Water

SWN is committed to the responsible use of water, our planet’s most vital resource. Because water is also necessary for our operations, we developed the Energy Conserving Water initiative, or ECH2O®, a comprehensive approach to water management. The primary goal of ECH2O® is to be “freshwater neutral.” That is, for every gallon of fresh water we use, we will offset or replenish that gallon – in the same operating region where it was used – through water-quality improvement projects or treatment technologies that return fresh water to the environment. We achieved freshwater neutral for each operating division in 2016, and we remained freshwater neutral in 2017. This voluntary effort to achieve freshwater neutrality is unprecedented in the oil and gas industry; we are unaware of another energy company that has even attempted such an ambitious goal. ECH2O® has four components: reduction, innovation, conservation and protection.

Companywide Freshwater Use / Conservation and Operational Offsets millions of barrels (MMbbl)

0 MMbbl 0 8.50 17 25.50 34 42.50 51 59.50 68 201520162017
Companywide Freshwater Use
Conservation and Operational Offsets

Reduction

To reach and maintain our freshwater neutral goal, we work to optimize water usage, reduce reliance on freshwater sources and increase use of alternative water sources (such as recycled produced water) for hydraulic fracturing. Hydraulic fracturing requires more water than any other aspect of our operations; water is used primarily for formulating the fracturing fluid used for well stimulation. We also use water to create well cement and drilling mud, pressure-test pipelines, cool compressor stations and conduct other minor operational functions.

Water Use Performance

SWN’s overall water use increased in 2017 compared to 2016, as a result of an increase in our drilling and completion activities after a comparatively low-activity year in 2016. Our water needs vary by play, due to differences in reservoir rock, well depth, lateral length and other factors. We continue to adjust our completion designs to find the optimum approach and improve productivity per well. In some cases we have used more sand and water than in previous years, and our lateral lengths per well have increased.

Average Water Demand per Well in 2017

barrels (bbl)

52200
104400
156600
208800
261000
Fayetteville Shale
151,000
Northeast Appalachia
233,000
Southwest Appalachia
261,000
Year Value - barrels (bbl)
Fayetteville Shale 151,000
Northeast Appalachia 233,000
Southwest Appalachia 261,000
As much as possible, we use recycled produced water in our operations. When necessary, we supplement with freshwater sources. Any produced water we are not able to reuse, we share with other operators to use in their operations or dispose of via approved salt water injection wells and vetted third party service companies. The graphic below illustrates our water sources and water disposal by major operating regions.

Water Used and Recycled by Division

barrels (bbl) Water Used and Recycled by Division barrels (bbl)
For a breakdown of our freshwater sources (surface water, groundwater and water utilities) by operating region see Appendix p. 13; for more details on water recycling by operating region see Appendix p. 14; for more detail on water disposal see Appendix p. 16.

Improving Well Productivity and Water Use

We continuously seek ways to improve our operations to optimize well productivity, water use and other environmental factors. For example, we are currently conducting internal research and working with private labs and universities to better understand well dynamics – including efficient proppant transport, fluid/rock interactions, fracture conductivity and complex fractures – to further improve well productivity and water use. Our ongoing efforts to improve well productivity, on their own, should reduce our water use and environmental footprint in the long term by reducing the number of wells we need to drill to access the oil and gas in our formations.

Produced Water Storage, Recycling and Treatment

Between 5 and 20 percent of the water we use downhole flows back out of the well after hydraulic fracturing and during production, depending on the operational circumstances. We recycle this water1  as much as possible into our operations to reduce our use of fresh water. We build extensive pipeline water transport systems and storage systems to move produced water and fresh water across our operations. These systems enable us to use recycled produced water in hydraulic fracturing instead of fresh water and to significantly reduce truck traffic – which further minimizes the environmental and community impacts of our operations. In Arkansas, we have also developed carefully coordinated logistical systems for transporting produced water between well sites to maximize water recycling. In Pennsylvania and West Virginia, where we acquired assets more recently, we are building new infrastructure to move water and facilitate produced water recycling. This infrastructure will be completed in 2018 and 2019.

70%

of water used for hydraulic fracturing in our Fayetteville region in 2017 was recycled produced water
In Arkansas, to store produced water, we use permitted, double-lined impoundments equipped with leak-detection monitoring zones between and under the two synthetic liners. We continue to reduce the number of produced water impoundments in Arkansas, going from 175 in 2013 to 30 in 2017. In West Virginia, we use above-ground tanks to store produced water. In Pennsylvania, we use both lined impoundments and tanks. When possible, we treat produced water and return it to the environment at a quality equal to, or better than, the original fresh water, which reduces the need to dispose of produced water and can provide an additional method for offsetting our fresh water use. Currently, we have two water recycling facilities in Arkansas that are permitted by the Arkansas Department of Environmental Quality and the U.S. Environmental Protection Agency (EPA) to treat and discharge the water in accordance with the stringent National Pollutant Discharge Elimination System limits assigned to each facility. We are also working on a range of strategies to treat produced water (see the Innovation section below for more details). We do not send any produced water to municipal treatment facilities.

Reducing Freshwater “Capture”

Rainwater and groundwater can be captured by our water-quality protection systems, including in produced water storage impoundments, reuse/recycling facilities, secondary containment systems and groundwater leak detection systems. Once this fresh water is in our protection systems, we must treat it as produced water, so it is lost from the natural freshwater cycle. We are implementing strategies to reduce freshwater capture. For example, we are reducing the number of open produced water storage impoundments, as noted above. We are also reassessing the size of secondary containment systems, to optimize effectiveness while also reducing the amount of rainwater they can capture and implementing process monitoring and controls to discharge uncontaminated groundwater rather than impound it with production water.

Wastewater Disposal

We seek to recycle produced water whenever possible rather than disposing of it in injection wells. Produced water disposal is handled differently in each region, in accordance with applicable law. In Arkansas, we inject the wastewater either into our own permitted injection wells in the region or into state-permitted, third-party wells. The disposal wells in Arkansas are outside the zone of concern for seismicity delineated by the Arkansas Oil and Gas Commission. In West Virginia, produced water is trucked to Ohio for injection, and we also avoid areas of seismic concern in this region. In Pennsylvania, we transport produced water to third-party facilities equipped and permitted to reuse it or treat and discharge it. In all regions, we are mindful of concerns about wastewater disposal and keep up to date on scientific studies to remain knowledgeable of the latest developments. We also conduct thorough assessments of salt water disposal wells and operators to help ensure we choose the best possible locations for produced water disposal. In West Virginia and Pennsylvania, SWN works with adjacent operators to develop water-sharing agreements for both fresh and reuse water, providing a valuable alternative to wastewater disposal.

8.6 million

barrels of our wastewater was injected in 2017
(from our primary operating areas)

844000

barrels of our produced water, which would otherwise have been disposed, was instead used by other operators for hydraulic fracturing in 2017

19%

increase in produced water sharing in 2017 compared to 2016

Innovation

As part of the ECH2O® program, our engineers continuously seek innovative ways to reduce freshwater use – from instituting new operational practices to piloting alternative water sources and treatment technologies. For example, SWN is researching water treatment technologies that provide alternatives to injection disposal. We are currently testing technologies that safely and economically evaporate a portion of produced water, leaving only a concentrated brine to transport and dispose. We are also testing treatment technologies that allow for permitted discharge of water back to the environment in a form that meets or exceeds stringent requirements set by the National Pollutant Discharge Elimination System. These technologies will help us reduce the volume of water we dispose of in injection wells – extending their life, reducing the need for new injection wells and helping mitigate any risks associated with them. We are also researching alternative proppants that might allow further water use reductions.2

Conservation

We undertake conservation projects to provide the volumetric freshwater benefits that offset our remaining use of fresh water and allow us to be freshwater neutral. In these projects, we work with government agencies and nonprofit partners to restore wetlands and natural flow regimes, improve water quality and aquatic habitat, and positively influence watersheds, thereby protecting and increasing aquatic biodiversity.

2.8 billion

gallons volumetric benefit of conservation projects in 2017

6 billion

gallons volumetric benefit of conservation projects since launching ECH2O® in 2012

10

major conservation projects completed since 2012

Freshwater Neutral by Division

millions of barrels (bbl) Freshwater Neutral by Division millions of barrels (bbl)
In 2017 and early 2018, we completed a key ECH2O® project on the Cheat River in Preston County, West Virginia. In the 1980s, the Cheat River and its tributary, Muddy Creek, were dramatically impacted by the blowout of old mine complexes (not owned or operated by SWN), which almost instantly devastated the river system, destroying aquatic habitat and eliminating a multi-million-dollar ecotourism- and recreation-based economy. For the restoration project, we worked with the West Virginia Department of Environmental Protection (WVDEP) to capture and treat multiple sources of acid mine drainage (AMD). SWN funded the construction of a pipeline to collect AMD-polluted water within the Muddy Creek watershed and pump it to a treatment plant constructed and managed by the WVDEP. Before restoration, Muddy Creek contained 50 times the allowable quantities of aluminum and iron.

Together, the AMD water line and treatment facility will restore water quality in Muddy Creek to a condition that will support aquatic life and significantly improve water quality in the Cheat River. SWN’s portion of this project provides a volumetric benefit of 11.4 million barrels per year.

SWN has also undertaken two other AMD restoration efforts in recent years. We funded and helped to complete the Fall Brook AMD treatment facility in Pennsylvania, which is part of the Tioga River watershed. We also funded the restored operations of the White Ash AMD treatment facility in Pennsylvania, part of the Loyalsock Creek watershed. All three of these projects provide diversion and treatment of AMD-polluted waters, later released back into the river systems as clean, fresh water.

Protection

SWN is committed to protecting surface water and groundwater in our areas of operation. Protection of these water resources is a core element of ECH2O® and a key element of our social license to operate. Hydraulic fracturing occurs thousands of feet below the surface, well below any freshwater aquifer zone and with layers of impermeable rock in between (or else the gas and oil would have seeped through long ago). Nonetheless, we take comprehensive measures to ensure that the contents of our wells never come into contact with this water.

SWN employees and contractors utilize industry best management practices (BMPs) for well construction, drilling, completion and maintenance to ensure the integrity and soundness of our wellbores.

These BMPs meet and often exceed applicable regulations and are updated regularly as new technologies, practices and information become available. Examples of BMPs include baseline water-quality testing whenever possible; monitoring each phase of drilling, completion and production; and verifying the mechanical integrity of the steel casings.3  When planning wells, we investigate historical drilling activity in the vicinity to ensure we avoid affecting nearby wells, including investigating public records of oil and gas and water wells and communicating with landowners about previous drilling. We are also in the process of certifying some of our wells through the Independent Energy Standards Corporation’s TrustWell program. Currently, 20 of our wells in Pennsylvania and West Virginia have received Gold certification through this program, based on their operational excellence and use of environmentally sound and sustainable best practices in management systems, preventive controls, and surveillance and response.

Ensuring Wellbore Integrity in a Typical Marcellus Shale Well

Our Record

SWN takes very seriously any landowner or community concern about possible impaired groundwater, and we investigate each one brought to our attention. We drilled 152 unconventional wells during 2017 and have drilled more than 5,550 unconventional wells as of year-end 2017. Since 2005, we have recorded 209 instances (i.e., approximately 3.8 percent of wells drilled) in which individuals have questioned whether our exploration and production operations may have affected their privately owned groundwater wells. Of those, 170 were in Arkansas, 32 in Pennsylvania, six in West Virginia and one in Colorado. Investigations revealed that in more than 25 percent of the claims, there were no actual water-quality problems at all. As the pie chart illustrates, the majority of the claims were attributable to naturally occurring conditions (such as nuisance bacteria), mechanical failure of the landowners’ water wells or drought conditions.4  And, as in all petroleum basins, naturally occurring stray gas or methane is common throughout our operational area and can affect groundwater.5

Well Water Impairment Claim Findings

SWN’s Unique Approach to Fracturing Additives

The fracturing fluid used in SWN’s operations is 99.9 percent water and sand. The remaining percentage is made up of chemicals necessary for safe and effective fracturing, including biocides, friction reducers, hydrochloric acid, scale inhibitors and corrosion inhibitors. The chemical additives do not include benzene, toluene, ethylbenzene or xylenes (BTEX). In addition, we do not use diesel in our fracturing fluids.

Breakdown of 0.1% Fracturing Fluid Additives by Type

100%

SWN was one of the first companies to report fracturing fluid composition for 100% of our hydraulically fractured wells to the voluntary FracFocus Chemical Disclosure Registry.6
To better understand and reduce any potential risks associated with our fracturing additives, we developed the Right Products program. Through Right Products, each fracturing fluid chemical is assessed at the component level against key environmental and health hazards (e.g., toxicity, bioaccumulation potential, appearance on a regulatory list of chemicals of concern, developmental toxin, carcinogen, etc.). The program has enabled us to honor suppliers’ right to protect confidential business information (CBI) while also improving the environmental profiles of our fracturing fluid additives. We avoid the CBI issue by using a third-party toxicologist to conduct the hazard assessments and give each product a numerical score. Our suppliers provide the toxicologist with detail on each product’s chemical makeup (protected by confidentiality agreements between the parties), and we simply receive the final score and a summary of why it received that score. Based on the results of the hazard assessment, each product is either approved, recommended for further evaluation, or denied for use in SWN operations by the SWN Chemical Advisory Board. If a product receives a high score in the hazard assessment and there’s not a ready substitute, we conduct a risk assessment, which considers potential exposure in addition to hazard. Risk assessment findings are presented to the Chemical Advisory Board for a decision and are elevated to senior management if needed.

Right Products Program Scoring Results

292 products scored for 20 service companies

In 2017, we conducted an audit of the Right Products program to assess if there were any products being used that had not been reviewed and scored through the program. As shown below, the results illustrate that the program is effective and there is a trend of increasing coverage over time. We also assessed the program by operating division, by contractor company and by the number of wells serviced by each contractor, to target opportunities for improvement.

97.1%

of hydraulic fracturing additive products used in our wells were scored through the Right Products program in 2017, up from 94.5% in 2016

The Energy Water Initiative

SWN is an active member of the Energy Water Initiative (EWI), a collaborative effort among 23 companies in the U.S. unconventional oil and natural gas industry to improve lifecycle water use and management. The EWI is an informal forum through which companies can participate in projects and open dialogue about responsible water management.
  1. This water is called flowback water and/or produced water – the terms are defined in state regulations, and the definitions can differ in each state.
  2. Proppant is the material used to hold open the cracks in hydraulically fractured shale, so that the hydrocarbons have a pathway to flow into the well. We currently use sand as a proppant.
  3. Casing is hollow steel pipe. See a video that details our horizontal drilling and fracturing practices and how we seek to ensure wellbore integrity (Flash plugin is required).
  4. In the pie chart, “Miscellaneous” includes situations such as when no diagnosis was possible (e.g., due to lack of landowner permission to sample the well), claims pending resolution, brine contamination and diminution; “mechanical” refers to a mechanical or equipment problem with the water well; “stray gas” is without regard as to whether biogenic or thermogenic; “no problem” includes situations where the complaint is only due to aesthetics (e.g., naturally occurring iron or manganese).
  5. See, for example, http://pubs.usgs.gov/sir/2012/5273/.
  6. See http://www.fracfocus.org.