Outline. Senate Bill 4 Overview

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2 Senate Bill 4 Overview Outline Types of Well Stimulation Treatments Why Well Stimulation Treatments are Necessary Overview of Hydraulic Fracturing in Ventura County History of Sespe Oil Field Operations in the Sespe Oil Field Condor Mitigation and Support Measures Water Usage / Water Disposal Hydraulic Fracture Monitoring Disclosure

3 Senate Bill 4 Overview Signed into law by Governor Brown on September 20 th, 2013 Imposes the strongest regulations and disclosure requirements for well stimulation operations of any state in the nation Interim regulations went into effect on January 1 st, 2014 and will be in place until July 1 st, 2015 when permanent regulations go into effect Division of Oil and Gas is currently finalizing permanent regulations

4 Senate Bill 4 Compliance Operators must obtain a permit for all well stimulation treatments Requires neighbor notification, and water testing rights and obligations Operators must submit a groundwater monitoring plan for before and after well stimulation treatment testing or obtain groundwater monitoring exemption from the State Water Resources Control Board Requires public disclosure of makeup and volume of all fluids other than water, by CAS (chemical abstract service) number and trade name Requires post-treatment reporting and disclosure

5 Types of Well Stimulation Treatments Hydraulic Fracturing Involves pumping fluids into a wellbore at a high enough pressure to cause the reservoir rock to fracture. Once the fractures are initiated a propping agent such as sand is pumped into the wellbore to keep the fractures open. Hydraulic fracturing has been occurring in the United States since the 1940s and in California since the 1950s. Acid Stimulation Involves pumping a diluted acid into the wellbore to reduce drilling damage caused by drilling mud and cement or to enhance the permeability of the reservoir rock. Depending on the purpose of the treatment, acid stimulations are pumped both above or below the fracture pressure of the reservoir. The two most common types of acid used in oil wells are hydrochloric (HCl) and hydrofluoric (HF). Acid stimulation has been occurring in the United States since the 1930s. Both types of treatments are typically completed in only 2-3 days per well

6 Why Well Stimulation Treatments are Necessary Enhance permeability of reservoir rock Permeability is the property of a reservoir rock that is an indication of the ability of fluid or gas to flow through the reservoir. The most common unit of measure of permeability for oil reservoirs is the millidarcy (md). Typical permeability for a sandstone reservoir that is stimulated is md and typical permeability for a shale reservoir that is stimulated is md. Typical permeability for sandstones in California that don t require stimulation is ,000 md. For reference the typical permeability of a gravel pit is 10,000,000 md. Reduce damage done during the drilling process Many reservoirs are damaged during the drilling process, most commonly caused by either drilling mud invasion or cement invasion. The stimulation treatment helps dissolve near wellbore invasion or creates a path from the wellbore past the damage zone to the reservoir. Drilling damage is more prevalent in naturally fractured reservoirs which are common in many of the fields in Ventura County.

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8 Hydraulic fracture fluids are typically 99.55% water and sand. The remaining 0.45% is chemicals, many of which are found in common household products and used by the public every day.

9 Oil Production & Hydraulic Fracturing in Ventura County Oil was first discovered in California near Santa Paula in Ventura County in the 1860s Current production is 25,000 BOPD and 24,000 MCFD. Production peaked in the late 1970s at 51,000 BOPD and 54,000 MCFD Industry is responsible for 5,500 direct and 2,700 indirect jobs 1 Total economic contribution to Ventura County in 2012 was $4.265 billion or 6.9% of the total for the county 1 Hydraulic fracturing began occurring in Ventura County in the early 1960s Over 500 wells have been hydraulically fractured in the county to date and hydraulic fracturing has taken place in most of the major fields in the county 1 Los Angeles County Economic Development Corporation, Oil and Gas in California: The Industry and its Economic Contribution in 2012

10 Ventura County Oilfields Contains Hydraulically Fractured Wells No Hydraulically Fractured Wells County Lines N Sespe Sespe Ojai Ojai Ojai Del Valle Bardsdale Shiells Canyon Rincon Ventura South Mountain 10 Miles Oxnard Sources: Esri, HERE, DeLorme, USGS, Intermap, increment P Corp., NRCAN, Esri Japan, METI, Esri China (Hong Kong), Esri (Thailand), TomTom, MapmyIndia, OpenStreetMap contributors, and the GIS User Community

11 Sespe Oil Field History Early 1880s Prospectors began searching for oil in the area due to the presence of numerous natural seeps. Discovery well Tar Creek 1 completed in 1887 at depth of 965 with initial production of 185 BOPD 1890s thru1950s - 80 wells drilled on the Tar Creek and White Star leases targeting shallow shale zones. Most of these wells had depleted by the 1950s. Early 1960s - Start of hydraulic fracture completions in deeper Sespe sandstone/conglomerate zone leads to increased drilling activity. Every new well in the field from this point forward is hydraulically fractured to Active well count increased to 156 wells Sespe Field reaches peak production at 7,100 BOPD and 7,400 MCFD 1970 to Active producer count increases to 260 wells 1987 Seneca acquires 50% of field from Argo Petroleum 2008 Seneca acquires majority of rest of the field from Vintage Production Company. Seneca now owns ~98% of field Seneca starts adding 5 to 6 new wells per year Natural seep near Tar Creek

12 Hydraulic Fracturing in the Sespe Oil Field Sespe Field produces from the Sespe sandstone/conglomerate reservoir between 2500 and 8500 below surface. The interval completed in most wells covers ~1000. Wells are vertical, or near vertical, in pay zone no horizontal wells. At one time the reservoir was buried as much as 15,000 below surface, but has been uplifted by faulting over time. The reservoir permeability is only md because of this deep burial. Without hydraulic fracturing the field would have been uneconomic to develop. Fracture treatments at Sespe have been a standard operating procedure since During the last 49 years, 258 wells have been fractured with a total of 677 fracture treatments with no environmental impacts. Seneca and the industry have a proven record of stewardship in the Sespe oil field relating to fracture treatments. Fracture Treatment at Sespe Field

13 BOPD and BWPD Well count Sespe Field Production History Cumulative Production to Date 42 MMBO & 69 BCF Barrels Oil per Day Well count First Fracture Barrels Water per Day

14 Condor Mitigation & Support Measures Seneca recognizes the importance of condor mitigation measures at Sespe. Since Seneca began operations in the field in 1987 no injury or death of a condor has been caused by or associated with Seneca s operations. We have implemented the following measures after consultation with U.S. Fish & Wildlife: Agency Support Perimeter fencing around pads where condors have landed Burying and re-orienting electrical lines Whirly birds for pumping units Grating over well cellars Educational seminars for employees and contractors Abatement of attractive nuisances

15 Examples of Condor Mitigation Measures Fencing around pad perimeter Posted signs about micro-trash Metallic whirly birds on top of unit Grate covering well cellar

16 Condor Mitigation & Support Measures Seneca s Response to LPFW Trashing the Sespe Article: Met with LPFW Director Jeff Kuyper on March 31, 2014 at Sespe Confirmed none of the condor injuries or deaths referenced in article were result of Seneca operations Provided explanation and handouts of Condor Mitigation Measures Based on GPS data from U.S. Fish and Wildlife for 2012 & 2013 only 1 of 13 pads LPFW visited were landing sites for Condors Showed evidence that all items pointed out were remedied Confirmed that Seneca implemented 12 of 14 Recommendations LPFW lists in article. Seneca has not employed a full time biologist (Item 12), but has a condor conservationist and volunteer on Sespe staff and has significant biological consulting resources available to address any new issues that arise

17 Water Used for Hydraulic Fracturing Seneca uses a combination of produced water from the Sespe oil reservoir and fresher water from two water source wells in the field NO water is used that would otherwise be consumed by humans or utilized for agricultural purposes Sespe Field is not located below a groundwater aquifer used for human or agriculture consumption, and there is NO geologic or hydrologic connection to beneficial uses of water sources Water Disposal The processing of produced water at Sespe is a closed loop system. All produced water is treated at a central treating facility in the field and re-injected into the Sespe oil reservoir via DOGGR regulated disposal wells

18 Ventura County Groundwater Basins Sespe Oilfield Groundwater Basins N

19 Hydraulic Fracture Monitoring How can the dimensions of the fracture be measured? How high above the perforations do the fractures travel? How far laterally do the fractures travel?

20 Hydraulic Fracture Monitoring How far laterally (half length) do the fractures travel? Average half length was 382 and maximum was 548 How can the height of the fracture be measured? Microseismic monitoring can locate the position of the noise in 3D that is caused by the rock breaking from the frac fluid. 19 fracture treatments were observed using microseismic in 2011 and 2012 How high above the perforations do the fractures travel? Average height growth was 144 ft Maximum height growth was 386 ft At Sespe the typical distance from the top perforation to the base of the surface casing is > 2500

21 Microseismic Side View Images 19 fracture treatments were observed Average maximum distance above the top perforation on each fracture was 144 ft Highest event distance above the top perforation was 386 ft White Star Frankel A-502 Thornbury-Geis Oak Flat 2-31

22 Hydraulic Fracturing Disclosure

23 Seneca has voluntarily disclosed the chemicals that were used during frac treatments for the last two years into FracFocus.

24 FracFocus disclosure report for Seneca s Oak Flat #1-31 well.