Fracture Stimulation Position Statement

Fracture stimulation creates a crack – or a fracture – in a rock that allows natural gas and/or crude oil trapped in underground formations to move more freely through isolated production tubing so that it may rise to the surface at faster rates and, in turn, increase hydrocarbon production from reservoirs. Basic elements – sand, water and pressure – are used to create fractures. In fact, sand and water make up more than 99 percent of the fracturing fluids used today. While the majority of fracturing fluids are of sand and water, the remaining portion involves complex chemistry, much of which has been created through Halliburton's research and development efforts, and which is managed in accordance with proper industry and governmental procedures.

This technology – also known as hydraulic fracturing – has been used for 60 years in more than one million wells in the United States, and has been studied and reviewed by the U.S. Environmental Protection Agency (EPA) and state governmental organizations to ensure it is a safe means to enhance the production of needed fuel resources.

In light of the global demand for natural gas, formation stimulation is critical to the responsible production of hydrocarbons. While alternative fuels have promise, the need for traditional fuels – including natural gas and oil – is likely to remain substantial for decades into the future. According to the International Energy Association's World Energy Outlook in 2008, fossil fuels –natural gas, oil and coal – will account for 80 percent of the world's primary energy mix in 2030.

Our goal is to provide products and services that have the smallest environmental impact, are safe in their intended use, consume energy and natural resources efficiently and can be recycled, reused or disposed of safely. We seek to develop services and technologies for maximizing the recovery of oil and gas in existing reservoirs, and for pursuing clean energy sources for the future.

Halliburton views Health, Safety, Environment (HSE) & Operational Excellence as critical to our success and long-term sustainability and we are committed to continuously improving our performance. Our Corporate HSE Policy is overseen by the Health, Safety and Environmental Committee of the board of directors, which provides direction for the management of HSE and input on current and emerging health, safety and environmental issues.

As the cleanest fossil fuel, natural gas meets a variety of energy needs – from generating electricity and heating homes to powering vehicles. More and more, however, natural gas resources are produced from unconventional plays (e.g., gas shales, tight sands and coalbed methane) and cannot be adequately secured and delivered to the customer economically without the use of fracture stimulation technology.

The U.S. Congress has recognized that fracture stimulation has been regulated for decades by the states and is essential for future development of America's energy supplies. When passing the federal Safe Drinking Water Act (SDWA) in 1974, and then amending it in 1980, Congress created a program to monitor disposal of wastes injected underground. Congress made clear it never intended to regulate well stimulation activities under the SDWA. Congress reaffirmed this position in 2005 when it clarified that fracturing stimulation is exempted from the SDWA, except where diesel is used in the fracturing fluids.

That same year (2005), Halliburton was the first to introduce an industry-leading advancement – continuing to improve a technology it first commercialized in 1949 – by introducing diesel-free liquid gel concentrates into its suite of well stimulations fluid systems and helping operators move to higher levels of environmental performance.

Halliburton has always embraced the job of ensuring that all of our technologies meet the highest environmental standards. We continue to take a leadership position in developing systems to rank the HSE risks of chemical products used in oilfield services.

This system, once completed, will enable us to rank our chemical products and compare the risks of products that perform the same function. When the highest risk chemicals are identified, we will work to eliminate materials and change formulations to lower these risks.

Chemicals used in fracture stimulation products are the first to be ranked using this system. Halliburton expects to categorize most of our fracture stimulation chemical product portfolio in 2009 using this process. We continue to make publicly available all the Material Safety Data Sheets for our chemical products on our Web  site.

There have been questions asked and allegations made about the perceived risks of groundwater contamination from fracture stimulation. Halliburton remains confident that fracture stimulation is a safe and environmentally sound practice based on the industry's decades-long track record, as well as the conclusions of government and industry studies and surveys.

The natural gas and oil industry protects shallow aquifers by taking steps to prevent the escape of fracture stimulation fluids from wells and formations. Operators use a steel casing or liner which is then cemented in-place to isolate the surrounding rock from the reservoir. These zonal isolation techniques seal off and protect drinking water from fluids used in wells. In addition, fracture stimulation activities take place at depths that are typically thousands of feet deeper than any groundwater aquifers that could reasonably be considered a source of drinking water.

These industry practices are consistent with state regulatory programs and have effectively prevented drinking water contamination in more than one million fracture stimulation jobs across the United States. Studies conducted by the EPA, state agencies, and industry organizations have found no substantiated evidence that fracture stimulation has ever contaminated underground sources of drinking water. Even so, Halliburton continues to improve our fracture stimulation fluids and processes to further improve their overall environmental performance.

For more information: Fracture Stimulation