Oil & Gas Executives Explain How to Rebalance the Conversation on Unconventional Development

Written by John Egan for Industrial Info Resources (Sugar Land, Texas)--Advertising professionals have an old saying: "If you don't like what people are saying, change the conversation." The Oil & Gas Industry did that in Colorado over the last year, and companies developing unconventional reserves of oil & gas in other markets should take heed, speakers told the North American Prospect Expo (NAPE) conference last week in Denver.

Charles "Chuck" Davidson, chairman of Noble Energy Incorporated (NYSE:NBL) (Oklahoma City, Oklahoma), summed up the outreach challenge facing companies involved in extracting hydrocarbons: "In the November election, across the nation there were eight ballot measures to prohibit or significantly curtail hydraulic fracturing. Four of those measures passed--in two places in California, and one each in Texas and Ohio. I'm not comfortable with a loss rate of 50%."

"We were slow to pick up on the public's concern about safety," Davidson told about 2,500 attendees in a luncheon address December 10. "What we have found over the last year, is that transparency is critical" if you're going to be successful in stakeholder outreach. "The winners will be companies that are transparent and proactive in engaging stakeholders. There is a continually growing environmental challenge to development of unconventional oil & gas reserves. Left unmet, those challenges could have a significant long-term impact on unconventional energy development."

Noble is one of Colorado's largest oil & gas producers. About a year ago, it reportedly told investors it planned to invest up to $12 billion in the Centennial State over 2014-2018 to develop the Denver-Julesburg Basin, located north of Denver. But those plans could have been at risk if measures to restrict or prohibit hydraulic fracturing made it onto the ballot in several Colorado cities. One luncheon attendee described the ballot initiatives facing Colorado operators as a "near-death experience."

Colorado Governor John Hickenlooper kept those measures off the ballot by creating an 18-member commission to advise the legislature on how to balance the public's concern over hydraulic fracturing with mineral owner's property rights. That commission is scheduled to issue a report to the Colorado legislature in early 2015. For more on that issue, see August 7, 2014, article - Oil & Gas Industry Sees Brisk Business in Colorado after Withdrawal of Voter Initiatives.

"What we found in Colorado is that you have to start by educating people," Davidson said. "Even though Colorado has a long history of significant energy production, there were relatively few people who knew we could operate without hurting the environment. People in Colorado needed to understand how we conduct our business before they will be receptive to where we want to go. They had to understand that they were not facing an either/or proposition--either energy production or the environmental protection, either energy or safety. In fact, Coloradans could have it all--energy production with environmental protection, energy production with safe work practices.

To change the conversation in Colorado, Davidson told attendees the company and the industry needed to ramp up spending on advertising and outreach. "When you go silent is when people start filling in the blanks" in ways that work against the industry, he cautioned.

Davidson's message was echoed by other executives who spoke at NAPE. Alan Harrison, vice president of drilling operations for WPX Energy Incorporated (NYSE:WPX) (Tulsa, Oklahoma), said: "We need to keep working to expand our horizons from a narrow focus on operations to a broader view that includes stakeholders. We need to continue the dialog and highlight the safety and mitigation measures we have in place" to protect the environment.

Another executive, Steve Trippett, asset director for PDC Energy Incorporated (NASDAQ:PDCE) (Denver, Colorado), told attendees his company was trying to be more proactive in Colorado: "In Colorado and across the nation, we as an industry need to do a much better job educating the public. What's not going to work is regularly facing ballot initiatives governing our ability to do business."

Several attendees credited an industry-funded organization, Coloradans for Responsible Energy Development (CRED) (Denver, Colorado) with helping balance the discussion in Colorado over hydraulic fracturing and development of unconventional oil & gas reserves. Over the last year, that group conducted extensive primary market research on consumer views that helped shape an aggressive advertising campaign highlighting steps oil & gas companies have taken to ensure the environment is protected as resources are being extracted. For more on CRED and the challenges the industry faced in Colorado, see March 7, 2014, article - Oil & Gas Industry Responds to Changing Political Environment in Colorado, and March 11, 2014, article - U.S. Oil & Gas Industry Gears Up to Defeat Voter Initiatives to Limit Hydraulic Fracturing.

As CRED was conducting its work, operators with prominent operations in Colorado, including Noble, Encana Corporation (NYSE:ECA) (Calgary, Alberta), Anadarko Petroleum Corporation (NYSE:APC) (The Woodlands, Texas) and ConocoPhillips (NYSE:COP) (Houston, Texas), also boosted their outreach and advertising in the state. The effort was successful. "Over the last 12 months, the conversation in Colorado has changed," Sarah Landry, director of operations and programs for the Colorado Oil & Gas Association (COGA) (Denver, Colorado), told NAPE attendees. "A year ago, the conversation was dominated by the word 'fracking.' Everyone fled the middle as the extremes got loud. But then the industry showed up and began collaborating with government and stakeholders. The industry's outreach changed the tenor of the conversation. If I leave you with anything today, it is to engage. There is still a massive disconnect in the public's mind between energy consumption and energy production. This is a great industry and we need to continue telling our story."

Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, three offices in North America and 10 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle™, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.