GOVERNOR’S SMALL BUSINESS FORUM APACHE CORP. JUNE 4, 2014

DRILLING PERMIT APPLICATIONS – BURLESON CO. 2 Note – the size of each dot is about 600 times larger than an actual well site on this map scale.

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. ZONEHazard to Ground Water If Well Integrity Is Lost Typical Number of Barriers Above Surface Low1 to 2 Fresh Water Low to Moderate2 to 4 Mid DepthVery Low1 to 2 DeepLowest1

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 a biodegradable 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 over 10,000 ft. (separation of over ½ mile to nearly two miles) - typical frac height is less than 300 ft (top to bottom)  Water tables in these areas are shallower than 1000 ft. The main biocide we use has been approved for well use in the North Sea – carries the Gold band (safest) rating.

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

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 Near 100% of all fracs use this additive Adsorbent in baby diapers, flocculent in drinking water preparation Biocide Glutaraldehyde % (decreasing)Medical disinfectant Alternate Biocide Ozone, Chlorine dioxide UV, % (increasing) Disinfectant in municipal water supplies Scale Inhibitor Phosphonate & polymers and others 10 – 25% of all fracs use this additive Detergents Surfactant various 10 to 25% of all fracs use this additive Dish soaps, cleaners

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, Note: this does not include the effects of water recycling from produced water back to frac water. Water Use in In Perspective: 1.Texas has over half fracture jobs done each year in US – need 80 to 100 billion gallons of water total. 2.City of Houston loses 22 billion gallons per water per yr. in leaks. 3.Texas cities lose 200+ billion gallons per year in leaks. 4.Amount of water in TX to fracs less than 1.6% of total.

Questions

Basin or AreaTypical 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 mm30 to 50%0.2%<0.05% Devonian (PA) 4 to 5 mm40 to 50% <40% to 100% 0.2%<0.1% (polymer) Eagle Ford (TX) 4 to 5 mm5 to 10% 50% 0.3 to 0.4% (Hybrid Frac) <0.2% (polymer) Fayetteville (AR) 3 to 4 mm30 to 60%0.2%<0.05% Haynesville (LA) 4 to 6mm5 to 15%0.3% (Hybrid Frac) <0.1% (polymer) Woodford (OK) 4 to 5 mm30 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