living with the land sustainability Report 2011

Transcription

1 living with the land sustainability Report 2011

2 2 letter from the ceo letter from the ceo Apache Corporation is pleased to present our second annual Sustainability Report for Apache continually strives to achieve responsible and sustainable operations across its worldwide asset base spanning five continents. We empower our employees to seek innovative solutions that create value to our operations while also incorporating sustainability initiatives, including reducing greenhouse gas (GHG) emissions, protecting biodiversity in environmentally sensitive areas, providing a safe operating environment and giving back to the communities where we operate. Among the past year s sustainability highlights: Apache and partner Encana received the 2011 Environmental Performance Award from the Canadian Association of Petroleum Producers for developing infrastructure designed to reduce the environmental impact of natural gas development in British Columbia s Horn River Basin. Apache employees worked safer. In an analysis of the company s safety performance including joint venture operations over a three-year period ending in 2010, employee recordable injuries declined by 88 percent and work-restricting injuries by 90 percent. Apache kicked off its Give Where We Live program, presenting $100,000 in grants to non-profit organizations in the Lafayette / Acadiana, La. area. The popular Facebook campaign is a grassroots effort to unite Apache employees and their local communities.

3 2011 sustainability report 3 At Apache, we believe increased use of natural gas should play an important role in any practical carbon policy because it emits significantly less GHG than other fossil fuels. In the United States, ample domestic supplies make natural gas the only fossil fuel than can simultaneously reduce the country s trade imbalance and improve the environment with lower emissions. For a growth company like Apache, reducing our absolute GHG emissions can be a challenge, but we have been successful at identifying and implementing many initiatives that both improve operations and reduce emissions across the company s operational regions. In the North Sea and in Egypt, we replaced fuel oil with natural gas to generate power to substantially reduce costs and emissions. In Canada, Apache sequesters carbon dioxide from a coal-fired electric plant to increase oil recovery at our Midale field. In the United States, we built seven compressed natural gas (CNG) fueling stations and converted 246 field vehicles to operate on CNG with the goal of converting the majority of our field vehicles within five years. These and other efforts have led to a reduction in greenhouse gas emissions in Apache is a leader in protecting biodiversity in several environmentally sensitive areas around the world, including nearly 270,000 acres of wetlands in south Louisiana that are subjected to continual coastal erosion. Apache spends considerable resources to maintain freshwater marsh habitats and ecosystems that support substantial plant, wildlife and fish populations. Safety is not negotiable at Apache, and we demand high standards from our regular and contract employees. All workers are empowered to ensure a safe and environmentally responsible operation. Apache gives back to the communities where we operate by providing monetary and volunteer support to hundreds of civic and philanthropic organizations. Apache supports education through the Fund for Teachers and Springboard: Educating the Future and the arts through support of the Ucross Foundation. We have donated more than two million trees to local communities across the United States. Apache s operations are underpinned with identifiable programs that balance exploration and production activities with environmental stewardship, safety and corporate outreach. Our employees are empowered, encouraged and committed to deliver a sustainable future. G. Steven Farris Chairman and Chief Executive Officer about the cover Apache derives its benefit from the Earth and therefore we take our environmental responsibility very seriously. This book highlights our efforts toward a sustainable future.

4 4 vision vision Apache s commitments to the environment, safety and community are sustained by our mission to build value for our shareholders.

5 2011 sustainability report 5 At Apache, our mission statement is a sustainability statement: Our mission is to grow a profitable global exploration and production company in a safe and environmentally responsible manner for the long-term benefit of our shareholders. Each year, we renew our unwavering commitment to these standards. Taking a long-term view means that finding sustainable answers to the challenges we face is an integral part of the business. It s our culture, our values, how things are done at the company, and what it takes to get the most out of our assets. Apache explores for and produces crude oil and natural gas through operations in the United States, Canada, the United Kingdom sector of the North Sea, Egypt, Australia and Argentina. Our commitments to the environment, safety and community are sustained by the primary motivations of the business: Building value for our shareholders, developing a talented and motivated team of employees, operating more efficiently and maintaining positive connections with essential stakeholders. We ve learned that the right decisions for our business match up well with the right decisions for the environment, the safety of our employees and our stakeholders: We substitute natural gas for diesel fuel to power our operations, reducing both costs and emissions. We seek non-potable sources for the volumes of water necessary to find and produce oil and gas, and we recycle a significant amount. We empower workers to step in when a danger appears present, reducing costly accidents and making sure our people get home safely from work. We help build sustainable communities through employment, taxes and royalties and involvement through monetary and volunteer support. Governance Apache s governance policies and practices reflect our belief that accountability and transparency, and not just stability, promote sustainability. Good ideas come from many sources, external and internal, and policies and procedures that provide for the informed exchange of ideas that accountability and transparency encourage are prominent in Apache s governance profile. Advocacy Over the course of several years, Apache has developed an extensive network of relationships within the industry and is an active member of several state and national industry advocacy groups, with company representation on the leadership level. The primary focus of most industry advocacy groups is to promote positive legislative and regulatory decisions. This is best accomplished by ensuring decisionmakers at the local, state and federal levels are informed about what the company does and how it does it. These organizations work to raise awareness and advocate for sound energy policies and pro-business economic solutions.

6 6 environment environment Linking environmental responsibility with sound industry operations

7 2011 sustainability report 7 biodiversity Protecting and restoring Louisiana marshlands Apache has owned nearly 270,000 acres of land along the coast of Louisiana since The state is losing about 34 square miles of freshwater coastal marsh land each year, and land ownership often is in dispute. The causes of marsh erosion are complex and subject to fierce debate. But for a land owner like Apache, the potential financial consequences are simple enough: If a marsh turns into open water, it becomes public land with mineral rights reverting to the state of Louisiana. Apache s business goal maintaining the marshes and recovering more of the oil and gas resource beneath the acreage is aligned with broader environmental goals. The marshes are a nursery for many of the most valuable fish and shrimp catches in the Gulf of Mexico. Shrimp spawned in fresh waters grow in the grasses on the edges of marshlands in the transition zone between fresh and salty water. Vegetation provides nutrition and protection for shrimp a major money maker for fisherman and a key food source for many other species, including drum and snapper that also seek protection in the marsh vegetation when young. If open saltwater encroaches on the freshwater marsh, the shrimp lose the fragile ecosystem so crucial to their survival. By protecting and restoring the marshes, Apache protects its business assets and the surrounding ecosystem, creating a win-win situation for the environment and the company. Helping nature heal marsh land Since the 1930s, nearly 1,000 wells have been drilled in the Golden Meadow field in South Louisiana s LaFourche Parish, some standing in the water only about 40 feet apart. Apache has been operating in Golden Meadow since Here the marsh has suffered from subsidence, saltwater intrusion, erosion mainly from hurricanes and extensive canal building from the early days of oil exploration. What is left of the freshwater marsh is in the form of islands of grass on the borders of the wide channels in a field where Apache has been drilling wells and upgrading facilities to extend the life of an oil field that has had many operators over the years. A visitor can spot the areas where there s been recent drilling there s more vegetation around it. Apache uses the spoil that is dredged up to allow drilling rigs on barges to move onto a well site to rebuild the banks along the channels. Using the spoil, or the soil removed during an excavation, the goal is to create as much, if not more, marsh than was lost. Grasses are planted to hold the soil in place. Old channels are closed off when they are no longer needed. Pipelines are routed through open water rather than disturbing marsh. Scan the QR Code with your smart phone to see an interview with Tim Allen, general manager of Apache Louisiana Minerals. For user instructions, please see page 31.

8 8 environment Lake DeCade: Rebuilding the banks, defending against saltwater intrusion Apache and the previous owners have backed projects creating barriers and water control systems to preserve freshwater marshes in the face of forces destroying marshes to the south. The south bank of Lake DeCade is a low dirt levee topped by a bristling barrier of oyster grass and bullwhips. A handmade billboard on a sheet of plywood proclaims that this is The Kajun Bahamas. Every year on the Fourth of July this is the home of a unique celebration with grills, coolers and lawn chairs set up for a party in the shallow water. Lake DeCade has gotten saltier during some A closer look shows how the choppy waters have gouged the bank that divides the lake from the increasingly salty marshlands to the south. It s a weak spot in an unbroken line of defenses against salt water intrusions, stretching nearly 18 miles from east to west across Apache land. Without reinforcement a strong storm could wipe out the bank allowing salt water to pour into the lake, threatening freshwater marshes to the north. In 2010, Apache picked up 15 percent of the cost of a $3 million project to line an 8,450-foot stretch of the south banks with rocks. The federal government is covering the balance of the cost. In a short period, salt water can kill the vibrant vegetation found in a freshwater marsh and drive out alligators, bass, frogs and many of the types of ducks that winter here. The lake is at the heart of Apache s largest Louisiana land holding known as La Terre, French for the land, in Terrebonne Parish. This property combines marshes that are breeding grounds for the fish and shrimp in the Gulf of Mexico on top of oil and gas deposits. An aerial photograph from 1945 shows an hourglass-shaped lake with a nearly solid marsh around it. A comparable shot of Lake DeCade now would show a roughly oval shaped lake with a lace work of ponds nearby. periods because it s linked by navigation channels to the Houma Industrial Canal. When the winds and tides are aligned, this large canal to the Gulf of Mexico is an avenue for salt water incursions. Every year Apache rebuilds the bank of Lake DeCade by dredging up dirt from the lake. This low levee includes water control devices that keep out salty water but allow shrimp and fish in this natural nursery to move out to the lake. wheatstone lng Apache and its partners are developing the Wheatstone LNG project in Western Australia under the strictest of environmental conditions. The project, a joint venture between the Australian subsidiaries of Apache, Chevron, Kuwait Foreign Petroleum Exploration Company and Shell, received approval under national environmental law in The project partners will adhere to 70 environmental conditions, including submitting plans on how they will protect matters of environmental significance and implement a biodiversity offset strategy. The strict conditions will help protect threatened and migratory species such as dugongs, marine turtles, sawfish, dolphins, whales and the marine environment. rigs to reefs Apache supports the Rigs to Reefs program, which is the heart of the Texas Artificial Reef Program. It involves the recycling of obsolete petroleum platforms into permanent artificial reefs rather than allowing them to be taken ashore as scrap. Rigs make ideal artificial reefs because they are environmentally safe, made of highly durable and stable material and already support a thriving reef ecosystem. To date, more than 100 offshore petroleum structures have been donated by cooperating oil and gas companies. Currently, the Artificial Reef Program receives 50 percent of an oil company s savings from converting the jacket to a reef instead of taking the structure to shore where it is salvaged. The funds received are used to finance research, administration, maintenance, liability and construction of new artificial reefs. The funds also make the Texas Artificial Reef Program self-sufficient with no need for taxpayer dollars. Scan with your smart phone to see the Rigs to Reefs video.

9 2011 sustainability report 9 greenhouse gases Improved operations bring lower costs, reduced emissions Managing greenhouse gas emissions at Apache has become an integral part of improving operations. These improvements come from projects large and small. Apache has built regional electric grids for its facilities in Egypt and Argentina; replaced diesel generators with high-efficiency, natural-gas powered units; installed advanced metering and monitoring systems; and extended the life of its fields by injecting carbon dioxide into underground reservoirs that otherwise would have been emitted by smokestacks. Some large reductions come from improving basic operational efficiency. We look for opportunities to run our business better, and in the process we reduce emissions, said Cal Cooper, Apache s manager of Worldwide Greenhouse Gas. Some businesses have fixed operational facilities and can measure GHG reductions by direct measurements year on year. On the other hand, purchasing facilities can sometimes make year-to-year comparisons difficult. Even during a period of rapid expansion, Apache is looking for ways to reduce the amount of carbon dioxide (CO 2) emitted per barrel of oil equivalent produced. Removing CO 2 one tree at a time CO 2 -e Detail 2010 (in metric tonnes) 2010 GHG Emissions by Region Argentina 1,050,000 Australia 850,000 Canada 1,600,000 Egypt 3,400,000 North Sea 400,000 Central 500,000 GOM Onshore 400,000 GOM Shelf 1,700,000 Permian 1,000,000 TOTAL 10,900,000 Recently, with oil production climbing, Apache s Egypt Region spent millions to convert inefficient diesel-burning generators to more efficient electric generators burning lower-cost, cleaner-burning natural gas. The project in Egypt points to the company s biggest target for emissions management the fuel burned to power this growing, energyintensive business. There s also a steady flow of smaller ideas being put into action for more efficiencies. At the Forties Field in the United Kingdom sector of the North Sea, installing control units in the compressors allows operators to slow the speed of the fans during warm-up to save energy. Apache s results-oriented approach to reducing emissions reaches to its advocacy for increased use of cleaner-burning natural gas for electric generation and transportation, as well as its charitable activities. Through the nonprofit Apache Foundation, the company has awarded communities more than two million trees since We estimate that each tree will remove 110 pounds (50kg) of carbon dioxide per year for 50 years, or about 2.5 tonnes, during the life of each tree. In Canada, Apache is among the leaders in using carbon-dioxide rich exhaust gas from electrical generation plants to extend the life of aging oil fields. In 2010, Apache reduced its emissions by 805,000 metric tonnes of C02 equivalent. This figure isn t the product of some algorithm or clever rework of numbers, but rather a straightforward and tangible amount. It comes from projects large and small within our existing facilities across a variety of regions. Our feeling is that the numbers, as well as the work they represent, speak for themselves. Even in the midst of an impressive growth spurt we have been able to reduce emissions in our facilities by 800,000 tonnes. All of these projects have been paid for with benefits such as lower fuel costs, greater energy efficiency and reduced downtime and maintenance expenses, with cleaner air as a bonus. Carbon Disclosure Project Apache participates in the Carbon Disclosure Project, an independent not-for-profit organization holding the largest database of primary corporate climate change information in the world. Thousands of organizations from across the world s major economies measure and disclose their greenhouse gas emissions, water use and climate change strategies through CDP. Scan with your smart phone to visit the Carbon Disclosure Project.

10 10 environment North Sea: A payoff for converting to gas Tracking emissions in real time declining field emissions ( ) The Forties Field is the largest and among the oldest discoveries in the North Sea, dating to At year-end 2010, it was the second biggest producer in the United Kingdom sector of the North Sea. Maintaining production requires water floods, natural gas injection, ongoing drilling and other strategies. The energy needed to power all those activities could easily translate into high emissions of CO 2, but that s not the case. This single field represents approximately 8 percent of Apache s worldwide production, but only 3 percent of the company s greenhouse gas emissions. Since Apache bought the field in 2003, it has invested more than $3 billion to drill wells and improve operations. One key project called the Ring Main improved the efficiency of power generation in the face of increased power requirements as oil output increased. Most of the field s power now comes from natural gas that previously had been flared instead of diesel delivered by boat from onshore refineries. Investing in cleaner growth Apache s Australian operations are required to report emissions monthly to regulators, but an engineer in the regional office in Perth can now see what s happening on the company s platforms in real time. What began as a way to reduce the labor needed to comply with Australia s National Green House Emission Reporting Scheme, or NGERS, is being used to find new ways to reduce emissions and operating costs. The emissions report is based on a variety of indicators of electric generator performance, including fuel use, downtime and power output. The data is being used to identify opportunities to improve performance. For example, the data indicated that a turbine on an offshore platform had suboptimal efficiency and after further investigation, it was discovered that a bit of cleaning restored its output to optimal levels. Explosive growth in oil output in Egypt has quickly moved it to the top of the list of Apache s highest producing regions. The growth of Apache s carbon emissions in Egypt tracks the rise in its oil production; the region represented about one-fourth of the company s 2010 oil and gas output and also its CO 2 emissions. Apache s Qarun Petroleum Co. joint venture with the Egyptian government has been driving output higher using diesel generator sets to power the pumps that produce the oil. Apache has been moving to limit emissions by replacing many of the widely dispersed diesel generators with a far more efficient electrical generation plants fired by natural gas and linked to the wells by 75 miles (120 kilometers) of overhead power lines. Scan with your smart phone to see a video about Midale operations. year total field c0 2 emissions ,887, ,542, ,900, Tonnes c0 2 per 1,000 barrels of oil equivalent (MBOE) * Gross production from Apache-operated fields A cleanup operation with a long-term reward Apache s Midale Field in Canada, which was discovered 57 years ago, has become a test bed for ways to extend the life of oil fields while reducing carbon dioxide emissions. The field in Saskatchewan just north of the U.S. border is expected to produce an additional 60 million barrels of oil, extending its productive life, due to injections of carbon dioxide (CO 2) that otherwise would have gone up a smokestack. The payoff could go far beyond the value of another couple decades of oil production. This is one of the first fields in the world where carbon dioxide emissions from a coal-fired electric generation facility are being used for enhanced oil recovery. And when all the oil is gone, the CO 2 will remain underground. Midale and the nearby Weyburn field operated by Cenovus are both part of the Plains CO 2 Reduction (PCOR) Partnership, a crossborder, government/business effort to test the feasibility of using industrial emissions for enhanced oil recovery and ultimately sealing them in the ground for the long term.

11 2011 sustainability report 11 resources Conserving nature s resources as we provide energy From efforts to preserve and restore marshes in South Louisiana to developing oil fields near a pristine reef of the Western Australia coast, Apache works to develop oil and gas resources in ways that match its economic goals with what s best for the environment and communities. Water an essential commodity for people, agriculture and many industries also is important in drilling and producing oil and gas. Across its operations, Apache is using new and proven technologies to reduce our draw on freshwater supplies. For example, we have invested in a new water plant to process nonpotable water sources to limit the freshwater impact of drilling and completion operations in the Horn River Basin of northeastern British Columbia, an abundant shale gas play. Also at Horn River, pad-drilling techniques enable Apache to tap large areas from a small location, minimizing the impact on the surface. The wells drilled there are clustered in a relatively small area, allowing Apache to reach out more than mile in each direction without disturbing the land. To protect drinking water aquifers close to the surface, Apache s wells are lined with corrosion-resistant steel and sealed off from the surrounding rocks by cement to prevent leaks. and environmentally responsible operations in shale formations in the Horn River Basin, Argentina and new areas where we are exploring. As a significant producer of natural gas in North America, Egypt, Argentina and Australia, Apache is increasing its use of the fuel to reduce its own emissions and operating costs. We are also encouraging more reliance of gas in the transportation and electric generation sectors in North America, and developing LNG resources that will help rapidly growing Asian economies meet their soaring energy demand with the cleanest-burning fossil fuel. Apache s nearly 270,000 acres along the Louisiana coast present special challenges the impact of years of subsidence, salt water intrusion, erosion, and the lasting impact of extensive canal building in earlier years when the importance of the marshes to the ecosystem was not understood. Today, Apache s goal is to create as much, if not more, marsh than was lost through a range of strategies. Apache s business is developing resources that can be used to improve the standard of living for people and communities all over the world. Our obligation is to preserve the natural environment as best we can so that it will continue to provide benefits to these same communities. Developing abundant natural gas resources often requires hydraulic fracturing the process that uses water and sand to crack gas-bearing formations and allow gas to flow to the surface. Apache has been using this technique in tight and unconventional natural gas reservoirs in Oklahoma and Texas for more than 30 years, and we are committed to safe

12 12 environment Producing oil and gas and protecting water resources Securing large volumes of water needed to develop unconventional formations like the Horn River Basin in northeast British Columbia is a key issue for Apache and other oil and gas producers, along with the imperative to use great care to prevent contamination of drinking water aquifers penetrated on the way to productive formations. Applying two well-known and proven technologies, horizontal drilling and hydraulic fracturing, has unlocked previously untapped natural gas resources in North America. Environmentally responsible operations and innovative solutions to water issues are essential if natural gas is to fulfill its promise as a means to reduce carbon emissions from the electric generation and transportation sectors. Apache has years of experience dealing with water issues in drilling and production operations and seeking solutions that rely on non-potable water in its operations. This reduces the impact on regional aquifers, lakes and rivers used for local water supplies. In mature oil fields, like Apache s fields in the Permian Basin of West Texas and New Mexico, the largest component of what comes out of the well is salt water that is separated from the oil and frequently pumped right back into the reservoir, enhancing the recovery of oil and gas reserves while minimizing the disposal of production by-products. Eighty percent of the water used in hydraulic fracturing operations required to complete Apache s shale gas wells at Horn River will come from an aquifer sealed deep in the earth and filled with non-potable water. Apache and partner Encana have gone to extraordinary lengths to find a way to avoid using water from nearby rivers and lakes. And the investment includes doing what it takes to ensure drilling and completing wells won t contaminate underground freshwater resources. Tapping the plentiful supply of non-potable water in the Debolt aquifer required drilling more than 2,600 feet deep and designing and building a water treatment plant to remove the hydrogen sulfide (H2S), a poisonous gas commonly found in Canadian gas, in the salt water. Apache developed the water treatment method and designed the plant that was built by Encana. The $75 million project ensures adequate supplies of water in a region where droughts can lead to restrictions on surface water use that shut down drilling. Apache is taking lessons learned at the Debolt aquifer and applying it to operations in other areas Environmental Performance Award Debolt Water Treatment Plant Apache and Encana were recognized for developing infrastructure designed to reduce the environmental impact of natural gas development in British Columbia s Horn River Basin. apache global water usage 88 percent comes from non-potable water sources 35 percent is recycled or reused in secondary oil recovery operations Scan with your smart phone to learn more about the 2011 Environmental Performance Award.

13 2011 sustainability report 13 Water Detail 2010 CDP Water Country Argentina Australia Canada Egypt UK US TOTAL Units ML/YR ML/YR ML/YR ML/YR ML/YR ML/YR ML/YR Municipal Water Waste Water 0 3, ,422 Rainwater Ground Water 4, ,623 12,874 25,304 75, ,039 Surface Water 0 0 1, , ,071 TOTAL 4,396 3,682 18,548 12,975 29,357 75, ,743 Water Recycled/Reused 2010/2009 (total volume of water recycled and reused) Volume recycled (ML 3 /YR) 2010 Volume reused (ML 3 /YR) Total Volume reused/recycled (ML 3 /YR) 15,695 76,894 92,589 64% ,116 52,948 85,064 35% Total volume recycled/reused as a percentage of withdrawals (%)

14 14 environment Hydraulic Fracturing: Unlocking resources, emphasizing safety Developing gas resources trapped in lowpermeability shale formations has pushed the oil and gas industry into areas beyond traditional oil patch states and provinces and into communities where the local population is less familiar with the industry s practices. As shale plays draw the industry into unfamiliar areas, residents in many communities have become concerned about the possibility for contaminating drinking water supplies and drawing down water supplies currently used for household, manufacturing and agricultural uses. Apache has been drilling wells in tight and unconventional natural gas reservoirs in Oklahoma and Texas for more than 30 years. We are applying this experience, our commitment to safe and environmentally responsible operations and proven technologies to unlock gas in shale formations in the Horn River Basin in northeast British Columbia and Argentina. When we plan wells in new areas, Apache reaches out to elected and other governmental officials, non-governmental organizations, First Nations, other indigenous groups and community leaders to explain Apache s practices and describe what the community should expect during the process of drilling and completing a well and the subsequent production period. At the center of recent concerns is hydraulic fracturing, the process of cracking the hard rocks to release natural gas and allow it to flow to the surface. The industry has been fracing wells safely and successfully for nearly 60 years. Combining the procedure with another proven technology horizontal drilling provided the breakthrough that has enabled widespread, economic development of shale formations with potentially abundant reservoirs of gas and oil. Scan with your smart phone to learn more about hydraulic fracturing. What is hydraulic fracturing? Hydraulic fracturing is a procedure that stimulates production from oil and gas wells, particularly in shales and other tight or high density formations with low permeability. The formation is cracked open by pumping a fluid that is almost all water and sand under high permeability pressure into formations far below the surface and beneath potable drinking water aquifers. The sand, or propant, stays in the cracks to keep them open and create a channel for gas to escape to the surface. The more fractures in a well, the greater the volume of gas that will flow to the surface. What are the ingredients in frac fluid? Water and sand constitute 99 percent of most frac fluids. In addition, there are small amounts of other chemicals that each plays a critical role in the process. While some are potentially dangerous, they make up a small percentage of the mixture. Can these chemicals reach the drinking water supply? Drinking water aquifers generally are located close to the surface a few hundred feet deep while gas-bearing formations are found at much deeper levels, up to one to two miles. After wells are drilled through a drinking water aquifer, steel casing and cement are set in the wellbore to prevent contamination. Scan with your smart phone to learn more about Sustainable Shale Development in the Horn River Basin.

15 2011 sustainability report 15 Hydraulic fracturing: Full disclosure In the United States, Apache has taken a lead role encouraging the development of a national chemical registry for hydraulic fracturing that is now available online at This web-based system publishes detailed information concerning chemicals used in hydraulic fracturing and their application on a well-by-well basis. The project to protect groundwater was initiated jointly by the Interstate Oil and Gas Compact Commission and the Ground Water Protection Council. Transparency and full disclosure are very important in this process, said Cal Cooper, manager of Worldwide Greenhouse Gas. Apache has committed to placing all of its U.S. hydraulic fracturing jobs in the registry and fully disclosing the chemicals we use as much as we can. Paper recycling efforts Apache works to protect the environment on many fronts, including paper recycling. The company was recognized for its efforts by Cintas Corporation. According to Cintas, Apache s environmentally responsible paper shredding operations at its Houston headquarters helped save 814 trees, 96 barrels of oil, 335,160 gallons of water and 144 cubic yards of landfill in Apache Energy recognized for environmental performance Apache Energy s Devil Creek Development Project was a nominee in the prestigious 2011 Golden Gecko Award sponsored by the Western Australian Department of Mines and Petroleum. Apache s nomination was for environmental and community activities undertaken at Gnoorea Point on the Pilbara coast, close to Apache s Devil Creek Gas Plant, where horizontal directional drilling techniques were used to minimize the impact on an environmentally sensitive area and maintain access to a popular stretch of beach during the construction phase of the plant s gas pipeline shore crossing. Apache was a leader in successful legislative efforts in several states to make disclosure of hydraulic fracturing fluids mandatory. In Texas, the company supported efforts by state regulators who adopted rules requiring oil and gas companies beginning in 2012 to disclose on the national registry the chemicals used in hydraulic fracturing. Apache also is encouraging vendors and trade groups across the country to participate in the voluntary registry.

16 16 environment Natural gas: An ideal alternative fuel to meet today s challenges Natural gas has gained widespread acceptance as a transportation fuel with more than 12 million natural gas-fueled vehicles worldwide. It is anticipated that more than 20 million will be natural gas powered by year In the United States where advances in drilling and completion techniques have unlocked 100 years of gas resources at current rates of consumption only about 120,000 compressed natural gas (CNG) vehicles are in use, and the lack of refueling infrastructure limits opportunities to expand the fleet. As a significant producer of natural gas in North America, Egypt, Argentina and Australia, Apache has engaged policymakers and communities to increase their awareness of the benefits of increased utilization of natural gas. Apache has taken a leadership role in America s Natural Gas Alliance, the leading industry organization advocating for greater use of gas in transportation and power generation. Natural gas is an extremely important source of energy for reducing pollution and maintaining a clean and healthy environment. In addition to being a domestically abundant and secure source of energy, the use of natural gas also offers a number of environmental benefits over other sources of energy, particularly other fossil fuels, in the transportation and electric generation sectors. Apache Builds CNG Station for Houston s Bush Intercontinental Airport Apache Corporation announced in early 2011 that it was building a compressed natural gas (CNG) refueling station for the ecoparkfleet of buses that carry passengers to and from the city s economy parking lots at Houston s Bush Intercontinental Airport. At Apache, we are convinced that clean-burning natural gas must be a bigger part of the solution to America s ever increasing reliance on imported crude oil, while reducing pollution caused by other, more carbon-intensive fuels used in transportation and power generation, said G. Steven Farris, Chairman and Chief Executive Officer at Apache. Farris said the new CNG station is a win-win solution. It provides for a better environment in Houston as natural gas burns cleaner than diesel or gasoline. It s an abundant, domestic fuel source with estimates of a 100-year supply. Developing domestic supplies also provides for local jobs that produce a more economic fuel. Filling up a tank with CNG is a fraction of the cost compared with gasoline or diesel. In the United States, Apache has seven operating CNG fueling stations with many more planned. These stations enable its fleet of 246 natural gas-powered field vehicles to operate on this cleaner-burning and more economical alternative to gasoline. Apache also has rebranded its trucks in the Gulf Coast Region, adorning vehicles with Apache decals identifying them as powered by natural gas. The company is exploring the feasibility of expanding the CNG program to its worldwide operations. Scan with your smart phone to learn more about compressed natural gas.

17 2011 sustainability report 17 Apache Employee CNG Vehicle Incentive Program Expanding the CNG focus to its employees, Apache launched the Apache Employee CNG Vehicle Incentive Program in This program provides two significant incentives: Free CNG for the first $5,000 of CNG fuel purchases at Apache CNG stations or any public-access stations, and Reimbursement for half of the additional cost of the CNG-dedicated or CNG-converted vehicle from either Apache or state incentives. I think that generally the prospect of getting more natural gas out of the ground here in the United States and allowing us to replace imports is something that we should be pursuing. And we ve got a lot of natural gas deposits. So I am very interested in finding out how we do, in an environmentally sound way, extract all that natural gas. President Barack Obama during WTAE Pittsburgh television interview July 11, 2011.

18 18 health and safety health and safety At Apache, safety is not negotiable

19 2011 sustainability report 19 Individual initiative and sense of responsibility shape health and safety programs Working in the oil and gas production industry can be intense so situational awareness is critical, proper training is essential and safety is not negotiable. Rules, regulations, policies and procedures have been designed to protect workers and the environment, but merely knowing the rules will not ensure safety and prevent incidents and injuries unless this knowledge is translated into action on a constant basis. As Apache s operations in the Gulf of Mexico expands, the Apache culture of performing tasks with a sense of urgency is embraced, but not at the sake of safety or risk to the environment. The essential elements of Apache s operating culture individual initiative and sense of responsibility infuse environmental, health and safety (EH&S) programs across the company s global operations. Apache has established Worldwide EH&S Standards of performance across the company that permit each region to adapt programs and procedures to fit local rules and culture while establishing high standards for training, compliance, maintenance and environmentally responsible operation. Apaches also plan and prepare to respond to extraordinary events. To raise the bar for safety standards in the Gulf, Apache s Gulf of Mexico Shelf Region is deploying company personnel to lead crews of contractors on each manned platform. Like many Gulf operators, Apache has relied on contractors to operate most offshore production facilities. Spill Response Apache s spill response capability has been greatly enhanced by its membership in various response organizations, including the Marine Well Containment Company, Helix Well Containment Group, Clean Gulf, Oil Ltd. and the Oil Spill Prevention and Response Advisory Group in the UK. Apache subsidiary Apache Deepwater LLC has joined the Marine Well Containment Company (MWCC), a not-for-profit, independent organization committed to being continuously ready to respond to a well control incident in the deepwater Gulf of Mexico. We recognize we must be vigilant in managing risks properly, said G. Steven Farris, chairman and chief executive officer. We also recognize that it is essential to have the capability to respond rapidly to a subsea well control incident even as we expect the equipment will never be used. In the event of an incident, MWCC will support equipment mobilization. An interim containment system is ready for deployment with the capacity to contain up to 60,000 barrels per day of fluid in up to 8,000 feet of water. Work is also under way on an expanded containment system for delivery in 2012 to handle up to 100,000 barrels per day of fluid in up to 10,000 feet of water. Scan with your smart phone to see Apache s Worldwide EH&S Standards.

20 20 health and safety Safer workplace Apache employees are working safer. Responding to an empowering environment set forth by Chairman and CEO G. Steven Farris, Apache employees have displayed a continuing trend of reduced injuries and improved compliance over the past three years. Safety is not negotiable at Apache and we demand high standards from our regular and contract employees, Farris said. All workers are empowered to ensure a safe and environmentally responsible operation. In a recent analysis of the company s safety performance over a three-year period ending in 2010, employee recordable injuries declined by 88 percent and work-restricting injuries by 90 percent. The safety data from 2008 to 2010 includes Apache s joint venture operations. John Williams, manager of Environmental, Health and Safety, said the core elements of the company s safety culture are competence and personal responsibility. recordable injuries ( ) recordable injuries (including joint ventures) Total Recordable Injuries Total Hours Worked 8,560,807 11,587,530 12,744,997 Injury Rate 1.71% 0.40% 0.20% Injury Decrease % % % TOTAL injury rate decrease -88% work-restricting injuries (including joint ventures) Total Restricted Work Cases Total Hours Worked 8,560,807 11,587,530 12,744,997 Days Away, Restrictions and Transfers 0.47% 0.21% 0.05% Injury Decrease % % % TOTAL injury rate decrease -90% Competence at Apache means not only knowing how to do a job to achieve an operational goal, but it also includes knowing how to conduct work safely, Williams said.

21 2011 sustainability report 21 Apache s unique culture: Hard to describe, harder to emulate Apache s record of creating shareholder value is built on the contributions of a diverse and motivated group of 4,770 employees and a culture of empowerment across all levels of the organization. Though we operate in six nations, Apaches are united by our work ethic, sense of urgency and values of integrity and respect for human dignity. The work is rewarding and turnover is low. Apache s technical teams have access to seismic and other data, abundant acreage to mine for opportunities, and adequate capital to carry ideas through to drilling new wells and adding production. Employees in the field are encouraged to take ownership of their wells, manage costs and seek ways to increase production. Our responsibility to our colleagues starts with ensuring a safe workplace. Safety is not negotiable and it will not be compromised. Honest dealing is a matter of respect for our colleagues and others we encounter. We conduct business fairly and ethically and comply with applicable laws, regulations and government requirements, including the Foreign Corrupt Practices act. Apache s Code of Business Conduct sets out our expectations. Apache employees thrive in a culture that values and rewards them for growth that is both profitable and sustainable. We are committed to long-term growth rather than short-term gratification, and our compensation systems include programs that align employees with shareholder interests. We provide competitive benefits packages that are based on the laws and customs in each of the countries in which we operate. Our wellness programs encourage employees to adopt a healthy lifestyle for themselves and their families. Scan with your smart phone to see Apache s Code of Buisiness Conduct. Apache is also committed to equal employment opportunity throughout its work force. Our core policy states that the company will base all employment-related decisions and actions exclusively on employment-related criteria. Harassment is not tolerated.

22 22 health and safety Finding, keeping talent in a competitive environment Apache is building the foundation for the future, developing the next generation of technical and professional experts and field hands as senior employees move toward retirement. Apache trusts me with more responsibility, and with that comes more opportunities and experience, said Collin Currell, a former Apache intern who joined the company in January 2010 after graduating from the University of Texas. He is one of the young engineers in a three-year development program, working alongside Apache s veterans and experiencing a range of assignments. The development program is designed to give a broad range of experience in engineering and the Apache way of doing business, said Chris Weatherl, one of the first to join the development program after graduating from the University of Tulsa and currently a senior reservoir engineer in Apache s Egypt Region. Staying healthy Our wellness programs encourage employees to adopt a healthy lifestyle because it s the right thing to do for themselves and their families. From oral health to stress management to weight control, Apache s wellness program aims to give employees the tools needed to lead healthy lives. Our monthly newsletters and periodic updates provide information, authoritative sources and opportunities for Apaches to stay on a healthy track and participate in such programs as Workplace Partnership for Life, which promotes organ donation. I worked in reservoir, production and drilling engineering in the Southern and Central regions and I still use those experiences, Weatherl said. Knowing what is required to be an Apache production engineer or drilling engineer has made me a better reservoir engineer. Mark McClelland, improved recovery and resource assessment manager and leader of the development program, said Apache is laying the foundation for the continued success of the company. Apache is committed to being a good corporate citizen by operating responsibly, safely and by building enduring relationships with our communities.

23 2011 sustainability report 23 community Respecting our communities and building relationships

24 24 community Innovative, local solutions for stakeholders across the world Across six nations on five continents, Apache develops resources essential to economic growth and improved living standards. Along this path, we build enduring relationships with the communities in which we operate through our commitments to environmental stewardship, sustainable development, education, civic improvement and philanthropic causes. Give Where We Live kicks off in 2011 In an effort to give back to the communities in which the company operates, Apache kicked off its Give Where We Live program, offering $100,000 in grants to non-profit organizations in the Lafayette/Acadiana, La. area. Give Where We Live is a grassroots effort to unite Apache employees and their local communities. Apache s Gulf of Mexico Deep Water, Shelf and Onshore regions sponsored the first challenge. Non-profit organizations submitted applications and were narrowed to five finalists by employee committees. Voting via Facebook, employees and the public cast their ballots for the five contenders, which competed for grants of $50,000, $25,000, $10,000 and two $5,000 grants. The remaining $5,000 was divided equally among the five semifinalists that did not qualify for the final voting round. The campaign drew fans from across the globe and more than 20,000 votes. Thank you, Apache. You deserve a huge round of applause! May God bless your company. Hopefully, others will follow in your footsteps, fan Tami Stiteler said on Facebook. Thanks Apache. Your generosity will touch so many lives, said fan Donielle Gaubert Watkins. Apache Foundation Tree Grant Program Since 2005, Apache has awarded more than two million trees to nonprofit institutions and communities across 14 states through grants from the Apache Foundation, our philanthropic affiliate. These trees will improve the environment and the quality of life in these communities for decades to come. The company has set a goal to plant three million trees and is encouraging more communities to participate. Apache s corporate giving program is regionbased and employee-driven. In each of our communities, Apache employee committees determine which programs and high-impact projects will receive funding from the company. trees awarded by year year trees , , , , , , ,824 Scan with your smart phone to see television coverage of the Give Where We Live campaign.

25 2011 sustainability report 25 Investing in education and building our future During the past 11 years, Fund for Teachers has given more than $17.2 million in grants to some 4,500 teachers, enabling them to travel the world to enrich the experiences they bring to their classrooms. In 2010, 455 teachers from 272 schools received fellowships to expand their horizons, helping to make them more passionate and effective teachers. Fund for Teachers, which like Apache was established by Raymond Plank, aims to enrich the personal and professional growth of teachers by recognizing and supporting them as they pursue opportunities around the globe that will have the greatest impact on their vocation, the academic lives of their students and in their schools. Our goal is to inspire the inspirers, says Karen Kovach Webb, Fund for Teachers executive director. We believe that teachers are the catalyst to make change for their students, their schools, their districts and their communities. Fund for Teachers projects range from language and cultural immersion to art and web design to math and science. Two teachers from Deer Park, TX., Terri See and Sheila Schatzke, spent two weeks in Europe creating lesson plans for art and technology classes. They also created virtual field trips to provide students a closer experience with many historical places, priceless works of art and stunning architecture found in Rome and Paris. The teachers odysseys typify a Fund for Teachers fellowship: Providing opportunities and experiences outside the confines of a textbook. Other teachers used their opportunities to engage in service learning, spending time in other classrooms or with groups such as Global Volunteers and Earthwatch. Supporting Fund For Teachers is one element of Apache s wide-ranging commitment to the communities in which it operates, and reflects the specific emphasis on education. The company also supports Ucross Foundation, an artist-in-residence program in Wyoming, and Springboard: Educating the Future, which funded construction of schools for young girls in poor rural villages in Egypt. Scan with your smart phone to learn more about Fund for Teachers. springboard: educating the future In Egypt, Apache continues to enhance the educational opportunities for 7,000 young girls attending more than 200 Apachebuilt one-room schools in remote rural areas, where girls traditionally have been deprived of educational opportunities due to geographic, social and economic realities, and have little opportunity for a better future. These schools provide girls with an opportunity learn to read and write, to add numbers and to learn skills that will help them make life better for them, their families and their villages. Apache and Springboard: Educating the Future have partnered with Egypt s National Council for Childhood and Motherhood and the Sawiris Foundation for Social Development to continue to enhance the girls educational experience.

26 26 community Supporting our neighbors At MD Anderson Cancer Center in Houston, Apache has made a long-term commitment to support a new stateof-the-art advanced imaging center as well as to provide funds for its critically important data management efforts and preventative care. In Perth, Western Australia, Apache Energy is providing funding for research to investigate a rare, very aggressive and almost invariably fatal form of tumor called NUT midline carcinoma. In Argentina s Mendoza Province, Latin America s most prolific wineproducing region, Apache employed a new cableless imaging technology for a 3-D seismic survey in order to avoid disrupting extensively cultivated areas with irrigation systems, factories and settlements. Helping those in need Apache s Australia Region helped the youngest victims of the Japan earthquake and tsunami by presenting a $150,000 check to Save the Children Australia s relief efforts in Japan. About 74,000 children were left homeless when the giant tsunami struck the northeast coast of Japan following a massive 9.0 magnitude earthquake. The disaster prompted a worldwide relief response to help the earthquake victims. Apache s Australia Region also donated $100,000 to help boost tourism efforts in Mission Beach, a popular tourist attraction along the Coral Sea in Queensland that was hit hard when Cyclone Yasi, one of the most powerful cyclones on record, slammed into Australia s northeast coast.

27 2011 sustainability report 27 Apache lends a helping hand to local firefighters As wildfires raged across the Southwest United States during the hot summer months, Apache stepped up to help firefighters by donating much-needed fire trucks, equipment and cash. In the Midland, Texas., area, Apache donated fire trucks to the Northeast Midland County Volunteer Fire Department and the Greenwood Volunteer Fire Department. In Elk City, Okla., the company donated a Chevrolet Silverado 3500HD four-wheel drive truck to the Elk City Fire Department. Apache also donated $50,000 to help rural Oklahoma firefighters stretched to their limits by the scores of wildfires. And Apache employees made donations to help several different volunteer fire departments northeast of Midland purchase equipment for battling the fires. The donations were made through the company s matching gift program. Tulsa Transit gets donated CNG vehicles Apache donated two new paratransit vans powered by compressed natural gas to the Metropolitan Tulsa Transit Authority. The MV-1 vans are the first factory-built and assembled vehicles that meet or exceed the vehicle guidelines of the Americans with Disabilities Act (ADA). The vehicles are powered by CNG, which costs less than gasoline and produces fewer greenhouse gas emissions. Tulsa Transit plans to use the new wheelchairaccessible vans as part of its door-to-door Lift Program for disabled individuals. The donated vans were decorated in vivid graphic designs depicting the ecologically friendly nature of compressed natural gas by graphic arts students at Tulsa Technology Center. Apache Matching Gift Program The Apache Matching Gift Program is an essential part of an effective community outreach program. In 2010, Apache and its employees donated a total of $703,149 in matching gift funds. Apache matches employee contributions to charitable organizations on a dollar-for-dollar basis up to $10,000 per employee per year until the annual match budget is depleted. The program matches donations to charitable organizations in social welfare, education, conservation and ecology, health and human services, arts and culture, and civic improvements.

28 28 community Human Rights This is an excerpt of the letter written by Sarah Teslik, senior vice president, Corporate Governance, reflecting Apache policies on human rights. It was written in response to an inquiry received from an Apache shareholder. First, you note that human rights are most at risk in countries with oppressive regimes, weak governance and conflict. We agree with you, and in general we avoid doing business in such places. It is not without reason that the bulk of our operations are in the United States, Canada, Australia and the United Kingdom. In our two additional regions Argentina and Egypt we are entwined with the interests and needs of the people. It is not accidental that, as the people of Egypt change their government, our operations continue as usual. We have built and fund hundreds of schools for Egyptian girls, created jobs for unskilled Bedouin as well as skilled professionals and assisted some of the most lowly paid textile workers in expanding their markets. But we do much more helping individual Egyptians individually. Our activities in Argentina also reflect our reluctance to rely exclusively on systems to promote human rights. While we run or support a large number of programs whose reach is broad and deep, such as providing scholarships for children in situations of social vulnerability, running social development projects in rural villages, funding a variety of training and capacity building programs for teachers, operating programs that help indigenous peoples and supporting programs for the handicapped, it is many of the individual projects in which our people engage of which we are most proud. When one of the local indigenous communities needed a water well, we drilled it. When the child of one of the local indigenous leaders was burned in an accident, the spouse of one of our employees volunteered free care. We could not operate a system that mandated that we drill free wells and dispense free medical care, but we can create a culture that keeps the human in human rights. In all of our regions we are known for being committed to the place and the people. Each region develops its own way to be a good corporate citizen in its part of the world. Ultimately, our ability to make a difference in the lives of others comes from our ability to hire and retain the sorts of people who want to make the world a better place while making us a better company. To achieve this, we consciously rely less on some of the standard hiring systems that other companies use and rely more on our own employees to find and bring us the best. Respecting Indigenous Culture Apache s efforts in Argentina and Egypt are only part of the human rights initiatives the company has forged in the communities where it works. Two examples include: Respecting the indigenous culture of the Aboriginal traditional owners, Apache chose to change the location of its Devil Creek Gas Processing plant in Australia, moving it 40 kilometers away from the Burrup Peninsula to avoid any impact to culturally significant rock art. Working closely with First Nations, Apache Canada joined with the governments of Canada and British Columbia, EOG Resources and the Haisla Nation Council to celebrate the signing of an agreement to proceed with a $4.5 billion Kitimat LNG project on Haisla reserve land on the Douglas Channel.

29 2011 sustainability report 29 indicators Performing safely, responsibly and socially