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Shale Energy

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Advances in horizontal drilling and hydraulic fracturing have resulted in a rapid increase in shale oil and gas development in the U.S. – although activity has slowed in the past two years due to low commodity prices.

Hess has made significant investments in these unconventional oil and gas plays – first in the Bakken Formation in North Dakota, one of the premier U.S. tight oil plays, and more recently in the Utica Formation in Ohio, an emerging shale gas play. Oil and gas from these plays constitute about 45 percent of Hess’ total operated production.

We recognize that some groups have voiced 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, we aim 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, includes identification and ranking of environmental considerations and other aspects of our operated activities as well as technical review and value assurance activities. We also perform numerous EHS audits on an annual basis.

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. Hess also has processes and procedures to respond to an LOPC 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 operates a regional network of groundwater quality monitoring wells. We believe these activities afford all parties a level of protection, while promoting transparency and stakeholder engagement. 

Water Use

We understand the importance of managing water resources responsibly and continue to evaluate our operations for potential opportunities to improve our water performance. Hydraulic fracturing accounted for 18 percent of Hess’ total freshwater consumption in 2016, with our North Dakota and Ohio assets reflecting 11 percent and 7 percent, respectively.

The ability to incorporate alternatives to fresh water within the operational life cycle is dependent upon a multitude of factors and is predominately driven by local conditions. In 2015 Hess initiated a program to evaluate opportunities to reduce the quantity of recovered water disposed in underground injection wells. Through various efforts to pilot the reuse of drilling, flowback and produced water in hydraulic fracturing, we were able to eliminate the disposal of more than 76,000 barrels of recovered water and to offset our use of freshwater resources by that amount.

Well Integrity

Whether for conventional or unconventional resources production, a key to protecting groundwater is well integrity – that is, working to ensure physical barriers 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 internal Hess standards.

Certain U.S. state agencies require operators to design casing and cementing plans that will isolate any underground fresh water from the contents of the wellbore. 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 technology applications.

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.

  • 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.

  • 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, and 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 ratings.


Induced seismicity from hydraulic fracturing or underground injection wells has not been a focus of potential concern 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 when performing hydraulic fracturing in areas of known faults or areas where previous seismic activity greater than 2.0 magnitude has occurred. 

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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 as discussed in the Water Use section, nonfreshwater sources may also be used. Proppant is a solid material, such as sand, used to hold the formation open and allow the oil and gas to flow into the well. As of 2016 we have switched to sand as proppant instead of ceramic materials. The chemical additives in fracturing fluids are used for specific purposes such as reducing friction, killing bacteria or inhibiting corrosion or scale deposits.

We know that some stakeholders are concerned about the chemical composition of hydraulic fracturing fluid. Hess does not use diesel or benzene, toluene, ethylbenzene or xylene (BTEX) in our hydraulic fracturing fluids. All of our downhole chemicals are disclosed on the FracFocus reporting website (www.fracfocus.org).

 We also evaluate the additives we use and consider new products that become available. In 2014 and 2015 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. Using fewer chemicals per well 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. 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 North Dakota wells.

Data on the composition of hydraulic fracturing fluid used in each well is publicly available on the FracFocus website. While respecting laws that allow our service providers to preserve the confidentiality of their fracturing fluid formulations, we encourage transparency in chemical use and disclosure.

Air Emissions

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, flaring may occur. See the Climate Change and Energy section of our sustainability report for more information on greenhouse gas (GHG) emissions, and the Environment section for discussion of non-GHG air emissions.

Land Use

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 (up to 18) 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.

Transportation Impacts

We are sensitive to stakeholder concerns about increased trucks 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 2016 we were able to remove more than 51,000 trucks from the road through additional infrastructure projects and oil gathering improvements. For example, in 2016 we further increased our use of piping, rather than trucks, to transfer fresh water for completions at our North Dakota asset. During the year we piped water to 100 percent of our well completions in North Dakota – approximately 5.2 million barrels, which offset more than 50,400 truck deliveries. We also use temporary pipelines to supply fresh water for 100 percent of our well completions in Ohio.

In addition, the Hess completions team is using a new “sandbox system” for delivering proppant sand to about half of the wells Hess is fracturing in North Dakota. With the sandbox system, the boxes empty by gravity, and the sand falls out of the boxes onto a conveyor. Importantly for road safety, the sandboxes can be delivered ahead of time and pre-staged for use throughout the fracturing process. This reduces the need for nighttime and bad weather truck deliveries.

Also in 2016, a cross-functional initiative involving EHS, Operations and Global Supply Chain – aimed at reducing, reusing and recycling water at our Utica asset – reviewed the water management value stream to identify inefficiencies through a Lean “Kaizen” problem-solving approach. By addressing those inefficiencies, the team saw significant cost savings while simultaneously reducing two key safety exposures: driving (the typical fluid hauler’s average drive time was cut from six hours to three) and spills. We have significantly reduced water disposal costs and improved communication with fluid haulers, which has led to quicker response time for spills. 

Crude-by-Rail Safety

Over the past several years, the transport of crude oil by rail has become an issue of concern in the U.S. and Canada. Improving crude-by-rail safety is a shared effort among railroads, regulators and operators. At Hess, we are committed to doing our part to minimize the 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 have worked with local and national governmental agencies, industry, rail equipment manufacturers and the railroads to facilitate the safe transportation of crude oil and other petroleum products. Also, we have an internal, cross-functional Rail Transport Working Team that shares information regarding issues relating to rail safety. We are also actively engaged with industry efforts to further improve the safety of rail crude oil transport. We are represented on the American Petroleum Institute’s Rail Policy Committee, Government Affairs Committee and Rail Transportation Group. We are also active on several multi-stakeholder task forces addressing these issues.

We recognize that appropriate train and track design standards and maintenance are significant factors in preventing train derailments. We rely on guidance from studies conducted by railroads and regulators and follow mandatory train and rail car design and maintenance standards. To that end, Hess was one of the first companies in 2015 to procure crude oil tank cars equipped with thicker shells and full-height head shields for puncture resistance, enhanced thermal protection and bottom fittings protection as called for in the DOT-117 enhanced tank car design standard issued in May 2015.

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 rail cars are included in the joint venture. However, Hess, through our affiliates and service agreements with the joint venture, continues to operate the assets.

We do not own any “legacy” DOT-111 rail cars. Through the midstream joint venture, we have an ownership interest in 956 crude oil rail cars that were constructed between May 2011 and March 2012 in accordance with AAR Petition 1577 (CPC-1232) safety standards and are equipped with advanced safety features, including a thicker, more puncture-resistant shell, extra-protective head shields at both ends of the rail car, and additional protection for top fittings and a self-closing safety relief valve. Each of these CPC-1232 crude oil rail cars is capable of being upgraded to the most recent DOT-117 safety standards. Although the CPC-1232 cars are not currently in use, they are available for service until the retrofit deadline of April 2020 and can be retrofitted for service after that date.

The midstream joint venture acquired 550 new crude oil rail cars, which it began receiving in 2015. These cars have been constructed to the most recent DOT-117 standards, with the exception of adding electronically controlled pneumatic (ECP) brakes. In accordance with the transportation legislation passed by Congress and signed by President Obama in December 2015, implementation of the ECP brake requirement is on hold while the National Academy of Sciences conducts a hazard study on ECP brakes to determine whether they are warranted.