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 all groundwater and fresh water aquifers. After a well is drilled to total depth, hydraulic fracturing takes place thousands of feet underground, a considerable distance below any drinking water aquifers. Standard company well design practices ensure that crude oil and natural gas producing zones 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% water and sand, and less than 1% of 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 Energy in Depth, America’s Natural Gas Alliance, 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.com 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 significant 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.
Top of PageEOG’s Use of Hydraulic Fracturing
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, Fort Worth Barnett Shale, the Marcellus Shale and Haynesville Shale. 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, including in many instances 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 casing and cement to protect and isolate potable groundwater zones 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 Ground Water Protection Council and The Interstate Oil and Gas Compact Commission, 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 complete in 2012.
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.
Top of PageEOG’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 in fracture fluids, and the recycling and reuse of hydraulic fracturing fluids. EOG continues to work with state regulatory agencies and oil and natural 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.
Best Practices: 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 the 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.
As noted above, all chemicals used in EOG’s hydraulic fracturing operations are highly diluted, resulting in fluids that are typically more than 99% sand and water and less than 1% chemical additives. These fluids are injected into shale formations far below the drinking water aquifers. While EOG will continue to find ways to optimize chemical additives and minimize any impact of these additives, the company believes there are minimal risks to the public health and the environment from the diluted fluids that are currently utilized.
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 impervious rock and that the risk of migration of fluids to drinking water aquifers or the surface is not significant.
EOG understands the importance of well bore integrity and the proper casing and cementing of wells to protect shallow 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, and EOG is highly supportive of industry-wide efforts to promote the use of appropriate materials and procedures by all oil and gas operators in their surface casing programs.
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:
“[C]ouncils 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 National Petroleum Council.
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 lined 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 – flowback 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.
Transparency: Concerted efforts by EOG and others in the oil and gas industry have resulted in the development of the FracFocus.com website, hosted by the Ground Water Protection Council and the Interstate Oil and Gas Compact Commission. 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.com website, in addition to supplying nationwide hydraulic fracturing fluid data, also provides educational information to the public on the topic of hydraulic fracturing.
EOG is continuing to populate this database with information about its new wells. Although FracFocus.com was begun 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 and Colorado have mandated that operators use the FracFocus database to submit reports about the nature of fluids used in all hydraulically fractured wells completed in the state. EOG is complying with these disclosure rules.
In August 2010, the state of Wyoming adopted new rules requiring operators of oil and natural gas wells in that state to disclose detailed information about the chemical additives used for the hydraulic fracturing of each well. EOG has operations in Wyoming and is complying with these disclosure rules.
In addition, in August 2011, the state of Montana adopted rules requiring operators of crude oil and natural gas wells in that state to disclose the chemical additives used in hydraulic fracturing. EOG has operations in Montana and is complying with these disclosure rules.
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 U.S. Securities and Exchange Commission 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. EOG is not aware of any such spills in 2011 that have resulted in regulatory action. 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 U.S. Securities and Exchange Commission. 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 and litigation related to spills or releases of hydraulic fracturing fluids is not substantial.
EOG has not incurred fines or penalties for any environmental or safety incidents during calendar year 2011 that individually or in the aggregate are material to EOG’s consolidated financial position, results of operations or cash flow. Additionally, EOG is not a party to any claims or litigation related to contamination from hydraulic fracturing.
EOG also understands the importance of community engagement. Since most of EOG’s operations 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. 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. Moreover, 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 natural environment and to human health, and has taken, and continues to take, prudent steps, through the use of technology, 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.
Top of PageFor 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).
Oil and Gas in Texas: A Joint Association Education Message (2010)
FracFocus: Chemical Disclosure Registry
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