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Assuring your approval Modern permitting involves doing due diligence, proving sustainable benefits Alan Bailey Petroleum News
There was a time when people tended to view permitting as simply a question of obtaining government agency approval for certain specific actions planned for a project.
But that’s no longer a viable approach, Joseph Perkins, a member of Stoel Rives LLP and a lawyer with many years of experience in the permitting of resource extraction projects in Alaska, told the Law Seminars International Energy in Alaska Conference Dec. 8.
Nowadays people need to work on a much broader front, viewing the permitting process more in the light of demonstrating that a project is in everyone’s best interest, and doing the same due diligence investigation as is required to persuade an investor to commit funding to the project, Perkins said.
What makes sense? “That concept of ‘best interest’ is now the way in which every agency goes about making its decisions,” Perkins said. “This permitting process is no longer just satisfying the procedural hoops, so that I can do what I want. It is the process of deciding what makes the most sense and convincing, not just the government agencies, but also your neighbors.”
Perkins cited a failed attempt at developing coalbed methane in the Matanuska and Susitna valleys in 2003-04 as an example of what can happen when a company does not pay sufficient attention to a project’s neighborhood — in that particular debacle community concerns about noise and the possibility of groundwater contamination nixed the coalbed methane development. Essentially the would-be developers had done the necessary permitting to address the legal property rights for the project without adequately considering the broader community perspectives regarding what was proposed, Perkins said.
“What we’re really talking about here in terms of decision making, when it comes to any of these big projects, is the best interest,” Perkins said. “Is it in the best interest of the neighborhood to have this project go forward? Is it a good thing?”
Wide neighborhood And the audience that a business needs to convince about the value of what it wants to do may turn out to be much wider than is immediately apparent. For example, as a place of national interest, Alaska has a “neighborhood” that extends far beyond its borders.
“Alaska’s resources draw attention and the decisions we make draw attention,” Perkins said. “And therefore we are part of a larger neighborhood.”
That means, for example, that every new project in Alaska is going to have to address the question of greenhouse gas emissions, in addition to the more local concerns such as any impacts on the livelihood of Native communities, or any interactions with endangered wildlife, he said.
And for resource extractive industries such as oil and gas, with those resources being finite, convincing a broad community that a project has sustainable value may prove challenging.
“We need to look at our projects making a positive impact that will continue beyond the life of those projects,” Perkins said. “We need to be able to convince our neighborhood that our project is sustainable in that way.”
Due diligence With the task of persuading investors to put money into a project closely analogous to the task of persuading government regulators that a project is worthwhile, broadly similar due diligence is required for both tasks: A business that plans a project with a strong appeal to investors will likely find that it has done much of the spadework required for permitting, Perkins said.
“The manner in which anyone should approach permitting … is to constantly be thinking about what is someone else going to be wanting to know about my project when it comes time for me to ask that someone else for money,” Perkins said. “It is actually a very easy way of thinking about permitting. … Some of the projects that I’ve worked on in a variety of different ways have all confirmed this way of thinking for me.”
And a key issue both from an investment and a permitting point of view is the nature of the critical risks that a project faces. Those risks need to be identified and addressed from a permitting perspective, while at the same time a prospective investor will need to be comfortable that any significant risks are being adequately managed.
Multidisciplinary team The complex and far-reaching nature of today’s permitting, and the linkage between permitting and project due diligence, speak to the need for a multidisciplinary team that deals with both the due diligence and permitting aspects of a project, Perkins said. A team of this type can take a broad view of the project, rather than become too focused on the particular concerns of one or two specialists at the expense of perhaps missing some major project risk.
“It’s a task which is not just the environmental people dealing with ‘can this project be sited here?’ or ‘can this particular permit be acquired so that I can go across this salmon stream?’” Perkins said. “The due diligence task and the permit task that confronts almost any project now is much bigger than it was, much more complicated, much more iterative.”
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