“Transparency and adequacy are best against resistance”

Iryna Lendel was born in Ukraine, destined to make a spectacular career in the US, after receiving a Ph.D. in Economics from Lviv Regional Institute of the National Academy of Sciences of Ukraine in 1995, and a Ph.D. in Urban Studies and Public Affairs from Cleveland State University’s Maxine Goodman Levin College of Urban Affairs in 2008. She also received a Diploma of Higher Education in Economics with Honors (Master’s degree) from the Ivano-Frankivsk Institute of Oil and Gas (Ukraine). Iryna was presented with the 2007 Russel Kashian and Susan Oneson Award for a peer-reviewed published article and the Maxine Goodman Levin Discretionary Fund Award in 2005. While she was an associate professor in Ukraine, Iryna received the Fulbright Research Scholar Award for conducting regional economic development research at Cleveland State University in 1997-98. She was a Co-Principal Investigator in a project known as “An Analysis of the Economic Potential for Shale Formations in Ohio.” Owing to this major breakthrough in shale gas extraction, Ohio was authorized to drill 239 wells last August, compared to several ones in 2009-10 and 94 in 2011. This allowed Ohio to tangibly increase its steel output, placing second best US steel supplier, providing thousands of jobs in the gas and steel industries. Ukraine appears to follow suit, after making a deal with Shell and talks with Shevron. The problem is the risks involved in the extraction of “nonconventional” [i.e., shale] gas and outbursts of public protest.

Ms. Lendel, could this quest for nonconventional gas with Shell damage the Ukrainian environment and threaten the populace?

“Any industrial project involves the risk of damage to the environment. Obviously, getting raw materials is even more risky. The highest risk comes when you fail to act in strict accordance with production regulations. The intrigue of developing shale oil and gas fields is the usage of the hydraulic fracturing technique. It has been used for years, along with special additives to solutions that help keep bores open in shale or solid sandstone long after hydraulic fracturing.

“In order to correctly assess the risks, it is necessary to determine their causes and decide on ways of reducing these risks to a minimum. For example, there is the risk of using a larger amount of water, compared to conventional drilling, namely purchasing, transporting this water, storing and recycling the spent solution, isolating groundwater when making the vertical wellbore; storage and consumption of fuel and lubricants, and so on. In most cases on record in the United States, damage to the environment was caused by problems relating to the storage of spent water, when heavy rains caused it to flow out of open pools; also by road accidents involving 18-wheelers, where none should have been in the first place. Add here the problem of transporting water containers to the sites without pipeline water supply.

“To properly assess such risks, one must know everything about the companies and their technologies involved in a given development-and-extraction project in Ukraine. For example, open spent water pools are banned in Ohio, so all such water must be kept in sealed containers. I could cite a number of examples with separate companies voluntarily applying precautionary measures to avoid damage to the environment, using a special covering for the drilling site to prevent the liquid from spreading around. Some companies have their vehicles washed before leaving the site.”

Do you think the Ukrainian side is prepared to meet every requirement laid down in the agreement, along with securing environment and populace on a level matching that of Shell?

“You should address this question to your authorities. All I can say is that Shell boasts one of the world’s highest environmental protection standards, and that the Ukrainian side could learn a lot from its experience.”

What about obstacles, including in terms of Ukrainian technologies and materials?

“I believe that most such obstacles will materialize because Ukraine lacks modern shale gas development technologies. I was once posed a similar question in Ohio. I answered it relying on my interviews with shale gas development company officials there. I said that a company must have reliable personnel, equipment, technologies, and suppliers [on the new site], instead of spending lots of money transporting all this to that site. Another option is the usage of local resources and materials to secure the company’s hi-tech standard. In terms of economy, the first option is good, although it spells heavy spending. This option secures hi-tech standard, along with a possibility of adjusting technologies to local conditions. A company that wants to stay on the site for a long period of time will have to look for ways to make the production process less expensive, by enlisting local partners, paying for the training of local specialists, using local materials and contractors.”

What kind of problems Shell and Ukraine are likely to encounter when exploring such oil and gas deposits?

“Lots of them, for all I know. There will be political, economic, and technological problems. Political stability and predictable economy are the most important factors in the working out of correct business estimates and avoiding risks. You need a clear-cut legal framework, including regulations, tax rates, raw materials’ costs, and so on. A lot will depend on the geophysical characteristics of the deposits, for this data will allow a given company to decide on how much to invest and where, so as to get adequate revenues. Also, the presence or absence of infrastructure will be of the utmost importance.”

Would you care to comment on the possibility of political obstacles in Ukraine; on what the local ecologists could do to help this project; also on what the signatories should do to convince the populace that this project is good for them and for the rest of Ukraine?

“From what I have read in your media, there is resistance to this project, which is only natural. There are various kinds of resistance, when people, even specialists, fail to comprehend the risks and their consequences; also, when this resistance is rooted in actual fears. In this case people have all the information they need and they want to help make up for the risks involved on a bona fide basis. Transparency and adequacy are best against such resistance.”

Why do you think Shevron started having problems in the west of Ukraine? Some experts believe that exploring and developing shale gas deposits there would threaten the environment.

“The kind of resistance in Ukraine, from what I have been able to figure out from your media reports, should be explained by the fact that the local communities were not involved in the public discussion of the project, also by the opacity of the decision-making process. To discuss environmental risks, one has to study the situation, assess the local opportunities and risks, then make calculations. I believe the Ukrainian government and local authorities will welcome this approach to the matter.”