David Miller's Remarks at press conference on Community Engagement Standards

As prepared for delivery
Press Conference on Community Engagement Standards
David Miller, API Director of Standards
Wednesday, July 9, 2014

Opening statement, as prepared for delivery:

Good afternoon and thank you for joining our call today.

This morning, API is announcing the publication of a first-of-its-kind industry standard for community engagement. These guidelines will provide a roadmap for oil and natural gas operators seeking to build lasting, successful relationships with local residents in areas of the country where energy development opportunities are open for the first time, thanks to advances in horizontal drilling and hydraulic fracturing.

API first began publishing standards in 1924. Developed and managed by industry and academic experts, API’s certification and standards program is accredited by the American National Standards Institute (ANSI), the same body that accredits programs at several national laboratories.

Today, we’re expanding our standards portfolio to reflect best practices and proven models that have been developed by industry participants over decades of successfully building mutually-beneficial relationships with communities across the nation.

Hydraulic fracturing is a proven, safe technique that has been used since 1949 in over one million wells right here in the U.S. As a result, America is now the number one producer of natural gas in the world, and by 2015, it is expected that we will take the top spot in crude oil production. Of course, with this success, come both benefits and challenges.

The benefits are clear: a lower trade deficit, millions of new jobs, higher government revenue, and a level of energy security that is changing the global landscape.

A study by IHS estimated that, for the average U.S. household, the increase in disposable income resulting from energy developed with hydraulic fracturing totaled $1,200 in 2012 – a sum expected to grow to $3,500 in 2025.

The same report found that the full unconventional value chain supported over two million jobs in 2012 and is projected to support nearly 4 million jobs by 2025. These jobs are increasingly multiplying in areas of the country where oil and natural gas exploration doesn’t have the same history as Texas or Oklahoma. That’s why the industry’s heightened focus on community engagement is so important.

In areas like North Dakota, for example, the economy is flourishing and local operators are working diligently to ensure newly-opened resources are developed in conjunction with community goals. API’s new standard is designed to share those lessons with operators around the country.

Dubbed ANSI/API Bulletin 100-3, API’s community engagement guidelines will serve as a gold standard for good neighbor policies that address community concerns, enhance the long-term benefits of local development, and ensure a two-way conversation regarding mutual goals for community growth.

The standard provides a detailed list of steps that oil and natural gas companies can take to help local leaders and residents prepare for energy exploration, minimize interruption to the community, and manage resources.

The document is divided into the five phases of oil and natural gas development: entry, exploration, development, operations, and exit.

During the entry phase, companies determine the potential for energy extraction in a given area. They are encouraged to introduce key personnel to local leaders, share information on safety commitments and operational goals, and set professional standards for local employees and contractors.

In the next phase, during exploratory drilling, companies are encouraged to focus on transparency, open dialogue, and education, with recommendations for community meetings and discussions around training for job opportunities.

In the development phase, as operations are expanded to match the potential of local resources, companies are urged to work with local emergency responders to prepare against any potential risks. They also are prompted to engage with local authorities, develop relationships with mineral owners, and promote best practices regarding safety and environmental protection.

During the operations phase, industry presence declines, as existing wells continue to produce, while the land impacted by development and exploration is reclaimed and restored. Long-term standards for maintenance and traffic safety are recommended, as well as a public feedback mechanism that allows local residents to maintain two-way communication with company representatives.

Finally, during the exit phase, companies may close or transfer ownership of local operations, sometimes after decades of successful production. Just as companies plan for their original entry, it is recommended that they engage with the community regarding plans for reclamation and restoration, and prepare stakeholders for the transition.

Each community is different, and the standards are not designed to be exhaustive, but rather to serve as a reference for developing a plan-of-action that matches the needs and concerns of a broad range of stakeholders -- from rural farmers to indigenous tribes.

And, as with all our standards on hydraulic fracturing, API’s Global Industry Services division will work hand-in-hand with industry participants to educate operators on the successful deployment of engagement strategies. The guidelines will be available free-of-charge on API’s website, and shared with regulators at every level of government.

With that, I’d like to thank you for your time, and I’ll open things up to questions.

For this portion of the call, I’ll be joined by Karen Moreau, executive director of the New York State Petroleum Council, who will be available to provide an on-the-ground perspective of community engagement. Karen, thanks for taking the time to be here.