HYDRAULIC FRACTURING & PRODUCED WATER REUSE PROPOSAL: PRESENTATION TO BURLESON COUNTY COMMISSIONERS

APACHE CORP.

NOVEMBER 26, 2013

Produced water reuse decreases fracturing water demand in any area in which it has been used.

Apache has used saltwater and reused produced water for fracturing for three years.

Excellent safety record for containment

Reduced fresh water use by 40% to 95%

Seen comparable or better well response with salt water

In the US, we have produced water recycling operations in all of our onshore major areas.

PRODUCED WATER REUSE

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How we rate storage methods:

1. Large above ground containment. Above ground industrial quality ”swimming pool”- type

enclosures.

Double lined (36 mil) with special preparation of all sites.

Surrounding perms.

2. Excavated in-ground “ponds” with double liners and monitoring.

3. Steel “frac” tanks

STORING PRODUCED WATER?

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Salinity – 50,000 ppm (<30,000 to nearly 100,000 ppm)

Other ions: calcium, iron, etc.

COMPOSITION OF PRODUCED WATER

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MAXIMUM SALINITY IN WORST CASE LEAK OF PRODUCED WATER INTO A FLOOD PLAIN

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Produced Water (ppm)

Stored Produced Water

Volume (gallons)

Stored Produced Water

(acre feet) Depth of flood

water Flood zone radius (ft)

Flood zone radius (acres)

Average fresh water TDS

Worst Case TDS (ppm)

1,000 1,000,000 3.1 1 500 18.0 250 359 35,000 1,000,000 3.1 1 500 18.0 250 5304 50,000 1,000,000 3.1 1 500 18.0 250 7486

100,000 1,000,000 3.1 1 500 18.0 250 14758

Produced Water Salinity (ppm)

Stored Produced Water

Volume (gallons)

Stored Produced Water

(acre feet) Depth of flood

water Flood zone radius (ft)

Flood zone radius (acres)

Average fresh water TDS

Worst Case TDS (ppm)

1,000 1,000,000 3.1 3 500 18.0 250 290 35,000 1,000,000 3.1 3 500 18.0 250 2116 50,000 1,000,000 3.1 3 500 18.0 250 2921

100,000 1,000,000 3.1 3 500 18.0 250 5605

Produced Water Salinity (ppm)

Stored Produced Water

Volume (gallons)

Stored Produced Water

(acre feet) Depth of flood

water Flood zone radius (ft)

Flood zone radius (acres)

Average fresh water TDS

Worst Case TDS (ppm)

1,000 1,000,000 3.1 3 1000 72.1 250 260 35,000 1,000,000 3.1 3 1000 72.1 250 736 50,000 1,000,000 3.1 3 1000 72.1 250 946

100,000 1,000,000 3.1 3 1000 72.1 250 1645

1 ppt is 1000 ppm

WHAT LEVEL OF PPM IS HARMFUL TO WILDLIFE? FRESH WATER MUSSELS AS A WORST CASE.

BRAZOS FLOW EXAMPLE

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Nominal Flow Range (low to high to flood (ft3/sec) acre ft per sec acre feet per hr acre feet per day

700 0.02 58 1389

4200 0.10 347 8332

8000 0.18 661 15870

For worst case tank rupture - considering all of a tank of one million gallons of 100,000 ppm produced water went into the Brazos River at once, dilution to <1000 ppm would be reached in less than 12 hours at the lowest flow, 2 hours at medium flow and less than 1 hour at current (11/25/2013) flow. In a flood, the salinity would be in the fresh water range in minutes.

REFERENCE SLIDES

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DRILLING PERMIT APPLICATIONS – BURLESON CO.

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http://www.texas-drilling.com/burleson-county Note – the size of each dot is about 600 times larger than an actual well site.

FRESH WATER IN CENTRAL TEXAS

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http://www.tpwd.state.tx.us/publications/pwdpubs/media/pwd_rp_t3200_1058.pdf

http://www.tpwd.state.tx.us/publications/pwdpubs/media/pwd_rp_t3200_1058.pdf

WATER SPECIFICS

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http://www.tpwd.state.tx.us/publications/pwdpubs/media/pwd_rp_t3200_1058.pdf

Water Quality Classified Stream Segment 1212 (TNRCC 1996). The reservoir impounds Yegua Creek and has a drainage area

of 1007 square miles (USGS 1999). Somerville Lake is classified as water quality limited due to its

use as a public water supply. Other designated uses include for contact recreation and for high aquatic life.

The lake is also used for flood control. (covers 11,460 acres and has a capacity of 160,100 acre-feet of water (TWDB 1997))

At top of flood pool, the lake covers 24,400 acres. As of August 31, 1994 there were nine permitted facilities with

a combined authorized discharge of 1.37 MGD into the lake. The TNRCC has detected elevated levels of chlorophyll a in the

upper portions of the reservoir (TNRCC 1996).

SOMERVILLE LAKE (1967 COMPLETION)

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Excerpts from “Evaluation of Natural Resources in Bastrop, Burleson, Lee and Milam Counties” March 2000, Texas Parks and Wildlife.

The Little River is Water Quality Classified Stream Segment 1213 that flows into the Brazos River.

The segment is classified as water quality limited due to water quality standards violations (TNRCC 1996).

Designated uses for the segment are for contact recreation, high aquatic life, and as a public water supply.

As of August 31, 1994 there were 14 permitted wastewater outfalls in this portion of the Little River with an authorized discharge of 9.73 MGD (TNRCC 1996).

Elevated levels of fecal coliform bacteria and nitrogen and phosphorus concentrations higher than TNRCC screening criteria occur downstream of the City of Cameron (TNRCC 1996).

The TPWD has identified the Little River in the study area as an ecologically significant stream due to its thriving mussel population (TPWD 1999a)

LITTLE RIVER

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Excerpts from “Evaluation of Natural Resources in Bastrop, Burleson, Lee and Milam Counties” March 2000, Texas Parks and Wildlife.

BRAZOS RIVER FLOODS At levels of 50.8 feet water begins flowing across the flood plain into Oyster Creek

HYDRAULIC FRACTURING

What is it?

Hydraulic fracturing involves injection of water. sand, polymer (an adsorbent in diapers and a drinking water purifier) and a small amount (+/- 100 ppm) of biocide into a well to create a fracture in oil and gas bearing rock or to reopen natural fractures that are already there.

Well depths for this operation may vary from 4000 ft to 10,000 ft.

Water tables in these areas are less than 1000 ft.

WELL DEVELOPMENT

This is the scope of hydrocarbon development that begins with seismic and land leasing and includes:

All Materials Transport Activities

Drilling operations

Well Construction

Fracturing

Well Cleanup

Well Production

Plug and Abandonment

ROUGH COSTS AND TIMING

Assuming one well development, 80 acre spacing, 10 to 20 fractures per horizontal well. Note: these are wide range industry numbers from many different plays.

• Single Barrier Failure => No Leak Path? => No Well Integrity Failure

• Unless All Barriers Fail, A Leak Will Not Happen

Barrier Failure or Well Integrity Failure

Wells are Designed with Multiple Barriers.

Number of Barriers Depends on the Hazard Level.

ZONE Hazard to Ground Water If Well Integrity Is Lost

Typical Number of Barriers

Above Surface

Low 1 to 2

Fresh Water

Low to Moderate 2 to 4

Mid Depth Very Low 1 to 2

Deep Lowest 1

WELL CONSTRUCTION – WHAT’S DIFFERENT?

11/25/2013 19

ENVIRONMENTAL ISSUES

1. Does fracturing pollute groundwater?

2. How much water does fracturing use?

3. Does fracturing cause earthquakes?

4. What is the leak rate of wells?

5. Will dangerous chemicals be used here?

6. Where will the waste go?

7. Is methane migration to groundwater linked to fracturing?

8. Where are the factual risks and what are the real questions that need t0 be asked?

WELL DEPTH TO SCALE

HOW CLOSE DOES THE TOP OF A FRAC COME TO GROUND WATER?

VERTICAL FRACTURES – WHERE DO THEY STOP?

Two inch by 1.5” view from a downhole TV camera run in clear water. Amoco - Circa 1971.

Fracture Growth Naturally Limited •Natural formation barriers. •Tectonic stresses in the rock •Leakoff into the reservoir. •Natural fractures that form complex or network fractures. •Typical frac height about 200 to 300 ft.

This is 1999 EPA data on reported instances – but not volumes – How has it changed?

11/25/2013 24

2011 TCEQ DATA ON CONTAMINANTS FREQUENCY OF

REPORTING IN POLLUTION ANALYSIS

0 200 400 600 800 1000 1200

Brominated & other Halogenated

Radioactive

Crude Oil (transport)

Barium

PAH

PCB

Nitrate & Nitrite

Pesticides & Herbicides

MTBE

Waste Oil

Toxic Metals (Sb, As, Pb, Hg, Cr, Zn, etc.)

Unknown

Diesel (from Underground Petroleum Storage Tank)

All Benzene & BTEX materials

unidentified metals

Chloronated Mixed Materials

TPH (Total Petro. Hydrocarbon - non-TRC control)

Chlorinated Solvents

SVOC & VOC

Gasoline (from Underground Petroleum Storage Tank)

11/25/2013 25

TCEQ DATA ON CONTAMINANTS FREQUENCY OF REPORTING IN POLLUTION ANALYSIS

0 1000 2000 3000 4000 5000

Brominated & other Halogenated

Radioactive

Crude Oil (transport)

Barium

PAH

PCB

Nitrate & Nitrite

Pesticides & Herbicides

MTBE

Waste Oil

Toxic Metals (Sb, As, Pb, Hg, Cr, Zn, etc.)

Unknown

Diesel (from Underground Petroleum Storage…

All Benzene & BTEX materials

unidentified metals

Chloronated Mixed Materials

TPH (Total Petro. Hydro. Non-TRC Control

Chlorinated Solvents

SVOC & VOC

Gasoline (from Underground Petroleum…

2000

2006

2011

11/25/2013 26

11/25/2013 27

CLASS II INJECTION WELLS – RISKS TO USDW – 50 BASINS PROBABILITY OF LEAKS TO USDW FROM INJ. OF CORROSIVE WATERS

Horizontal well w/ 100% of USDW, protected by proper surface casings isolation, the probability of impact on a USDW:

Between 1 well in 200,000 and 1 in 200,000,000). ----------------------------------------------------------------

April 2009 “Modern Shale Gas – Development in the United States – A Primer”.

Michie & Associates, 1988, Oil and gas Water Injection Well Corrosion Prepared for the API

SO – WHAT IS THE MOST COMMON PROVEN THREAT TO USDW?

Leaking Underground Storage Tanks of Gasoline & Diesel (from filling stations) Human sewage, Animal waste (CAFOs), Landfills

----------------------------- Salt from road deicing, irrigation & deeper water withdrawals. Salt, silt, rust (iron), SRB’s, bacteria, air, methane Bromides, chlorine, biocides from water treating or dumping. Pesticides, herbicides, fungicides, fertilizer, nitrates, etc. Arsenic, fluoride, radioactive elements - Natural Oil residue from roadways - Human

Contaminated groundwater accounts for approx. half of water-borne disease outbreaks every year in US

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Basin or Area Typical Frac Volume Used (Gal.)

% Frac Water Recovered

Typical % of Recycled or Salt Water use –Operator dependent

Typical Chemical % in Frac

Chemical % in Flowback (Gross Est.)

Barnett (TX) 4 to 5 mm 30 to 50% 0.2% <0.05%

Devonian (PA) 4 to 5 mm 40 to 50% <40% to 100% 0.2% <0.1% (polymer)

Eagle Ford (TX)

4 to 5 mm 5 to 10% <30% to >50% 0.3 to 0.4% (Hybrid Frac)

<0.2% (polymer)

Fayetteville (AR) 3 to 4 mm 30 to 60% 0.2% <0.05%

Haynesville (LA) 4 to 6mm 5 to 15% 0.3% (Hybrid Frac) <0.1% (polymer)

Woodford (OK) 4 to 5 mm 30 to 50% ~20% to >50% 0.2% <0.05%

Permian Basin Oil Shales (TX)

2 to 3 mm ~40% ~40% to 100% 0.4% to 0.5%

Conventional Well (Not shale)

50,000 to 100,000

60% to 90%+

1% ~0.5%

Estimates: Fracture Water Usage, Flow Back Volumes & Chemicals

MINING (COAL, OIL, GAS, MINERALS) WATER USAGE?

Source: Susan Combs, Texas Comptroller of Public Accounts: “The Impact of the 2011 Drought and Beyond”, February 6, 2012.

Note: this does not include the effects of water recycling from produced water back to frac water.

WATER USE PER ENERGY PRODUCED

11/25/2013

Water used and water consumed are different values. Does fracturing take water out of the hydrological cycle when produced waters (including frac flowback) are re-injected?

WATER USE AND MANAGEMENT

BURLESON COUNTY EARTHQUAKE HISTORY

http://www.homefacts.com/earthquakes/Texas/Burleson-County.html

Potential of a 5.0 earthquake in the next 50 years.

Source: Steve Willson, Apache, SPE ATW 23 April 2012

Does Fracturing Cause Earthquakes?

BARRIER AND INTEGRITY FAILURES: >330,000 US WELLS FOCUS IS ON GROUNDWATER POLLUTION POTENTIAL

Things That Keep Real Integrity Failures Very Low 1. Pressure inside the wells is lower than outside in hydrostatic of water table. 2. Modern wells are built with multiple barriers. 3. Cement reinforces and protects the casing. 4. Regulations are tighter now than 3 years ago. 5. Multi-Fractured horizontal wells replace 5 to 10 vertical wells in shale. Less pollution

potential with fewer water table penetrations.

Proof? – look at occurrence rankings of proven groundwater pollutants.

0.000% 0.020% 0.040% 0.060% 0.080% 0.100%

Barrier Failure Ohio Old WellsIntegrity Failure Ohio Old Wells

Barrier Failure Ohio Newer WellsIntegrity Failure Ohio Newer Wells

Barrier Failure Texas Old WellsIntegrity Failure Texas Old Wells

Barrier Failure Texas Newer WellsIntegrity Failure Texas Newer Wells

Barrier or Integrity Fail Texas Horizontal…

16,000 horizontal multi-frac wells – no subsurface leaks reported or found.

Full Report is SPE 166142 – peer reviewed & published Nov 2013

APACHE AND CHEMICAL USAGE

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We have a list of chemicals that we will not pump. We work with vendors to use lower risk chemicals and reduce the total chemical content.

COMMON FRAC CHEMICALS

Most Common

Slick Water

Frac Additives

Composition CAS

Number

Percentage of

shale fracs that

use this additive.

(This in NOT

concentration)

Alternate Use

Friction

Reducer

Polyacrylamide 9003-05-8 Near 100% of all

fracs use this

additive

Adsorbent in baby diapers,

flocculent in drinking water

preparation

Biocide Glutaraldehyde 111-30-8 80% (decreasing) Medical disinfectant

Alternate

Biocide

Ozone,

Chlorine dioxide

UV,

10028-15-6

10049-04-4 20% (increasing) Disinfectant in municipal

water supplies

Scale Inhibitor Phosphonate &

polymers

6419-19-8

and others 10 – 25% of all

fracs use this

additive

Detergents

Surfactant various various 10 to 25% of all

fracs use this

additive

Dish soaps, cleaners

INJECTION & DISPOSAL WELLS

Seismicity, 1973 to Present

http://earthquake.usgs.gov/earthquakes/states/texas/seismicity.php

Gas migration >>200+ yrs. old, highly

regional, many causes, 1000’s of seeps.

SPE 166142, Barrier vs. Well Failure, King

1.Spill clean fresh or salt water 2.Spill biocide 3.Spill dry additives 4.Spill of diesel from truck wreck 5.Spill of diesel -wrecked re-fueler 6.Spill frac tank water, no adds 7.Spill frac tank water w/adds 8.Spill diesel fuel while re-fueling 9.Spill of frac tank -flowback water 10. Frac press ruptures surface casing 11. Cooling pulls tubing out of packer (casing maintains integrity) 12. Mud channel, well < 2000 ft 13. Mud channel, well > 2000 ft 14. Intersects well in the pay zone 15. Intersect properly abandoned well 16. Intersects improper abandoned well 17. Frac to surface through rock, well greater than 2000 ft deep. 18. Earthquake, mag. >5.0 19. Frac intersects a natural seep 20. Emissions > background 21. Normal frac operation – no problems.

Fracturing Risk Evaluation

=> Very Small Risks

To Groundwater

Full Details in

SPE 152596

Frac to Surface? Less than 1 chance in a million Frac Ruptures Surf Csg? Less than 1 chance in 100,000 Earth Quake > 5.0 Less than 1 chance in a million Spills Diesel at surface About 1 chance in 10,000?

Highest Risks are Transport, Some from Well Construction

AIR EMISSIONS – DURING AND AFTER…

Frac: Do not have to use diesel pumpers!

Natural gas bifuel kits cut diesel use 50 to 60%

Electric pumpers making their way into the field

Green Completions – less CH4 gas leakage

Target is < 1.0% - we are there now. Can go lower (UT study September 2013)

Limit pneumatic equipment venting.

Let’s start with a 50% reduction in diesel exhaust pollutants => Natural Gas as Bifuel

NATURAL GAS DISPLACING ALL OR PART OF DIESEL FUEL

Source: U.S. Dept. of Energy - Argonne National Laboratory Report; TIAX Report; NGV America; AGL

20-30% Reduces CO2 Emissions

70-90% Reduces CO Emissions

75-95% Reduces NOx Emissions

70-80% Reduces Particulate Matter Emissions

50-55% Reduces VOC Emissions

Effect of 50% to 60% substitution of natural gas for diesel

Transporting the water? – Temporary pipelines?

Questions