Unconventional development projects follow a general life cycle. Each step in the life cycle has a number of common activities that can have important environmental andsocial impacts. Managing those activities to reduce/control the impacts can reduce the project’s business risks and improve the overall success of the development program.
Operations in many shale plays are rapidly shifting from exploration into the longer-term production step of the life cycle. The pace of change presents significant challenges to maintaining compliance with federal and state environmental, health and safety (EHS) requirements.
To reduce the risk that significant noncompliance could result in regulatory issues that could slow or halt development activities, many operators are conducting independent reviews of their assets. Such reviews, which can be conducted in accordance with the Texas Environmental Health and Safety Audit Privilege Act, provide management and owners with an appraisal of potential environmental liabilities and recommendations for managing compliance risk. EPA has also developed a specific audit policy for new owners of assets who want to make a "clean start" at newly acquired facility by addressing environmental compliance prior to or early in the stages of ownership.
These types of audits focus on key questions to identify areas for improve performance and thereby enhance shareholder value:
Do the locations have the necessary permits, authorization and plans?
Do the permits, authorization and plans represent current operations?
Can the operations expand?
What capital will be necessary to come into compliance with regulatory permits and requirements?
What is the compliance culture? Is there a sufficient management of change program to identify and adjust to different compliance requirements?
ERM’s experience has shown that the most frequent findings from these audits include storm water contamination issues, lack of air permitting or under-permitting emissions sources, failure to use adequate control devices, and problems with spill containment and spill plan implementation. Through the audit privilege process, disclosed civil and administrative violations can be corrected without incurring monetary penalties, in addition to a prescribed time frame to implement corrective actions. An environmental audit can be a beneficial tool for new or experienced owners or operators looking to enhance their asset value and manage non-technical risk at their sites.