Hydraulic Fracturing Operations
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EOG is a leading producer of crude oil and natural gas, including crude oil and natural gas found in tight rock formations and other sources that require the use of a technology known as hydraulic fracturing. Hydraulic fracturing technology, which has been safely used for decades and is constantly being enhanced by the oil and gas industry, enables EOG to produce crude oil and natural gas from formations that would otherwise not be recovered.

Specifically, hydraulic fracturing is a process in which pressurized fluid is pumped into underground formations to create tiny fractures or spaces that allow crude oil and natural gas to flow from the reservoir into the well so that it can be brought to the surface. This process has been safely and effectively used by the oil and gas industry for more than 60 years in over one million wells.

How Hydraulic Fracturing Works

In accordance with state regulations, the wellbore is encased with protective steel and cement, called surface casing, to protect the groundwater. The depth of this surface casing is designed to protect drinking water aquifers. After a well is drilled to total depth, hydraulic fracturing takes place thousands of feet underground, in zones that are separated from drinking water aquifers by thousands of feet and multiple layers of impermeable protective rock barrier.

The makeup of the fluid used in the hydraulic fracturing process is typically more than 99 percent water and sand, and less than 1% highly diluted chemical additives that are typically found in common household items such as laundry detergents, cleaners and beauty products. Lists of chemical additives most typically used in fracture fluids are available to the public, via internet websites and in other publications sponsored by the American Petroleum Institute, the American Exploration and Production Council and other oil and gas trade associations, and are known to the government agencies that regulate the industry. Specific information about the fracture fluids used in particular wells is available on the FracFocus.org website, hosted by the Ground Water Protection Council (GWPC) and the Interstate Oil and Gas Compact Commission (IOGCC). Additionally, in accordance with federal requirements, Material Safety Data Sheets are maintained on every well site location for every chemical used in the fracturing process.

While the majority of the sand remains underground to hold open the fractures, a percentage of the water and additives flow back from hydraulic fracturing operations. These fluids are then either reused or safely disposed of at sites that are approved and permitted by the appropriate regulatory authorities. EOG regularly conducts audits of these disposal facilities to verify compliance with all applicable regulations.

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EOG’s Use of Hydraulic Fracturing Technology

EOG utilizes hydraulic fracturing technology in completing wells that are drilled in large resource plays such as the South Texas Eagle Ford, North Dakota Bakken/Three Forks, Fort Worth Barnett Shale, Marcellus Shale and Haynesville Shale. As hydraulic fracturing technology continues to evolve, EOG will evaluate the use of new technology in its operating areas, to improve well performance and minimize the amount of water and chemical additives required for the completion of its wells.

EOG designs, constructs and operates its wells and facilities in a responsible way. A detailed drilling and completion plan is created for each well based on individual geological, geophysical and engineering analyses, which often includes advanced imaging technology. Each plan takes into consideration the natural fracturing of the rock and the size, structure and thickness of rock formations of the specific field or basin where the activity is being conducted. EOG designs steel and cement surface casing to protect and isolate drinking water aquifers from the production stream and from hydraulic fracturing fluids in the wellbore. EOG’s practices are designed to comply with all applicable regulations for groundwater protection and well completion. These practices are ongoing.

Leading scientists and many public officials and agencies believe that hydrocarbons produced from shales and tight formations through hydraulic fracturing are critical to the country’s energy future and that hydraulic fracturing can be conducted safely. Moreover, studies conducted by respected regulators and authorities, including the EPA, the GWPC and the IOGCC, have verified that hydraulic fracturing is safe and non-threatening to human health and poses little or no risk to underground sources of drinking water. At the request of Congress, the EPA is conducting another study of hydraulic fracturing that is expected to be completed in 2014.

New supplies of crude oil and natural gas recovered through the use of hydraulic fracturing technology have reversed the decline in production in the United States of clean-burning, low-carbon natural gas. Also, by producing crude oil domestically, EOG lessens America’s dependence on imported crude oil from less politically stable areas of the world. Energy supplies discovered in the United States also contribute to the strengthening of the economy by providing substantial jobs growth and increases in the production of goods and services.

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EOG’s Commitment

EOG recognizes that hydraulic fracturing is a key part of the answer to America’s energy self-sufficiency. EOG is committed to conducting its hydraulic fracturing operations in an environmentally responsible manner and helping to provide the United States with adequate energy supplies that are produced through safe, proven methods.

As part of its commitment to environmental stewardship, EOG continuously evaluates all aspects of its day-to-day operations, including hydraulic fracturing, chemical additives used in fracture fluids, and the reuse and disposal of produced fluids. EOG continues to work with state regulatory agencies and oil and gas industry trade associations to promote transparency in the disclosure of the fluids used in the hydraulic fracturing process, while respecting the intellectual property rights of the manufacturers supplying the additives.

Managing Risks: EOG will continue to monitor and assess any new policies, legislation and regulations related to hydraulic fracturing to determine the impact on its operations and, where necessary, take appropriate actions. There have been no federal, state or local bans or moratoria on hydraulic fracturing that apply to any mineral leases or areas of operations where EOG conducts hydraulic fracturing.

Legal and operational risks related to hydraulic fracturing are disclosed in EOG’s periodic reports that are filed with the United States Securities and Exchange Commission (SEC) and readily available to the public.

EOG is continually taking steps through training, information sharing and continuous improvement in its operational practices to prevent safety or environmental incidents related to hydraulic fracturing, including surface spills or other releases of fluids. In the unlikely event of a surface spill containing fracturing fluids, the company has a program that requires prompt reporting to the appropriate governmental agencies and the remediation of any such spills. Spills resulting in or expected to result in fines or penalties in excess of the $100,000 regulatory threshold under federal securities law are publicly reported by EOG in its periodic filings with the SEC. While EOG’s goal is to have no spills, EOG believes that it engages in sound operational practices to minimize spills and that the risk of material loss from claims, regulatory action or litigation related to spills or releases of hydraulic fracturing fluids is not substantial.

EOG has not incurred fines or penalties for any environmental incidents during calendar year 2012 that individually or in the aggregate are material to EOG’s consolidated financial position, results of operations or cash flow. Additionally, EOG has not incurred any environmental fines or penalties related to subsurface contamination resulting from hydraulic fracturing. Moreover, EOG is not aware of any significant community barriers or public opposition that would prevent it from conducting hydraulic fracturing operations in any of its operating areas.

As noted in the following section on “Water Management”, EOG is actively managing water resources. EOG is not aware of any water supply or waste disposal issues that would significantly limit EOG’s hydraulic fracturing operations in any of its operating areas.

In summary, EOG believes that hydraulic fracturing operations pose minimal risks to the environment and to human health. EOG has taken, and continues to take, prudent steps, through the use of technology, training, best practices and public education, to further minimize any associated risks. EOG’s goal remains to safely, efficiently and responsibly find and produce valuable energy resources, while protecting the air, water, land and health of the communities where it operates and where its employees live and work.

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Best Practices

Minimizing Chemical Additives: EOG’s operating groups who are responsible for the completion of oil and gas wells in the various geologic regions and plays throughout North America are testing the use of different types, quantities and mixtures of hydraulic fracturing fluids, and are sharing their findings throughout EOG. The company has engaged outside laboratories to assist in this effort. One of EOG’s ongoing goals is to further minimize the amount of chemicals required for hydraulic fracturing in the completion of its wells.

EOG is also testing the use of newer and more environmentally compatible additives that are being developed by various oilfield service companies. Through this process, the company is generally using hydraulic fracturing fluids with fewer chemicals. During 2012, EOG tested friction reducers and scale inhibitors promoted as being more environmentally compatible by the manufacturers. EOG is also testing an advanced, non-chemical oxidation process for controlling bacteria, algae and scale that would replace a chemical additive used in the hydraulic fracturing fluids.

All chemicals used in EOG’s hydraulic fracturing operations are highly diluted, resulting in fluids that are typically more than 99 percent sand and water and less than 1 percent highly diluted chemical additives. These fluids are injected into shale formations far below drinking water aquifers. While EOG will continue to find ways to optimize chemical additives and minimize any impact of these additives, government and independently conducted studies have shown there are minimal risks to public health and the environment from the fluids that are currently utilized.

Visualization Technology: EOG also has increased the use of visualization technology, called microseismic, to monitor the hydraulic fracturing process. This technology allows the company to measure the size and placement of the fractures. The data confirms that the fractures are separated from drinking water aquifers by thousands of feet of impermeable rock and that the risk of migration of fluids to drinking water aquifers or the surface is not significant.

Wellbore Integrity: EOG understands the importance of wellbore integrity and the proper surface casing of wells to protect drinking water aquifers. This has been a focus of EOG and state regulators for many years for all oil and gas wells, including those completed through hydraulic fracturing. EOG is highly supportive of these industry-wide efforts to promote the use of appropriate materials and procedures by all oil and gas operators in their surface casing programs. EOG is also actively working through trade associations to assure that state regulations dealing with wellbore integrity remain up-to-date and take into account changing technology and best practices.

EOG has procedures and practices in place in each of its operating areas to promote wellbore integrity. The company strives to meet or exceed state requirements in the design, drilling, completion and testing of wellbores in order to protect drinking water aquifers, control well pressures and avoid the migration of gas or fluids.

EOG takes steps to carefully plan the construction and casing of each well, and verifies through testing the mechanical integrity of each well prior to conducting hydraulic fracturing operations. Because of differences in geologic and other conditions at well locations, surface casing programs and testing equipment and procedures must be customized for each area. Certain materials or tests that may be appropriate in one area may not be appropriate in other areas. These differences are taken into account by both the well operators and state regulatory authorities.

For all proposed wells, a surface casing program is designed by EOG based on the particular conditions of the locations where the wells will be drilled. The company periodically consults with specialized service providers to determine the proper constituents of the steel and cement to be used, and uses specialized equipment to evenly distribute the cement between the casing and the wellbore. EOG monitors pump pressures and fluid returns during the cementing process to verify adequate coverage of the cement throughout the targeted area, including coverage of hydrocarbon strata and zones containing drinking water aquifers.

EOG tests the surface casing integrity of the wells it operates in the United States, in accordance with applicable state regulations, prior to completing and flowing a well. In 2012, EOG tested the surface casing integrity of 100 percent of the wells it drilled in the United States during 2012. EOG uses testing equipment and procedures that are appropriate for the particular materials and conditions and that comply with regulatory requirements. Throughout the drilling and completion process, the company has well control procedures in place to prevent leaks and well control incidents from occurring. In addition, prior to completing a well, EOG establishes a maximum allowable annular pressure (the pressure in the space around the well bore) for the hydraulic fracturing operations as a way to protect the casing string. This pressure is monitored throughout the completion of the well. In 2012, EOG conducted annular pressure monitoring of 100 percent of the wells it completed in the United States during 2012.

Other Measures to Protect the Environment: EOG also recognizes the risks related to surface spills during the hydraulic fracturing process. Various techniques and technologies are used to protect against surface spills during the drilling and completion process. In Pennsylvania, for example, each operated well site in the Marcellus Shale is typically built with a protective liner and a perimeter barrier to prevent runoff in the unlikely event of a surface spill of any fluids. All trucks and equipment travel on this liner, which is regularly inspected to confirm its integrity. Tanks located on these liners are used to temporarily store – for reuse or disposal – produced water that may contain diluted hydraulic fracturing fluids. The trucks that transfer the wastewater from these tanks conduct their operations in areas that are protected with liners. Certain construction techniques allow the company to move and often reuse the liners at multiple sites.

As part of EOG’s ongoing commitment to environmentally responsible operations, EOG tracks and documents the volume and frequency of oil spills from its U.S. operations involving greater than 5 barrels. For 2012, EOG’s oil spill rate in respect of its U.S. operations was 0.014 barrels of crude oil for every one thousand barrels of crude oil equivalent (MBoe) of EOG’s production during 2012 from its U.S. operations. EOG calculates the oil spill rate for a particular year by dividing the aggregate volume of oil spills involving greater than five barrels of oil from its U.S. operations during such year by EOG’s U.S. production for such year (on an MBoe basis).

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Communicating and Promoting Best Practices

Industry Group Participation: In addition to promoting regulatory compliance and sharing best practices among its operating groups, EOG is also supportive of recent recommendations by the National Petroleum Council (NPC) to establish regional councils of excellence to share best practices among companies for protecting the environment, safety, and public health. According to the NPC report released on September 15, 2011:

“Councils of excellence… should function as centralized repositories and systematic mechanisms to collect, catalog, and disseminate non-proprietary standards, practices, procedures, and management systems that would be made available to all appropriate government and private sources. Because development of natural gas and oil resources differs depending on factors such as the geology, water resources, and geography of the region, what constitutes effective practices is regionally defined. As such, there may be a need for multiple councils, each with a regional focus. The councils would be industry led and should be open to companies, regulators, policymakers, nongovernmental organization stakeholders, and the public.”

EOG is a member of the NPC.

In a further effort to promote industry-wide best practices in the Marcellus Shale, the Marcellus Shale Coalition, of which EOG is a founding member, has implemented and published “Recommended Practices” for various aspects of oil and natural gas operations, including “Site Planning, Development and Restoration”, “Supply Chain”, “Pre-Drill Water Supply Surveys”, “Responding to Stray Gas Incidents” and “Motor Vehicle Safety.”

Through its work with the Canadian Association of Petroleum Producers, EOG has promoted the development of best practices related to resource development in Canada. Similarly, EOG is active in joint industry efforts to advance play-specific best practice development in the Barnett and Eagle Ford areas of Texas.

Transparency: Concerted efforts by EOG and others in the oil and gas industry have resulted in the development of the FracFocus.org website, hosted by the GWPC and the IOGCC. The GWPC is a national association of state ground water and underground injection control agencies whose mission is to promote the protection and conservation of ground water resources. The IOGCC is an organization representing the governors of 37 states that produce the majority of crude oil and natural gas in the United States. The FracFocus.org website, in addition to supplying nationwide hydraulic fracturing fluid data, also provides educational information to the public on the topic of hydraulic fracturing. It has also been announced that FracFocus.org will be upgrading its website to allow public searches of the disclosures by date, chemical name and chemical identification number, in addition to searches by state, county, well and operator name. EOG has supported FracFocus.org since its inception and supports full disclosure and greater transparency in the disclosure of hydraulic fracturing fluids.

In April 2011, EOG began disclosing chemical ingredient data for its well completions on FracFocus.org, and EOG is continuing to populate the FracFocus.org database with information about its new wells in the United States. EOG’s practice is to disclose chemical ingredient data for all well completions on FracFocus.org, whether or not such disclosure is required by the state where the well is located. In 2012, EOG began requesting that service companies providing hydraulic fracturing services supply EOG with all of the chemical ingredients used (both those listed in the OSHA-mandated Material Safety Data Sheets and any other ingredients). The ingredients disclosed by suppliers and manufacturers are then included in EOG’s FracFocus.org submissions. In 2012, EOG submitted chemical ingredient data to the FracFocus.org database for 100 percent of its U.S. well completions during the year.

Although FracFocus.org began on a voluntary basis, it is rapidly becoming the standard reporting system many state agencies use in their regulatory programs. For instance, the states of Texas, Colorado, Montana, Oklahoma, Pennsylvania, North Dakota, Utah, Mississippi and Louisiana have all approved or are considering FracFocus.org for the reporting of additives under each state’s regulations. EOG is complying with these disclosure rules in those states where it has operations.

Other states, including Wyoming, New Mexico and Montana, have adopted rules requiring operators of crude oil and natural gas wells in those states to disclose detailed information about the chemical additives used for hydraulic fracturing, similar to the FracFocus.org database. EOG is also complying with these disclosure rules.

Community Engagement: EOG also understands the importance of community engagement. Since most of EOG’s in North America are in rural areas, much of the community interaction is with landowners, mineral interest owners and surface owners who have rights to the land or minerals on which EOG operates. In addition to these groups and individuals, EOG also recognizes the importance of proactively engaging others in the community, especially if operations are conducted in more populated areas or areas unfamiliar with crude oil and natural gas operations. EOG has actively engaged with civic leaders, elected officials and community groups in a collaborative manner to discuss impacts that may arise from the company’s operations, including hydraulic fracturing and water management, while looking for opportunities that strengthen the communities where the company is active. EOG believes that it has earned a good reputation as the “operator of choice” among many landowners, surface owners, mineral interest owners and others in the communities where the company operates. Many EOG employees and their families live in these communities and take pride in EOG’s commitment to doing business “the right way.” EOG also understands that there are issues related to any industrial activity, including crude oil and natural gas operations, and tries to anticipate and minimize these issues, maintain open lines of communication and properly address concerns in a responsible manner.

Addressing Questions: Due to the mostly rural nature of EOG’s operations, questions or concerns about EOG’s operations are typically communicated by the landowner or surface rights holder or neighboring landowners in the vicinity of our operations. These matters are handled by the EOG Land Department assigned to a particular operating area. Occasionally, a matter is not resolved locally and is elevated to EOG’s headquarters office. Because of the flat reporting structure, open communications and overall culture of transparency within EOG, any concerns or complaints of significance are promptly elevated to management in both regional operating offices and EOG’s headquarters office. If the matter involves potential legal or ethical issues covered by EOG’s Codes of Business Conduct and Ethics or involves a call to the EOG Business Conduct and Ethics Hotline (which is published and available to the public through the Codes of Conduct on EOG’s website), it is referred to the General Counsel and the Compliance Committee, which routinely tracks all inquiries and reports at least annually to the Board of Directors.

In order to further promote responsible practices and open communication with nearby communities, EOG has been a founding member of the Barnett Shale Energy Education Council (BSEEC) in North Texas, the Marcellus Shale Coalition (MSC) in Pennsylvania, the South Texas Energy and Economic Roundtable (STEER) (comprised of significant operators in the Eagle Ford Shale) and the Eagle Ford Task Force (comprised of landowners, mineral owners and royalty owners, local community leaders, local elected officials, water representatives, environmental groups, oil and gas producers and pipeline companies and oil services companies (including a hydraulic fracturing company, a trucking company and a water resources management company)). In announcing to the public the formation of STEER during 2012, the organization stated:

“The South Texas Energy and Economic Roundtable is a not-for-profit association whose mission is to ensure that resource development in South Texas occurs to the mutual benefit of both the energy sector and communities in South Texas. Formed by some of the largest oil and gas operators in Texas, STEER is committed to coordinating and facilitating communications and public advocacy for a broad range of stakeholders interested in production of the energy resources available in South Texas.”

STEER, BSEEC, MSC and similar organizations are expected to assist all operators in identifying and responding to community concerns, and these organizations will supplement EOG’s continuing efforts to maintain good communications and relations with landowners and others in the communities where we operate.

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For additional information, please see:

Modern Shale Gas Development in the United States: A Primer (Prepared for the U.S. Department of Energy by the Ground Water Protection Council, 2009).

Hydraulic Fracturing: Unlocking America’s Natural Gas Resources (American Petroleum Institute, 2010).

The Real Facts about Fracture Stimulation: The Technology Behind America’s New Natural Gas Supplies (American Exploration and Production Council, 2010).

Common Hydraulic Fracturing Fluid Components (U.S. Department of Energy, 2011).

Energy In Depth

Oil and Gas in Texas: A Joint Association Education Message (2010)

FracFocus.org: Chemical Disclosure Registry

The Marcellus Shale Coalition

The Barnett Shale Energy Education Council


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