Environmental

Reducing emissions is one aspect of our overall environmental strategy. Hilcorp’s production has grown primarily through acquisition. Along with the newly acquired assets, we inherit the original emissions profiles of these acquired assets. Hilcorp spends substantial capital retrofitting and refurbishing ageing equipment. The emissions reduction impact of our focused investment to retrofit and right size equipment is clear after we take over operatorship. Reducing the emissions intensity of our product ensures that the maximum societal benefit is realized from the late-life assets we acquire.

Leaders in Carbon Sequestration

Prior to the Federal Government expanding the 45Q tax credits to incentivize similar projects, our West Ranch CO2 Flood was the first of its kind project to capture a coal plant’s emissions and extract CO2 for commercial use.

• To date, we have successfully sequestered over 3.7 million metric tons of CO2 at West Ranch Field using CO2 captured by the coal plant operator.
• The CO2 capture potential is the equivalent of taking 350,000+ cars off the road.
• Many of our late-life assets may have future CO2 sequestration potential and are being evaluated.

Identifying Sources and Monitoring

Hilcorp recently completed its largest and most comprehensive equipment inventory. This survey of tens of thousands of locations establishes a quality baseline for emissions reporting and reductions. Accurate inventory management combined with a robust monitoring program helps not only reduce EPA-calculated emissions estimates, but more importantly, actual emissions. Because each asset team possesses different variables that might affect actual emissions, Hilcorp uses a wide variety of technologies and methods for monitoring. Hilcorp has a robust emissions monitoring program that exceeds national and state regulations in every state in which we operate.

• In the San Juan Basin, Audio, Visual, and Olfactory (AVO) inspections on over 15,000 wells are performed 1-2 times per month.
• Dedicated personnel perform Optical Gas Imaging (OGI) to identify and fix leaks.
• Operators and Environmental Health and Safety personnel regularly complete facility inspections to ensure equipment is maintained and functioning properly.
• Laser technology is deployed to survey sites and identify and repair leaks.
• Aerial flights are performed by third party partners to detect and report identified leaks.

Combustion

Hilcorp targets compression emissions through compression right-sizing, consolidation, and innovation. Appropriate combustion allows increased operational efficiency, reduced costs, and less fuel burned –resulting in fewer emissions.

• In 2021, Hilcorp spent over $4MM to reduce compression horsepower by 25,000hp in the San Juan Basin—a reduction of 92,500mT of CO2.
• Hilcorp designed, manufactured, and deployed 48 of the smallest upstream screw compressor packages in the industry in 2021 resulting in an 83% emissions reduction at each site.

Pneumatics

• In 2020, Pneumatic emissions were our largest reported source of methane emissions based on EPA factors.
• In 2021, over 400 “high bleed” pneumatic devices were identified and replaced within 60 days. As a result, 1,300 mT of calculated potential methane emissions/year were eliminated.
• Our goal is to replace natural gas driven pneumatics with mechanical alternatives resulting in no methane emissions and no burned fuel to actuate the devices.
• Over 99% of our pneumatics are low or intermittent bleed.

Current Pilots Underway

• On hundreds of pneumatics, discharge is routed to an on-site compressor to offset fuel usage.
• Asset Teams are testing the viability of solar powered air compressors to replace natural gas with compressed air.
• Natural gas-powered equipment is being replaced with electric equipment where electricity is readily available.
• Ground and aerial monitoring methods are constantly tested and evaluated as possible solutions, including the most advanced imaging technologies, drones, and other technologies.

Reductions and Planned Reduction

At Prudhoe Bay, Hilcorp will spend $10MM on a pilot project to develop the potential to capture CO2 from the fuel gas stream—a project that could result in the capture of over 600,000 metric tons of CO2 per year.

• Hilcorp conducted a pilot study to verify the efficiency of solar powered heat trace pumps, and is currently in the process of aggressively replacing old pumps that previously vented to atmosphere.
• Hilcorp developed a prototype mechanical drain valve that is currently in operational testing.
• Our tank Refresh Program resulted in the proactive testing of 1,400 tanks and taking proactive measures to potentially prevent future problems on nearly 1,300 tanks.

Meaningful Reductions

San Juan Basin

Hilcorp’s asset-level approach allows the individual asset teams to utilize the appropriate tools and methods that exist for each asset type. In the San Juan Basin, a natural gas rich basin, pneumatics and combustion are drivers for both methane and CO2. The asset teams’ focus on inventory management and monitoring resulted in reductions in the number of pneumatics needed, the modernization of existing pneumatics toward no bleed, and the right-sizing of compression. These efforts contributed to a 22% reduction in emissions and a 10% reduction in methane intensity.

Alaska North Slope

Hilcorp’s presence on Alaska’s North Slope includes assets acquired over time. For those North Slope assets operated by Hilcorp for at least four years, methane intensity has reduced by 12%. Combustion and the associated CO2 emissions remain a focus area.

Cook Inlet and Kenai (Alaska)

In Alaska’s Cook Inlet and Kenai Peninsula, emissions are down 25% and methane intensity is down 24%. A continued focus on reducing combustion through right-sizing and more efficient use is driving emissions down.

We are experts in the responsible development of resources while protecting waterways. Across all operations, we limit the use of fresh water. Hilcorp operates near or around water in the wetlands of Louisiana and in Alaska’s Cook Inlet and on the North Slope.

Across the country, Hilcorp is a member of organizations that provide us with response assets, training, exercise support, technical expertise, and assistance in managing regulatory compliance. All are certified by the U.S. Coast Guard to provide oil spill response personnel and equipment in support of Hilcorp’s operations. For example:

• Cook Inlet Spill Response, Inc. and the Alaska Clean Seas, covering our southern and northern operating areas in Alaska, respectively.
• The Clean Gulf Associates, which supports our Gulf Coast operations.
• Our drilling operations utilize closed loop fluid systems, which allow drilling fluids to be recycled and minimize waste. As a result, we prevent impacts to the soil and groundwater.

Wildlife exist in every area of operation for Hilcorp. We work with governmental agencies to understand the behaviors, migrations, and hibernation of the various species we might encounter in order to protect their habitat and life cycles.

• Wildlife can come in contact with our areas of operation and it is our duty to protect the wildlife surrounding our facilities.
• In 2016, Hilcorp made national news regarding the vigorous steps we took to protect a pregnant polar bear after our employees discovered the maternity den on the causeway to one of our locations on the Alaska North Slope. To read more about the news coverage, please click here. Promptly, we reported the sighting to the U.S. Fish and Wildlife Service and welcomed scientists and conservationists, including the Polar Bear International advocacy group to study the site using remote camera systems. Hilcorp canceled two operations, closed the road, and sent a Slope-wide compliance bulletin in order to prevent any disturbances to the den. The mother and cubs emerged from the den peacefully.
• Hilcorp annually performs aerial forward-looking infra-red (FLIR) overflights of the Alaska North Slope to identify potential polar bear den locations so that we can prevent disturbances. Additionally, all Hilcorp employees and contractors on the North Slope take a polar bear awareness training class to ensure they understand how to keep the bears and themselves safe.
• Hilcorp has put into place a set of rigorous measures to avoid disturbing basking seals and seals birthing lairs on the sea ice near one of our Alaska North Slope locations. All employees and contractors at this location take a seal disturbance mitigation training class annually to understand better how to keep these ice seals safe and undisturbed.
• Each year, Hilcorp operates with the Kenai National Wildlife Refuge in Alaska and partners with the Federal Land Manager of the U.S. Fish and Wildlife Service in preparing and executing an Invasive Plant Management plan. This plan includes eradication, prevention, and education and outreach.
• Hilcorp annually partners with the National Oceanic and Atmospheric Administration (NOAA) Fisheries department for their “Belugas Count!” event. We provide supplies, man observation stations, and participate in the public outreach and education of the event at the Alaska Zoo.