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The Warsaw Voice » National Voice » January 30, 2014
Norway in Poland
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Managing Project Risk
January 30, 2014   
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Comprehensive risk management creates a good basis for a reliable and safe implementation of shale gas exploration and production projects.

The ISO 31000:2009 standard includes guidelines and principles of risk management. Based on the standard, shale gas operators can establish clear procedures and responsibilities that will enable them to maintain all related risks at an appropriate level. “The appropriate level” should be understood as ALARP, or As Low As Reasonably Practicable—taking into account the time, trouble and cost involved and achieved when further actions become unreasonably disproportionate to the additional risk reduction obtained. A valuable part of the risk management system are procedures established in case of a Major Accident Hazard.

Each phase of a project requires a different risk management approach. Early strategic planning, due to lack of data, is based on a qualitative approach. Moreover, when stakeholders and project details are identified it is possible to define specific risk criteria, which usually cover areas such as health and safety, environmental impact, the impact on local communities and the risk related to the operator’s resources, assets and production capacity. At a later stage, when more data are available, a quantitative risk assessment is normally carried out.

For advanced projects, it is particularly important to design appropriate “preventive and corrective barriers” designed to minimize the possibility of appearance of major hazards and mitigate their potential impact.

Comprehensive risk assessment of shale gas projects should consider their complexity and the specific project context.

Local communities are often unaware of any shale gas projects planned in their neighborhood. Seismic surveys and exploratory drilling offer the opportunity for both supporters and opponents of extracting natural gas from shale deposits to advance and pursue their goals.

In such a case gaining the favor of local communities is not just a matter of the operator’s comfort, but primarily helps reduce the risk associated with any downtime involving drilling equipment or delays resulting in tangible financial losses for the operator and hurting the project’s profitability.

The primary concern of local communities related to shale gas extraction is the project’s possible negative environmental impact. This aspect is often the topic of reports on drilling projects that pollute water reserves, poison animals and have a negative impact on crop yields. Many of these reports are untrue, but operators do not have a coherent concept of how to respond to them.

One of the basic tools that could support operators is a logbook recording the impact of each action on selected environmental aspects in a reliable and systematic way. For this tool to be effective, any field work should be preceded by an analysis of selected environmental parameters representing an environmental baseline. These can later be compared to all subsequent results included in environmental monitoring.

Environmental baseline parameters should include pH, conductivity, heavy metal concentration, concentration of selected inorganic and organic ions, the level of radionuclides, the concentration of thermo- and biogenic methane, and other parameters that can offer a detailed insight into the condition of the local environment. Water, soil and air samples should be collected in accordance with international standards and best available practices and by qualified staff. Measurements of selected parameters should be carried out throughout the operator’s activities in a given area and be based on an environmental monitoring plan (performed on a regular basis).

Such an approach requires financial outlays but can reduce the risks associated with a negative impact on the environment through a rapid identification of possible deviations from the baseline levels.

Potential environmental hazards are linked with all stages of the project and subcontractors performing their individual tasks, often working under time pressure.

The responsibility of the operator is to assess whether individual processes are carried out in a reliable and professional way and by qualified staff. The operator must ensure that selected subcontractors work according to the approved procedures and take a holistic approach to the process, being aware of the impact of their work on subsequent activities and keeping in mind that even a small error or inaccuracy, if not handled properly, may lead to delays, accidents, failure of the project, or in extreme cases, disaster.

The operator’s responsibility is to manage all processes throughout the operating cycle, taking into account safety, regulations, logistics, selection and verification of subcontractors, mutual relations between processes, and qualification of appropriate technology. This task is extremely difficult especially in the case of developing business sectors (such as shale gas extraction in Poland), where access to reliable subcontractors is difficult, and legal, environmental and geological conditions not fully defined or documented. Risk analysis provided by a recognized independent organization with extensive experience in risk management can provide the operator a basis for further work. Such a study includes all the necessary information related to risk factors—facts that can be easily used to win public acceptance or support for the operator in consultations with other stakeholders, authorities or financial institutions.

Magdalena Kubiak-Krupa, Michał Skup, Michał Gronert
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