Hydraulic Fracturing Test Site (HFTS)

> September 28, 2016 > OGIF 2016 – Washington, DC > Presented by: Eddie Johnston, Vice President – Research Operations

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ESTABLISHED 1941

Company Overview

> Independent, not-for-profit established by the natural gas industry

> GTI tackles tough energy challenges turning raw technology into practical solutions

> Downhole to the burner tip including energy conversion technologies

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> In an $21 million project sponsored by a public-private partnership, GTI is collaborating with hydraulic fracturing experts from industry, academia, and government on a Hydraulic Fracturing Test Site (HFTS).

Hydraulic Fracturing Test Site (HFTS) - Project Overview

Ground Truth: Through-Fracture Cores

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> The primary goal of the HFTS is to minimize current and future environmental impacts by reducing number of wells drilled while maximizing resource recovery.

>Objectives ─ Assess and reduce air and water environmental

impacts

─ Optimize hydraulic fracture and well spacing

─ Improve fracture models

─ Conclusively determine maximum fracture height

Goals and Objectives

Aerial view of well sites in Texas

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HFTS Team

Site Host

Sponsors

Research Team

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> Data from 87 nearby wells made available to research team

> 11 new wells ─ 6 Upper Wolfcamp

─ 5 Middle Wolfcamp

> 2 Offset legacy wells ─ Testing re-fracturing

Test Site Location - Extensive Nearby Science Data

Test Site Area

Whole Core Production Log Microseismic Dipole Sonic Log Petro Logs 3-D seismic LPI Leasehold

Test Site Area

Laredo Acreage LPI leasehold

Reagan North corridor area

UWC Hz MWC Hz

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> Water and air sampling before and during fracturing, during flowback and production

> Comprehensive geophysical open-hole well logs in horizontal laterals – image + quad combo

> Side wall cores – 60 rotary and 50 pressurized

> Diagnostic fracture injection tests – 14 vertical, 4 horizontal

> Cross-well seismic survey between 4 wells, before and after fracturing

> Production and pressure monitoring – during fracturing and ongoing

> Radioactive and chemical tracers

> Colored proppants

> Microseismic and tilt-meter monitoring

> Fiber optic coil tubing production logs

> Through fracture whole cores

> More…

One-of-a-Kind Data Set

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> Completed Slant Core Well ─ Nearly 600 feet of whole core through two hydraulically

fractured reservoirs ─ Upper Wolfcamp ─ Middle Wolfcamp

> CT scanned all cores > Logged and cased well

─ Quad Combo, including spectral gamma and image log

> Mass Spectroscopy analysis in entire slant lateral > Core description completed > Installed 8 isolated bottom hole pressure gages to

monitor reservoir depletion through created fractures

Through-Fracture Core Recovery

Image Courtesy: Laredo Petroleum

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Through Fracture Core Highlights

>Insights expected to increase resource recovery and spur new technology development

>Results challenge industry assumptions and understandings

Image Courtesy: Laredo Petroleum

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> 5 groundwater wells within 2 miles of HFTS sampled for ground water quality before, during, and after hydraulic fracturing operations.

Groundwater monitoring

> RESULTS ─ No methane or BTEX

measured in groundwater

─ Conductivity and TDS increased during fracturing due to large volumes of water being withdrawn

─ Aquifer chemistry returned to normal within 6 weeks

> No evidence of subsurface migration of produced water or natural gas to aquifer

Water Well

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> Air quality was measured before, during, and after hydraulic fracturing operations 1,000ft upwind and 1,000ft downwind from HFTS pad to assess impact on local air quality.

Air Quality

Wind Direction

Air Quality Sampling Locations

> RESULTS: ─ Air quality during hydraulic

fracturing, flowback, and production did not significantly differ from baseline measurements or from air quality in Midland TX.

─ VOCs of interest measured during flowback were considerably lower than NIOSH time weighted average exposure limits.

> No meaningful impact on local air quality

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>Refinement of the Reservoir Model, implementation of optimized completions, and applied learnings from the GTI proprietary Hydraulic Fracturing Project, have resulted in a significant production uplift.

>We anticipate that as the project advances, additional learnings will further enable efficiency gains, leading to safe, environmentally responsible, efficient, and commercial production in the Permian Basin.

Impact: Prudent Resource Recovery

Source: Laredo Petroleum September 2016 Corporate Presentation

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> Continue field data collection ─ Pressure Monitoring, Production Monitoring, Environmental Sampling

> Complete core description & develop methods for proppant detection in fracture surfaces and drilling sludge in core sleeves

> Transition from field data acquisition to analysis and integration of data

> Redefine the understanding of hydraulic fracturing via the research collaboration of world class subject matter experts

> Elevate the learnings of HFTS and extrapolate the environmental impacts of precision well spacing and increased hydraulic fracturing efficiency on ground water resources to West Texas basins

> Provide valuable scientific findings that inform the general public, policy makers, regulators, and operators to ensure prudent resource recovery as a key element of US energy security

Going Forward

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Contact information: Eddie Johnston Vice President – Research Operations 847-768-0889 Office edward.johnston@gastechnology.org