The objective of the paper is to review the environmental risks facing Oil & Gas industry with the perspective of reducing pollution and environmental compliance costs by using innovative technological tools. The environmental risks of industry operations are many but are commonly associated with; drilling fluids containing toxic materials (including oil/grease, heavy metals, & naturally occurring radioactive materials); produced waters posing threat of accidental release; potential emissions of hydrogen sulfide in natural gas deposits with its deadly effects on human health; and blowout of exploratory wells (statistically, in 0.5-1% cases) under pressurized contents of a geologic formation resulting in harmful emissions; and other accidents severely impacting environment and the project economics. To focus on general environmental risks, statistics of environmental incidences and preventions related to well drilling, pipelines incidents and spills/leaks are described. Guidelines and some economically feasible options based on technological advances to minimize risks to environment & human health are also listed. However, the paper essentially emphasizes the importance of technological advances to reduce industry's operational and environmental compliance costs during all phases (exploration, drilling, production, transportation, and storage) of oil and gas exploration and production (E&P). An an example, using modern technology, a substantial cost reduction from $8M in 1980 to about $0.1M today is realized for a 50 sq-mile exploration survey. The U.S. Department of Energy (DOE) estimates that by 2020, the lower cost compliance technology programs could decrease cumulative industry environmental compliance costs by over $36 billion. The cost reduction coupled with better survey and monitoring data allows less intrusive methods with least impact on environment. Compliance cost reduction further provides opportunities for investing in continued research & development (R&D) towards achieving environmental protection goals. Therefore, special emphasis is to be given to applications of "smart technological solutions" in achieving essential goals of environmental protection, economic benefits and environmental sustainability. New exploration and production technologies for the petroleum industry are developed primarily to increase oil recovery and reduce the cost of recovery. Reducing costs often goes with reducing the environmental impact of exploration, drilling and completion procedures. The industry search for advanced technology to produce oil and to meet environmental regulations has developed new, improved techniques and strategies which accomplish both goals. Conducting operations that are "Smarter, Farther, Deeper, Cleaner and Smaller" makes good business sense and helps to protect the environment. Many oil companies have learned that going that one step farther to protect sensitive environments and avoid pollution, pays them back directly in increased economic benefits. In the US, petroleum production generates on average, 7 to 8 barrels (approximately 15 billion barrels annually) of wastewater or produced water per barrel of oil. Today, operators are using advanced reservoir management techniques as discussed above to enhance well placement and reduce water production. Downhole oil/water and gas/water separation could dramatically further reduce the amount of water produced up the wellbore, cutting operating costs, improving environment by decreasing the possibility of groundwater contamination from produced water spillage. Besides reducing environmental compliance costs, sensible use of modern technology results in lesser volume of waste produced in conjunction with re-use of resources (such as re-injection of treated wastewater) as well as provides speed and reliability of processing information. As an example, the cost of analyzing a 50-square mile survey for Oil & Gas operations has fallen from approximately $8 million in 1980, to just about $0.1 million today. Satellite imagery and aeromagnetic surveys ar useful tools to pinpointing resources and reduce wastes. These methods allow engineers to better "see" underground to locate potential sources of oil and gas, dramatically improving exploration success rates, reducing drilling costs, and minimizing environmental impacts. Fiber optics sensor systems are increasingly being applied throughout a reservoir's life to optimize production. This helps to develop "smart wells" technology, which collects data on well performance and reservoir properties downhole that can be monitored from anywhere in the world via the Internet. Slim-hole drilling technology (drilling holes of a diameter of 6 inches or less) is changing exploration and production, especially in the early stages of exploration and in re-entering existing small-diameter wells to reach new reserves in mature fields. Even greater reductions in costs and environmental impacts can be achieved with more advanced technologies. Using above mentioned smart technologies during all phases of Oil & Gas industry is directly reducing overall operational costs and should achieve DOE's targeted goal of reducing the cumulative industry environmental compliance costs by over several billion dollars by next decade. The reduction in cost of environmental compliance and liability is directly benefiting additional research in finding new low cost technologies for the industry. The newer technologies in turn continue to further help reduce the overall environmental compliance costs while adequately protecting the environment. Copyright 2009, Society of Petroleum Engineers.