When social license to operate is shaken

LWOODWARD ike those of most industries, oil and natural gas companies are used to operating under certain legal and regulatory rules.

Those rules tend to hold relatively constant. When changes are made, in most cases they are made slowly and methodically, often with input from industry representatives. Industry leaders don't always like or agree with the rules they have to follow, but they generally are aware of all aspects of the regulations and can plan for their changes.

What's sometimes far more difficult to follow, prepare for and work under is a concept known as “social license to operate.” Essentially it's the public's willingness to put up with the industry and allow it to exist.

Oklahoma's history is deeply intertwined with the oil and natural gas industry. A large percentage of people in the state work in the industry or have friends or family in the industry. A sizeable percentage of the state population — especially its rural population — receives regular or occasional checks from the industry by way of royalty or lease payments.

As a result, the oil and natural gas industry in Oklahoma has been granted more leeway to operate in the state. Society has deemed the industry an important part of the state and local economies.

That's not the case in all parts of the country.

With several presidential candidates pushing for much stronger restrictions on — or the elimination of — the oil and natural gas industry, industry leaders are paying attention to how they are perceived and received, even in energy-producing states like Oklahoma.

“We took a big hit in social license because of seismic activity,” Chad Warmington, president of the Petroleum Alliance of Oklahoma, said earlier this month at the Tri-State Oil and Gas Convention in Woodward.

“One of the things I'm most proud about is how the industry responded to seismicity.

We were able to partner and work with the Corporation Commission and work with the Governor's Council on Seismic Activity. It's a tremendous success story.”

While still higher than historic averages, the number and strength of earthquakes in the state is down sharply from their peak in 2015 and 2016.

Still, industry leaders say they have more work to do to gain and keep the favor of the members of the communities where they operate.

Communication with neighbors and community leaders is key, said Byron Cottingham, production manager at Oklahoma Citybased Roan Resources.

“Our operations are close to several municipalities,” he said. “Very early on, we had discussions with a lot of the cities. We're also having open lines of communications with state legislators and the Corporation Commission to make sure we hear their concerns and also try to address them.”

One of the most common complaints about oil and natural gas operations is the damage caused to local or county roads from hauling equipment.

“We understand we have an impact on the roads,” Cottingham said. “In the city of Tuttle alone, we've paid hundreds of thousands of dollars to the city to try to help improve that.

“Working collaboratively with the communities and the counties is important. Getting those open lines of communication has been crucial.”

Companies and their representatives also must treat landowners and community members with respect, said Scott Goodwin, vice president of operations at Denver-based FourPoint Energy, which is operating in western Oklahoma and the Texas Panhandle.

“Let's be sure to treat others with respect and do what we said we're going to do,” he said. “Make sure you respect landowners and do the right things. That will help us keep the solid reputation we have in the state and built upon it.”