Environmental Responsibility

Centennial continually monitors and manages greenhouse gas (GHG) and other emissions from our operations. We have installed emission control and gas capture equipment at essentially all of our production facilities. Centennial routinely and regularly performs infrared camera inspections to identify any GHG emissions, and expeditiously repairs any leaks within the timeframes required by state and/or federal regulators.

We believe that transporting our crude oil production by pipeline is not only efficient but also the safest means of transportation. Pipeline transportation not only helps us reduce emissions and our consumption of diesel fuels, but also has the added benefits of reducing highway traffic and the risk of accidents. Companywide, approximately 90% of our crude oil production is transported via pipeline.

Centennial also strives to limit the amount of natural gas flared at its wellheads. To help achieve our goal of 100% gas-capture, Centennial has secured firm natural gas pipeline capacity to market hubs outside of the Permian Basin for all of its expected residue gas production for the next several years. This will minimize potential gas flaring, allowing Centennial to capture its produced natural gas and safely transport it to end-users.

Hydraulic fracturing is a process in which pressurized fluid is pumped into underground formations to create tiny fractures or spaces that allow crude oil and natural gas molecules to flow from the reservoir into the well casing and surface gathering pipelines. Hydraulic fracturing, or fracing, is an essential part of our business and is utilized in all of our newly drilled and completed wells.

The mixture utilized in fracing is typically more than 99% water and sand. Less than 1% is composed of chemical additives that are highly diluted and commonly found in various household products, such as laundry detergents, cleaners and beauty products. This technique has been safely and effectively used by the oil and gas industry for approximately 70 years.

Source: Company estimates

Centennial strives to be as transparent as possible; therefore, we publicly report our chemical usage on each of our hydraulic fracturing jobs. We are an active participant in FracFocus, the national hydraulic fracturing chemical registry. FracFocus is managed by the Ground Water Protection Council and Interstate Oil and Gas Compact Commission, two organizations whose missions center around conservation and environmental protection. The FracFocus.org website makes it possible for anyone to see what chemicals were used at a given well. We will continue to publicly disclose our use of chemicals to FracFocus.

Source: Company data

We take great care in protecting groundwater resources where we operate. While hydraulic fracturing occurs thousands of feet below freshwater aquifers, wellbore integrity is critical to ensure groundwater protection. During drilling, Centennial utilizes multiple layers of steel casing and cement in order to provide a safe barrier to protect aquifers. We also continuously monitor a well’s pressure during drilling and completion operations to ensure the highest wellbore integrity. This monitoring continues throughout the entire drilling, completion and production processes.

Hydraulic fracturing requires a significant volume of water. In 2018, Centennial management formed a project team to develop comprehensive water sourcing, disposal and recycling solutions for its operations. In 2019, we began implementing the team’s water recycling solutions into our operations, with an initial focus on our operations in New Mexico. During 2019, more than three million barrels of flowback and produced water were recycled and reused in our operations in New Mexico. In early 2020, Centennial initiated water recycling solutions for our Texas operations. Water recycling reduces both freshwater consumption and produced water disposal volumes, and we plan to continue to increase our use of recycled water with a goal of using recycled water in our operations whenever practical.

Land is core to our values at Centennial, and we believe it is critical that we maintain it for future generations. We respect the land where we operate, knowing that many Centennial employees and their families live in communities on or near such lands.  Centennial acknowledges that certain issues arise during crude oil and natural gas operations and tries to anticipate and minimize these risks, maintain open lines of communication and properly address landowner and community concerns in a responsive manner.

We have successfully minimized our surface impact through measures within our drilling operations. For example, our extended lateral development has resulted in a reduction of land disturbance. In addition, Centennial is shifting almost entirely to multi-well pad development, which involves drilling multiple wells from a single surface site. This style of project development further minimizes our footprint by reducing the amount of construction, infrastructure needs and vehicle traffic. Further, we comply with various regulatory, oil and gas lease and surface agreement requirements relating to remediation of surface impacts and restoration of the surface of the land once we have completed our operations.

Centennial is also mindful of the biodiversity in the areas where we operate. In planning our operations, we work to identify and avoid sensitive habitats, including those involving endangered and threatened species protected by the Endangered Species Act and comparable state laws. Our assessments of the environmental context of a particular area also enable us to apply location-specific solutions that mitigate possible impacts to the nearby species and their habitats.

Spill prevention is vital to minimizing adverse environmental impacts to the surface, water resources and wildlife while simultaneously helping to ensure a safe workplace. Successful spill management requires effective training, continual maintenance, containment measures and situational responsiveness. Should a spill or release occur, Centennial has processes and procedures in place to quickly respond in order to minimize and mitigate its environmental impact. In addition, Centennial also has procedures to remediate any potential spills.

As part of our ongoing commitment to environmentally responsible operations, Centennial documents the volume of oil, produced water and other substances spilled from its operations. During 2018, we experienced a 69% year-over-year reduction in regulatory oil spills across our operations, even with a significant increase in oil production.

Source: Company data

Centennial calculates its oil spill rate by dividing the aggregate volume of oil spills from its operations during a period by Centennial’s gross oil production for the same time period. Centennial’s oil spill rate are as follows:

Source: Company data

Centennial’s water spill report is as follows:

Source: Company data

Centennial calculates its water spill rate by dividing the aggregate volume of water spills from its operations during a period by Centennial’s gross water produced for the same time period. Centennial’s water spill rates are as follows:

Source: Company data