Sustainable Development of Natural Gas from Shale

© 2012 Chevron U.S.A. Inc. All rights reserved.

Sustainable Development of Natural Gas from Shale

Gregory HildChevron U.S. Marcellus Operations

APEC Workshop on Unconventional Natural GasWashington, D.C.6 November 2012


Bringing Global Knowledge and ExperienceDriving sustainable development

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Focusingon prevention is key to safe & responsible development

Applyinglessons learned and best practices globally

Enablingeconomic growth while protecting the environment

© 2012 Chevron U.S.A. Inc. All rights reserved

World-Class Natural Gas Field in our Backyard

Recoverable Reserves (Tcf)

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South Pars/ 1,235North DomeIran & Qatar

Marcellus 489United States

Urengov 222Russia

Yamburg 138 Russia

Hassi R’Mel 123Algeria

Marcellus Shale: The 2011 Playbook, July 2011 edition, www.hartenergy.com.

http://www.hartenergy.com/

© 2012 Chevron U.S.A. Inc. All rights reserved. 4

>700,000 net acres of Marcellus Shale

60% operator of a Marcellus Shale JV

49% non-operating interest inLaurel Mountain Midstream

Active exploration in Utica trend

Growing development capability

Overview of Chevron’s Marcellus Operations Premier acreage – a future legacy asset

Marcellus Trend

Utica Trend

0 50 100 MI

161 KM


Marcellus ShaleA Great Public Resource and Responsibility

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Tremendous positive impact in Pennsylvania. In 2010: Supported nearly 140,000 jobs Generated $11.2 billion in the regional equivalent

of gross domestic product Added $1.1 billion to state and local tax revenues

Chevron is committed to: Responsible development globally Keeping people safe and protecting the

environment Working closely with local governments,

respecting our neighbors and investing in the community


Combining Two TechnologiesHydraulic Fracturing and Horizontal Drilling

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Provided by Marcellus Shale Coalition

Over the past decade, we have used innovation to combine hydraulic fracturing with another technology - horizontal drilling, to unlock natural gas from shale rock.

Hydraulic fracturing occurs several thousand feet away from groundwater zones.


Hydraulic FracturingA Proven and Safe Technology

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• Used safely in the U.S. since 1949 on more than 1.2 million wells• 90 percent of oil and gas wells use hydraulic fracturing technology

worldwide• Not a technique used exclusively on shale gas wells


Shale DevelopmentNew Application of Existing Technologies

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Multiple layers of steel casing and cement are used to protect the water table – both during drilling and for the life-of-well.



The well is drilled horizontally into the shale formation and is cased and cemented.



The production casing and cement in the horizontal section is perforated to establish communication with the shale rock.



Water and sand – with a small amount of chemicals – are pumped into the shale to create a network of fractures to release the gas.



The well is put on production - it will produce gas and small amounts of water for decades.



Responsible DevelopmentFocus on Prevention

Protecting groundwater

Protecting surface water and land

Reducing environmental impact

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Well Design – SW PennsylvaniaProperly designed wells protect groundwater over life of well

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Steel Barriers Cement Barriers

Fresh water protectionCoal seam isolation and protection

Intermediate casing: hole stability and well control

Max. groundwater

Max. coal

350'700'

2,700'

>7,000'to groundwater

7,500' – 8,500'TVD

Not shown to scale

Lateral length

(Shale)Fracture

(Well)

Mixture of water, sand and chemicals, under pressure, form fractures

Natural gas flows from fractures into well


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Designing Wells to Protect Groundwater Multiple barriers of protection

16” Casing: Fresh Water ProtectionExtends + 350’ from the surface

11 ¾” Casing: Coal Seam Isolation & ProtectionExtends + 700’ from the surface

8 5/8” Intermediate Casing: Hole Stability & Well ControlExtends + 2700’ from the surface

5 ½” Production CasingExtends 10,500’ – 14,500’ from the surface to end of horizontal section

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All strings cemented back to surface


Protecting Surface Water and LandMultiple Steps Taken to Prevent Fluid Release

Multiple barriers, such as containment liners and berms, used to prevent leaks and spills

Erosion and sedimentation controls protect surface water

Significant regulatory oversight at state level

Robust internal environmental compliance inspection process

Baseline water quality tests within 3,000 feet of each well

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Reducing Environmental ImpactGood Practices

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Pad drillingReduce footprintAccelerate reclamation process with hydro-seeding

Centralized impoundmentsMinimize freshwater use:

• Recycle water from wells• Use of non-potable water


Minimizing Our Environmental FootprintMultiple wells from a single pad

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Reclamation of LandRestoring the land to its original contours

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Work closely with landowners and regulators to develop reclamation plan

Reclamation process begins immediately after operations are complete

Indigenous grass using a process called hydro-seeding accelerates re-growth


Life of a Well Active Development vs. Production

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~98% well life: minimal footprint

~2% well life: development activity

• Shale gas wells are expected to produce for ~50 years• Long-term footprint of a well pad is typically less than 1 acre• Shale gas wells typically require minimal future well work


Safe and Responsible Resource DevelopmentDrive continuous improvement across the industry

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Ensureour own operations are safe and environmentally responsible

Engageregulators to share new technologies and practices

Advancesustainable shale development across the globe

Establishhigh standards and practices across industry


Discussion

Documents

Sustainable Development of Natural Gas from Shale