Environmental stewardship of the planet’s water resources includes two key focus areas for Vermilion: protection of water bodies, including oceans, lakes and rivers; and increasing our water efficiency. We support this using key performance indicators on water use in the Performance Metrics section of this report and our participation in the CDP Water Security assessment.
Vermilion recognizes that water is a shared resource. We therefore take seriously our responsibility to protect the water bodies close to our operations, whether they are on the Bordeaux coastline or Parentis Lake in France, or off Australia’s northwest shelf. Although freshwater use represents a relatively small percentage of our annual water withdrawal, water stewardship is a core element of our sustainability program. We take a location-specific approach, complying with or exceeding water and operating regulations in all of our business units. This includes assessing areas of potential water stress, identifying water-related risks and potential consequences, and protecting aquatic biodiversity. We also monitor water as a risk factor, understanding that a decreased water supply due to climate change, for example, would impact our operations. As a result, we emphasize:
Reflecting our activities as an upstream oil and gas producer, water is accessed within all of Vermilion’s operational areas for various uses, including dust control, drilling, well completion (fracturing in North America only), voidage replacement, and enhanced oil recovery.
As part of our corporate risk evaluation process, which prioritizes water, we recognize that several water stress assessment tools, including the Water Resources Institute (WRI) Aqueduct tool and World Wildlife Fund (WWF) Water Risk Filter, identify some of our operating areas as water stressed. However, based on our field-level observations and monitoring programs, regulatory communications, and interactions with other industrial, agricultural and domestic water users, none of our operating areas are at this time deemed to be under water stress in the context of our operations.
Several factors are considered when evaluating water stress within our operating area, both in terms of water availability and the risk our operations may present to sensitive or region-critical water resources. In general, regulatory oversight of water use in all of our operated areas is well developed with allocation or diversion licensing requirements that consider other water users and the capacity of the resource (surface and groundwater) to support the intended withdrawals. Regulatory authorizations for groundwater withdrawals commonly involve an assessment of aquifer yield as part of the licensing process. Longer-term (i.e. multi-year) diversion licenses typically include a requirement for ongoing aquifer monitoring to ensure that the withdrawal, or collective withdrawals of multiple users, is not adversely impacting the reservoir with time. Authorizations for surface water withdrawals typically set limits with respect to maximum allowable drawdown and include additional provisions (e.g. inlet screening, access requirements, etc.) to mitigate risk to aquatic organisms and habitat. Limits with respect to the permitted withdrawal volumes and recovery rate are commonly stipulated in the withdrawal authorizations and are enforceable under regulation.
Should our ongoing monitoring and stakeholder engagement activities indicate that an acute or chronic water stress condition is evolving in any of our operating areas, we would further assess the risk presented to, and by, our operation and would implement appropriate mitigative measures. Depending on the area circumstances, this could include sourcing (and hauling) water from outside of a water-stressed area, switching to drilling fluid systems that do not require freshwater, implementation of additional risk management measures to monitor and safeguard vulnerable water resources (surface and groundwater) and, potentially, short or long-term suspension of operations within the water-stressed areas.
Vermilion uses our Enterprise Risk Management (ERM) System, with its Corporate Risk Register & Risk Matrix, to identify, assess & monitor new & emerging climate-related risks on an ongoing basis, updating the Register as needed but annually at minimum. We also use tools such as WRI Aqueduct and WWF Water Risk Filters to identify water stress in areas as it relates to our operations and value chain partners and ensure that the information is fed into operational development strategies to protect water bodies and increase water efficiency. We use regional government databases whenever available to us.
Based on our ERM system, our long-range planning and business need, we assess water-related risks that include:
The results of our assessment annually feed back into our risk/opportunity management process to ensure we have a sound data foundation to support responsible decisions in our operating areas. Detailed analysis of these risks, including potential impact, financial implications, management methods and cost of management, support our business strategy for managing water.
The majority of Vermilion’s water withdrawals (98%) are produced water associated with conventional oil production, primarily within the Canadian Business Unit. Through proactive water management, Vermilion is able to secure water for future activities, while minimizing risk and impacts. We prefer to use brackish rather than freshwater in our operations; however, the use of freshwater aquifers is unavoidable in some locations. The availability of freshwater, both now and in the future, is therefore considered important to our operational activities. While alternatives are available now and are expected to continue to be available based on government licensing of water supplies in our regions, there would be an economic and, potentially environmental (transport), impact should we need to seek sources other than our current options.
In addition to working within the existing regulatory frameworks in our operating areas and engaging with local, field-level environmental and fisheries officers with respect to water use and availability, Vermilion’s surface land and community relations groups also actively engage with other stakeholders with respect to water-related matters. Landowner consultation is an integral part of all drilling programs and includes dialogue with respect to current water uses and vulnerabilities. Where practical, and particularly in agricultural areas, landowners are often engaged in the provision of freshwater to limit risk and facilitate mutual benefit. Open attendance (“townhall”) events are also routinely hosted by Vermilion’s operations and community relations teams which provide a forum for stakeholder discussion and communication of water-related concerns. Vermilion’s field operations and joint-venture teams are also in regular communication with other industry operators, either through formal industry associations or ad hoc engagements, which allows for a direct sharing of water-related activities and concerns, as well as identification of collaborative opportunities..
We require 100% of third-party contractors & sub-contractors to be HSE pre-qualified prior to commencing service work. This includes water-related issues, ranging from compliance with regulations to groundwater protection from spills. This helps ensure they have an HSE program in place that meets or exceeds our requirements. We also observe & interact with our vendors on an ongoing basis to ensure that they are adhering to Vermilion’s HSE practices, procedures & rules. This is essential because we operate in regions with strong regulatory approaches to water and : we prioritize the safety & environmental protection of our communities. Our site & work procedures also provide strong oversight of staff and contractor activities. We are also conducting a global supply chain risk assessment, analyzing risks based on geography, industry and operations, including climate, environmental and water policies, for suppliers with > $1MM spend in 2019.
Operationally and environmentally, we continue to work hard to establish the most efficient and sustainable ways of sourcing and reusing this critical resource. As the single largest component used in hydraulic fracturing operations, water is essential to developing many types of oil and gas reservoirs, particularly in North America. In Vermilion's operations, we use fracturing only in some semi-conventional clastic reservoirs. We do not develop shale or other unconventional reservoirs. As a result, our semi-conventional development activities are significantly less frac intensive than shale development, requiring much lower volumes of water. 303
Approximately one-quarter of the water we pump during a Canadian frac, for example, returns immediately during flowback operations. We then employ fracture fluid technology that lets us re-use this flowback water on subsequent wells. We are also assessing where we can adjust completion schedules to optimize water use, and recycle flowback water to reduce overall make-up water requirements. Finally, we are also looking at the potential of using produced water (non-potable water produced with oil and gas) from our operations to replace other water sources.
We operate in accordance with strict regulations and Industry Recommended Practices (IRPs) that protect groundwater groundwater sources through exploration and production phases. For example, Petroleum Services Association of Canada’s IRP #14 ensures that non-toxic, water-based drilling fluid is used when penetrating freshwater aquifers down to the government-established base of groundwater protection. Steel casing is then put into place and cemented in permanently to isolate the upper portion of the well while drilling to the final reservoir target.
In Alberta, the Cardium formation is Vermilion’s shallowest development play that uses hydraulic fracturing practices to stimulate the formation. Here, as in our other areas of operation, we employ micro-seismic and computer modeling to ensure we are not contacting or impacting potable water aquifers through our activities. The micro-seismic events measured during hydraulic fracturing operations indicate the height and extent of the fracture system. This data tells us that a typical hydraulic fracture height in the Cardium interval is up to 100 metres. We also know that the Cardium interval is typically found at 1,750 metres below surface and the base of the deepest groundwater is at approximately 600 metres. We therefore maintain an approximate separation distance of 1,100 metres (1,1 km) of rock from the base of groundwater protection to the top of the hydraulic fracture.
Ensuring Containment: Flowback fluids are contained onsite in a closed system, where they are later treated and re-used, or disposed of at authorized facilities at he conclusion of a program. In addition to accessing current technology in our operations, Vermilion has been involved in trialing many new and emerging technologies, and we have invested time and money in an effort to make them viable. Examples of this include research and development to implement technology that allows for the treatment and re-use of advanced gel chemical fracture flowback fluids. This approach reduces the freshwater needed to complete wells and the volume of water disposed of via deep well injection.
FracFocus disclosure: We publicly disclose all of the additives we use to FracFocus in Canada and the United States for 100% of our operations there, as well as via our regulatory submissions. We continue to work to decrease the required concentration of our additives and we work with our fracturing suppliers to source even better alternatives for future consideration.
In all of our operating areas, water use is highly regulated, and adherence to regulatory requirements and industry best practices related to water use is monitored across all business units.
A full 100% of water volumes withdrawn and discharged are tracked for internal and external accounting, management and/or reporting purposes. All water volumes are measured using a combination of meters and volumetric calculations. The data is tracked and analzyed to facilitate regulatory reporting (as required) and internal governance and sustainability initiatives.
More than 99% of Vermilion’s water withdrawals are assessed for water quality parameters. Produced water is assessed to determine compatibility and treatment requirements with respect to future re-injection and to assess corrosivity in the context of asset integrity and management programs (e.g. pipelines). Freshwater used for drilling purposes (e.g., hydraulic fracturing or drilling fluid systems) is also assessed to ensure compatibility with the drilling formations and to determine additive requirements.
Depending on the circumstances, the water quality assessment may include routine chemistry parameters (pH, conductivity, major cations/anions, etc.), total and/or dissolved metals, hydrogen sulphide, and biological parameters iron reducing and acid producing bacteria. The majority of the analyses are completed at accredited laboratories. Some parameters (e.g. temperature) may also be monitored in the field.
As an organization, the majority of Vermilion’s water withdrawals (98%) are produced water associated with conventional oil production. The majority of this volume (85%) is reinjected into the oil producing formations for voidage replacement or disposed via deep well injection. Lifecycle tracking of produced water is a regulatory and corporate obligation with defined accounting and reporting requirements.
In Vermilion’s offshore Australian operations, discharge occurs to seawater in accordance with a government authorization that mandates water quality and quantity, as well as monitoring and reporting requirements. This volume (constituting 14.5% of Vermilion’s water discharge) is metered as part of the discharge process.
The remaining 0.5% of Vermilion’s total water discharge is to third party wastewater treatment plants, disposal facilities and is either metered or determined by volumetric calculations at the point of transfer.
In 2019, we aligned our water data reporting with CDP’s methodology for water security, and we are currently benchmarking key data, including freshwater intensity, to assess further development of our water program.