UNCONVENTIONAL RESOURCES

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Maude Berenice Austin
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1 UNCONVENTIONAL RESOURCES EXPERTISE & TECHNOLOGY

2 Drill site Las Carceles c21, the Aguada Pichana field, Neuquén basin, Patagonia. Florian VON DER FLECHT / TOTAL OPENING NEW HORIZONS Unconventional hydrocarbons so named because of their geological source rather than their composition are in fact conventional oil and gas but trapped in tight and impermeable rocks and strata, requiring novel and unconventional techniques to extract them. At Total, active in many such oil and gas projects around the world, from research to exploration and production, we are ensuring that we are ready to deliver these valuable resources, when they are needed, in a safe, yet also a socially acceptable and environmentally responsible way. ACTIVE ENGAGEMENT ON ALL CONTINENTS 2

SIGNIFICANT CHALLENGES VALUABLE REWARDS Total s strategy is to be ready to deliver these hydrocarbons wherever and whenever needed, this can be done cleanly and safely today, but it must be

3 SIGNIFICANT CHALLENGES VALUABLE REWARDS Total s strategy is to be ready to deliver these hydrocarbons wherever and whenever needed, this can be done cleanly and safely today, but it must be economically viable and socially acceptable. Total already has commercial activities producing or developing; tight gas and oil, shale oil and gas, extra heavy oils, and coal bed methane. Social licence to operate. Society rightly expects that oil and gas production is undertaken responsibly, with respect for local people and communities, but not just restricted to local concerns, we must consider wider society. Environmental concerns. Much has been reported about the negative consequences caused by unconventional hydrocarbon production, particularly from shale oil and gas. This extends to water use and groundwater pollution risks, land use and landscape impacts, potential seismicity issues, as well as air quality. Total recognizes and understands these concerns and is working hard to ensure that they are all properly addressed, and that state of the art engineering measures are used. Economic viability. The cost of producing unconventional hydrocarbons has so far been higher than for conventional oil and gas. Great technological progress has been made here, making unconventionals more competitive. TOTAL HYDRAULIC FRACTURING Environmental concerns must be addressed, when fracking for shale oil or gas, or for tight gas, multiple well casings can protect any groundwater and habitat above. ENHANCED ENERGY SECURITY Key figures About HALF of the worlds gas resources lay trapped in shale and coal beds (shale being the larger resource) The shale oil and gas revolution in the United States dramatically changed the country s energy outlook. Reliance on oil and gas imports has been significantly reduced, with the US now self sufficient in natural gas. The resulting switch from coal to gas in power generation has resulted also in large scale reductions in the emissions of carbon dioxide, thus helping in the battle against climate change. However these benefits have not come without challenges. Particularly prominent has been the issue of local acceptability, not just in the US but in Europe and other parts of the world. Production costs and environmental concerns also weigh heavily. To succeed, unconventional oil and gas must compete with other energy sources, and the long term success of these resources will require that each of these concerns is addressed. Tight Gas Conventional natural gas trapped in lower permeability rock typically in the range 0.01 to 0.1 md. (not shale). It may require enhanced production techniques. Tight Oil As with tight gas, conventional oil trapped in lower permeability rock but not shale. Shale Gas Conventional gas trapped in shale rock, the source rock where oil and gas were formed. Extremely low permeability (typical 100nD) less permeable than concrete! Requires specialized techniques such as horizontal drilling and fracturation to release the gas. Shale Oil As shale gas, conventional crude oil trapped in extremely low permeability shale rock. Coal Bed Methane Methane is the main component of conventional natural gas. Coal Bed Methane is natural gas found in un-mined coal beds. Extra Heavy Oils (incl oil sands) Extremely viscous fluids, not able to be mobilized using conventional methods, requiring heat, solvent or other extraction methods making their production expensive and environmentally challenging. 3

$DEVELOPING NEW TECHNIQUES Shale rock, with its extremely low permeability requires the creation of micro fractures to release its oil and gas.$

4 DEVELOPING NEW TECHNIQUES Shale rock, with its extremely low permeability requires the creation of micro fractures to release its oil and gas. Thierry GONZALEZ / TOTAL Total has considerable historic expertise in production methods such as horizontal drilling and hydraulic fracturing, and is recognized within the industry for its pioneering in their development. Partnerships with operators already engaged in unconventional production enables us to apply these techniques more widely. In addition to this our sizeable R&D program allows us to be particularly innovative in advancing technological progress. DEDICATED RESEARCH & DEVELOPMENT BRINGING ENVIRONMENTAL ASSURANCE The hydraulic fracturing test site (HFTS) experimental program aimed at studying and optimizing hydraulic fracking is already yielding impressive results. A joint industry and government initiative involving major IOC's, the US Department of Energy and the Gas Technology Institute means that a balanced approach is assured. At a test site on the Wolfcamp Shale in Texas a series of 3km horizontal wells have been drilled and fracked. Specially designed well spacing, including through fracture drilling, was used to enable the acquisition of multiple data types. These included; micro-seismic, oil tracker, proppant tracer analysis, down hole pressure measurement and multiwell interface testing. Using Diagnostic Fracture Injection Tests (DFIT), imaging logs and cores, we should soon be able to deliver accurate fracture mapping. This dataset has already demonstrated that fracture propagation is under control and validated the theory that fractures would stop at geological barriers. Calibrating fracture networks in this way confirms that environmental impacts can be safely controlled and helps improve the efficiency of fracturing techniques. 4

$WORTH NOTING HORIZONTAL DRILLING AND FRACTURING (FRACKING) Total has considerable and widely acknowledged experience in the horizontal drilling and hydraulic fracturing of conventional reservoirs,$ $Each well is cased and cemented to prevent gas leaks and water contamination. Its horizontal section (typically up to 2km long) is then multifractured.$

5 WORTH NOTING HORIZONTAL DRILLING AND FRACTURING (FRACKING) Total has considerable and widely acknowledged experience in the horizontal drilling and hydraulic fracturing of conventional reservoirs, yielding viable and sustainable production. Today, we can reduce surface impacts with well clusters, where several wells are drilled from a single well pad. Each well is cased and cemented to prevent gas leaks and water contamination. Its horizontal section (typically up to 2km long) is then multifractured. Fracturing operations can be conducted with minimal impact and disturbance. Water consumption is minimized with re-use of produced water, and any chemicals are segregated as controlled waste. Land use is significantly less per unit of energy than from either wind or solar power. As pioneers in horizontal drilling, Total engineers receive Offshore Engineering Centre (OEC) distinction in Texas in WELL CLUSTER (CURRENT CONFIGURATION) Multiple wells extending kms in each direction, all from a single site or "wellpad" minimize any surface impact. TOTAL ROCK CHARACTERIZATION, FUNDAMENTAL IN OIL AND GAS PRODUCTION Precise characterization of reservoir source rocks is essential (organic content, maturity, measuring porosity & permeability being crucial parameters), using the SEM (scanning electron microscope) enables us to study these rocks at nanoscale level. Porosity and permeability measurement using conventional oil and gas techniques has proven slow and unreliable when applied to the extremely low permeabilities encountered with tight rock (tight oil & gas and shale). Total s own LIPS (Laser Induced Pyrolysis System), a product of internal R&D, and the only tool of its kind in the world, it uses laser technology to provide highresolution measurement of organic content over an entire core length. LIPS can operate continuously analyzing up to 150 meters of core sample per week. It is portable, can be used on site and has become a vital tool in Total s unconventional exploration program. Total R&D laboratory LIPS uses laser penetration to provide high-resolution core images. 5

The same innovative approach that enabled previously impossible production from deep offshore or LNG from the arctic tundra is applied in the development of unconventional resources.

6 Sulige tight gas treatment prior to transit to Beijing for power generation. Pascal LAURENT / TOTAL DELIVERING VALUABLE RESOURCES Major project development is a core strength and business main stay for Total. The same innovative approach that enabled previously impossible production from deep offshore or LNG from the arctic tundra is applied in the development of unconventional resources. Whether in supporting partners or leading in operations, the objective is the same; creating shared value with viable and sustainable production. GLADSTONE LNG (AUSTRALIA) Gladstone LNG is located in north eastern Australia and operated by partner Santos. Produced coal bed methane is pumped from fields located in the Bowen and Surat basins in Queensland 400 km away from liquefaction at the Gladstone LNG plant. The Coal Bed Methane Gladstone LNG plant, Australia TOTAL E&P Australia 6

$In this tight gas field Total brought expertise in factory drilling and hydraulic fracturing.$ Over 400 wells have been drilled to date with a development plan of over 2,000 wells and an anticipated production plateau of 3 billion m3/year.

Over 400 wells have been drilled to date with a development plan of over 2,000 wells and an anticipated production plateau of 3 billion m3/year.

7 Environmental protection using acoustic sensors at Barnett Shale,Texas, USA SULIGE (CHINA) T Thierry GONZALEZ / TOTAL otal partners CNPC in a block on the giant Sulige field in north eastern China. In this tight gas field Total brought expertise in factory drilling and hydraulic fracturing. Over 400 wells have been drilled to date with a development plan of over 2,000 wells and an anticipated production plateau of 3 billion m3/year. BARNETT & UTICA (USA) After our six year involvement in the Barnett shale play, we have gained considerable experience and understanding in the efficient production of natural gas from shale. José-Ignacio Sanz, CEO Total E&P USA T he USA is home to the shale revolution and the development of economically viable production in a developed country. Total s experience in partnering with Chesapeake in the Barnett (gas) and Utica (oil & gas) shale plays has been invaluable in driving down development costs and lead times. In keeping with environmental best practice, surface area footprints are minimized using multi-well pad drilling, and produced water is reused in fracturation whenever practical. Today Total owns and operates Barnett shale with around 2,865 wells, an average horizontal drain length of over 1,500 metres, and a production of 80 kboe. Total is also a 25% stakeholder in Utica Shale. REGION NEUQUEN (ARGENTINA) Hydraulic fracturing at the Aguada Pichana field in Patagonia in Argentina. Florian VON DER FLECHT / TOTAL I n the Neuquén province of Argentina, at the foot of the Andes, is the Vaca Muerta formation where Total Austral, as operator, has multiple licenses to drill for gas, gas condensate and oil: Aguada Pichana Aguada San Roque and Ricon de la Ceniza. (Shale gas and oil, tight gas). Currently a mix of exploration and development in 10 blocks (6 operated) covering over 4,575 km2, with successful exploration and pre-development wells already drilled and fractured. Production from the Total operated Aguada Pichana block started in 2012, delivering dry gas, and is expected to continue for many years. 7

8 total.com Total is a major energy player committed to supplying affordable energy to a growing population, addressing climate change and meeting new customer expectations. Those commitments guide what we do. With operations in more than 130 countries, we are a global integrated energy producer and provider, a leading international oil and gas company, and a major player in solar energy with Total Solar and our affiliate SunPower. We discover, produce, transform, market and distribute energy in a variety of forms, to serve the end customer. Our 98,000 employees are committed to better energy that is safer, cleaner, more efficient, more innovative and accessible to as many people as possible. As a responsible corporate citizen, we focus on ensuring that our operations in more than 130 countries worldwide consistently deliver economic, social and environmental benefits. Our ambition is to become the responsible energy major. TOTAL S.A. Share capital: 6,133,930, euros RCS Nanterre Exploration & Production Paris Phone: +33 (0) , place Jean Millier La Défense Paris La Défense Cedex France Exploration & Production Pau Phone: +33 (0) Avenue Larribau Pau Cedex France Design & layout: Cover: Florian VON DER FLECHT / Total (Shale gas exploration, Aguada Pichana, Patagonia, Argentina) - Illustrations: Analogue - May Printed with vegetables inks on paper from sustainably managed forests.

A RESPONSIBLE OPERATOR

A RESPONSIBLE OPERATOR EXPERTISE & TECHNOLOGY RESPONSIBLE OPERATOR Stakeholder consultation in the Democratic Republic of Congo. Philippe Jean / PJN Consulting With over 95,000 employees working in over