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Hydraulic Fracturing Issues� Part 1�

Last month Mark and Drew described the process of hydraulic fracturing (HF or�“fracking”) on one of our Tonkawa horizontal wells. This month, I would like to�begin discussing how the fracking process affects our environment and the polit-�ical and emotional landscape.�

Can hydraulic fracturing be done safely for the environment and the public? Ab-�solutely yes! Has it always been done correctly? No.�

So, how do we ensure it is done safely and who is responsible? These are some�of the questions I would like to explore over the next two months.�

Let me start by saying that advances in fracking are inherently responsible for increasing the U.S. natural�gas reserve base to over 2500 TCF (over a 100 yr supply) and increasing daily domestic production by�20% since 2006.�

However, fracking is nothing new. The first frac was performed in 1949. We were fracking wells in the 1960’s�with large volumes of water and sand. In fact, the origins and early success of our company was largely due to�technology advances in HF. The Mississippi formation was known to contain large volumes of hydrocarbons.�However, the oil and gas could not be recovered economically until large slick water 0 were applied to this res-�ervoir. This is what kicked off the development of the Sooner Trend that led to�drilling almost every quarter section from Hennessey, north to Enid and west to�Fairview. The Sooner Trend was one of the first “resource plays” and Ward Pe-�troleum was one of the primary players to develop this resource.�

Why all the fuss about fracking? The general public does not understand our in-�dustry and issues related to the process of fracking (we are not even sure how�to spell the word). So the public forms their opinion from what they see and�read in the media. It takes about an hour to do a “frac 101” class to the general�public but only 15 seconds to form an initial opinion based on a headline such�as “Carcinogens injected into wells.” Headlines like this cause fear and get at-�tention, but are extremely misleading and unfair.�

My goal in these articles is to dispel some of the most commonly heard false�claims, but also to point out where things could and should be done better.�While an in depth discussion of well design is beyond the scope of this article, I�will use the following diagram to make some general comments on relevant is-�sues.�

WARD PETROLEUM CORPORATION�

November, 2011

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THE BIG PICTURE�By Bill Ward�

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Wellbore Design – Multiple strings of casing encased in ce-�ment are used to protect groundwater during drilling, com-�pletion (fracking) and production of a well. State agencies�like the Oklahoma Corporation Commission (OCC) and the�Colorado Oil and Gas Conservation Commission (COGCC) are�responsible for regulating design standards and ensuring�operator compliance. It is up to each state agency to deter-�mine what level of proof they require based on where the�well is located. For example, in a municipality, we would be�required to run a cement bond log on all strings of casing�and submit that to the regulating agency (a very high level�of proof). However, in a very remote part of the state and�far away from any water supply used for drinking, we may�only be required to prove we circulated cement to the sur-�

face when cementing the surface pipe (still proof, but only one piece of evidence).�

Hydraulic Fracturing – Once the wellbore has been properly designed and compliance with state rules con-�firmed, the frac job is performed. When the frac job is pumped the annular space is monitored for any abnor-�mal changes in pressure. This is a reliable way to monitor whether the fluid is pumped into the right�formation (proof drinking water is protected). As Mark mentioned in last month’s article, we pump up to 1.5�million gallons of water and up to 1.8 million pounds of sand into the formation. What is in the frac fluids is an�area where a lot of misinformation has been spread.�

The documentary Gasland claims that fracturing fluid is a mix of over 596 unknown and proprietary chemi-�cals. The truth is, the fracturing process uses a mixture comprised almost entirely (99.5%) of water and sand.�The remaining materials, used to condition the water, are typically found and used around the house. The av-�erage fracturing operation use fewer than 12 of these additives. Here is a list of what those additives are:�

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As you can imagine, many of these “household” chemicals are carcinogenic taken in large quantity. The concentra-�tion found in frac fluid should not be a concern.�

Claims are also made that HF and our industry are unregulated. This is simply not true! Our industry is subject to�federal, state and local regulations that cover everything from initial permits to well construction to water disposal.�Rules are in place and enforced. Our industry is one of the most highly regulated and studied. Here is a list of rules�we are subject to during HF:�Rule 205 Inventory chemicals – Material Safety Data Sheets are required for all fluids on location�Rule 317 Well casing and cement history; Cement bond logs – proof the aquifer is protected.�Rule 317B Setbacks and precaution near surface waters and tributaries that are sources of public drinking water.�Rule 341 Monitor pressures during stimulation. Proof aquifer is protected during frac job.�Rule 608 Special requirements for CBM wells.�Rule 903&904 Pit permitting, lining, monitoring, and secondary containment.�Rule 906 Requires Commission, CDPHE and landowner of any spill that threatens to impact water of the state.�The regulating agency requires notification of when you plan to begin each frac job.� (Taken from the COGCC website)�

And that is just rules for fracking. There are many more for the drilling, production process and E&P waste manage-�ment. States due a good job of letting you know what has to be done. Information is provided to the state and kept�on file. Field inspectors are visiting multiple locations daily.�

The safety of HF has been studied extensively.� Previous studies conducted by respected authorities have all con-�cluded that hydraulic fracturing is safe�. The EPA (2004), the Ground Water Protection Council (2009), the Interstate�Oil and Gas Compact Commission (2002), the Association of American State Geologists, and 14 state agencies have�all found�HF non-threatening to the environment or public hea�lth.�

Despite these findings, more studies are being done. The EPA has launched a new secondary study “to investigate�the potential adverse impact that HF may have on water quality and public health”. The study is expected to have�preliminary results by 2012, with final deadline of 2014. Additionally, the Secretary of Energy has been instructed�by the President to perform a study to identify measures that can be taken to reduce the environmental impact and�improve the safety of shale gas production and HF.�

I believe these studies are justified. The general public does not trust our industry. We need to have credible stud-�ies presenting the facts in an unbiased way. There are also multiple Universities studying different sectors that our�industry impact such as air quality and the life cycle of water. I welcome all these studies because we have nothing�to hide. If we have a problem, we will figure out a way to fix it. There are still questions that need to be answered�from an industry perspective and also from the public perspective.�

In part 2 of this article, I will discuss some of the conflicting studies and outline specific steps I believe our industry�should take to ensure we have a positive outcome in the debate over hydraulic fracturing.�

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Be true to your Work, your Word and your�Friends.�

If you count your money, you don’t have a billion�dollars.�

--J. Paul Getty�

If at first you don’t succeed, skydiving is not for�you.�

--Arthur McAuliff�

A manager is responsible for the application and�performance of knowledge.�

--Peter F. Drucker�

If I had to sum up in a word what makes a good man-�ager, I’d say decisiveness. You can use the fanciest�computes to gather the numbers, but in the end you�

have to set a timetable and act.�--Lee Iacocca�

Reality is the leading cause of stress amongst those in�touch with it.�

--Jane Wagner�

The game has a cleanness. If you do a good job, the�numbers say so. You don’t have to ask anyone or play�politics. You don’t have to wait for the reviews.�

—Sandy Koufax�

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Front Range News�

I traveled to Oklahoma for the Mid-continent AAPG meetings the first week in Octo-�ber and then spent the 6th and 7th in the Enid office. I did tour the new Cherokee Strip�Regional Heritage Center and I think everyone should go and tell a neighbor about it.�We (Carolyn and I) drove home in rain and then through snow out at the Denver Air-�port so knew that Fall was official.� We finished our new offices so moved in on the 14th and 15th from the 9th floor to�the 10th floor.�On the 17th we had to hold Staff Meeting huddled around Bill's cell phone, but all the�electronics are now hooked up and running.�All contact numbers remain the same only the Suite�number changed from 901 to 1000. The offices are beautiful and a have a great floor plan. Hopefully,�you got some pictures from Jordan.� We had a visit from the Lucas Capital folks and enjoyed some time together both business and�pleasure. Jordan went out on another Marathon well that was drilling horizontal so he got to see all�the equipment, software, and jobs that are associated with that. Our little 3-D shoot way down south�was started and finished so will now go to processing. We had business meeings in Greeley and Den-�ver, then back to Denver for the annual RMAG Prospect Fair.� We finished the month with nine inches of wet snow while all the trees still had their leaves, so the�entire Front Range looks like Enid after an ice storm. We'll be clearing tree limbs for the next 2�months. After the snow, the weather cleared and we woke up to a 7 degree morning. Anyway, we’ll�be back to Fall by the end of the week, just no leaves! It is time to start counting the number of shop-�ping days before Christmas.� I hope everyone appreciates how short I keep these articles with just lots of one-liners.� Jim�

Before�

View of 1st snow�

Ward Petroleum�Ft. Collins�

Conference�Room�

Reception Area�

Geology�

Remodel�In�

Progress�

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The Window of Opportunity�By Zig Ziglar�

Over the years I have experienced various obstacles to my workout routine. I recall once when I�was in Tampa, Florida, for a seminar. At seven o’clock I stepped out of my hotel to do my walking�but, unfortunately, it was raining. The good news is that there was a parking garage attached to�the hotel, so I headed there to take my walk. Needless to say, I prefer to walk outdoors where I�can see things as I go, but walking in a covered garage beats getting wet, and certainly beats not�walking at all. I had been enjoying my walk and planning my talk for about 25 minutes when I�suddenly noticed that the rain had stopped. I hurried outside to take advantage of that window�of opportunity and had made it about a block and a half when the rain returned. I headed back�to the covered garage and continued my walk–and the planning of my talk.�

As I reflect on my activity that morning, I had no idea how long it would continue to rain or how�long the break in the rain would last. However, I do believe that too many people wait for every-�thing to be “just right” before they do anything, and they often miss out on life’s opportunities.�

The second little lesson I learned on that walk is that in a parking garage you follow the incline to�the top. It’s more difficult to walk up but to develop endurance you’ve got to go uphill. To go up�in the business world or, for that matter, in the academic or political world, you frequently have�to experience difficulty as you go. Without the difficulty you never develop the mental sharpness�and physical strength which are necessary to succeed.�

Somebody once said that the only way to the mountaintop is through the valley. When you en-�counter those “mountains,” just remember that the climbing will enable you to climb the next�one higher and faster, which ultimately means I will SEE YOU AT THE TOP!�

Zig Ziglar is known as America’s motivator. He is the author of 29 books and numerous audio and�video recordings.�

Avoid eyestrain at the computer�

If you spend most of your workday staring at a computer monitor, you may notice an abnormal number of red�blood vessels in the whites of your eyes. Prolonged work at a computer can lead to engorged blood vessels,�along with dry, itchy eyes. Here are several tips to avoid computer-vision syndrome:�

• Rest your eyes regularly. Take breaks away from the computer.�

• Blink frequently to keep moisture moving to your corneas.�

• Reduce the glare from your monitor by adjusting the light around your desk, or using a�screen filter.�

• Place your monitor at or just below eye level.�

• Keep the distance between your eyes and the monitor about the same distance as you would when reading a�book.�

• Check the prescriptions of your eyeglasses or contacts regularly to be sure they are correct.�

• Upgrade to a liquid-crystal-display monitor or another model with a high refresh rate that�flickers less.�

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Desk and Derrick of Enid Attends�60th Annual National Convention�

Jody Kuberskey recently attended the 60th Annual Convention for the Association of Desk and�Derrick Clubs (ADDC)in St. Louis. The ADDC offers a seminar class every year at convention. This�year it was on Drilling. She and Tammy Watkins, Enid D&D member and an independent Land-�man, both took this class as a better insight to their jobs. However, this turned out to be much�more than that. The ADDC offers six (6) classes on different oil and gas topics once a year When�they complete all six classes a certificate as a Certified Petroleum Technician is awarded. So far�ADDC has handed out eight (8) certificates and it looks like that number will increase greatly�over the next few years. The two great things about the class, was learning all about how drilling�mud is the most important element to drilling a well and they were out of class early enough as it�was the perfect to tour the Arch of St. Louis.�

Jody went on to say: “Tammy Watkins and I had heard all about this film of�Louis and Clark at the Arch that we had to see. The 30 minute wide-screen,�almost 3-D like, film was an amazingly accurate account of the Louis and�Clark Expedition into the west. The movie clips made you feel like you were�on the travel to discover the west with them, from raging rapids, to being�lost in the wilderness, to a feeling of intense grandeur. The film was a de-�lightful tease to what we were about to experience. The 630 feet trip up in�the air, in a space-pod designed car (where you could NOT see out) was only�the beginning of what we would see. At the top, image seeing a panoramic�view of a city where you were just walking not even an hour ago. If the feeling that escaped me at�this precise moment was anything like what Louis and Clark must have felt, then believe me….it�was the same intense grandeur that all should experience at some point in his life time.”�

“I would like to thank Lew and Bill Ward and Mark Jopling for allowing me to participate in a�vast variety of educational seminars, the certification program and a wealth of information from�industry speakers. Also thanks to the Region II D&D Clubs who put on this fabulous conven-�tion.“�

A Thanksgiving tale�

A man ran into the butcher shop just before closing on the day before Thanksgiv-�ing. “You’ve got to help me,” he said. “I told my wife I’d bring home a turkey for�tomorrow’s dinner, and I forgot! Do you have any turkeys left?”�

“Well, I’ll see,” the butcher said, and he went into the walk-in fridge. He found only one�thin, scrawny turkey, and he brought it for the customer to look over.�

The man shook his head. “Are you sure you haven’t got anything else?”�

Hiding his irritation, the butcher headed back to the walk-in fridge, taking the turkey with�him. There were no others, so after a few minutes he brought the original turkey out again.�“Took me a while, but I found this one.”�

The customer sighed. “All right. I’ll take ’em both.”�

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2011�DECEMBER�BIRTHDAYS�

Lea Ann Strait 12-12�Stuart Houska 12-15�June Webb 12-16�Brad Curtis 12-17�Casidy Ward 12-28�Bob McKinnon 12-31�

ANNIVERSARIES�

Larry Jenkins 12-03� 27 years�LeaAnn Strait 12-13� 29 years�Judy Bradford 12-19� 6 years�Allison Angelton 12-26�

28 years�

NOVEMBER�BIRTHDAYS�

Jody Kuberskey 11-07�Drew Deaton 11-05�Steve Eckert 11-15�Patricia Vilhauer 11-19�Gilbert Tompson 11-21�Mary Kruger 11-24�Jim Evans 11-24�

ANNIVERSARIES�Jim Evans 11-08� 18 years�Brenda Brummal 11-16� 30 years�Amanda Hills 11-17� 3 years�

November�S� M� T� W� T� F� S�

1�All Saints�

Day�

2� 3� 4� 5�

6�Daylight�Savings�

Ends�

7� 8� 9� 10� 11�Pay Day�

12�

13� 14� 15� 16� 17� 18� 19�

20� 21� 22� 23� 24�Thanks-�

giving�

25�Pay Day�

26�

27� 28� 29� 30�

December�S� M� T� W� T� F� S�

1� 2� 3�

4� 5� 6� 7� 8� 9� 10�Christmas�

Party�

11� 12� 13� 14� 15� 16� 17�

18� 19� 20� 21� 22� 23� 24�

25� 26� 27� 28� 29� 30� 31�

Veteran’s�Day 11-11�

Ward Petroleum� Christmas Party�

December 10th�Oakwood Country Club�

We'll be turning our clocks�

back this weekend, which for�

most of us will mean an extra�

hour of sleep. But for the 20 to�

30 million Americans who suf-�

fer from insomnia, it will�

hardly make a difference.�

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Ward Petroleum’s Booth at the 24th Annual United Way Chili Cook-Off�Wonders of the World�

Visit Ward Petroleum�on the web!�

www.wardpetroleum.com�

Pumpkin Bars�By Paula Deen�

Bars�:�4 eggs�1 2/3 cups granulated sugar�1 cup vegetable oil�15-ounce can pumpkin�2 cups sifted all-purpose flour�2 teaspoons baking powder�2 teaspoons ground cinnamon�1 teaspoon salt�1 teaspoon baking soda�Icing:�8-ounce package cream cheese, softened�1/2 cup butter or margarine, softened�2 cups sifted confectioners' sugar�1 teaspoon vanilla extract�

Directions�Preheat the oven to 350 degrees F.�Using an electric mixer at medium speed, combine the eggs, sugar, oil and�pumpkin until light and fluffy. Stir together the flour, baking powder, cinna-�mon, salt and baking soda. Add the dry ingredients to the pumpkin mixture�and mix at low speed until thoroughly combined and the batter is smooth.�Spread the batter into a greased 13 by 10-inch baking pan. Bake for 30 min-�utes. Let cool completely before frosting. Cut into bars.�To make the icing: Combine the cream cheese and butter in a medium bowl�with an electric mixer until smooth. Add the sugar and mix at low speed until�combined. Stir in the vanilla and mix again. Spread on cooled pumpkin bars.�

Enid Office�502 S. Fillmore�P O Box 1187�

Enid, OK�73702�

Phone: 580�234-3229�Fax: 580�234-6237�

Ft. Collins�Office�

215 W. Oak�Suite 1000�

Ft. Collins, CO�80521�

Phone: 970�449-4636�Fax: 970�

Email: judyb@wardpetroleum.com�

Ward Petroleum Corporation�

2011 Ward Team�Wonders of Enid�

Linda Weathers Randy Thacker,�Brad Curtis, Amanda Hills and Susan Hessel�

Lew Ward� enjoying some�

chili�

‘Wonders of Enid’�