Shale Gas and ‘Fracking’
A Guidance Note for Financiers
A number of financial institutions, including Credit Agricole SA, Standard Chartered and F&C Asset Managment, commissioned us to produce a Guidance Note on issues and responsible business practices associated with shale gas development and exploitation. The Guidance Note identifies a range of local and global challenges posed by the development of the world’s vast shale gas resources, including
- Climate change impacts associated with shifting power generation to natural gas from other sources, as well as fugitive methane emissions during production.
- Concerns about the high volumes of water and toxic chemicals used in shale gas operations and the risks of contamination, particularly to local sources of drinking water.
- Impacts on the environment, biodiversity and ecosystems as a result of shale gas operations, the intensive use of chemicals, associated emissions, waste and truck traffic.
- Social, cultural and economic consequences for local communities arising from factors such as landscape impacts, high volumes of truck traffic and an influx of new workers into an area.
- Challenges to operating companies pertaining to scale and the cumulative impact of multiple operators and contractors working in a single area, posing issues for co-ordination and the anticipation and management of risks, including accidents and occupational health hazards.
- Regulatory variation and weakness in providing effective oversight of an activity with such complex potential impacts, especially in countries with weak governance, and where there may be a history of corruption and poor contractor management.
The Guidance Note also specifies 16 areas of responsible business practice that should be pursued by the shale gas operators – 4 practices relate to the company’s overall quality of management, accountability and disclosure, and a further 12 relate to particular areas and activities of operation, such as: environmental & social impact analysis; well integrity; toxic chemicals; water quality; freshwater management; air emissions, including fugitive methane; local infrastructure impacts; seismicity and workforce exposure to silica. The Guidance Note drew on leading research, expert academic insight and the experience of companies in the sector.