Moving Beyond Misinformation: Education and Engagement

1. Moving Beyond Misinformation: Education and Engagement

2. Misperception: Hydraulic Fracturing is Injecting Fluids into Groundwater

3. The Process

4. Drilling Distance Aquifer 400-800 ft. Wells Fargo Center ~700 ft 7000 ft.

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

6. Surface Casing • Purpose • 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

7. Production Casing • Purpose • 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

8. Misperception: Hydraulic Fracturing is Not Engineered

9. Fracture Design Predict-K 3.0 • 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

10. Pump Schedule • A pump schedule is required for the simulator to determine the predicted fracture geometry • Fluid and proppant volumes • Treatment rate • Additive rates Frac Job

11. Treatment Graph Frac Job

12. Misperception: Drilling is Getting Riskier

14. Fractured Contact

15. Footprint 1 Well Pad or 32?

16. Misperception: Drilling and Hydraulic Fracturing Uses Too Much Water

17. Colorado Water Use Source: USGS 2005 Estimated Withdrawals and Use of Water in Colorado, 2005

18. Horizontal Well Activity • 2011 • 517 Horizontal wells permitted • 2009-2011 • 295 Horizontal wells spud • Total wells spud • 2009 - 2019 • 2010 - 2327 • 2011- 2069

19. 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

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

21. Misperception: There is No Data Showing Groundwater is Protected

22. 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

23. COGCC Data

24. Meaningful Engagement and Education

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

26. HF Disclosure Example

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

28. 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 Sources: Colorado Oil and Gas Conservation Commission, Independent Petroleum Association of America.

29. Total Direct Public Revenue $1.1 Billion 2010 Sources: Colorado Dept of Revenue, Office of Natural Resources Revenue, Colorado Dept of Local Affairs

30. COGA Fast Facts

31. 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

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