Scope of Report Message From the Chairman Our Company 2006 Highlights 2006 At A Glance 2006 Performance Data How We Operate Review of Operations Safety Performance Environmental Performance Global Workforce Community & Social Performance Global Compact Index GRI & IPIECA/API Index Verification Statement

ENVIRONMENTAL PERFORMANCE

We are committed to meeting the highest standards of corporate citizenship by safeguarding the environment.

ENVIRONMENTAL STEWARDSHIP AND BIODIVERSITY

The company’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 and social 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. Sites where remediation may be necessary include gasoline stations, terminals, onshore exploration and production facilities and refineries.

We do not operate in any areas currently designated as protected areas by the World Conservation Union (IUCN). Our environmental policy clearly states our commitment to recognize the existence of, and to comply with, all legal and regulatory requirements related to any protected area. Further, our commitment to high standards of environmental responsibility in all aspects of our global operations extends to areas where legal and regulatory requirements are less defined. In all areas, both with and without “protected” designations, our processes identify sensitivities and form the basis for practices that protect the environment.

Our EHS & SR management system ensures key environmental objectives are integrated into the overall business planning process and identifies appropriate ways to reduce environmental impacts related to current operations and new projects. Our operating units establish and maintain documented environmental objectives, including those addressing biodiversity, and manage progress toward those objectives.

Clean-up of the Elizabeth River in Chesapeake, Virginia

Hess Corporation’s Chesapeake Terminal is located along the Southern Branch of the Elizabeth River. Prior to our ownership the property had been used as a creosote wood treatment plant for more than 75 years, resulting in creosote contamination to the site as well as the adjacent river. To effectively address the historic creosote contamination, we joined the Virginia Department of Environmental Quality Voluntary Remediation Program. Close cooperation with program staff has provided for rapid progress on the project. As part of our contribution to the Program, we completed soil and groundwater evaluations, including drilling and monitoring subsurface wells. Our results indicate that the majority of the contamination is restricted to the area immediately adjacent to and beneath the former creosote treatment areas.

We also work in partnership with other organizations devoted to the Elizabeth River revitalization and remediation. The company is an active member of the Elizabeth River Project, a nonprofit organization, whose mission is to restore the Elizabeth River to the highest practical level of environmental quality. We are also a member of the Money Point Revitalization Task Force. The task force is working to develop a full corridor revitalization plan to remediate the river and prevent further contamination.

The remedial action plan for the Chesapeake Terminal includes stabilization/remediation of near-surface soils, containment, and removal of contaminants. Remedial activities completed or underway include:

• Implementation of a phytoremediation system
• An extraction system which has pumped approximately 25,000 gallons of creosote to date, and
• Removal and disposal of approximately 300 feet of buried piping and associated contaminated soil.

We are a proud participant in multiple partnering efforts intended to restore the Elizabeth River to its former beauty. We continue to facilitate the sharing of best practices and lessons learned across these partnerships to ensure timely success in our joint endeavors.

Environmental/Social Impact Assessments

For major new projects, particularly those in previously undeveloped areas or areas with known sensitivities, additional tools are used to facilitate biodiversity action planning, including ESIA. We employ a risk based approach to ESIA that enables the evaluation of potential impacts and the effectiveness of mitigation measures. Biodiversity considerations are incorporated throughout an ESIA, including consideration of the biological, chemical, and physical characteristics of the area under study. The ESIA examines boundaries, services, continuity, and scale of ecosystems, as well as crossborder and human interactions with ecosystems. We use the best available guidelines and tools, such as those developed by the Energy and Biodiversity Initiative (EBI), the International Petroleum Industry Environmental Conservation Association (IPIECA), Wildlife Conservation Society (WCS), and IUCN to assess biodiversity sensitivities. Assessments are enhanced through local knowledge, site specific investigations and risk assessments. Typically, ESIAs are conducted by qualified consultants with specific expertise relevant to the natural and socioeconomic setting of the project or activity. These consultants are managed through a process that ensures our environmental expectations and requirements are met.

We use the best available guidelines and tools, such as those developed by the Energy and Biodiversity Initiative (EBI), the International Petroleum Industry Environmental Conservation Association (IPIECA), Wildlife Conservation Society (WCS), and IUCN to assess biodiversity sensitivities. Assessments are enhanced through local knowledge, site specific investigations and risk assessments. Typically, ESIAs are conducted by qualified consultants with specific expertise relevant to the natural and socioeconomic setting of the project or activity. These consultants are managed through a process that ensures our environmental expectations and requirements are met.

Our policies and practices reflect the links between human welfare, cultural diversity and environmental conservation. We consider the interactions between ecosystems and the people who depend on them. Community environmental and health expectations are also considered, regardless of regulations. Ongoing and open consultation with concerned communities is a priority. Community input is integrated into key decision making, and information sharing with communities occurs regularly.