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The Impact of Non-Technical Risk in Unconventional Oil and Gas Projects


This paper discusses the impacts of non-technical risks on unconventional oil and gas projects (as well as other energy projects) and discuss how non-technical risk assessments and mitigation plans can reduce these risks and avoid delays to projects. Introduction In today's challenging energy environment, companies and projects face multiple key project risks that go beyond traditional challenges like engineering and geology. These risks are known as non-technical risks (NTRs). NTRs are perhaps the biggest impediments to energy projects today and cost companies billions of dollars every year. Examples of projects delayed by non-technical risks include the Keystone XL Pipeline, the Alaska Arctic OCS exploration program, Peru's Camisea Pipeline project and the Cape Wind Energy project. In all of these cases, energy projects were severely delayed due to NTRs and public and/or government backlash. In all cases, the level of risk and the potential mitigation strategies to reduce those risks were not appropriately assessed. In the burgeoning shale plays in North America and around the world, NTRs are also threatening to delay or derail energy projects. Opposition to the practice of hydraulic fracturing (HF), is increasingly targeting and impacting energy projects as well as hampering community acceptance of such projects. Local ballot initiatives and statewide restrictions or bans on HF are proliferating in states such as Ohio, Michigan, Indiana, Colorado, New Mexico, New York, New Jersey, Vermont, Massachusetts, California and Texas among others. Despite the economic and societal benefits that result from unconventional resource development, growing concern over non-technical issues are threatening the future of the US shale plays.