CDP. Module: Introduction. Page: W0. Introduction. CDP 2015 Water 2015 Information Request W0.1. Introduction

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1 CDP CDP 2015 Water 2015 Information Request Hess Corporation Module: Introduction Page: W0. Introduction W0.1 Introduction Please give a general description and introduction to your organization. Hess Corporation (HES) is a leading global energy company engaged in the exploration and production (E&P) of crude oil and natural gas. In 2014, Hess completed its transformation to a pure play E&P company by divesting its remaining downstream businesses. W0.2 Reporting year Please state the start and end date of the year for which you are reporting data. Period for which data is reported Wed 01 Jan Wed 31 Dec 2014 W0.3 Reporting boundary Please indicate the category that describes the reporting boundary for companies, entities, or groups for which water-related s are reported. 1

2 Companies, entities or groups over which operational control is exercised W0.4 Exclusions Are there any geographies, facilities or types of water inputs/outputs within this boundary which are not included in your disclosure? Yes W0.4a Exclusions Please report the exclusions in the following table Exclusion Please explain why you have made the exclusion Abstraction of saline/brackish water from oceans and seas Freshwater use by Retail Marketing Offshore operations utilize seawater primarily for once-through cooling, with the vast majority being returned to sea. We do not track this at the group level. The Retail Marketing business was divested at the end of the third-quarter of 2014, and thus not included. Retail's freshwater use was about 10% of Hess Corporation's total freshwater use. Further Information Module: Current State Page: W1. Context 2

3 W1.1 Please rate the importance (current and future) of water quality and water quantity to the success of your organization Water quality and quantity Direct use importance rating Indirect use importance rating Please explain Sufficient amounts of good quality freshwater available for use Sufficient amounts of recycled, brackish and/or produced water available for use Vital for operations Neutral Not very important Not very important Freshwater is vital for our onshore exploration & production operations, primarily for cooling and hydraulic fracturing. In addition, access to new frontier areas can be restricted due to limitations on the local freshwater supply. Brackish and recycled water are used in some of our onshore operations as substitutes for freshwater, however, the quantities used are minor compared to freshwater use. W1.2 For your total operations, please detail which of the following water aspects are regularly measured and monitored and provide an explanation as to why or why not Water aspect % of sites/facilities/operations Please explain Water withdrawals- total volumes Water withdrawalsvolume by sources Water discharges- total volumes We monitor and measure all freshwater withdrawals. These are reported into the corporate database, which aggregates the data for the company. As is typical for our industry, we do not discharge any water back to the sources from which it came, our withdrawal volumes equal our consumption volumes. Withdrawal/consumption measurements at our assets are broken down by source (e.g., utilities, surface water, groundwater, reused/recycled, and rainwater) as required by corporate reporting. Hess does not have process wastewater discharges. Therefore, this category is not applicable. At the group level, Hess tracks produced water discharges to sea at for its offshore operations. This is a sector specific voluntary metric. Onshore, some U.S. operations have federal/state stormwater 3

4 Water aspect % of sites/facilities/operations Please explain Water dischargesvolume by destination Water dischargesvolume by treatment method Water discharge quality data- quality by standard effluent parameters Water consumption- total volume Facilities providing fullyfunctioning WASH services for all workers Less than 1% discharge permits; however, these permits do not require monitoring of volumes. We measure and monitor freshwater withdrawals at all applicable operations. We do not discharge any water back to the abstraction sources; therefore, our withdrawal volumes equal our consumption volumes. Hess does not have process wastewater discharges. Therefore, this category is not applicable. Hess does not have process wastewater discharges. Therefore, this category is not applicable re: standard effluent parameters. Hess tracks a sector-specific voluntary metric, "oil in produced water discharged to sea" for offshore operations. We measure and monitor freshwater withdrawals at all applicable operations. We do not discharge any water back to the abstraction sources; therefore, our withdrawal volumes equal our consumption volumes. Hess has a food, water, and lodging safety subject matter expert who ensures that workers are provided fully functioning WASH services. In addition, this is included in the scope of our corporate audit. Provision of WASH services to workers is a given and monitored by the asset/facility. W1.2a Water withdrawals: for the reporting year, please provide total water withdrawal data by source, across your operations Source Quantity (megaliters/year) How does total water withdrawals for this source compare to the last reporting year? Comment Fresh surface water 2175 Higher Brackish surface water/seawater 0 Not applicable Rainwater 0 Not applicable Due in part to changes in methodology and categorization. 4

5 Source Quantity (megaliters/year) How does total water withdrawals for this source compare to the last reporting year? Comment Groundwater - renewable 6164 Lower Negligible difference Groundwater - non-renewable 0 Not applicable Produced/process water 0 Not applicable Municipal supply 892 Lower Wastewater from another organization 0 Not applicable Total 9231 Higher W1.2b Water discharges: for the reporting year, please provide total water discharge data by destination, across your operations Destination Quantity (megaliters/year) How does total water discharged to this destination compare to the last reporting year? Comment Fresh surface water 0 Not applicable Brackish surface water/seawater 0 Not applicable Groundwater 0 Not applicable Municipal treatment plant 0 Not applicable Total 0 Not applicable W1.2c Water consumption: for the reporting year, please provide total water consumption data, across your operations 5

6 Consumption (megaliters/year) How does this consumption figure compare to the last reporting year? Comment 9231 Higher W1.3 Do you request your suppliers to report on their water use, risks and/or management? W1.3a Please provide the proportion of suppliers you request to report on their water use, risks and/or management and the proportion of your procurement spend this represents Proportion of suppliers % Total procurement spend % Rationale for this coverage W1.3b Please choose the option that best explains why you do not request your suppliers to report on their water use, risks and/or management 6

7 Primary reason Please explain W1.4 Has your organization experienced any detrimental s related to water in the reporting period? Yes W1.4a Please describe the detrimental s experienced by your organization related to water in the reporting year Country River basin Impact indicator Impact Description of Length of Overall financial Response strategy Description of response strategy United States of America Other: Colorado (Texas) Phys- Increased water scarcity Higher operating costs Operating costs at the Seminole Gas Processing Plant are primarily driven by production rates in the Permian Basin, but increasing water scarcity in west Texas has led us to evaluate the plant s water use and explore opportunities for its optimization. Life of the asset Unknown Other: Feasibility study We have completed a Feasibility Study (FS) project at our Seminole Gas Plant to evaluate current water sources, inventory process quality and quantity requirements, and identify and analyze appropriate efficiency measures. This study is expected to yield good practice as well as technology-based recommendations focused on reducing the plant s overall water demand. United Other: Reg- Higher Economic production of Varies based Unknown Greater As part of our due diligence process, 7

8 Country River basin Impact indicator Impact Description of Length of Overall financial Response strategy Description of response strategy States of America Missouri River (North Dakota), Ohio River (Ohio) Regulatory uncertainty operating costs shale oil and gas typically requires horizontal drilling and hydraulic fracturing. Bans, moratoria, or regulatory restrictions on hydraulic fracturing may limit access and future production, increase costs, and extend timelines. on uncertainty and delays in regulation. due diligence the Environmental Affairs and Government Affairs departments, as well as the asset, monitor policy and regulatory development. W1.4b Please choose the option below that best explains why you do not know if your organization experienced any detrimental s related to water in the reporting year and any plans you have to investigate this in the future Primary reason Future plans Further Information Module: Risk Assessment Page: W2. Procedures and Requirements W2.1 8

9 Does your organization undertake a water-related risk assessment? Water risks are assessed W2.2 Please select the options that best describe your procedures with regard to assessing water risks Risk assessment procedure Coverage Scale Please explain Comprehensive company-wide risk assessment Direct operations All facilities Water risks are considered in two risk assessment (RA) processes- enterprise risk management (ERM) and activity-based RA, focusing on economic and operational risk, respectively. Both processes take input from functional subject matter experts to establish a risk profile and are informed by audit findings; publicly available regional water assessments, databases, and management plans; water-specific daily news services; stakeholder consultations; investor information requests; industry association work groups; and public media. The ERM work product is a heat map that prioritizes the likelihood and potential of identified risks based on value. Activity-based RA is performed during early project stage. As the project matures, the RA is updated for those development and operations activity risks. A management plan document is prepared that includes a risk register to track risk mitigations. Critical or significant risk mitigations are aligned to annual business plans. W2.3 Please state how frequently you undertake water risk assessments, what geographical scale and how far into the future you consider risks for each assessment 9

10 Frequency Geographic scale How far into the future are risks considered? Comment Annually Facility >6 years Annually River basin 3 to 6 years Annually Facility 1 to 3 years We conduct the Enterprise Risk Management (ERM) process at project decision points. Risks at Seminole and Permian are considered more than 6 years into the future. Environmental risks, including water, are part of this process. The ERM process evaluates the entire life cycle of a project. We conduct additional water-specific risk assessments at each project phase and at least annually. The average frequency of these assessments is once per year. The water-specific risk assessments look 1 to 5 years into the future. We conduct the Enterprise Risk Management (ERM) process at project decision points. Risks in Ohio and North Dakota are considered 1-3 years into the future. Environmental risks, including water, are part of this process. The ERM process evaluates the entire life cycle of a project. W2.4 Have you evaluated how water risks could affect the success (viability, constraints) of your organization's growth strategy? Other W2.4a Please explain how your organization evaluated the effects of water risks on the success (viability, constraints) of your organization's growth strategy? We evaluate water quality and quantity effects, availability, and need using an asset-based risk assessment. Both water quantity and quality issues are vital for our corporate growth strategy. We may also be excluded from new frontier areas because of limited water supplies. Water quality is critical to our growth strategy because water of insufficient quality precludes use in operations without additional treatment. W2.4b 10

11 What is the main reason for not having evaluated how water risks could affect the success (viability, constraints) of your organization's growth strategy, and are there any plans in place to do so in the future? Main reason Current plans Timeframe until evaluation Comment W2.5 Please state the methods used to assess water risks Method Please explain how these methods are used in your risk assessment WRI Aqueduct Other: ERM and assetlevel risk assessment process Used as a screening tool to evaluate local and regional water availability. Because this tool maps locations against water-stressed areas and provides useful input into our risk assessment, we consider this to be the best tool available. In addition, water is factored into both our enterprise and asset-level risk assessment processes. This is used for all operations. W2.6 Which of the following contextual issues are always factored into your organization's water risk assessments? Issues Choose option Please explain Current water availability and quality parameters at a local level Relevant, included for some Water availability and quality parameters are included in our asset-level water-specific risk assessments. WRI Aqueduct may be used as a screening tool, along with local and/or regional 11

12 Issues Choose option Please explain Current water regulatory frameworks and tariffs at a local level Current stakeholder conflicts concerning water resources at a local level Current implications of water on your key commodities/raw materials Current status of ecosystems and habitats at a local level Current river basin management plans Current access to fully-functioning WASH services for all employees Estimates of future changes in water availability at a local level Estimates of future potential regulatory changes at a local level Estimates of future potential stakeholder conflicts at a local level Estimates of future implications of water on your key commodities/raw materials Estimates of future potential changes in the status of ecosystems and facilities/suppliers Relevant, included for some facilities/suppliers Relevant, included for some facilities/suppliers Not relevant, explanation provided Relevant, included for some facilities/suppliers Relevant, included for some facilities/suppliers Relevant, included for some facilities/suppliers Relevant, included for some facilities/suppliers Relevant, included for some facilities/suppliers Relevant, not yet included Not relevant, explanation provided Relevant, not yet included water studies. Each asset conducts these types of risk assessment as part of moving from one phase of operations to another. Accordingly, as an example we are evaluating water use and potential conservation measures at the Seminole Gas Processing Plant in Texas. Current regulatory frameworks are embedded in our Enterprise Risk Management (ERM) process as well as our region/asset-level water-specific risk assessments. We are monitoring current water regulations carefully as they have a direct on our ability to extract oil and gas. Water risk is factored into stakeholder engagement and risk assessment. Our key suppliers provide Hess with equipment and machinery, fracturing fluid additives, and professional services. With few exceptions, such as guar gum, water risks will not greatly production or pricing of these goods and services. Ecosystem s are included in our asset-level water-specific risk assessments. For example, in Ohio we monitor water quality and ecosystem conditions in local water resources to ensure our operations are in compliance with all internal and regulatory standards. Seminole gas plant is located in the Texas Water Development Board Region O. The TWDB develops strategic plans regarding water use and availability. Hess uses the WRI Aqueduct tool as an input to risk assessment at a basin level. Hess has a food, water, and lodging safety subject matter expert who ensures that workers are provided fully functioning WASH services. In addition, this is included in our corporate audit. Provision of WASH services to workers is a given and monitored by the asset/facility. Projected changes in water availability are included in our asset-level water-specific risk assessments. For example, we recently commissioned an independent consulting company to evaluate hydrogeologic conditions at Seminole Gas Plant. Current regulatory frameworks are embedded in our ERM process as well as our waterspecific risk assessments. We are monitoring current water regulations carefully as they have a direct on our ability to conduct oil and gas activities including hydraulic fracturing operations. Projected local stakeholder conflicts may be included in our asset-level water-specific risk assessments. Our key suppliers provide Hess with equipment and machinery, fracturing fluid additives, and professional services. With few exceptions, such as guar gum, water risks will not greatly production or pricing of these goods and services. Projected ecosystem s may be included in our asset-level water-specific risk assessments. 12

13 Issues Choose option Please explain habitats at a local level Scenario analysis of availability of sufficient quantity and quality of water relevant for your operations at a local level Scenario analysis of regulatory and/or tariff changes at a local level Scenario analysis of stakeholder conflicts concerning water resources at a local level Scenario analysis of implications of water on your key commodities/raw materials Scenario analysis of potential changes in the status of ecosystems and habitats at a local level Relevant, included for some facilities/suppliers Relevant, not yet included Relevant, not yet included Not relevant, explanation provided Relevant, not yet included Other Not evaluated Not evaluated Scenario analysis of projected changes in water availability are included in our asset-level water-specific risk assessments. Scenario analysis of projected regulatory changes may be included in our asset-level waterspecific risk assessments. Scenario analysis of projected local stakeholder conflicts may be included in our asset-level water-specific risk assessments. Our key suppliers provide Hess with equipment and machinery, chemicals, and professional services. Water risks will not greatly production or pricing of these goods and services. Scenario analysis of projected ecosystem s may be included in our asset-level waterspecific risk assessments. W2.7 Which of the following stakeholders are always factored into your organization's water risk assessments? Stakeholder Choose option Please explain Customers Not relevant, explanation provided Because we sell into a commodity market, our customers do not engage directly with us about water risks. Employees Relevant, included Our employees are a key part of our Enterprise Risk Management (ERM) and activity-based processes, with subject matter experts providing insights from both the enterprise and asset level. Aspects of water risk to employees are factored into the activity-based methodology. Investors Not relevant, Although some stakeholders are considered in asset-level risk assessments, investors are considered only 13

14 Stakeholder Choose option Please explain Local communities NGOs Other water users at a local level Regulators River basin management authorities Statutory special interest groups at a local level Suppliers Water utilities/suppliers at a local level explanation provided Relevant, included Relevant, included Relevant, included for some facilities/suppliers Relevant, included for some facilities/suppliers Relevant, included for some facilities/suppliers Relevant, included for some facilities/suppliers Relevant, included Relevant, included for some facilities/suppliers Other Not evaluated Not evaluated at the portfolio level. Water risk assessments are conducted only at the asset level, not at a portfolio level. Conducting responsible and sustainable operations and respecting community and other stakeholder needs has always been a priority for Hess. Therefore, our ERM and activity-based processes consider community relationships, and our risk mitigation strategies involve community outreach programs. For example, Hess makes well-specific information on volumes of water and chemical additives used for hydraulic fracturing publicly available at FracFocus.org. Hess views credible NGOs as important partners and stakeholders. For this reason, our ERM process considers NGO relationships, and our risk mitigation strategies often involve NGO outreach programs. For example, Hess participates in the Energy Water Initiative (EWI), a forum to address knowledge gaps in the shale oil and gas development water cycle that includes industry peers and engages frequently with nonindustry entities such as government, academia, and NGOs. Hess recognizes that it shares available water resources with other water users. As a result, our waterspecific risk assessments consider other water users near our assets, as needed, and our asset-level risk mitigation strategies sometimes involve direct interaction with these organizations. Seminole gas plant is located in the Texas Water Development Board Region O. The TWDB develops strategic plans regarding water use and availability. Seminole gas plant is located in the Texas Water Development Board Region O. The TWDB develops strategic plans regarding water use and availability. Our assets engage as needed with local stakeholder groups, including communities, NGOs, other water users, regulators, and water utilities/suppliers. The priorities of these groups are incorporated into our risk assessment processes as needed. We are reliant on certain key suppliers, for example, for technology related to frac fluid composition. As a result, both our ERM process and water-specific risk assessments consider the potential influence of such suppliers. We utilize our own water wells at the Seminole Gas Processing Plant; at our upstream locations, we typically rely upon commercial suppliers who obtain water from various sources including surface water (e.g., under agreements, from local landowners), and municipal utilities. W2.8 Please choose the option that best explains why your organisation does not undertake a water-related risk assessment 14

15 Primary reason Please explain Further Information Module: Implications Page: W3. Water Risks W3.1 Is your organization exposed to water risks, either current and/or future, that could generate a substantive change in your business, operations, revenue or expenditure? Yes, direct operations only W3.2 Please provide details as to how your organization defines substantive change in your business, operations, revenue or expenditure from water risk Water-specific risk assessments conducted at the asset level consider and document all known water risks, regardless of the financial magnitude. The Hess ERM process considers risks equal to or greater than $100 million as material. W3.2a Please provide the number of facilities* per river basin exposed to water risks that could generate a substantive change in your business, operations, revenue or expenditure and the proportion of total operations this represents 15

16 Country River basin Number of facilites Proportion of total operations exposed to risk within river basin (%) Comment United States of America United States of America United States of America Other: Colorado (Texas) Other: Missouri River, North Dakota Seminole gas processing plant and Permian production. Proportion based on 2014 operated production. North Dakota production. Proportion based on 2014 operated production. Other: Ohio River Proportion based on 2014 operated production. W3.2b Please provide the proportion of financial value that could be affected at river basin level associated with the facilities listed in W3.2a Country River basin Financial reporting metric Proportion of chosen metric that could be affected within the river basin Comment United States of America Other: Colorado (Texas) % global production capacity 6-10 United States of America Other: Missouri River, North Dakota % global production capacity United States of America Other: Ohio River % global production capacity 1-5 W3.2c 16

17 Please list the inherent water risks that could generate a substantive change in your business, operations, revenue or expenditure, the potential to your direct operations and the strategies to mitigate them Country River basin Risk driver Potential Description of Timeframe Likelihood Magnitude of potential financial Response strategy Costs of response strategy Details of strategy and costs United States of America United States of America Other: Colorado (Texas) Other: Missouri River, North Dakota Physical- Increased water scarcity Regulatory- Regulatory uncertainty Higher operating costs Higher operating costs Due to worsening water scarcity in west Texas, we are evaluating our water use at Seminole Gas Processing Plant with the objective of optimizing water efficiency. Regulatory action related to water resources management can have serious ramifications for our 1-3 years Highly probable Low 1-3 years Probable Medium Increased investment in new technology Other: Comply with local legal requirements or company s internal standards, whichever is Staff time and consultant services. Staff time and subscription services to regulatory hydraulic fracturing daily communications. We undertook a Feasibility Study (FS) project at our Seminole Gas Processing Plant and are undertaking a hydrogeologic evaluation to look at current water sources, to inventory process quality and quantity requirements, and to identify and analyze appropriate efficiency measures. Our asset-level staff in North Dakota tracks local legal requirements related to water management and ensures compliance. In 17

18 Country River basin Risk driver Potential Description of Timeframe Likelihood Magnitude of potential financial Response strategy Costs of response strategy Details of strategy and costs United States of America Other: Missouri River, North Dakota Physical- Increased water scarcity Higher operating costs businesses. In particular, there has been fast-paced development and implementation of legislation, regulations, and policies around managing water in the development of shale oil and gas resources. Hess may incur additional costs to secure sufficient water for our hydraulic fracturing and well maintenance activities in North Dakota. Current-up to 1 year Highly probable Low more stringent Increased investment in new technology Staff time, laboratory analyses, and additional costs. addition, our Environmental Affairs team routinely tracks proposed U.S. legislation and regulation, and issues periodic summaries to our businesses. Hess has a water technology team, which has developed hydraulic fracturing fluid water quality and reuse guidelines and recommendations for technology applications. The water technology team evaluates water sources, including fresh water, saline water and 18

19 Country River basin Risk driver Potential Description of Timeframe Likelihood Magnitude of potential financial Response strategy Costs of response strategy Details of strategy and costs Other: All assets outside of the United States Physical- Increased water scarcity Other: Constraint to future growth We may be excluded from new frontier areas because of limited water supply. 1-3 years Unlikely High Greater due diligence Staff time and consulting services wastewater, and assesses their suitability for hydraulic fracturing. In North Dakota, the water technology team, along with asset personnel, has piloted freshwater substitution options, including brackish water and treated sanitary wastewater, for both hydraulic fracturing and well maintenance activities. For major new projects, Hess conducts risk assessments and, where appropriate, environmental scoping and assessment. In the event that water issues are identified, risk 19

20 Country River basin Risk driver Potential Description of Timeframe Likelihood Magnitude of potential financial Response strategy Costs of response strategy Details of strategy and costs mitigation and management measures would be put in place. W3.2d Please list the inherent water risks that could generate a substantive change in your business operations, revenue or expenditure, the potential to your supply chain and the strategies to mitigate them Country River basin Risk driver Potential Description of Timeframe Likelihood Magnitude of potential financial Response strategy Costs of response strategy Details of strategy and costs W3.2e Please choose the option that best explains why you do not consider your organization to be exposed to water risks in your direct operations that could generate a substantive change in your business, operations, revenue or expenditure 20

21 Primary reason Please explain W3.2f Please choose the option that best explains why you do not consider your organization to be exposed to water risks in your supply chain that could generate a substantive change in your business, operations, revenue or expenditure Primary reason Please explain Risks exist, but no substantive anticipated Our key suppliers provide Hess with equipment and machinery, fracturing fluid additives, and professional services. With few exceptions, such as guar gum, water risks will not greatly production or pricing of these goods and services. W3.2g Please choose the option that best explains why you do not know if your organization is exposed to water risks that could generate a substantive change in your business operations, revenue or expenditure and discuss any future plans you have to assess this Primary reason Future plans Further Information Page: W4. Water Opportunities 21

22 W4.1 Does water present strategic, operational or market opportunities that substantively benefit/have the potential to benefit your organization? Yes W4.1a Please describe the opportunities water presents to your organization and your strategies to realize them Country or region Opportunity Strategy to realize opportunity Estimated timeframe Please explain United States of America United States of America United States of America Improved community relations Improved water efficiency Cost savings Improved water efficiency R&D Improved water efficiency Innovation New technologies and operating procedures may provide opportunities for improved water use efficiency and reduced evaporative loss in cooling operations. These innovations may improve water efficiency, reduce costs, provide environmental benefits and increase redundancy. We are currently considering how to apply them at our United States assets, especially in Texas. New technologies and operating procedures may provide opportunities for non-potable water sources in hydraulic fracturing operations. We are currently testing them at our United States assets, specifically in North Dakota. Utilize third-party regional water treatment opportunities to supplement natural gas plant water use and decrease reliance on freshwater sources 1-3 years 1-3 years Unknown Process cooling water at our Seminole Gas Processing Plant in West Texas is our largest freshwater use. Water is sourced from a Hess- owned and operated well field. Due to low humidity and hot temperatures, there is high evaporative loss. We conducted a feasibility study and are conducting a limited hydrogeologic assessment to evaluate water use and explore future conservation measures. A pilot study in North Dakota tested the technical and economic feasibility of using brackish groundwater for hydraulic fracturing and well maintenance. In pilot wells, 14 percent of the frac fluid freshwater volume was replaced by brackish water. We also tested the viability of using treated sanitary wastewater from the crew camps that house our workers. Though technically suitable the volume is presently insufficient for frac applications. We continue to evaluate third-party proposals that aim to provide alternative sources of water at optimal cost. One such proposal is currently under evaluation to determine if treatment options and costs are viable for our operations. 22

23 W4.1b Please choose the option that best explains why water does not present your organization with any opportunities that have the potential to provide substantive benefit Primary reason Please explain W4.1c Please choose the option that best explains why you do not know if water presents your organization with any opportunities that have the potential to provide substantive benefit Primary reason Please explain Further Information Module: Accounting Page: W5. Facility Level Water Accounting (I) W5.1 Water withdrawals: for the reporting year, please complete the table below with water accounting data for all facilities included in your answer to W3.2a 23

24 Facility reference number Country River basin Facility name Total water withdrawals (megaliters/year) at this facility How does the total water withdrawals at this facility compare to the last reporting year? Please explain the change if substantive Facility 1 Facility 2 Facility 3 United States of America United States of America United States of America Other: Colorado (Texas) Other: Missouri River (North Dakota) Permian Basin 6078 Lower Negligible change. North Dakota Production 1668 Higher Negligible change. Other: Ohio River Utica 1000 Much higher Production activity in the Utica increased significantly from 2013 to Further Information Page: W5. Facility Level Water Accounting (II) W5.1a Water withdrawals: for the reporting year, please provide withdrawal data, in megaliters per year, for the water sources used for all facilities reported in W5.1 Facility reference number Fresh surface water Brackish surface water/seawater Rainwater Groundwater (renewable) Groundwater (nonrenewable) Produced/process water Municipal water Wastewater from another organization Comment Facility

25 Facility reference number Fresh surface water Brackish surface water/seawater Rainwater Groundwater (renewable) Groundwater (nonrenewable) Produced/process water Municipal water Wastewater from another organization Comment Facility Facility W5.2 Water discharge: for the reporting year, please complete the table below with water accounting data for all facilities included in your answer to W3.2a Facility reference number Total water discharged (megaliters/year) at this facility How does the total water discharged at this facility compare to the last reporting year? Please explain the change if substantive W5.2a Water discharge: for the reporting year, please provide water discharge data, in megaliters per year, by destination for all facilities reported in W5.2 Facility reference number Fresh surface water Municipal Treatment Plant Seawater Groundwater Comment Facility N/A Facility N/A Facility N/A 25

26 W5.3 Water consumption: for the reporting year, please provide water consumption data for all facilities reported in W3.2a Facility reference number Consumption (megaliters/year) How does this compare to the last reporting year? Please explain the change if substantive Facility Lower Negligible change. Facility Higher Negligible change. Facility Much higher Production activity in the Utica increased significantly from 2013 to W5.4 For all facilities reported in W3.2a what proportion of their water accounting data has been externally verified? Water aspect % verification What standard and methodology was used? Water withdrawals- total volumes ISAE 3000 Water withdrawals- volume by sources ISAE 3000 Water discharges- total volumes Not verified Water discharges- volume by destination Not verified Water discharges- volume by treatment method Not verified Water discharge quality data- quality by standard effluent parameters Not verified Water consumption- total volume ISAE

27 Further Information Attachments /Shared Documents/Attachments/Water2015/W5.FacilityLevelWaterAccounting(II)/ERM CVS Assurance Statement HESS_Issued 23 june2015.pdf Module: Response Page: W6. Governance and Strategy W6.1 Who has the highest level of direct responsibility for water within your organization and how frequently are they briefed? Highest level of direct responsibility for water issues Frequency of briefings on water issues Comment Individual/Sub-set of the Board or other committee appointed by the Board Scheduled-quarterly The Hess Board of Directors has established an Environmental, Health and Safety Subcommittee to focus on EHS risks. W6.2 Is water management integrated into your business strategy? Yes W6.2a 27

28 Please choose the option(s) below that best explain how water has positively influenced your business strategy Influence of water on business strategy Please explain Establishment of sustainability goals Tighter operational performance standards Other: Transparency Hess has an Environment Health and Safety policy covering both natural resource conservation topics that include water conservation, and pollution prevention topics, which includes wastewater discharges. Our assets have operations-specific voluntary and compliance-based strategies to reduce fresh water use where feasible and to engage in collective action and stakeholder engagement where appropriate. Our corporate strategy includes public disclosure of water use and wastewater management in our annual corporate sustainability reports and in our response to the annual CDP Water Disclosure information request. W6.2b Please choose the option(s) below that best explains how water has negatively influenced your business strategy Influence of water on business strategy Please explain Delays in business explansion Political opposition, conflicts over water use, and regulatory developments related to shale energy have affected our ability to expand. W6.2c Please choose the option that best explains why your organization does not integrate water management into its business strategy and discuss any future plans to do so 28

29 Primary reason Please explain W6.3 Does your organization have a water policy that sets out clear goals and guidelines for action? Yes W6.3a Please select the content that best describes your water policy (tick all that apply) Content Please explain why this content is included Publicly available Company-wide Incorporated within group environmental, sustainabiilty or EHS policy Hess has an Environment Health and Safety policy covering both natural resource conservation topics that include water conservation, and pollution prevention topics, which includes wastewater discharges. Our assets have operations-specific voluntary and compliance-based strategies to reduce fresh water use where feasible and to engage in collective action and stakeholder engagement where appropriate. Our corporate strategy includes public disclosure of water use and wastewater management in our annual corporate sustainability reports and in our response to the annual CDP Water Disclosure information request. W6.4 How does your organization's water-related capital expenditure (CAPEX) and operating expenditure (OPEX) during the most recent reporting period compare to the previous reporting period? 29

30 Water CAPEX (+/- % change) Water OPEX (+/- % change) Motivation for these changes We are not able to compare current water-related spending to historic spending because we do not yet have a comparable baseline spend amount. This is due to the fact that for the last three years Hess has been in the process of transforming its business model. We have moved from a vertically integrated oil and gas company into an exploration and production business focused on the most promising properties. Further Information Attachments /Shared Documents/Attachments/Water2015/W6.GovernanceandStrategy/Hess 2014 CSR.pdf Page: W7. Compliance W7.1 Was your organization subject to any penalties, fines and/or enforcement orders for breaches of abstraction licenses, discharge consents or other water and wastewater related regulations in the reporting year? No W7.1a Please describe the penalties, fines and/or enforcement orders for breaches of abstraction licenses, discharge consents or other water and wastewater related regulations and your plans for resolving them 30

31 Facility name Incident Incident description Frequency of occurrence in reporting year Financial Currency Incident resolution W7.1b What proportion of your total facilities/operations are associated with the incidents listed in W7.1a W7.1c Please indicate the total financial s of all incidents reported in W7.1a as a proportion of total operating expenditure (OPEX) for the reporting year. Please also provide a comparison of this proportion compared to the previous reporting year Impact as % of OPEX Comparison to last year Further Information Page: W8. Targets and Initiatives W8.1 Do you have any company wide targets (quantitative) or goals (qualitative) related to water? 31

32 No W8.1a Please complete the following table with information on company wide quantitative targets (ongoing or reached completion during the reporting period) and an indication of progress made Category of target Motivation Description of target Quantitative unit of measurement Base-line year Target year Proportion of target achieved, % value W8.1b Please describe any company wide qualitative goals (ongoing or reached completion during the reporting period) and your progress in achieving these Goal Motivation Description of goal Progress W8.1c Please explain why you do not have any water-related targets or goals and discuss any plans to develop these in the future Hess sets expectations and requirements that all operations are in compliance with applicable water and wastewater-related regulations, as well as other mandatory and voluntary commitments. In addition, Hess expects that all operations report annual consumption of freshwater, which we define as one containing less than or 32

33 equal to 2,000 parts per million Total Dissolved Solids (TDS). Because these are expectations, we do not consider them to be a goal. There is a possibility that Hess may set a water target as part of our EHS and SR strategy refresh. Further Information Module: Linkages/Tradeoff Page: W9. Managing trade-offs between water and other environmental issues W9.1 Has your organization identified any linkages or trade-offs between water and other environmental issues in its value chain? Yes W9.1a Please describe the linkages or trade-offs and the related management policy or action Environmental issues Linkage or tradeoff Policy or action Water use, transportation emissions Linkage In 2013 in North Dakota we began using flexible hose for freshwater transport instead of trucks. This type of hose collapses flat when not in use, like a fire hose, and can be used to pipe water directly from the water source to our wells. The 600-foot sections of hose can be connected to lengths of several miles. We conducted our first pilot in September 2013 with four well pads and have now expanded its use to 20 percent of our wells. Use of these flat hoses eliminates the need for trucks to haul water, resulting in less traffic and noise, lower GHG and other air emissions, reduced transportation costs and risk of vehicle accidents. In 2014 our North Dakota hydraulic fracturing team piped 43 percent of the water used for fracturing, exceeding its 25 percent target. Approximately 4.5 million barrels of water were piped, removing approximately 41,174 truckloads from the 33

34 Environmental issues Linkage or tradeoff Policy or action road. The hydraulic fracturing team developed operating procedures for cold weather operations, and, with the cooperation of vendors, piping was successfully utilized throughout the cold weather months. Further Information Module: Sign Off Page: Sign Off W10.1 Please provide the following information for the person that has signed off (approved) your CDP water response Name Job title Corresponding job category Michal Pelzig Senior Manager, Sustainability Environment/Sustainability manager W10.2 Addressing water risks effectively, in many instances, requires collective action. CDP would like to support you in finding potential partners that are also working to tackle water challenges in the river basins you report against. Please select if your organization would like CDP to transfer your publicly disclosed risk and drivers and response strategy data from questions W1.4a, W3.2b, W3.2c, W4.1a and W8.1b to the United Nations Global Compact Water Action Hub. 34

35 No Further Information CDP 2015 Water 2015 Information Request 35