Environment

Environment

Cimarex is proud to be a responsible producer of oil and gas.  We believe that minimizing the environmental impact of our operations is an important part of how we conduct ourselves and that the impact of our activities should be minimal and temporary. We want to leave things as we found them.

We strive to keep our operational footprint small.  We are able to minimize surface disturbance by drilling multiple horizontal wells from a single location.   These wells are able to reach and extract hydrocarbons over an area that would have traditionally required much greater surface disturbance.  Other benefits of pad drilling include less truck traffic, consolidated storage tanks and facilities and more efficient field management.  Cimarex reports, by well, all of our hydraulic fracturing activities to FracFocus.  FracFocus is the national hydraulic fracturing chemical registry managed by the Ground Water Protection Council and Interstate Oil and Gas Compact Commission.  To view the details of Cimarex well completions, visit www.fracfocus.org.

At Cimarex, we have undertaken a set of initiatives to catalog our methane emissions at every location in order to understand how we might work to reduce our overall methane profile ahead of a regulatory requirement to do so.

The regulation of Greenhouse Gases (GHGs) in the United States began in 2007 with an Executive Order from President Bush requiring the regulation of mobile emission sources. Since that time, GHGs have received an increasing amount of attention, culminating more recently in President Obama’s Climate Action Plan which specified several actions that the Administration believed would reduce GHG emissions into the atmosphere. Many of these actions targeted the emission of methane, one of the components of GHG, which the oil and gas industry has been working to reduce.

The oil and gas industry has been reporting its GHG emissions to the EPA for several years. Below is an excerpt of the 2015 GHG report Cimarex filed with the EPA.
Component Emissions* 
Carbon Dioxide 885,653
Methane 856,889
Nitrous Oxide 548
Total 1,743,090
Reflects basin by basin reporting per EPA requirements.
*Metric tons of CO2 equivalent (mtons CO2e)

It’s important to make a distinction between the general reporting required for GHG emissions reporting and the specific methane emissions often discussed in the public space. GHG emissions reporting and methane reporting are not the same thing.  We hope this voluntary public disclosure helps to make clear what Cimarex is doing to both better understand and reduce our methane emissions.

So what have we done?

Workers
  • We performed multiple field inspections over a 10-week period to attempt to identify every methane emission source at our 2,301 operated facilities;
  • We enhanced our master equipment database, identifying every known source, down to each operating valve, and developed processes to identify and monitor the movement of methane emitting devices across the field;
  • Because there is no protocol for calculating  non-reportable emissions, we included every known source of emissions – from the wellhead to the last piece of equipment we operate;
  • We performed numerous validation exercises to ensure the quality of our calculated methane emission data;
  • Using this data, we placed methane emitting equipment into “buckets” (similar to EPA categories) to focus our ongoing operational approach to reduce methane emissions;
  • We used leak detection and repair (LDAR) – we will continue to invest in state-of-the-art monitoring technology that gives us the ability to better monitor sources of methane emissions and to better understand the effectiveness of our emission reduction efforts.

 

What did we find?

Cimarex’s total methane emissions from every known source is 932,770 metric tons equivalent (mtons CO2e), which includes everything we operate–our production facilities, our boosting and gathering facilities, our compressors, our water disposal facilities, our completion activities and our recompletion activities (see chart below). To be clear, while we included everything we operate in this calculation, the EPA reporting is limited and does not capture everything.  Moreover, the companies that report voluntarily often use different calculation methods, counting or excluding different devices, and often do not disclose what is or is not included in their GHGRP process.  The lack of transparency and uniformity makes it difficult to compare the emissions from one company to the next.

Methane
While the chart above shows the sources and amounts of Cimarex’s methane emissions, those numbers alone only tell part of the story. To complete the story there needs to be a comparison of how those methane emissions relate to the total volumes Cimarex produces and sells.  Referred to as methane intensity, we have calculated the percent of methane emitted relative to our total gross equivalent operated production.  First we convert our methane emissions to cubic feet of natural gas. Methane intensity is, then, calculated as follows:

Finally, there is a cost to the gas we don’t sell.  Using 2015 methane emission numbers and the average price we received for natural gas in 2015 of $2.53 per Mcf, we estimate the lost value of methane emissions to be $4.92 million.

$2.53/mcf x 1.94 Bcf of methane = $4.92 million 

What is net revenue interest (NRI)?
Cimarex doesn’t own 100% of the gas produced in all of our wells.    The portion of the gas we own is referred to as our net revenue interest.   To further define the value of lost gas net to Cimarex, we calculated our average net revenue interest in the properties we operate.  For 2015, Cimarex’s average NRI was 57.85%.

What is that amount net to Cimarex’s interest?

$4.92 million x .5785 (NRI) = $2.8 million net to Cimarex

In 2015, Cimarex had total revenue of $1.45 billion.  $2.8 million represents 0.19% of our total revenue.

What are we going to do now?

  • We’ve begun to install instrument air packages at our new facilities in the Permian Basin to operate pneumatic devices.
  • We are changing out our natural gas-fired pneumatic pumps with solar, wind and AC powered systems thus eliminating associated methane emissions.
  • We are undertaking a broad effort to retrofit the vast majority of our least efficient devices with equipment that emits significantly lower amounts of methane.
  • We’ve reduced overall energy use and associated methane emissions at numerous facilities by electrifying our well sites and removed gas (or diesel) powered generators by installing centralized gas lift compression to minimize individual wellsite compression.

We now have a place to start with our inventory, our monitoring, our mitigation and all the other work we are doing to reduce our methane emissions footprint. But this is just the beginning.  There will be more to come.  Cimarex will continue to provide the energy that sustainably fuels our world and our way of life.

Water recycling is another area of focus.  Typically frac flow-back fluids, which are composed mostly of water, are disposed of as a waste product.  We are changing that practice and recycling water wherever we can. In the Cana field we utilize large portable storage tanks to reuse frac flow-back fluids for hydraulic fracturing of new wells.   Similarly, we recycle produced water in the Permian Basin where the produced water contains high salt levels, often requiring special disposal wells.  We are installing a recycling facility in 2013 in Culberson County, Texas that initially will desalinize 5,000 barrels of produced water per day with plans to increase capacity in the near future.  Both the resulting water and the heavy brine (leftover salt from the desalinization) will be used for future fracture stimulation activities.  Not only do the Cana and Permian water recycling projects save water, but they also reduce truck traffic on limited roads.