Environmental Stewardship

There are five environmental topics that are critical for Parsley to responsibly manage: Climate Change, Emissions, Water, Spills, and Land Management.

Our Health, Safety, and Environmental (HSE) Statement serves as the foundation of our commitment to environmental stewardship, from acquisition and project design through construction, operation, and cessation. The HSE Statement comprises 10 important principles that demonstrate our commitment to employing operational controls and procedures that promote efficient, environmentally sound business practices.

Supporting our HSE Statement, Parsley’s Environmental Manual guides the actions of our employees across a range of topics including spill reporting, groundwater and stormwater management, air quality compliance, wetlands and waterways protection, and waste management. We are also in the process of developing an environmental management system framework across our operations that is aligned with climate, energy, environmental, and social issues management best practices recommended by organizations such as the International Organization for Standardization (ISO), The International Association of Oil & Gas Producers, and International Petroleum Industry Environmental Conservation Association.

Additionally, Parsley employees work with a number of different groups including The Environmental Partnership, the Texas Methane and Flaring Coalition, The Nature Conservancy, The Trail Foundation, and others to share best practices and learn more about protecting our environment.

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Climate Change

Parsley is adapting to the changing landscape of the oil and natural gas industry. We recognize the issue of global climate change and the related risks to our business and stakeholders, including the potential for climate change legislation, regulations restricting greenhouse gas (GHG) emissions, and other legal and market events that could result in increased operating costs and reduced demand for our products. We participate in the climate conversation at a local and national level by engaging key stakeholders and advancing responsible and efficient production of domestic oil and natural gas.

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Resilience During the
COVID-19 Pandemice

During the COVID-19 pandemic, which, along with increased production from foreign oil producers, caused an unprecedented decline in near-term oil prices, we demonstrated our resilience as a company. Our response to this crisis is indicative of how we can succeed in a future carbon-constrained scenario. Parsley took the following measures during this time of extreme global oil and natural gas supply imbalance:

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substantially reduced our capital development program
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restructured and added hedge positions for 2020 and 2021
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seized new opportunities to reduce operating costs
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shut-in marginally producing wells
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temporarily ceased drilling and completion activity until prices stabilized
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maintained our commitment to generate free cash flow and allocate capital based on project-level rates of return
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reduced flaring on our newly acquired Jagged Peak assets

Read more on Climate Change 103-2, 103-3, 201-2 | EM-EP-420a.4

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Parsley’s Board-level NESG Committee and internal SSCR Committee (led by our Chief Operating Officer) actively manage potential climate change risks and opportunities. These committees evaluate strategies and initiatives regarding the mitigation of climate change risks and GHG emissions and monitor the development of climate-related regulations and their potential impact on our business.

We participate in the climate conversation by continually engaging key stakeholders, and advancing responsible and efficient production of domestic oil and natural gas.

Looking ahead to the potential transition to a lower-carbon economy, we believe that oil and natural gas development and production will remain a key component of the global energy supply for the foreseeable future. We also believe that Parsley is well positioned to thrive in a future carbon-constrained environment and can play a significant role in helping to meet global energy demand in an efficient, safe, and environmentally responsible manner.

Our strategy positions us well to be a long-term, relevant player in the upstream oil and natural gas industry. Having developed only a fraction of our drilling inventory, our asset base affords us a long runway to continue developing and producing oil and natural gas without further acquisitions. Additionally, our operations are concentrated in the Permian Basin, which has substantial existing infrastructure that enables us to bring reserves to market more efficiently and economically.

We are also poised to endure with relevance because of the flexibility of our asset base, which consists of short-cycle projects that allow us to allocate capital in the short- and medium-term, and our ability to develop those assets with low cost and high operational efficiency. This low-cost and efficient approach enables our climate resiliency strategy, and as a result, we believe that the oil and natural gas we produce will remain among the most reliable, affordable, and versatile energy sources for consumers, supplementing the supply of other sources of energy to meet global demand.

Emissions

Parsley is committed to monitoring and managing our air emissions, as well as seeking out best practices from peers, industry associations, and global frameworks to minimize our environmental impact.

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Fugitive Emissions

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Transportation

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Measuring our impact

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GHG Emissions Intensity
(mtCO2e/MBOE)
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GHG Emissions Intensity Chart

Scope 1 GHG Emissions
(mtCO2e)
305-1 | EM-EP-110a.1

Scope 1 GHG Emissions

Flaring Intensity
(MCF/MBOE)1

Flaring Intensity

Flared Volumes as a Percentage of Total Gas Production1

Flared Volumes

1These charts reflect the total amount of gas flared by Parsley for the years indicated, including flared gas from completions/flowback, well testing, tank emissions, as well as third-party gas shut-ins, curtailments, and operational events. Our flared emissions increased from 2017 to 2019 for two primary reasons:

  • » Gas purchasers throughout the Permian Basin at times curtailed producers’ natural gas production as a result of takeaway infrastructure constraints caused by:
    • Increased supply and lack of capacity at gas plants;
    • Gas purchasers’ unplanned operational interruptions; and
    • Planned maintenance shutdowns.
  • » At times, Parsley flared gas from several facilities in the Delaware Basin that were undergoing equipment upgrades and planned maintenance to further reduce emissions.

Fugitive Emissions103-2 | EM-EP-110a.3

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Our stakeholders care about how oil and natural gas companies manage and mitigate emissions. Flaring is a relatively common practice in West Texas and is a concern for the public, so we work diligently, including with our midstream providers, to minimize flaring at all of our sites. We also participate in industry groups such as The Environmental Partnership and the Texas Methane and Flaring Coalition to share best practices on reducing all emissions.

We design most of our facilities with engineered and right-sized vapor recovery units (VRUs) to capture the maximum amount of gas from our tanks, and we take precautions to avoid venting or flaring gas whenever possible. As of the date of this report, more than 92% of our production flows through facilities with a VRU. For facilities where flaring does occur, we use engineered and right-sized flares to optimize the combustion of any flared gas.

We began installing VRUs in 2010, and today we employ VRUs with a 99% fugitive emissions capture efficiency rating. In addition to reducing emissions, VRUs generate revenue for Parsley because we can sell this gas at a premium due to the higher BTU heating value.

In early 2020, we instituted daily flare volume reports to enhance our oversight and management of flaring. The flaring reports show weekly and year-to-date metrics and help keep our flaring reduction practices and decisions at the forefront across the entire company.

Today we employ VRUs with a 99% fugitive emissions capture efficiency rating.

Parsley uses low- and no-bleed pneumatic control devices to reduce production facility fugitive emissions. Another way we reduce fugitive emissions is by utilizing instrumentation air at select facilities, instead of natural gas pneumatic controllers. Going forward, we plan to continue to evaluate opportunities to use instrumentation air at additional facilities. We also use natural gas to fuel our compressors, as well as rental generators, at certain locations. Additionally, we have been upgrading our tank thief hatches with better quality gaskets as needed to help minimize leaks.

Our leak detection and repair (LDAR) program utilizes state-of-the-art optical gas imaging (OGI) emissions monitoring technology to conduct semi-annual fugitive emissions leak detection surveys. In 2019, we conducted semi-annual LDAR surveys on 161 of our tank batteries and produced water disposal facilities to check for leaks. We are in the process of installing thermal imaging cameras on some of our newest and largest facilities, which will allow us to continuously and for flare combustion quality if flaring does occur. This technology will enable professionals from our Gas Department to respond immediately to any potential issues and repair gas leaks as soon as possible.

Transportation

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Pipeline takeaway capacity has been an industry concern as production, in some cases, has exceeded capacity. Where possible, we move oil, natural gas and produced water through oil, natural gas, and produced water takeaway pipelines, respectively, from our tank batteries. This mitigates loading and transportation emissions, road wear and tear, and potential traffic accidents. In 2019, on average we transported approximately 93% of our oil and 94% of our produced water by pipeline. Parsley’s access to robust pipeline infrastructure networks and reliable transportation mechanisms enable us to meet customer demand while transporting oil, natural gas, and produced water in an efficient and environmentally responsible way.

Measuring our impact

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Parsley currently tracks and measures our Direct (Scope 1) GHG emissions. We submit our Scope 1 GHG emissions data annually to the Environmental Protection Agency. While our Scope 1 GHG emissions have increased on an absolute basis over the past four years due to substantial increases in our oil and natural gas production, our Scope 1 GHG emissions have decreased on a unit basis, depicted below as GHG emissions intensity, over the same duration.

To offset emissions, we partner with Keep Midland Beautiful and The Trail Foundation to plant trees.

For fiscal year 2020, we established a flaring target as a quantitative performance metric to Parsley’s short-term incentive program to support our goal of reducing flaring. This target, which is outlined in our most recent Proxy Statement, includes the assets we acquired in the Jagged Peak acquisition, which were being flared at roughly 20% of total gas production at the time the acquisition closed.

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Water is critical to Parsley’s operations and an important natural resource in West Texas. Parsley’s water management team manages our short- and long-term water needs and reports directly to senior management. We strive to responsibly manage our freshwater use by conserving and protecting freshwater resources, investing in efficient transportation and storage facilities, and evaluating increased usage of recycled water in our operations. We also seek to responsibly manage our produced water through the use of transportation and disposal solutions that mitigate spills, protect underground resources and ensure the safety of our local communities.

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Freshwater use

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Produced water

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Responsible Water
Management

As an example of our focus on responsible water management, we have invested a substantial amount of capital to develop an extensive water infrastructure network, consisting of pipelines, disposal facilities, and salt water disposal wells. This infrastructure enables us to currently transport approximately ~94% of our produced water by pipeline. In 2019 alone, we avoided more than 815,000 truck trips1 as a result of this network.

For additional information about how we manage our freshwater and produced water use throughout our operations, including information about our pilot water recycling project, please see our inaugural Corporate Responsibility Report.

Freshwater and Produced
Water on Pipe

2018 2019
Freshwater1 100% 100%
Produced Water 90% 94%

Truck Trips Avoided2

2018 690,000
2019 815,000
1Freshwater used in drilling and hydraulic fracturing operations.
2The number of truck trips avoided is estimated by dividing the amount of produced water transported by pipe during 2019 by 120 Bbls (assuming 1 truck trip transports 120 Bbls).

94% of our
produced
water is
transported
by pipe.

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Freshwater use

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We are committed to regularly monitoring our freshwater consumption, seeking new opportunities to use recycled water, and exploring alternative solutions to improve freshwater efficiency throughout our operations. One of our biggest opportunities to conserve freshwater is to minimize the evaporation of freshwater in our storage facilities by accurately forecasting water requirements for each specific area of our network. Parsley continues to explore how to improve our real-time monitoring of water levels, flow rates, and other key metrics to better manage our water infrastructure remotely. In 2019, we completed the installation of remote monitoring systems at all of our active freshwater storage facilities, and this data is accessible to our teams via a third-party online platform. Additionally, we began tracking our water usage via the same software that tracks our oil and gas production.

We also continue to explore ways to use recycled water in our operations. In 2019, we further researched technologies utilized in our pilot water recycling project in the Midland Basin.

Produced water

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Parsley takes steps to properly store, transport, and dispose of our produced water to minimize spills, protect underground resources, and ensure the safety of our local communities. We report produced water injection volumes and pressures to the Railroad Commission of Texas (RRC) and conduct mechanical integrity tests as required. We also support efforts to understand any links between seismicity and the injection of produced water. Parsley is an active member of the Center for Integrated Seismicity Research, where we contribute to proactive research to better understand seismic activity in the region. We also comply with regulatory and permit requirements intended to mitigate the risk of seismic activity potentially associated with disposal operations.

Spills

Spills pose a risk to the public and surrounding environment and can negatively impact our reputation and social license to operate if not effectively avoided or managed. Spills can have an immediate adverse impact on crops, fish, and potable water resources. In addition, spills lead to product loss, cleanup costs, and potential lawsuits from surface owners and enforcement actions from local regulatory authorities.

Read more on spills 103-2, 103-3 | EM-EP-540a.2

Parsley closely monitors our facilities and pipelines for potential spills and associated impacts and conducts extensive planning and training on spill prevention, control, and countermeasure (SPCC) policies and practices. Parsley currently has 175 facilities covered by SPCC plans, and we train all applicable employees on our spill prevention policies and practices. Further, we financially incentivize employees and management to reduce spills by including total fluid spill rate as a metric considered in annual bonus payouts. Parsley tracks and reports all types of spills and all fluid spilled into our HSE management information system, Intelex, and we evaluate each spill for risk. Based on the risk level, we investigate and assign a corrective action type rating of 1, 2, or 3 to all spills. For our largest and highest-risk spills, we employ additional follow-up measures to ensure the proper completion of the corrective actions.

Total Fluid Spill Rate (Total Bbls
Fluid Spilled/MBbls Produced) 3

Total Fluid Spill

Number of Spills

Number of Spills

Volume of Spills (Bbls)

Volume of Spills

3 Data includes spilled produced water and spilled oil. Parsley records all spills that leave the primary container (well, flowline, gathering line, truck or facility piping, vessels, tanks, etc.) regardless of volume. This includes spills that are reportable to a regulatory agency and non-reportable spills. Produced water spills constituted approximately 86.9%, 85.9%, 84.1%, and 89.2% of the total volume of spills in 2016, 2017, 2018, and 2019, respectively.

Land Management

Much like water, land is a limited resource that is critical to Parsley’s operations. We carefully plan our development to ensure the necessary surface acreage is available while being mindful of our overall footprint and commitment to minimizing our impact. We prioritize our relationships with landowners, building trust before, during, and after a project is complete. We diligently apply sustainable land management practices to protect these relationships and our reputation, both of which are vital to our operations.

Read more on land management 103-2, 103-3 | EM-EP-160a.1

During our development process, we remain attentive to the needs of our communities and begin detailed development planning six months to a year in advance. To minimize our impact, we have utilized remote facilities, best-in-class noise barriers, strategic pad placement and line location, specialized or minimized lighting devices, unique water management solutions, and an array of monitors that detect emissions and noise for mitigation. Additionally, in certain circumstances, we have made available a public hotline to all stakeholders to receive questions or concerns about our operations.

We prioritize our relationships with landowners, building trust before, during, and after a project is complete.

We regularly develop multiple horizontal wells on a single pad to limit our surface impact to avoid disturbing the same parcel of land more than once and reduce downtime for farmers and ranchers. Multi-well project development also reduces the construction of duplicative facilities and vehicular traffic. Reducing our surface footprint reduces costs and enables us to complete drilling more quickly and efficiently. Parsley routinely drills horizontal wells with a lateral length of two miles or more, which increases our ability to efficiently produce hydrocarbons and reduces the impact of our operations on the available surface land.

Horizontal development allows us more flexibility in placing surface hole locations, reducing the need to place our rigs in sub-optimal or disruptive locations, such as in the middle of a field used for agricultural purposes. When planning our corridor development program, we often work with landowners to make certain that their surface activities remain as efficient as possible while reducing the risk that our operations conflict with those activities. For example, we will help re-configure the GPS units on farmers’ tractors to avoid our infrastructure.