HEALTH AND SAFETY
We have made significant improvements in our safety performance since 2000, reducing our annual injury rate by almost one-half. We achieved our best ever recorded safety performance in 2005 (chart 1, chart 2, table 1) and had no work-related fatalities. The safety target for employee recordable injuries was achieved. The year-end Lost Time/ Restricted Duty rate fell slightly short of the target rate. Notably, our entire Exploration & Production Division had zero employee lost time or restricted duty cases in 2005.

The annual Chairman's Award for Safety Excellence recognizes one operation or group that demonstrates outstanding commitment to workforce safety through systematic processes, exceptional performance, and sustainability of improvement.

The HOVENSA refinery in St. Croix was selected as the 2005 recipient of the Chairman’s Award for Safety Excellence. The award recognizes HOVENSA's significant improvement in safety over the last several years, culminating in first quartile performance compared to industry peers. HOVENSA's outstanding performance is the result of dedication to improvement and action by the entire organization.

President’s Awards were also given to the West Texas Exploration and Production operations and the Southeast Florida/South Carolina Retail operations for their exemplary safety performance.

ENVIRONMENTAL PERFORMANCE
Hess Corporation recognizes that to grow our business and to help meet the increasing global demand for energy, we must do so in a manner that protects the world’s land, water and air resources. Our priority is to put in place environmentally sound practices wherever we work.

Global Climate Change
Climate change is an issue that has a potential impact on future global economic growth and development and has prompted much public debate. We share this concern.

The Company has undertaken a program to assess, monitor and reduce greenhouse gas (GHG) emissions, including carbon dioxide and methane. The challenges associated with this program are significant, not only from the standpoint of technical feasibility, but also from the perspective of adequately measuring our entire GHG inventory. In 2005 we made further progress in developing our standardized reporting methodology.

We set a company-wide target of reducing our normalized GHG emissions by 5 percent by 2005 compared to 2001 emissions. We came close and are encouraged that our 2005 normalized emissions decreased by 4 percent in comparison to our 2001 baseline (chart 3, table 2). Our reported total GHG emissions increased by around 20 percent, from 5.1 million tons in 2001 to 6.1 million tons in 2005. This increase is largely attributable to an increase in operated production and the inclusion of sources not previously quantified.

As we continue to expand our operations our total atmospheric emissions may increase. We will continue to look for opportunities to sustain or reduce our overall carbon footprint. For example, our North Dakota operations are participating in the Plains CO₂ Reduction Partnership, assessing the technical and economic feasibility of capturing and storing CO₂ emissions from stationary sources in the northern Great Plains and adjacent areas.

Air Emissions
We set a target of reducing our normalized nitrogen oxides (NOx), sulfur oxides (SOx) and volatile organic compounds (VOC) emissions by 5 percent by 2005 compared to our 2001 baseline. We are pleased to report that our company-wide NOx emissions were reduced by 34 percent (chart 4), SOx emissions by 40 percent (chart 5, table 3) and VOC emissions by 14 percent (chart 6). These reductions were met largely by efficiency measures, fuel switching, vapor recovery and changes to our asset base.

Water Resources
Our operations have the potential to impact water resources. We have established metrics to help us monitor and improve our performance and controls to minimize these impacts.

Oil Spills and Releases
Our goal is to have no spills. Because oil spills and releases to the environment do occur accidentally, we track our company-wide spills in order to monitor performance, identify root causes and plan mitigation measures.

In 2005, we had 270 spills which totaled 531 barrels (bbls) of oil (chart 7, table 4). Both the number and volume of spills increased in comparison to 2004. Approximately 28 percent of spills were discovered as a result of an ongoing equipment replacement program at retail facilities, which will prevent further spills and leaks in the future. Spills at onshore production locations in the United States accounted for the greatest volume of oil spilled. All spills were promptly addressed and the recovered material was properly handled and disposed of.

The volume of oil discharged in produced water at offshore facilities decreased from 1,985 bbls in 2004 to 1,796 bbls in 2005. As in previous years, the quantity of water discharged also decreased and consequently the oil in water concentration increased from 16 parts per million (ppm) in 2004 to 20 ppm in 2005 (chart 8, table 5). This is well below the generally accepted regulatory limits of 30-40ppm.

In 2005, our overall volume of drilling mud and cuttings discharged decreased significantly, mainly due to a reduction in the number of wells driled (table 6). However, the amount of oil discharged with cuttings increased from 101 tons in 2004 to 350 tons in 2005.

RESOURCE USE
The overall quantity of waste generated increased from 90,708 tons in 2004 to 196,763 in 2005 (table 7). New remediation projects in the Permian Basin resulted in 91,812 tons of this total. Of all waste generated in 2005, 39 percent was recycled. As in 2004, approximately 0.3 percent of waste generated in 2005 was categorized as hazardous.

EXCEEDANCES AND ENFORCEMENT ACTIONS
Corporate policy has long stressed our fundamental commitment to comply with applicable environment, health and safety laws and regulations. Although 100% compliance is an operational goal, exceedances of permitted levels can occur, as do citations from regulatory authorities. A total of $279,330 was paid in penalties in 2005.

ENVIRONMENTAL STEWARDSHIP AND BIODIVERSITY
The Corporation’s operations are managed to avoid or minimize impacts on the environment. As a global organization we face the challenge of conducting operations in many geographic areas with sensitive or unique biological characteristics. Our systematic approach to environmental management and our commitment to understanding the human and natural ecosystems in which we work provide us with a framework to meet these challenges. This includes undertaking environmental baseline surveys and environmental impact assessments prior to the start of our operations, the introduction of appropriate operational controls and on-going monitoring during operations.

Our commitment to environmental stewardship extends beyond our operations to include decommissioning and remediation activities. Decommissioning activities may include plugging old oil and gas wells and dismantling both surface equipment and offshore platforms. Sites where remediation may be necessary include gasoline stations, terminals, onshore exploration and production facilities and refineries. Details of our estimated remediation liabilities and existing reserves can be found in our Annual Report at www.hess.com.

Table 1: Corporate Employee Safety
Table 2: Greenhouse Gas Emissions
Table 3: Criteria Pollutant Emissions
Table 4: Corporate Spills
Table 5: Oil in Water Discharges
Table 6: Mud and Cutting Discharges
Table 7: Solid Waste Management Profile
Table 8: Gas Flared
Table 9: NPDES Sampling Data
Table 10: External Waste Water Discharges