1. OVERCOMING CHALLENGES WITH E&P TECHNOLOGY MIKE BAHORICH 29 JAN 2014

2. OVERCOMING CHALLENGES THROUGH TECHNOLOGY 2  Australia Seismic  Fracwater treatment  Natural Gas Fuel

3. 3  Half of seismic boats now use technology  Other half has not figured this out yet  Savings to industry should be about $500MM/year  Apache patented invention APACHE FZB PATENT SAVING $250MM/YR

4. IT STARTED WITH THIS 4

5. 5 STEERABLE STREAMER SYSTEMS

6. 6 FANNING EVERY LINE REDUCES POTENTIAL INFILL

7. 7 CONVENTIONAL

8. 8 BROADBAND

9. APA WORLD’S FIRST SIM SOURCE ACQUISITION SimSource Conventional 75m 6000m 18.75m 37.5m

10. CONVENTIONAL

11. SIM SOURCE

12. 12 AUTONOMOUS NODES – THE FUTURE ? WesternGeco Liquid Robotics WaveGlider

13. 13

14.  FRESH  < 1000 ppm TDS  TDS = Total Dissolved Solids mg/liter =Salinity  Usually shallow  Not necessarily drinking water  BRACKISH  >1000 -5000 even 10,000 ppm  SALINE > 10, 000 ppm  PRODUCED  from Oil & Gas wells, may have hydrocarbons  Often 60,000 to > 100,000 ppm  Sea water ~ 35,000 TDS  Regulated surface handling and disposal WATER TYPES – Treatment and Value 14 FRESH BRACKISH SALINE PRODUCED

15. Low quality water works FRAC CHEMISTRY -- DICTATES WATER QUALITY 15 Metal Cations Gels Friction Reducer X-Linker Synthetic Polymers

16.  Chemical Reactions  pH change  Precipitation  Scaling  Colloid interactions  Reactive Components  Iron (Fe)  H2S  Suspended solids  Barium, Magnesium, Calcite etc.  Biocide WATER TYPES: Mixing Challenges 16

17. 1. Chemicals 2. Ozone oxidation 3. Nano-filtration 4. Hydrocyclones 5. Deionization 6. UV MVR Evaporator, RO, EC…and many more NEED BASED TREATMENT 17 3 3 2 2 1 1 4 4 5 5 6 6

18. PERMIAN BASIN ALTERNATIVE WATER SOURCES CAPITAN REEF Permian Carbonate Dolomite Up to 900 feet thick Fresh at surface 50K TDS deep High flow rate ~10,000 BWPD Irion County >2500 ft SANTA ROSA Triassic sandstone 0 to 300 feet thick Typically 50+ Up to 2400 feet deep Flow rate ~1500 to 2500 BWPD 2 wells/section TDS up to 100K <10K eastern areas 18

19.  180,000 Barrel water capacity  Graded pad, berm  Gravity flow, 3ft drop /bin  Dual lined steel on felt-like base.  Fill from top, or from below  Cable mesh bird protection  Monitored daily with radar probes and manual gauges  Buried pipes  Treatment trailers –Chlorine Dioxide (vendor) PRODUCED WATER STORAGE / TREATMENT 19

20. FRAC WATER BY COUNTY Fresh water Produced water Brackish water 20 Source : Apache Internal Reports 2013 Operations

21. 21  Caterpillar bi-fuel kits: feed methane into the air intake which reduces diesel useage by up to 70%.  Apache made a deal with Caterpillar, Halliburton and Schlumberger to introduce these kits to fracture stimulation while in the Caterpillar R&D stage.  Third party bi-fuel kits have been available but they may void the Caterpillar warranty.  Granite Wash. NEW TECHNOLOGY: APA, CAT, HAL, SLB 21

22. 22 ENGINE TECHNOLOGY 22

23. 23 NATURAL GAS SUBSTITUTION – COST SAVINGS  Potential cost savings at 70/30 natural gas : diesel ratio  Granite Wash Stiles Ranch Example  Diesel only  36,290 gal @$3.60/gal  $130,644 Diesel and Natural Gas 10,887 gal + 3,528 MCF @ $10/MCF $39,193 + $35,280 = $74,473

24.  Apache has made a deal with the SPE, SEG and AAPG to create three industry Wikis  SEG has finished the prototype based on the “Dictionary of Geophysics”  SPE is working on content based on the “Petroleum Engineering Handbook”  AAPG is behind but is developing plans APACHE WIKI PROJECT: SPE, SEG, AAPG  BENEFITS:  Quick search tool to find information  Links to technical papers  Updated by industry people with available time  Superior to Wikis internal to competitors Apache is creating an industry Wiki