Hydraulic Fracturing Test Site (HFTS) - Chicago Fracturing Test Site (HFTS) Update > USTDA Workshop – Beijing, China > December 3, 2015 > Presented by: Eddie Johnston, VP – Research,

Hydraulic Fracturing Test Site (HFTS)

Update

> USTDA Workshop – Beijing, China> December 3, 2015> Presented by: Eddie Johnston, VP – Research, GTI

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Program Objective

> The mission of HFTS is to increase shale environmental safety and stimulation effectiveness.

> Includes a ground water and air monitoring program to measure environmental impact.

> This will be accomplished through the evaluation and development of new methods and technologies that reduce material and energy inputs (fewer wells drilled), greater reliability and safeguards, and reduced environmental footprint.

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HFTS Participating Companies

>US DOE/NETL –Government Sponsor

>Laredo Petroleum –Test Site Host

>Halliburton>CoreLab>Encana

>Total>Devon>Energen>Discovery Natural

Resources>GE Oil and Gas

Each participating company has a focal point that embodies the advisory team, however SME’s from each participating company drive discussions and ideas that shape the overall program

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HFTS Test Program: Research Objectives> Assess Environmental Impact (emissions and water) with respect to

Hydraulic Fracturing – multiple wells and +100 hydraulic fractures.

> Determine optimum well spacing based on fracturing efficiency. Well spacing (industry-wide) is likely too close; optimum spacing will save drilling of 1000’s of wells with tremendous positive environmental impact.

> Evaluate inter-well interference in a chevron configuration with wells spaced 660’ apart in Upper and Middle Wolfcamp formations, with diagonal offsets of 400’.

> Understand stimulated rock volume & reservoir depletion over time.

> Identify and evaluate the distribution and effectiveness of geological fracture barriers.

> Evaluate pressure front barriers created in stimulation sequence.

> Test alternative frac designs in different wells in a relatively consistent geological setting.

> Test production performance by stage/perf cluster post stimulation

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Environmental Objectives

Assess Environmental Impact (emissions and water) with respect to Hydraulic Fracturing – multiple wells and +100 hydraulic fractures.

─ Mature Producing Area─ Will Focus on HF operations ─ Baseline water – pre and post frac. (Laredo has water

data) ─ Baseline Air pre-frac; measure air during frac-baseline post

frac.

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Well Drilling DoublesFootprint Expands

“The Most Environmentally Friendly Well is the one you do not Drill”.

Onshore Well Drilling

Year

The Problem We’re Trying to Solve is an Important One

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Laredo Petroleum – Our Host Site Partner

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Location

Wolfcamp FormationFocus

Approximately $100 million of data with Partner Laredo

Petroleum.

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Reagan North Production Corridor

Oil Gathering Line

Oil Gathering Station

Water Recycling Facility

Oil Takeaway Pipeline

Gas Lift Compression Facility

Gas Takeaway Pipeline

Gas Gathering Line

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Test Site Well Information

> 11 well pad currently being drilled in Reagan County

> Targeting Upper and Middle Wolfcamp, chevron configuration

> Wolfcamp depth ~7,500’

> All wells are 10,000’ laterals to be completed with 36 stage completions

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Proprietary Earth Model

Confidential

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Well Spacing

Confidential

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Through Fracture Cores

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Slant Core Well Workshop and Field TripDay long workshop in Midland to go over core well details including well

trajectory, coring program, logging, and reservoir pressure monitoring systemField trip to Sugg Ranch to see operations. Real time microseismic in progress

including tracing program and proppant visual indicators.

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Field Data Acquisition Schedule

Field Data Acquisition TaskWater Sampling and MonitoringAir MonitoringOpen Hole Logs (6Sm, 6SU)Vertical Pilot -7SU (Logs, Cores, DFIT)Horizontal Well DFIT (4SU, 6SM, 6SU, 8SU)Cross Well Seismic (Across Vertical Wells) 1 2Hydraulic FracturingMicrosesimic MonitoringFracture Tracer Program (RA, oil and water)Horizontal Well Pressure MonitoringFiber Optic Coil Tubing (fracture arrivals)Production Logs (FBCT)Slant Core Well (drilling and core recovery)Reservoir Pressure Monitoring

Feb 16 Mar 16Aug 15 Sep 15 Oct 15 Nov 15 Dec 15 Jan 16

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Comprehensive Field Data Acquisition> Microseismic and tiltmeter survey

> Oil tracers/RA tracers

> Bottomhole pressure gages during production

> Production logs

> Fiber optics through coil tubing

> Vertical and horizontal OBMI logs

> Pressurized sidewall rotary cores

> Open Hole micro DFIT and horizontal well toe DFIT analysis

> High resolution cross well seismic through stimulated interval

> Full core through a stimulated interval

> Reservoir pressure measurement post completion

> Water sampling and air sampling program

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Environmental Focus

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HFTS Environmental Monitoring: Status of 11/23/2015

Project Tasks that Require Water Sampling and Analysis

Task 11. Microbial Characterization Down-hole transformations that affect gas quality and facilitate

corrosion Effects on water impoundments and management

Task 12. Environmental Monitoring Groundwater Quality Produced Water Characterization (Composition and Chemistry) Air Quality

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Microbial Characterization: Background

Pathways of Interest

Effects of biofilm growth on corrosion rates

Microbially influenced corrosion impacts infrastructure integrity and safety

Organisms adapted to high pressure, temperature, salinity

Sulfate reducing organisms of high concern due to well water constituents

Transformations impacting gas quality

Acid gas production (CO2) and sulphidogenesis (H2S)

Decrease in formation permeability

Precipitation of carbonates/sulfides or biofilm growth

Microbially Influenced Corrosion

Biofilm and microbial deposits

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Environmental Water Monitoring: Background Pathways of Interest

Subsurface transport of gases to groundwater

Subsurface transport of produced water to groundwater

Transport of surface releases of produced water brines or chemicals to groundwater

Pathways of Little Relevance

Transport to streams / rivers from the site

Transport to water bodies from the site

Re: HFTS site is in a remote, arid region.

Baseline Data on Groundwater Provided by Laredo

General and inorganic constituent data (normal Texas well water)

Of interest: Sulfate levels in nearest 5 wells are at 80-260 ppm

Suchy and Newell: Kansas Geological Survey

Freshwater Aquifer

Target Oil & Gas

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Environmental Monitoring: Air Quality

Objectives

Determine degree to which emissions from the HFTS site change ambient air quality of locations that represent nearby residential areas.

Emissions from diesel engines and equipment

Industry specific emissions

HFTS Field Site

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Environmental Water Monitoring & Microbial Characterization: 5 Sample Locations

Ground Water – before (1) , during (2), after (2) hydraulic fracturing

5 Sentinel wells surrounding the 11 well test pad

Ability to detect migration of NG or produced water constituents into Edward-Trinity aquifer during or after to hydraulic fracturing activities

Impoundment Water – Weekly during hydraulic fracturing

Frac Pit 7-156 (Fresh), Frac Pit 7-197 (Fresh),

and Poseidon Tank (Treaded Produced water)

Understand on-site water management practices and

sources of microbiological populations and energy sourcesFrac Pit 7-156 (850,000 barrels fresh water)

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Environmental Water Monitoring & Microbial Characterization: 5 Sample LocationsFrac Fluids – #6SM #7SU #4SU

beginning, middle, and end of hydraulic fracturing for each well

Frac tanks – combination of water, proppant, chemicals

Detect microbial communities and chemical constituents

going down to identify potential transformations leading to corrosion / H2S

Flowback / Produced Water – #6SM #7SU #4SU Day 0, 5, 9, 14, 36, 90, 120, 365, 1.5 years

How have microbial communities changed over time, mass flow calculations for transformations down hole. Life cycle analysis for water quality.

4 horizontal cores - pressurized (2) Upper Wolfcamp (2) Middle Wolfcamp

Are there resident microbial communities before water is introduced through HF

Water Sampling

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Analytical Analysis: Ground and Produced Water

> Analytics and Data Collection General Chemistry: pH, conductance, alkalinity, Total dissolved

solids Hydrocarbons: Methane, total organic carbon, total petroleum

hydrocarbons, Oil and Grease, Benzene, toluene, ethylbenzene, xylenes (BTEX)

Selected cations and anions: calcium, magnesium, sodium, potassium, boron, chloride, fluoride, sulfate, sulfide, nitrate, nitrite

Metals: iron, zinc, copper, manganese, arsenic, barium, nickel, cadmium, lead, chromium

Volumes of water injected and cumulative volume of produced water generated at each of the three wells.

Metagenomic Analysis: Targeted and shotgun DNA sequencing of all bacteria and archaea present in source and Flowback water

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General Approach of Air Monitoring> Focus on constituents of concern that could be released to ambient air at increased

levels during hydraulic fracturing and production.

─ Potential sources: Engines during the completions, well pad operations, fluids management, etc.

> Direct ground-level measurements of air quality parameters

> Before - During - After Completions Phase for the HFTS horizontal wells.

> Sampling in Midland Texas for referential context and compare HFTS air quality to Environmental Protection Agency (EPA) collected data in Dallas and Houston.

North Reagan County, Texas

Hydraulic Fracturing in Reagan Texas

Mobile air quality unitMidland, Texas

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WindDirection

WindDirection

Air QualitySampling Locations

1 Mile

ExampleHydraulic Fracturing Activity at the Center Pad

Wind Direction: From the NE

Sampling Locations (red circles) 1,000 ft. from Well Pad

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Environmental Monitoring / Air Quality>Parameters MeasuredNOx OzonePM10H2SMethane VOCBTEX

>Weather Information: Wind Speed and Direction, Temperature, Humidity, Barometric Pressure, etc.

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In Summary

>This program is the most comprehensive collaborative field experiment conducted in shale to date

>Baseline environmental measurements of this brown field development are within expected tolerances

>Project should provide comprehensive learning and correlation of well spacing optimization and environmental footprint impacts

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GTI is a company that solves important energy challenges, a company that truly has…

…“the energy to lead”

Contact information:

Kent PerryExecutive Director [email protected]

Jordan CiezobkaSenior Engineer, [email protected]

Iraj A. SalehiSenior Institute [email protected]