Advances in horizontal drilling and hydraulic fracturing have resulted in signiﬁcant and rapid growth in shale oil and gas development in the U.S. Hess has made signiﬁcant investments in two unconventional oil and gas plays — the Bakken Formation in North Dakota, one of the premier U.S. tight oil plays, and the Utica Formation in Ohio. Oil and gas from these plays constitute about 44 percent of Hess’ total operated production.
We recognize that some stakeholders have concerns about the potential effects of shale energy operations on the environment, public health and safety. The practices we use are well established and, in most cases, have been employed in conventional oil and gas development for many years.
We aim to develop our resources responsibly and with minimal impact and, as discussed in the Social Responsibility section of our 2017 Sustainability Report, we seek to identify and address stakeholder concerns to improve our performance and enhance our license to operate. All assets undergo several stages of detailed, activity-based risk assessments during the appraisal, capture, development and production phases. These multidisciplinary risk assessments allow us to identify mitigation measures we can pursue to help us protect the environment, the communities in which we operate and the safety of our workforce. Our enterprise risk management process, discussed in the How We Operate section of our 2017 Sustainability Report, includes the identiﬁcation and ranking of environmental considerations as well as technical review and value assurance activities. We also perform numerous environment, health and safety (EHS) audits on an annual basis.
Whether for conventional or unconventional resource production, a key to protecting groundwater is well integrity — that is, ensuring proper physical barriers are in place between the wellbore and the surrounding rock and underground aquifers.
While hydraulic fracturing processes occur several thousand feet below the Earth’s surface, wellbores pass through groundwater- bearing zones at shallower depths. Before designing or constructing any well, we investigate the depth and lateral extent of any underground fresh water so that the well can be drilled and completed in a way that protects groundwater resources and conforms to regulatory requirements and Hess standards.
Certain regulatory agencies require operators to design casing and cementing plans that will isolate any underground fresh water from the contents of the wellbore. Where applicable, we submit this information in applications for well construction permits, which must be reviewed and approved by regulators. Well designs can vary from asset to asset due to differences in the formation, the management of drilling risks and the application of technology.
To help ensure well integrity, our drilling process for new shale wells is to line wellbores with multiple layers of steel pipe encased in cement to depths well below the deepest freshwater zones. Specifically:
- A surface casing is installed from the surface to below the lowest known freshwater zone and then cemented in that interval to isolate the freshwater zone, thereby creating a physical barrier between the materials in the well and the strata containing the groundwater being protected.
- Inside the surface casing, another casing is installed and cemented in place, and an acoustic cement bond log is employed to conﬁrm that the cement barrier meets regulatory requirements, where applicable.
- The well completion is performed through a ﬁnal casing (Ohio) or liner (North Dakota) placed inside the production or intermediate casing to the depth of the lateral. In North Dakota, a “frac string” is then run and connected to the top of the liner. This provides an additional physical barrier to isolate ﬂuids within the well.
- Once completed, at a minimum, all of our wells have a 300 pounds per square inch (psi) pressure gauge installed between the 9 5/8-inch and 7-inch casings to determine if it becomes overpressured. We are working to upgrade our wells by installing digital gauges that are connected to our supervisory control and data acquisition (SCADA) system. These enhanced gauges have already been installed in our wells having a low top of cement.
- Hess utilizes various well logging techniques to evaluate cement and casing integrity for the 7-inch casing that exceed applicable regulatory requirements. The log data, in combination with advanced wellbore stress modeling, helps ensure wellbore integrity during fracturing activity.
- To prevent potential fracture stimulation interference — that is, stimulating one well and having it result in hydraulic communication in nearby wells — existing offset oil and gas wells are shut-in during fracturing activity. In addition, the wellhead systems in nearby wells are tested prior to being shut-in or additional equipment is installed on wellheads that can safely operate within proper distances.
- During hydraulic fracturing, procedures are in place to operate surface and downhole equipment within their design parameters.
Induced seismicity from hydraulic fracturing or underground injection wells has not been an issue for our operations in North Dakota. In Ohio, regulators have implemented measures through the permitting process to address seismicity concerns in the state. Hess follows a monitoring methodology and an operational control process for performing hydraulic fracturing in areas of known faults or areas where previous seismic activity greater than 2.0 magnitude has occurred.
Well integrity continues to be an important issue for safeguarding the subsurface long after the construction and initial hydraulic fracturing has been completed. At the end of well life we follow similar measures so that the wells are permanently plugged and abandoned in compliance with Hess, regulatory and industry standards.
Hess drilled and completed 76 wells in the Bakken in 2017, 0.05 percent of which experienced compromised well barriers, and none of which resulted in a loss of well control or a loss of wellbore fluids to the environment. Any release to the environment would be captured, reported and investigated under our incident reporting and investigation processes. Well integrity-related releases to the environment would be regarded as Tier 1 and Tier 2 process safety events as defined by IOGP. Any releases with high potential severity would be subject to rigorous root cause analysis.
Protection of Water Quality
Hess protects water resources through the implementation of various controls. Our well pads and aboveground equipment use secondary containment during drilling operations to minimize impacts from any loss of primary containment (LOPC) events. Measures to prevent stormwater from entering the well pad are incorporated into our construction design, and precipitation that falls within an operating area is controlled to help prevent runoff from leaving the pad. We also have processes and procedures to respond to an LOPC that aim to quickly control, contain and mitigate impacts.
We employ closed-loop containment systems for drilling fluids, which reduce the risk of LOPC. These systems also provide efficiency in controlling waste volumes, as liquids and cuttings can be better separated for improved waste management and disposal. We store flowback and produced water in closed tanks.
In Ohio, Hess meets or exceeds state regulatory requirements for baseline groundwater and surface water sampling of neighboring properties prior to drilling. Through water sampling, both Hess and the surrounding property owners are provided with a baseline of water quality conditions prior to operations.
In North Dakota, the state’s Department of Health operates and routinely monitors a regional network of groundwater quality monitoring wells. The network is comprised of approximately 120 wells across 21 aquifers. The Department of Health samples wells every 18 months for benzene, toluene, ethylbenzene or xylene (BTEX), total petroleum hydrocarbons (TPH), metals and other water quality parameters. We believe these activities afford impacted parties a level of protection, while promoting transparency and stakeholder engagement.
We understand the importance of managing water resources responsibly and continue to evaluate our operations for potential opportunities to improve our water performance.
Hess utilizes the WRI Aqueduct Water Risk Atlas (Aqueduct) to assess water scarcity and associated risks. Using the default settings in Aqueduct, the majority of our North Dakota operations are located in the low to medium risk category while some leases around the Little Missouri watershed lie within the high-risk category. However, when the oil and gas weighting is applied within Aqueduct, then the entire state of North Dakota is designated as low risk based on water use assumptions for oil and gas operations.
In North Dakota we use water for several purposes. In 2017 we used approximately 1,170,000 cubic meters of fresh water for hydraulic fracturing and approximately 291,000 cubic meters of fresh water for well maintenance. In addition, we reused approximately 343,000 cubic meters of produced water for well maintenance. Our legacy conventional production operations in North Dakota withdrew and used approximately 316,000 cubic meters of Dakota Aquifer water for reservoir management (water flood) purposes.
A few statistics help give perspective to these numbers:
- Hydraulic fracturing accounts for 74 percent of our freshwater use and 54 percent of our total water use when brackish water (Dakota Aquifer) withdrawals and reuse of produced water are included.
- We reused 9 percent of our total produced water in 2017. Through reusing 343,000 cubic meters of produced water for well maintenance, we were able to offset freshwater use by that same amount.
- We currently do not reuse flowback water from hydraulic fracturing. Flowback water represents less than 1 percent of our total wastewater disposals in North Dakota.
We currently only use fresh water for hydraulic fracturing. Sixty-eight percent of the fresh water used for hydraulic fracturing is sourced from surface water (Lake Sakakawea), with the remainder sourced from groundwater wells.
In total approximately 3,300,000 cubic meters of produced water and flowback water were managed via deep well disposal in North Dakota in 2017. This water is isolated from surface water and groundwater resources throughout its lifecycle. Once extracted from below the surface, the water is contained in aboveground processing equipment and storage tanks which have secondary containment barriers; Hess does not use open impoundments or pits for wastewater storage. All tanks and processing equipment have corrosion control procedures in place and are subject to weekly integrity inspections by Reliability Operators under our leak detection and repair (LDAR) program in North Dakota, which covers all of our operations, to include storage equipment used for wastewater management (see Environment webpage). The use of closed tanks for produced water and residual drilling waste mitigates the potential for exposure to the environment and wildlife.
Naturally Occurring Radioactive Materials
Shale, petroleum and gas deposits often occur in aquifers containing brine (salt water) that also can contain naturally-occurring radionuclides, which are referred to as Naturally Occurring Radioactive Materials (NORM). Radionuclides, along with other minerals that are dissolved in the brine, separate and settle out, forming various wastes at the surface, including:
- Mineral scales inside pipes
- Contaminated equipment or components
- Produced water
Because the extraction process concentrates the NORM and brings it to the surface, these wastes are often classified as Technologically Enhanced Naturally Occurring Radioactive Material (TENORM). More information on TENORM can be found on the U.S. Environmental Protection Agency website, available at: https://www.epa.gov/radiation/tenorm-oil-and-gas-production-wastes
Hess’ Bakken operations include three key activities where NORM and TENORM are found: production equipment clean-out, when buildup of sludge occurs and impacts the operation of equipment; equipment replacement (e.g., flanges, values and piping); and asset retirement, when the aboveground assets are removed from the operational location for disposal or storage for reuse.
Clean-up activities and surveys are conducted by trained personnel to identify the presence of NORM/TENORM at Hess locations. Upon identifying the presence of NORM/TENORM at actionable levels, the North Dakota asset’s Waste Management procedure is consulted to inform how to label, store, transport and dispose of these materials. All NORM/TENORM wastes are disposed of at Hess-approved facilities, which have been audited by Hess for compliance with Hess requirements and applicable regulations.
To date, actionable levels of NORM/TENORM have not been identified in our produced water and, therefore, it is either reinjected into deep wells for disposal or reused for well maintenance.
Hydraulic Fracturing Fluid Composition
Hydraulic fracturing fluid is predominantly composed of water with proportionally small volumes of proppant and chemical additives. The water we use for the fluid is primarily from freshwater sources, though nonfreshwater sources may also be used. Proppant is a solid material used to hold the formation open and allow the oil and gas to flow into the well. Since 2016 we have used sand as proppant instead of ceramic materials. The chemical additives in fracturing fluids are used for specific purposes such as reducing friction, exterminating bacteria or inhibiting corrosion or scale deposits. By year-end 2016, Hess adopted the use of only two additives (a friction reducer and a surfactant), along with utilizing a more environmentally favorable version of the surfactant, for all new hydraulically fractured wells in North Dakota.
We know that some stakeholders are concerned about the chemical composition of hydraulic fracturing fluid. Hess does not use diesel or BTEX in our hydraulic fracturing fluids. All of our downhole chemicals are disclosed on the FracFocus reporting website (www.fracfocus.org). While respecting laws and contractual obligations that allow our service providers to preserve the confidentiality of their fracturing fluid formulations, we encourage transparency in chemical use and disclosure.
We also evaluate the additives we use and consider new products that become available. For example, Hess pioneered the use of high-concentration friction reducers (HCFRs). HCFRs have multiple benefits, including a reduction in pumping power requirements (which lowers fuel use and emissions) and a reduction in the overall number and volume of chemicals used per well (which reduces the number of vehicle deliveries and the occupational and environmental exposure risks associated with handling chemicals, as well as the potential for and consequences of spills). By the end of 2015, approximately 26 percent of our North Dakota wells had been completed with the reduced additive fluid composition containing HCFRs.
In our shale energy operations, regulated emissions occur during flowback and production operations. When technically feasible, these emissions are collected and directed to a pipeline for gathering and processing. Where pipeline availability is constrained or in the event of other operational issues, flaring may occur. See the Climate Change and Energy section of our sustainability report for more information on greenhouse gas emissions, and the Environment section for a discussion of non-greenhouse gas air emissions.
We seek to minimize land use and reduce the number of well sites needed to develop our acreage. In North Dakota this can be achieved by implementing multi-well pad drilling – that is, multiple wells on a single well pad with shared surface facilities. In both Ohio and North Dakota, we use geographic information systems when siting facilities to minimize the impact on the environment and local communities. In addition, we have implemented a detailed protocol to steer our development teams toward identifying opportunities to minimize impacts to the environment, including those related to land utilization.
We are sensitive to stakeholder concerns about increased truck traffic on the road in areas of high drilling activity. In North Dakota we have participated in multi-stakeholder initiatives aimed at minimizing impacts on public roads and traffic congestion. We have also collaborated with community partners and state officials in North Dakota to promote adequate infrastructure funding in an effort to improve traffic safety and support road maintenance. In 2017 we were able to remove more than 42,000 trucks from the road through infrastructure projects and oil gathering improvements. We also continued to use piping, rather than trucks, to transfer fresh water for completions at our North Dakota asset. In 2017, 100 percent of the water used for our well completions in North Dakota was transferred by piping – this amounted to approximately 7.4 million barrels, which offset more than 61,308 truck deliveries. We use temporary pipelines to supply fresh water to 100 percent of our well completions in Ohio.
In addition, the Hess completions team uses a “sandbox system” for delivering proppant sand to about half of the wells Hess is fracturing in North Dakota. During traditional truck unloading, blowers blast sand out of the truck, spreading dust. The sandbox system uses gravity to transfer sand from the container to the conveyor, eliminating the need for blowers. Importantly for road safety, the sandboxes can be pre-staged for use, meaning that they can be delivered as convenient, reducing the need for nighttime and bad weather driving for deliveries.
Transporting crude oil by rail has become a particular issue of concern for many stakeholders in the U.S. and Canada. Improving crude-by-rail safety is a shared effort among railroads, tank car manufacturers and owners, regulators and shippers. At Hess, we are committed to doing our part to minimize the potential risks involved. Hess encourages the adoption of a holistic approach to rail safety that is science based and addresses accident prevention, mitigation and emergency response capability.
We continue to work with local, state and national governmental agencies, oil industry, tank car manufacturers and owners, and the railroads to facilitate the safe transportation of crude oil and other petroleum products. We are actively engaged with continuing industry efforts to further improve the safety of rail crude oil transport and our interests in this area are represented on the American Petroleum Institute’s Rail Policy Committee, Committee on Federal Relations and Midstream Strategies Subcommittee.
Effective July 1, 2015, Hess entered into a midstream energy joint venture in which Global Infrastructure Partners purchased a 50 percent ownership interest in Hess’ Bakken, North Dakota, midstream assets. The Tioga Rail Terminal and associated tank cars are included in the joint venture. However, Hess, through our affiliates and service agreements with the joint venture, continues to operate the assets. The midstream joint venture’s entire fleet of 550 crude oil tank cars were constructed to meet the most recent DOT-117 standards for newly constructed tank cars.