Drilling and Completions

Compliance

Our facilities are regularly inspected by SM Energy employees and consultants, and periodically by regulatory officials. We also meet face-to-face several times a year with our contractors to help ensure compliance with applicable laws, regulations and codes. We also use ISNetworld, as part of our supply chain management process, to evaluate and monitor the EHS performance of our contractors.

Preparation For Drilling

Before we drill a well, our geologists and engineers study the size, structure and thickness of the rock formations to determine how our drilling should take place. We must obtain information on the depth and location of all freshwater zones to ensure that protections are put in place. We must file for and obtain all necessary state, federal, and local permits. We then have the opportunity to engage nearby residents and local governments to share information and listen to and address concerns prior to beginning operations.

Salt Water Disposal Wells

Oil and natural gas production requires wastewater disposal. We recycle water where reasonable; however, when we cannot, we use regulated disposal wells and comply with applicable state regulations.

When using third-party disposal wells, we evaluate the third-party operators to ensure they are approved and permitted by the applicable governmental agency and conduct audits to ensure each operator and its wells are in compliance with regulations. We also evaluate salt water disposal wells regarding their location in relation to fault lines, and other potential seismic concerns. We have also joined TexNet’s Center for Induced Seismic Research Advisory Committee to remain informed on the issue of seismicity and any concerns we should address with our operations.

Lifespan of a Well

Bringing a well into production requires multiple steps including transporting equipment, well pad construction and completion. The drilling rig and related equipment are only placed on the site temporarily and are removed when the well is completed and begins producing. Once the well is drilled and completed, all of the surrounding land that is not needed for future operations is then returned to pre-drilling conditions and the landscape is reclaimed. The well that remains can now produce for as long as 40 years. At the end of the well’s life, it is plugged and abandoned, and the site is reclaimed in accordance with applicable regulations and landowner agreements.

Hydraulic Fracturing

History

Hydraulic fracturing has been safely used in the oil and gas industry since the 1940s, and has been used in more than a million wells. While initially used to increase production in older wells, technological advances in the process have resulted in its use to access previously inaccessible natural gas and oil deposits in shale and other tightly compacted formations.

The Process

The hydraulic fracturing process involves pumping a mixture of water, sand and a relatively small proportion of special purpose chemical additives into a deep underground rock formation with enough pressure to create a network of fractures in the rock. SM Energy typically drills wells to depths between 4,000 and 14,000 feet, which are far below groundwater aquifers.

In order to protect groundwater sources during the hydraulic fracturing process, multiple heavy steel casings are typically inserted deep into the ground and fully cemented into the wellbore before beginning any operations. The casings, cement and placement specifications, and cementing processes are governed by state regulations and well developed industry standards. The cement must meet certain strength and quality criteria and extend from the depth of the casing back to the surface. The steel casing protects aquifers from any material inside the wellbore, while the cement provides an additional protective barrier.

Fracturing Fluids

In general, more than 99 percent of our typical fracturing fluid mix is comprised of water and sand, with the remaining less than one percent a blend of highly diluted special purpose chemicals that are also frequently used at municipal water treatment plants.

SM Energy discloses all of the chemicals used in our fracturing fluids at FracFocus.org.

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