Senior executives across the oil and gas industry are increasingly vocal about the impact of environmental and social issues on their business: CEOs presenting at the last two CERAWeek conferences (and other industry events) on insights into the energy future have repeatedly highlighted maintaining a ‘license to grow’ as among their top three concerns. Internal and industry studies now suggest that as many as 70 percent of major capital projects are being delayed by months – if not years. Consequentially, this is costing investors billions of dollars through stranded and inefficiently allocated capital caused by poor management of what has become known as Non-Technical Risk.

In North America, the challenge is being accentuated by the industry’s return onshore to unconventional shale plays after an absence of high intensity development for more than 20 years, as well as with the push into sensitive frontier locations, such as the Arctic. A confluence of greater industrial activity, questions over environmental performance and heightened community anxiety are making the industry a political hot potato.

Behind these challenges lie common root causes, including lack of specific accountability for managing Non-Technical Risk, unclear or contradictory incentives, the complex and cross-functional nature of the risks themselves, lack of integration into the core business and a lack of deep understanding by decision-makers.

This paper uses real case studies to explore three proven strategies to tackle the challenge of Non-Technical Risk. We present emerging techniques, supporting strategic decision-making and management across the capital value chain, from asset acquisition to site screening, field development and into operation. We provide fresh insights about how to integrate between non-technical functions, such as regulatory, environment, community and communications; how to incorporate into the day-to-day enterprise risk framework; and how to implement real management solutions on the ground.

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