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CSSD: Environmental cred for Appalachian shale producers

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The way a company reacts when its industry gets pushback on environmental performance can say a lot about it. 

Some, typically, try to fly under the radar. Some — sometimes called "bad actors" — fight regulation and comply minimally if at all, leaving citizens' groups to press regulators for enforcement. 

And then there are those that get out ahead of the pack — the "good actors" — committing to best practices and transparent operations. 

Some of those "good actors" in the shale oil and gas industry have formed the Pittsburgh-based Center for Sustainable Shale Development. Launched in March, the CSSD is turning best practices into a certification for environmental performance for producers in Appalachia. 

"We looked at the whole universe of what people are thinking about in this space, the leading edge of that," said Andrew Place of EQT Corp., who serves as the group's interim executive director. 

"We adopted our suite of standards from that universe." 

The standards were developed over the past two years by CSSD industry partners EQT Corp., Chevron Appalachia, Consol Energy and Shell in collaboration with environmental groups the Clean Air Task Force, Citizens for Pennsylvania's Future, Environmental Defense Fund, the Group Against Smog and Pollution and the Pennsylvania Environmental Council and philanthropic organizations the Heinz Endowments and the William Penn Foundation. 

The industry participation bodes well for West Virginia: EQT, Chevron and Consol were three of West Virginia's top producers in 2011, representing more than 20 percent of the state's 2011 production.

What the Standards Cover

The initial set of standards — to be updated and refined over time — addresses 15 areas related to water, air and climate with practices that exceed those required by regulation. 

"Things like post-operations water monitoring," Place said. "I don't believe that's handled in any regulatory space in the region, and I think that's a great piece for us to be working on." 

Green well completions, or capturing for productive use methane that previously has been vented and often still is wasted through flaring, is another standard Place pointed out. 

"We have a requirement for virtually all of our wells to be green completed by Jan. 1, 2014, and that's forward-looking from regulation," he said. That is a year ahead of an Environmental Protection Agency compliance date. 

Yet another extensive set of the standards will clean up engine emissions. 

"Drilling rig engines, frack truck engines, on-road truck engines … our standards are all forward-leaning with compliance from EPA Tier 4 standards in our fleets," Place said, referencing the center's accelerated schedule for reducing engine emissions of particulate matter. "I don't know any state regulations that are anything but silent on that." 

The standards are tailored specifically to shale development in the Appalachian basin: Ohio, Pennsylvania and West Virginia now, expanding into Maryland and New York as called for. 

It has to be that way, Place said. 

"If you were developing standards in south Texas, water might account for much of the standards document," he said. "Or, because of the significant infrastructure we have in place in this region, we are able to set pretty aggressive ‘green completion' standards, which would be a more challenging undertaking in the Bakken in North Dakota where it's pretty much greenfield development. Standards will always need to be regional to account for geology and geography and regional uniqueness." 

How Will it Work?

A company calling about certification will be directed to engage one from a list of accredited independent auditors. 

The auditor will conduct a review using the CSSD guidelines. If the company meets standards, it will be certified. 

There are many competent auditors already in the industry, Place said. 

In recognition of the fact that operations vary, a producer may prefer to start with certification in one or two areas — water, air, climate. But having begun, Place said, it has to complete full certification within two years. 

The cost? 

That remains to be seen, but Place said an initial estimate of the full audit is perhaps $30,000 — certainly between $10,000 and $100,000, depending on the size of the operator and other factors. He expects that two-year maintenance reviews will bear a similar cost. 

CSSD's services of maintaining and updating standards, accrediting auditors, issuing certifications, promotion and communications are supported by participating foundations and will not be charged to certified companies.

Operationalizing; Staying Current

The center collected its best practices from all across the industry: the American Petroleum Institute, America's Natural Gas Alliance, the Marcellus Shale Coalition, state environmental regulators, the EPA and the Bureau of Land Management. 

Now, the group is operationalizing them into an "evaluation document" for use by auditors, by making them specific. 

"For example, maximizing recycling of fluids," he said. "To quantify that, to be able to audit, you need a number, so we put a 90 percent figure on that." 

With regard to post-operations water monitoring, "How do you assure that you're monitoring where groundwater's flowing and you're capturing the potential for any risk?" he said, asking the kind of question the center is working through. 

In another example, "CSSD requires a review of the site-specific risks around our pads, both subsurface and surface, so what does that plan look like?" 

Place expects to have the "Version 1.0" evaluation document finalized this summer; certifications will begin after that is complete. 

Over time, the center will update its standards. 

"Certifications will be updated every two years," Place said. "That gives the public certainty that firms remain in compliance. But also, as we envision these standards evolving and tackling other topic areas — ‘Version 2.0' — the certification process will circle back and incorporate the ongoing changes." 

While CSSD's standards are specific to Appalachia, Place does see the center's process as a model. 

"The collaboration and transparency and quantifiable standards, the non-aligned board participation, the split of funding between industry and philanthropy — all that process side I think has a lot of value."