Social License to Operate: Hydraulic Fracturing-Related Challenges Facing the Oil & Gas Industry

Abstract

The crossroads of urban development and improved technology allowing oil and gas development in new areas can result in contentious community issues. The debate over one of the improved technologies-i.e., hydraulic fracturing-can be highly emotional. Consequently, industry must address community issues, earning trust and therefore a "social license to operate." This paper provides fundamental knowledge of the social license to operate concept, validates its application to the oil and gas industry, particularly with respect to shale gas development, discusses the current status of social license in the unconventional development sphere, analyzes current ongoing efforts for shale gas developers to monitor and establish a social license, and identifies potential new methods of encouraging, establishing, and monitoring a social license to operate. The paper also proposes a new institutional framework in which to promote the social license to operate, "The Center for Social License to Operate in the Oil & Gas Industry." I. Introduction Within the past decade, two key technologies have dramatically changed the landscape of oil and gas development, in turn drawing a great deal of attention to the "Shale Revolution": horizontal drilling and hydraulic fracturing. 1 These technologies, coupled with population growth and urban sprawl, have attracted a great deal of scrutiny to shale development. These technologic breakthroughs have also led to a paradigm shift in energy scholarship. Many shale resources that were previously considered unrecoverable are now economically recoverable. Interestingly enough, a significant portion of these shale resources encroach upon urban developments. As many as 300 million people around the world across six continents occupy land overlying a shale reservoir. 2 Large-scale industrial extraction of shale will no doubt impact these urban developments. Whether or not the impacts will be positive or negative for these local communities largely rests with industry's approach to development. 3

Understanding the social licence to operate of mining at the national scale: a comparative study of Australia, China and Chile

“…Finally, it may also be useful to more closely examine how SLO is realised under different legislative and regulatory frameworks. While a detailed examination of the legislative frameworks of Australia, China, and Chile was beyond the immediate scope of this paper, there is already a growing interest in exploring the relationship between legislation and social licence (e.g., Smith and Richards, 2015).…”

Understanding key elements in establishing a social license for CCS: An empirical approach

“…In the context of Shale Gas, notably in North America where there has been a rapid expansion in hydraulic fracturing activities, studies have identified factors which have contributed to a problematic SLO. For instance a historical lack of trust with the industries involved has be found to present a barrier to establishing engagement (Smith and Richards, 2015); this disconnect between stakeholders and communities combined with issues of transparency and lack of enforcement of regulations have been identified as making it particularly challenging to build a SLO (House 2013). An analysis of the print media has also highlighted how concerns and issues vary between regions and over time, suggesting that policies and strategies must be adapted to the specific time and context, stressing the importance of cultural and social concerns in addition to technical or economic risks (Gehman et al, 2016).…”

Sustainability lessons from shale development in the United States for Mexico and other emerging unconventional oil and gas developers

“…Such engagement could promote better decision making, stimulate community trust, and ultimately reduce negative impacts by increasing accountability, which in turn deters negligent practices by act or omission [139]. A key requirement for successful community engagement is the ability to disclose to the public all relevant information regarding baseline data before hydraulic fracturing activities commence, the permitting processes, and all data on operational impacts gathered throughout the lifetime of shale resource exploitation projects [140].…”