SWN is committed to the responsible use of water, a vital resource to our operations as well as the world, and at all times seeks to minimize our company’s impact on freshwater systems. The centerpiece of this approach is our goal to be “Fresh Water Neutral,”1  which we have achieved for the past four years. This commitment is unprecedented in the oil and gas industry. In addition, we are equally committed to responsible produced water management and the protection of groundwater.

SWN Tops Investor Scorecard for Leadership in Water and Chemicals Management

In March 2019, SWN received the highest score on an investor-led scorecard that assesses the 30 top-producing companies involved in hydraulic fracturing on their disclosure and performance on water and chemicals management best practices. This is the second year in a row that we topped this Disclosing the Facts scorecard, which is published by investor groups including As You Sow and Boston Common Asset Management. Our company was called out for several notable practices in the industry, including our industry-first Fresh Water Neutral goal, our detailed disclosures on water use and well integrity performance and our Right Products chemical assessment and management program.

Water Use

SWN in its operations optimizes water usage and reuses/recycles as much water as possible. Hydraulic fracturing requires more water than any other aspect of our operations, because we use it as the base for fracturing fluids. We also use fresh water to mix well cement and drilling mud, pressure-test pipelines, cool compressor stations and conduct other minor operational functions.

Our water needs vary basin-to-basin, and even pad-to-pad, due to differences in reservoir geology, well depth, lateral length and other operational factors. SWN’s overall water use increased in 2019 from 2018. SWN’s average water use per well also increased in both Northeast Appalachia and Southwest Appalachia, primarily attributable to increased lateral lengths and evolving fracturing fluid designs that require more water per well.

Average Water Demand per Well in 2019

barrels (bbl)

76200
152400
228600
304800
381000
Northeast Appalachia
340,000
Southwest Appalachia
381,000
Year Value - barrels (bbl)
Northeast Appalachia 340,000
Southwest Appalachia 381,000

Improving Well Productivity and Water Use

We continuously seek ways to improve our operations to optimize well productivity. For example, we are conducting a variety of research efforts, both internally and in conjunction with private labs and universities, to better understand well dynamics, including efficient proppant transport, fluid/rock interactions and fracture conductivity. These efforts have the potential to reduce our water use and environmental footprint in the long term by reducing the number of wells we need to drill to effectively access the hydrocarbons present.

Fresh Water Neutral

SWN’s commitment to being Fresh Water Neutral is a key part of meeting our goal to be a model operator and lead the way on responsible unconventional energy development. While we seek to minimize our use of fresh water as much as possible, primarily through water reuse and recycling, we know our operations will continue to need fresh water. That is why we have committed ourselves to achieve and maintain Fresh Water Neutral operations. We attained this goal in 2016, 2017, 2018 and 2019, and we believe we are the only oil and gas operator to achieve this benchmark.

Companywide Freshwater Use Compared to Fresh Water Neutral Offsets from Conservation Projects + Operational Offsets millions of barrels (MMbbl)

0 MMbbl 0 9.13 18.25 27.38 36.50 45.63 54.75 63.88 73 20152016201720182019
Companywide Freshwater Use
Fresh Water Neutral Offsets from Conservation Projects + Operational Offsets

A key part of our Fresh Water Neutral commitment is undertaking conservation projects in our operational areas to provide the volumetric freshwater benefits that match or exceed our operational freshwater usage. We work with government agencies and nonprofit partners to restore wetlands and natural flow regimes, improve water quality and aquatic habitat and positively contribute to natural watershed functions, thereby protecting and increasing aquatic biodiversity. Most of the projects we have undertaken address legacy water pollution issues unrelated to oil and gas operations or activities and provide a positive, lasting benefit to local communities. “New” fresh water from these projects provides a net “credit” of fresh water returned to the environment, which we use in our Fresh Water Neutral program to offset freshwater usage in our operations.

10

major conservation projects completed since 2014 in Arkansas, Colorado, Pennsylvania and West Virginia

2.9 billion

gallons of beneficial fresh water from our 9 active conservation projects in 2019

11.9 billion

gallons of beneficial fresh water from our 10 conservation projects since launching the Fresh Water Neutral program in 2012

Fresh Water Neutral

millions of barrels (MMbbl)

Responsible Produced Water Management

Typically, between 5 and 20 percent of the water we use downhole flows back out of the well after hydraulic fracturing and during production. We manage this produced water safely and responsibly through storage, treatment, reuse/recycling and, when necessary, disposal.

Recycling Produced Water

We recycle produced water back into our operations as much as feasible, which reduces our need for fresh water. We have increased produced water recycling rates across our operations through infrastructure investments, including pipelines and storage systems and improvements in our fracture fluid designs. Using pipelines instead of trucks to move water reduces a primary spill risk and significantly reduces truck traffic, further minimizing the environmental and community impacts of our business.

In 2019, we recycled approximately 99 percent of our produced water in Northeast Appalachia and approximately 52 percent in Southwest Appalachia.

If we are not able to reuse water ourselves, we work to safely share it with other operators for use in their operations. In 2019, we shared a total of 815,870 barrels of our produced water with other operators, sparing it from disposal.

The graphic below illustrates our water sources, water recycling and water disposal by major operating region.

When we dispose of produced water, we do so in approved salt water injection wells and through vetted third-party service companies, as discussed below. For a breakdown of our freshwater sources (i.e., surface water, groundwater and water utilities) by operating region, see the Appendix, p. 13; for more detail on water recycling by operating region, see the Appendix, p. 14; and for more detail on water disposal, see the Appendix, p. 16.

Produced Water Storage

We store produced water to minimize any possible risk of leaks, spills or other impacts to local ecosystems. We use a range of options to store produced water, including aboveground storage tanks and impoundments. We consider multiple factors to determine the appropriate storage method – most importantly, the safety of personnel and the environment. Other key considerations include regulations and permitting, topography, surface footprint, subgrade suitability, the quantity of produced water we need to store, operational support services (i.e., trucking, pipelines, etc.), proximity to disposal, economics (capital and operating expenses), length of storage and closure requirements.

In West Virginia, we store produced water in aboveground tanks, with lined containment berms under the tanks, appropriately sized for spill containment. In Pennsylvania, we use a combination of aboveground tanks and permitted impoundments. The impoundments are double-lined and equipped with leak-detection monitoring zones between and under the two synthetic liners. We also use groundwater monitoring wells around the impoundments to identify and address any potential leaks or spills.

Reducing Freshwater “Capture”

Inadvertent freshwater capture – or the collection of rainwater, surface water and groundwater in water storage impoundments, reuse/recycling, secondary containment systems, groundwater monitoring systems or other facilities – results in water loss from the natural water cycle; thus we try to limit this capture. For example, we try to limit our use of open produced water storage impoundments. We are also reassessing the size and design of secondary containment systems. We have developed and implemented a process to monitor, test and discharge uncontaminated groundwater rather than impound it with produced water.

Wastewater Disposal

When we are unable to recycle produced water, we dispose of it in accordance with applicable laws, regulations and best practices. For our operations in West Virginia, produced water is trucked to Ohio for injection, and we avoid areas of seismic concern in this region. In Pennsylvania, we transport produced water to vetted third-party facilities equipped and permitted to reuse it or treat and discharge it.

In all regions, we are mindful of concerns and the latest scientific knowledge about wastewater disposal. We also conduct thorough assessments of salt water disposal wells and operators, which guide our site and vendor selection. In 2019, 3.2 million barrels of wastewater were injected from our primary operating areas.

Protecting Water Resources

Hydraulic fracturing occurs thousands of feet below the surface, well below any freshwater aquifer zones and with layers of impermeable rock in between. Thus, the primary way we avoid impacts to surface water and groundwater supplies from our hydraulic fracturing is ensuring proper wellbore construction and integrity.

SWN uses industry best management practices (BMPs) for well construction, drilling, completion and maintenance to ensure the integrity and soundness of our wellbores. These BMPs meet or 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.2  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.

During the initial drilling and completion of our wells, we use cement bond logs whenever required by applicable regulations. In addition, we use cement bond logging tools to evaluate wellbore construction integrity whenever shortcomings in the cementing process of casings are considered possible. When using these logs, we rerun the testing/logging process with pressure on the casing to test for good bonding. In addition, we place pressure gauges on all wellbore annuli for the life of the well and monitor these gauges remotely and through daily human interface to ensure wellbore integrity at all times. This allows any wellbore integrity issues to be detected early in the life of an issue.

We are also certifying some of our wells through the Independent Energy Standards Corporation’s TrustWell™ program.

In 2019 we received Platinum certification on 20 of our wells in NE Appalachia through this program.  Not only were the Platinum certifications a first for SWN, these were the first, and to our knowledge only, wells to score Platinum with the TrustWell™ certification process.

In West Virginia, we test all water sources within 3,000 feet of the drilling location, which exceeds the regulatory requirement to test sources within 1,500 feet. In Pennsylvania, we test all water sources within 2,500 feet of drilling locations, which matches state regulatory standards. We perform post-drill testing in all areas in response to water well complaints, if requested by landowners, or in cases where it is written into a lease agreement.

Ensuring Wellbore Integrity in a Typical Marcellus Shale Well

Our Record

SWN takes very seriously any landowner or community concerns about surface water and groundwater, and we investigate every source-specific issue brought to our attention. We drilled 105 unconventional wells during 2019, bringing our total number of unconventional wells drilled through year-end 2019 to 5,755. Since 2005, we have recorded 240 instances where individuals have voiced concerns regarding privately owned groundwater wells in relation to our exploration and production operations (each, a “claim”). Of those claims, 171 were in Arkansas,3 59 were in Pennsylvania, 9 were in West Virginia, and one was in Colorado. As the pie chart below illustrates, investigations ultimately revealed that in 30 percent of claims, no water quality problems were found at all.4 Further, 60 percent of the claims were conclusively shown to be attributable to bacteria5 (40 percent), drought (10 percent), stray gas6 (3 percent) and mechanical failure7 of the water well itself (7 percent). Note that scenarios where no diagnosis was possible (e.g., landowner permission was not granted for water well sampling/analysis) or where an investigation is still open or the claim is otherwise not yet resolved are classified as “Miscellaneous.”8

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 portion is made up of additives necessary for safe and effective completion operations and includes biocides, friction reducers, hydrochloric acid, scale inhibitors and corrosion inhibitors. These additives do not include benzene, toluene, ethylbenzene or xylenes (BTEX) or diesel.

Breakdown of 0.1% Fracturing Fluid Additives by Type

SWN reports fracturing fluid composition for 100 percent of our hydraulically fractured wells to the voluntary FracFocus Chemical Disclosure Registry.9

To better understand and address any potential risks associated with fracture fluid additives, we employ our 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). The program has enabled us to honor suppliers’ right to protect proprietary information while allowing us to assess the profile of our fluid additives.

We utilize a third-party toxicologist to conduct Right Products hazard assessments, and each product is given a numerical score. The toxicologist works with our suppliers to ascertain details as to a product’s chemical makeup, and SWN then receives the final score for the product and a corresponding summary report. Based on these results, SWN’s “Chemical Advisory Board” deems the product as being either approved or denied for use in SWN operations or recommended for further evaluation. If a product receives a high hazard assessment score (implying potential concerns) and there’s not a ready substitute, a more detailed risk assessment is conducted. Risk assessment findings are presented to SWN’s Chemical Advisory Board for a decision and are elevated to senior leadership consideration as may be appropriate.

Right Products Program Scoring Results

318 products scored for 29 service companies and chemical suppliers

In 2017 and 2018, we conducted internal audits of the Right Products program to assess if any products were being used that had not been reviewed and scored through the program. The results suggest that the program is effective – we have a high level of control over the products being used in our fracturing operations – 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. In 2019, we built upon our 97% coverage with a new data algorithm that interfaces directly with Completions’ hydraulic fracturing designs and checks that all additive products in the fracturing design are approved for SWN usage per our Right Products program.

  1. Fresh Water Neutral means that, for every gallon of fresh water we use, we offset or replenish that gallon through aquatic environmental conservation projects or treatment technologies that return beneficial fresh water to the environment.
  2. 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.)
  3. We divested our Arkansas assets on December 3, 2018.
  4. “No problem” includes situations where the complaint is only due to aesthetics (e.g., naturally occurring iron or manganese).
  5. Naturally occurring bacteria in water wells is common in our areas of operation.
  6. Naturally occurring stray gas or methane is common throughout our operational areas and can affect groundwater. The term “stray gas” is used herein without delineation between biogenic or thermogenic.
  7. “Mechanical” refers to a mechanical or equipment problem with the given water well (e.g., a broken pump).
  8. The “Miscellaneous” classification as used herein encompasses any claim not falling within another claim classification (e.g., brine contamination and diminution).
  9. See http://www.fracfocus.org.