Responsible Energy Development: CAPP's Operating Practices for Hydraulic Fracturing

Responsible Energy DevelopmentCAPP’s Operating Practices for Hydraulic Fracturing Oil & Gas Water Management Strategies Conference Calgary, Alberta January 30, 2012 David Collyer

Advancing the 3Es• Generating Economic Benefits  Jobs and revenues across North America• Providing Energy Security  Safe, secure and reliable energy  Large energy resource potential• Providing Environmental Stewardship  Strong regulations  Technology advances

Key Drivers•Competitiveness•Social Licence•Performance + Communication = Social Licence

Responsible Canadian Energy Program• Canadian Responsible Energy represents a collective commitment by CAPP’s members to:  Measure our performance  Find new and innovative approaches to reduce our environmental footprint  Ensure every worker returns home safely every day  Continue to improve the ways in which we communicate and engage the public and other stakeholders

•2010 RCE Progress Report • Western Canada (excluding oil sands) • Oil sands • Atlantic Offshore • Highlighted shale gas development as an emerging issue, including concerns related to water and hydraulic fracturing

Responsible Canadian Energy– Water ObjectivesThrough the RCE program,Canada’s oil and gas industryworks to:• Reduce the amount of freshwater required per barrelequivalent of production.• Safeguard the quality ofregional surface andgroundwater resources.

Key Performance Areas

Oil Sands Water Performance Mining  3.1 barrels of fresh water per barrel of oil, with 80-90% recycled (2010 data)  Currently use 0.5 per cent of the annual flow of the Athabasca river• In situ (drillable)  0.4 barrels of fresh water per barrel of oil, with 90-95% recycled (2010 data)  No water from Athabasca River  Shift to using non-potable (saline) sub-surface aquifers

Technology Solutions – Greater Recovery and Less Water• Additives to reduce the need for both water and energy (steam)  LASER (Imperial), SAP (Cenovus), N-Solv  SC-SAGD (Laricina), SOLVE (Statoil/PTRC)• Non-aqueous extraction  ET-Energy, Shell, Petrobank Devon’s Jackfish Project• Saline water instead of fresh water  Devon Energy Jackfish Project• Collaboration on tailings research  Oil Sands Tailings Consortium (OSTC) Suncor TRO Tailings Management Process

Key Performance Areas

The Global Context• IEA expects global demand for energy to increase 47 per cent by 2035• Global demand for natural gas is expected to increase 55 per cent by 2035• IEA called next two decades a “golden age” for natural gas

N.A. Natural Gas Supply Outlook• Shale gas supply a game- changer• Technology breakthroughs• New producing regions• Emerging stakeholder environmental concerns (footprint, water)• Shifting S/D dynamic

How does hydraulic fracturing work?• One-time use of water to hydraulically fracture a well• Typical well produces 20 to 30 years• Reservoirs typically 2,000 to 3,000 m below ground• Freshwater aquifers usually at depths less than 300 m• Fractures extend about 50 to 100 m

Concerns About Shale GasDoes this make you feel more concerned about natural gas? A lot more concerned Somewhat more concerned Some reported cases of water wells being 55% 34% contaminated near natural gas developments New sources of natural gas, such as shale, require 51% 33% a lot of water to get the gas out of the ground Harris/Decima Natural gas is a fossil fuel - doesnt seem as clean as 28% 47% renewable sources of energy 0% 20% 40% 60% 80% 100%

Guiding Principles for Hydraulic Fracturing We will safeguard the quality and quantity of regional surface and1 groundwater resources, through sound wellbore construction practices, sourcing fresh water alternatives where appropriate, and recycling water for reuse as much as practical. We will measure and disclose our water use with the goal of continuing to2 reduce our effect on the environment.3 We will support the development of fracturing fluid additives with the least environmental risks. We will support the disclosure of fracturing fluid additives4 We will continue to advance, collaborate on and communicate5 technologies and best practices that reduce the potential environmntal risks of hydraulic fracturing.

Operating Practices for Hydraulic Fracturing

Practices put Principles into Action1 Fracturing Fluid Additive Disclosure  Publicly disclose all information on fracturing fluid additives

Practices Put Principles into Action2 Fracturing Fluid Additive Risk Assessment & Management  Create demand for more environmentally sound fracturing fluids  Assess potential risks and mitigate these risks  Make processes for developing well- specific risk management plans publicly available

Practices Put Principles into Action3 Baseline Groundwater Testing  Baseline groundwater testing prior to development and monitor over time  Sourcing freshwater alternatives and recycling  Share data collected as legally permitted

Practices put Principles into Action4 Wellbore Construction and Quality Assurance  Ensure wellbore integrity  Make wellbore construction Surface Casing and assurance (Conductor) practices publicly available Cement Base of Ground Water Protection Production Casing Not to Scale Graphic from Shell Canada

Practices Put Principles into Action5 Water Sourcing, Measurement and Reuse  Reduce overall use of freshwater  Measure water quantity  Monitor water sourcing  Make water sourcing, measurement and reuse practices publicly available

Practices Put Principles into Action6 Fluid Transport, Handling, Storage and Disposal  Mitigate potential risks of accidental spills  Ensure quick response to accidental spills  Make fluid transport, handling, storage and disposal practices publicly available

Summary•Huge opportunity for Canada•Need to be competitive•Social Licence to Operate•Principles and Practices:  Guide development  Inform and complement regulations  Consistently deliver responsible operations across Canada  Continue to develop the resource safely

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Responsible Energy Development: CAPP's Operating Practices for Hydraulic Fracturing

by Canadian Association of Petroleum Producers (CAPP) on Jan 30, 2012

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Responsible Energy Development: CAPP’s Operating Practices for Hydraulic Fracturing — Presentation Transcript