Assessing Risks

Water management

As part of our sustainable development (SD) risk management process, exploration, production and major project activities are assessed for water risks including: 

  • Local availability of water needed for drilling, enhanced oil recovery (EOR), hydraulic fracturing, steam generation, terminals, liquefied natural gas (LNG) production and decommissioning. 
  • Transport and storage of source water and produced water. 
  • Produced water treatment requirements. 
  • Water quality of discharged produced water and process water. 
  • Produced water disposal. 

Water risks for operated assets are assessed at the business unit or development-area level and plotted on a risk matrix. Time horizons considered are short-term (zero to five years), mid-term (five to 10 years) and long-term (10-25 years). Priority risks that could affect business activities and performance for our operated assets, as determined by likelihood and consequence on the matrix, are included in the corporate SD Risk Register.

The corporate Water Action Plan tracks mitigation activities for risks included in the risk register and provides information on the accountable action owner, milestones and target completion date.

Our governance structure provides board and management oversight of our risk processes and mitigation plans. We utilize an integrated management system approach to identify, assess, characterize and manage water risks. Descriptions of priority water risks and mitigation measures are provided to the executive leadership champion for water. They are also mapped to key categories in the enterprise risk management (ERM) process and shared with ERM risk owners to inform their assessments of risk ranking, corporate actions and mitigations. The ERM process is a direct input into our strategic business planning process. By identifying major crosscutting risks and trends, we closely link action plan efforts to key performance issues and address and mitigate identified risks. The ERM system and mitigation actions are reviewed regularly by executive leadership and the board of directors.

Water Stress and Scarcity

Fresh water is a limited resource in regions experiencing water scarcity, and local availability may be affected by physical climate-related risks as some regions experience changes in temperature and precipitation patterns. The United Nations projects that by 2050 at least one in four people is likely to live in a country affected by chronic or recurring shortages of freshwater. When evaluating access to water, we complete an enterprise-wide review of projected renewable water resources using the IPIECA Global Water Tool for Oil and Gas (IPIECA GWT).

IPIECA Global Water Tool Output Map

Our mapping shows that the projected 2025 water resources for all countries where we have assets is sufficient (1,700-4,000 cubic meters per person per year) or abundant (more than 4,000 cubic meters per person per year).

We further evaluate risks based on water scarcity or stress where our assets are located. This includes plotting the locations of our operated assets on the IPIECA map of 2025 water resources by watershed.

Water Scarcity Map

Our Permian Basin and Eagle Ford assets in the U.S. are in watersheds experiencing or predicted to experience water stress or scarcity.

We use the World Resources Institute Aqueduct Water Risk Atlas (WRI Aqueduct Tool) to assess exposure to baseline water stress. Our Eagle Ford, Niobrara and Anadarko assets are in basins with projected high or extremely high baseline water stress. In 2018, 3.3% of our total freshwater withdrawn was from surface water sources in Eagle Ford and Niobrara.

To mitigate water scarcity in the Permian Basin, we use mostly non-fresh water sources, and we are ramping up the use of recycled produced water for hydraulic fracturing in the China Draw development area of the Delaware Basin. We only use reused produced water for enhanced oil recovery (EOR) at our conventional Permian assets.

To mitigate water scarcity or baseline water stress risks in the Eagle Ford, we target deeper or more-brackish groundwater sources. We have a groundwater resource visualization tool, which provides a 3-D image of aquifers, water wells and natural gas and oil reservoirs. We use the tool to show stakeholders that we target water sources, which are not used by local landowners. In 2018, less than 5% of the total water withdrawn in the Eagle Ford was from surface water sources.

We had no drilling and hydraulic fracturing activity in Anadarko in 2018 and no freshwater was used. Water for use in Niobrara operations is primarily provided from third-party ground-water wells.