Moving Beyond Misinformation: Education and Engagement

Misperception: Hydraulic Fracturing is Injecting Fluids into Groundwater

The Process

Drilling Distance Aquifer 400-800 ft. Wells Fargo Center ~700 ft

Casing Multiple layers surrounding the aquifer Cement Conductor Casing Surface Casing Drilling Mud/Cement Production Casing Production Tubing

Surface Casing Purpose Depth Requirements Cement Helps Protect ground water Provide stable wellbore during drilling operation Provide well control during drilling Depth Requirements Set by State and BLM regulations Extends below the aquifer Cement Helps Protect casing from corrosion Provide zonal isolation Support casing in wellbore

Production Casing Purpose Cement Requirements Cement Helps Provide zonal isolation Provide well control Well path to productive intervals Cement Requirements Set by State regulations Set by BLM regulations Operator requirements Cement Helps Protect casing from corrosion Support casing in wellbore

Misperception: Hydraulic Fracturing is Not Engineered

Fracture Design Data Required Petrophysics/Formation properties k, Φ, ν, E, σ, Pp, BHT Fluid properties Multitude of fluid types n’, K’, μ, break profile, Pf, Proppant properties Variety of proppant types β, sg, size, CD Designing and optimizing the best frac job is an involved process across multiple disciplines. We require an analysis of the rock and its surrounding layers. This comes from tools run on wireline in the open hole before the production pipe is run and cemented. Predict-K 3.0

Pump Schedule A pump schedule is required for the simulator to determine the predicted fracture geometry Fluid and proppant volumes Treatment rate Additive rates AFTER THIS SLIDE – ADD PICTURE OF FRAC TRAILER Frac Job

Treatment Graph This is a typical job chart showing the most relevant information from a typical job. Many experts”can look at a chart like this and derive a lot of information about the quality of job provided by the service company and the quality of wellbore and reservoir being treated. Frac Job

Misperception: Drilling is Getting Riskier AFTER THIS SLIDE – CAN YOU ADD A SLIDE THAT SHOWS PROGRESSION FROM VERTICAL WELL IMAGE TO DIRECTIONAL TO HORIZONTAL? MAYBE WITH THE IMAGE THAT SHOWS APE GOING TO MAN?

Fractured Contact

Footprint 1 Well Pad or 32? 1280 acre, could require 32 vertical wells

Misperception: Drilling and Hydraulic Fracturing Uses Too Much Water

Colorado Water Use Total (Million gallons/Day)   Total (Million gallons/Day) Total (Billion gallons/Year) Irrigation (crop) 12,322 4497 Irrigation (golf course) 41 14 Public-supply 864 315 Domestic 34 12 Industrial 142 52 Livestock 33 Mining 21 8 Thermo-electric 123 45 Total withdrawals 13,581 4957 Source: USGS 2005 Estimated Withdrawals and Use of Water in Colorado, 2005

Horizontal Well Activity 2011 517 Horizontal wells permitted 2009-2011 295 Horizontal wells spud Total wells spud 2009 - 2019 2010 - 2327 2011- 2069 ADD TOTAL WELLS SPUD INFO

Estimate All Well Activity 2011 Estimate Water Use 1000 horizontal wells (5M gal) 1500 vertical wells (1M gal) Conservative Estimate: 0.14% of Colorado annual irrigation water use 0.13% of Colorado annual water use

Water Requirements Natural gas has one of the lowest water usage rates per MMBTU

Misperception: There is No Data Showing Groundwater is Protected

COGCC Groundwater complaints Hundreds of complaints No verified instances of hydraulic fracturing harming groundwater in Colorado Water sampling Since 2000, baseline and periodic water sampling for over 2,000 water wells in the San Juan Basin Independently verified; no significant increase in chemical concentrations Add another slide after this that shows this information is available on the COGCC database

COGCC Data

Meaningful Engagement and Education

FracFocus Website http://fracfocus.brocodev.com/ http://fracfocus.brocodev.com/hydraulic-fracturing-process

HF Disclosure Example

Baseline Water Sampling Pre and Post-drilling water samples taken around new well starts Increased transparency & accountability for industry

Colorado’s O&G Industry 46,426 active wells 7th highest state in natural gas production 7th highest state in number of natural gas wells drilled in 2010 12th highest state in crude oil production 18th highest state in number of crude oil wells drilled in 2010 $1.1B in public revenue $9.1B production value in 2010 102,000 jobs $1.1B in public revenue is just revenue that goes to the state of Colorado. Sources: Colorado Oil and Gas Conservation Commission, Independent Petroleum Association of America.

Total Direct Public Revenue $1.1 Billion 2010 Is this just to Colorado, or to Fed too? – All Colorado What’s this as percentage of total Colorado public revenue – Spoke to Brian, and he doesn’t have a number for total Colorado Public revenue, but suggested that you could try comparing it to the Colorado general fund which this year was $7.1 Billion, so roughly 15%. They didn’t include this comparison in the study because they didn’t have a good way to really compare it. Sources: Colorado Dept of Revenue, Office of Natural Resources Revenue, Colorado Dept of Local Affairs

COGA Fast Facts

Resources Hydraulic Fracturing Fact Sheet COGCC Gasland Correction Document COGA’s The Truth About Gasland Other Fact Sheets Natural Gas Facts Socioeconomic Benefits Produced Water Natural Gas Supply www.coga.org

Thank you for your interest in Colorado’s oil and gas industry! Questions? Thank you for your interest in Colorado’s oil and gas industry! www.coga.org