on high natural gas prices to drive earnings.
The response from employees has exceeded expectations. In early March, the company gave away CNG vehicles to 21 employees along with home fueling units. Southwestern is in the second phase of the program, during which the company plans to provide CNG conversion kits and fueling units to select employees.
The company plans to continue the program until it converts about 200 workers to CNG vehicles, Mueller says.
Making natural gas-powered vehicles a reality may be several years in the making and will likely require the industry to collaborate more with the auto industry and policymakers, says Mueller.
But it's a step toward changing consumer perceptions that the industry profits at an unreasonable cost to its customers and the environment.
In the more immediate future, technological advancements focused on the hydraulic fracturing process itself could help the industry win more public support.
Oilfield services provider Schlumberger is working on a technology that more accurately characterizes reservoirs so only the most productive wells are fracked and water usage is significantly reduced, Patrick Schorn, president of reservoir production at Schlumberger, said during a CERA Week panel discussion.
In addition, Exxon and General Electric Co.(IW 500/4) are collaborating to provide $2 million in seed money to develop university-led programs that provide state regulators with access to the latest environmental assessment technologies, Tillerson said at the energy conference.
If the oil and gas industry "gets it right," as Mueller says, employing an open-book policy and continued innovation, more communities may welcome the potential shale gas offers.
If not, the enthusiasm exhibited in those "Drill Baby Drill" signs will likely give way to "Not In My Backyard."
