U.S.  Onshore  Ambassador  Introduction   With  the  ever-­‐changing  environment  of  our  fast  paced  industry  and  the  technological  advancements   taking  place  every  day,  the  landman  has  had  many  challenges  to  overcome.    One  major  challenge  has   been  the  social  acceptance  of  the  Energy  Industry’s  operational  practices.  With  the  renaissance  of   America’s  energy  boom,  the  energy  industry  has  advanced  further  into  urban  regions  while,   transversely,  urban  sprawl  has  developed  into  historical  and  newly  emerging  energy  fields.    This  dynamic   has,  at  times,  put  the  energy  industry  at  the  forefront  of  the  public  view  and  is  taking  on  much  debate.       As  our  industry  exposure  increases  in  public  awareness,  so  does  the  scrutiny  of  our  standards  of   practice.      Unfortunately,  because  of  our  technical  practices,  much  of  the  general  public  does  not  have  a   complete  understanding  of  the  basic  concepts  about  how  their  energy  is  provided.    This  aspect  has   allowed  fear  to  be  spread  among  an  uneducated  public  by  those  with  political  and  social  agendas  that   strive  to  stop  domestic  energy  development.      With  many  states  and  energy  commissions  facing  a  large   grass  roots  movement  against  the  energy  industry,  it  was  time  for  a  proactive  approach.      The  message   needed  was  a  simple  and  clear  directive  -­‐  get  the  facts  on  energy  development  first  before  you  make  a   decision.       Industry  in  some  regions  of  the  United  States  realized  this  challenge  and  fully  devoted  an  effort  to   getting  the  facts  out  to  the  public.    This  initiative  starts  with  everyone  in  the  energy  industry  helping  to   promote  a  clear  and  concise  message  as  ambassadors  to  our  livelihoods.  With  this  idea,  I  am  proud  to   present  an  AAPL  ambassador  toolkit.    This  toolkit  includes  an  abundance  of  key  information  for  the   landman,  the  public  face  of  the  energy  industry.      With  this  knowledge  we  can  provide  those  who  are   unaware,  a  clear,  concise  and  unified  education  of  our  safe,  regulated,  and  vitally  important  industry.   Throughout  these  pages  you  will  find  key  messages  about  energy,  hydraulic  fracturing,  air  quality,  water   regulations,  social  investment,  economics,  taxation  and  derived  products  in  our  everyday  use.     I  encourage  you  to  share  this  information  to  those  around  you  and  extend  the  educational  message  we,   as  landmen  want  to  provide.  Have  a  friendly  non-­‐confrontational  conversation  with  stakeholders,  your   family  and  friends  within  your  social  circle  to  try  and  dissolve  those  unknown  fears  towards  one  of  the   most  highly  regulated  and  scrutinized  industries  in  our  nation.    This  toolkit  will  be  a  valuable  resource   that  will  provide  landmen  with  thorough  illustrations  and  comprehensively  researched  information  to   share  with  the  public.    Having  20,000  plus  AAPL  members  sharing  this  unified  message,  imagine  the   great  educational  benefit  we  can  provide.    This  is  truly  an  incredible  resource,  I  hope  you  take  on  the   role  as  an  AAPL  ambassador  for  the  good  of  our  industry  and  the  public  we  serve  with  our  products.       Sincerely,   Michael  T.  Kuledge,  RPL   Denver  Association  of  Petroleum  Landmen  –  AAPL  Director   Bayswater  Exploration  and  Production,  LLC.  -­‐  Operations  Landman U.S. Onshore Ambassador Toolkit Online Sources ANGA.us API.org COGA.org Energy.gov EnergyFromShale.org EnergyInDepth.org EnergyTaxFacts.com EnergyTomorrow.org FracFocus.org A values-based guide for sharing and openly communicating about the oil and natural gas industry. www.landman.org Information courtesy of Anadarko Petroleum Corporation #AAPLlandman OUR MISSION AAPL’s mission 1| Key Messages About Energy is to promote the 2| Hydraulic Fracturing: The Truth 3| Air Quality highest standards of 4| Water performance for all 5| Regulations land professionals, to 6| Investing in Our Communities advance their stature 7| Oil and Natural Gas by the Numbers and to encourage sound 8| Truth Versus Fiction: Oil and Natural Gas Profits AAPL Member’s Mark and Taxes Versus Other Industries and ethical stewardship 9| Products Derived from Oil and Natural Gas of energy and mineral 10| American Energy Transformation resources. 11| What Can I Do? 1 Key Messages About Energy Hydraulic Fracturing 2 3 4 5 6 7 8 Hydraulic Fracturing has had an enormous 9 Wpoes imtivues ti mrepcaocgtn oinze U an.Sd. eanpperrgeyc isaetceu trhiety e –ss ential reonlaeb elinnegr gtyh ep lnaaytsi oinn otou rp mroodduecren m liovrees .oil and natural gas than it consumes. 10 6 11 Section 1 – Key Messages About Energy Anadarko Ambassador Toolkit – U.S. Onshore www.landman.org 1| Key Messages About Energy Energy is fundamental to modern life. The confluence of horizontal drilling and hydraulic fracturing technologies has created new Oil and natural gas are the building blocks for opportunities to develop unconventional oil and thousands of products we use, and natural gas is a natural gas resources around the nation. cleaner generator of electricity – the power needed to light, heat and cool American homes. Modern TAKEAWAyS economies are dependent on a reliable, affordable •  Affordable energy is fundamental to modern life – energy supply, and they are further strengthened it is as important as air, food and water. through energy security. •  Oil and natural gas are used to make or power practically every product we touch every day. •  Every step in oil and natural gas development is highly regulated The U.S. has abundant resources of oil and clean-burning natural gas. In the last by multiple state and federal agencies across the U.S. several years, the country has experienced an energy revival. The tremendous oil and natural gas resources found in the U.S. have positioned the nation to benefit •  Oil and natural gas development supports millions of jobs and provides through economic growth, increased domestic jobs, lower electricity costs while tax revenue that funds public schools, local emergency management reducing the country’s dependence on foreign sources of energy. and a variety of municipal, state and federal programs and services. •  The men and women who work in the oil and natural gas industry provide a valuable and essential resource to America. 7 8 Section 1 – Key Messages About Energy Anadarko Ambassador Toolkit – U.S. Onshore Section 1 – Key Messages About Energy www.landman.org Why is the Oil and Natural Gas Industry Important “Rising U.S. oil and natural gas production is having a bigger impact on the U.S. economy than estimated a couple years ago.” to America? – John Larson, IHS Energy “The emergence of shale gas and tight oil in the U.S. demonstrates, once again, how innovation can change U.S. Jobs the balance of global economic and political power.” •  9.8 million jobs supported by the oil and natural gas industry – Daniel Yergin, Pulitzer Prize Winning Author •  $224 billion in wages paid to U.S. industry employees in 2011 •  $598 billion generated in associated labor income •  2.7 million jobs gained from 2002 thru 2012 “Advanced technologies for crude oil and natural gas through oil and natural gas activity production are continuing to increase domestic supply and reshape the U.S. energy economy as well as expand the potential for U.S. natural gas exports.” – Adam Sieminski, U.S. EIA Administrator U.S. Economy •  $85 million paid daily to the U.S. Treasury in federal income taxes, royalty payments and other fees in 2012 •  8% of the entire U.S. economy supported by industry •  $545 billion contributed to the economy through capital investments, wages and dividends by the oil and natural gas industry in 2011 •  $1,200 gained by U.S. households from low natural gas prices Source: API, Moody’s Analytics, PricewaterhouseCoopers, LLP 9 10 1 Hydraulic Fracturing: The Truth 2 3 4 5 6 7 8 9 Hydraulic fracturing has had an enormous positive impact on U.S. energy security, greatly reducing the need for energy imports. 10 12 11 Section 2 – Hydraulic Fracturing: The Truth Anadarko Ambassador Toolkit – U.S. Onshore www.landman.org 2| Hydraulic Fracturing: The Truth HOW DOES HyDRAULIC FRACTURING WORK? In hydraulic fracturing, a mixture of water, sand and additives is pumped under high pressure down the wellbore to create hairline fractures that form a pathway for oil and natural gas to be produced. Hydraulic fracturing The Depth is Equal to 5.5 Empire State Buildings is not new. Hydraulic fracturing is a highly engineered technology first developed in the 450-700 Ft. Multiple Layers of Steel Ground Water 1940s to enhance production of oil and natural gas from tight rock formations Encased in Cement Protect Ground Water miles beneath the earth’s surface. “Fracking” technology has improved and evolved over 60 years and has been applied to more than 1.2 million wells drilled in the U.S. •  A temporary process, typically lasting 3 to 5 days per well •  Separated from ground water by more than a mile of rock Protective Steel Casing •  Regulated by multiple state and federal agencies •  Supervised by highly trained engineers and technicians •  More than 90% of oil and natural gas currently produced in the U.S. onshore is done using hydraulic fracturing. •  60% to 80% of all wells drilled in the U.S. in the next 10 years are expected to require hydraulic fracturing. Hydraulic fracturing occurs at a depth Shale Fractures; 1 mm wide of approximately 7,000-8,000 Ft. •  Without hydraulic fracturing, as much as 80% of oil and natural gas from tight rock formations would be inaccessible. Source: CRS Report for Congress, January 2013, FracFocus.org, API Source: Adapted with Permission from Texas Oil & Natural Gas Association, © 2010 13 14 Section 2 – Hydraulic Fracturing: The Truth Anadarko Ambassador Toolkit – U.S. Onshore www.landman.org Proper Well Construction Protects Groundwater Understanding Hydraulic Fracturing Fluid Wells are constructed with multiple layers of steel pipe, also called casing, and cement to In hydraulic fracturing, operators use a mixture of water, sand and additives protect groundwater. During wellbore construction, the casing and cement are routinely pumped under high pressure to create fissures within targeted formations. The tested onsite to ensure integrity, and then the well is equipped with sensitive monitoring sand props open those fissures to allow oil and natural gas to flow, while the equipment for 24-hour observation throughout each well’s production life. additives reduce friction, prevent bacteria formation and inhibit scale. An Example of a Typical Well Design Additives used in hydraulic fracturing vary according to geology and are commonly found in household items. Each of the ingredients used in the hydraulic fracturing process is shared on the website FracFocus.org. 0.5% Chemical Additives } Such items include: 9.5% Sand • Sodium Chloride (table salt) 90% Water •  Guar Gum (ice cream) • Borate Salts (cosmetics) • Ethylene Glycol (household cleaners) • Sodium Potassium Carbonate (detergent) • Isopropanol (deodorant) Source: Adapted with Permission from Texas Oil & Natural Gas Association, © 2010 Source: Groundwater Protection Council, API 15 16 Section 2 – Hydraulic Fracturing: The Truth Anadarko Ambassador Toolkit – U.S. Onshore Section 2 – Hydraulic Fracturing: The Truth www.landman.org “[F]racking has been done safely for decades.” – Sally Jewell, U.S. Interior Secretary, Obama Administration, 2013 “In no case have we made a definitive determination that Simply put, you cannot have the the fracking process has caused chemicals to enter groundwater.” oil and natural gas production – Lisa Jackson, former U.S. EPA Administrator, 2012 levels now being realized in the “U.S. mastery of hydraulic fracturing and horizontal drilling U.S. without hydraulic fracturing. techniques has led to a slump in energy imports from some OPEC nations.” – Bloomberg, May 2013 TAKEAWAyS •  The combination of horizontal drilling and hydraulic fracturing has revolutionized oil and natural gas production in the U.S. •  Hydraulic fracturing enhances production of oil and natural gas from older wells and increases new production from formations once thought impermeable. •  Without hydraulic fracturing, Americans would likely pay significantly higher utility bills each month, pay more for raw materials and other consumer goods. •  Hydraulic fracturing is making energy security a reality for the U.S. 17 18