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Social License to Operate: Hydraulic Fracturing-Related Challenges Facing the Oil & Gas Industry

Don C. Smith, Jessica Richards, 2015 International Mining and Oil & Gas Law, Development, and Investment

The “Golden Age of Gas” ideology, as coined by the International Energy Agency (IEA), considers the big picture of unconventional gas development. According to IEA Executive Director Maria van der Hoeven, “exploiting the world's vast resources of unconventional natural gas holds the key to a golden age of gas...but for that to happen, governments, industry and other stakeholders must work together to address legitimate public concerns about the associated environmental and social impacts.”38 The IEA has noted that if environmental regulation is developed in line with these principles in mind, environmental performance will lead to a level of public acceptance that provides industry with a necessary “social license to operate.”39 Companies must consider the social impacts of shale gas extraction projects. Those companies who effectively evaluate these social impacts will be best positioned to earn a social license to operate from the communities surrounding the project area.

II. Social license to operate

Social license to operate is a tool whereby companies manage socio-political risk by conforming to a set of implicit rules imposed by their stakeholders.40 “While social license to operate is a fundamentally intangible concept, the concept does not lack definition or prescription for achievement.”41 It is an ongoing social contract with society that allows a pr