News

The price paid for discounting the social and political impact of your decisions is going to be high.

Coal Seam Gas industry has domestic and international hurdles ahead.

Institute for 21st Century Problem Solving

One of the most controversial new industries to emerge in the last ten years or so is coal seam gas, not only in Australia where the protest movement is picking up steam, but around the world. The US is ten years ahead and has experience with many of the outcomes. From New York to New Mexico, more than 100 municipalities have passed fracking bans or temporary moratoriums, according to FracTracker, a non-profit organization that compiles data on the oil and gas industry. The bans often put communities in direct conflict with states over the right to regulate the oil and gas industry. Now questions are being asked about whether all the pain has been worth it?

The Australian newspaper (September 12, 2013) reported that senior executive at oil and gas giant Conoco Phillips in Australia, Mike Nazroo, was recently arguing that tightness in gas supplies would be short-lived. According to Nazroo, the massive shale gas supplies of the USA are soon to be hitting global markets concurrently with the multi-use projects across Africa and elsewhere. In addition, there are a large number of gas projects going on across Europe, Russia and in Central Asia. As production from these fields moves to export mode, cheaper gas will be here to stay. The Australian suggests that this must put a question mark on the glowing report on Australia's industry recently delivered by BT and dampen the get rich dreams of many companies currently pushing governments around Australia to allow them to drill, often against the wishes of landowners, communities in general and local governments.

Recent survey data from social survey pollster Australian Opinion Research based on a random cross section of more than 5000 Australians 18+ indicated that the public is extremely suspicious about the coal seam gas industry and the governments that appear to be to be supporting it. The survey data below collected  prior to the election shows that just 21% of those surveyed believe that CSG will be the economic saviour it has been promoted to be and a mere 11% believe they can rely on governments to protect their interests when dealing with the coal seam gas industry. This is hardly a positive result for CSG.

coalseamgas2013.1

coalseamgas2013.2

Failure to take into account the social impact of business decisions is likely to cause serious roadblocks for business according to a recent report by business services group KPMG  (The Australian, Business p19, Sept 16, 2013). The report noted that a social licence to operate differs from a government licence to operate (i.e. regulatory compliance). One is handed out by the government and the other by community stakeholders.

This is a clear example of the second pillar of the 21st Century business model developed by Checkmate Analytics which specifies the need to take into account in any new business venture, the social impact of the business plan. (See below)

As the above diagram shows, a 21st century business venture will not only need both political licence and social licence to succeed it must also take into account the role of the media.

The KPMG report according to The Australian notes that billions of dollars of future investment and revenue are at stake if industry fails to obtain a social licence. However, we would suggest that does not need to be a stumbling block if it is handled up front. It becomes costly only after dollars have been expended on the project then more dollars must be expended trying to salvage it. The solution is hidden in plain view. KPMG rightly argue that social licence will drive mining companies to seek better measurement of community attitudes and feelings and in the process become far more sophisticated in assessing social impact.

Of course we agree but argue that at the moment the CSG industry for example would appear to have a lot of assessing to do. In the end, a trade- off needs to be made in every community. This might involve looking critically at the prospects of a real increase in wealth and resources to the entire community (not just the investors) against the potential environmental, social and health risks attached to it. All in a community are stakeholders and all need to be able to have input into these decisions should they wish to do so.

Notes:

1) Fracking involves injecting wells with millions of litres of water and chemicals to release trapped oil and gas. The chemicals have been shown to be toxic and the water usage is very high.

2. Comments by Mike Nazroo, Head of Commercial, Conoco Phillips, The Australian, Business section, Sept 12, 2013

3. Australian Opinion research is a 14 year veteran of online surveys in Australia and internationally and the first large scale online survey operator in Australia. The company regulatarly reports on social, political and business research and boasts a representative database of over 100,000 Australians together with access to more than one million additional survey respondents.

4. KPMG Report cited in the Australian Newspaper, Business section, p 19, Sept 16, 2013.

5. Fractracker links to an external site.

© Copyright 2013: Institute for 21st Century Problem Solving

The Institute for 21st Century Problem Solving is social sciences research institute which was formed from a belief that the pursuit of the social good can also provide significant ongoing rewards for business and NGO’s without bankrupting us morally.

 

 

 

 

 

 

 

 

 

 

 

Print Friendly

Leave a Reply

You must be logged in to post a comment.