1 Water Use in Oil and Natural Gas Production ConocoPhillips Canada Water in a World of Seven Billion Conference May 10,

2 Outline The global energy and water challenge Oil and natural gas production and water use Water sources in oil and natural gas development Industry response to the energy-water nexus ConocoPhillips initiatives Future trends

3 The Global Energy and Water Challenge Water Availability World Energy Demand Ref 2: 2011 EIA World Energy Consumption by Fuel Type Quadrillion BTU Ref 1: World Meteorological Association

4 Oil and Natural Gas Production and Water Use Type of Oil and Natural Gas Production 2010 Average Water Use Intensity (bbls of water/bbls oil equiv) Oil sands – Mining Oil Sands – In Situ Conventional Oil Shale Gas 4 (U.S. data) 0.08 – 0.24 Energy use and production of energy are linked to water use Operating and In Construction Western Canadian Oil Production Ref 3: 2010 CAPP RCE Ref 4: 2010 Harvard Kennedy School Ref 5: 2011 CAPP Crude Oil Forecast

5 Water Sources for Oil and Natural Gas Production

6 Water Sources Oil and Gas Development Today’s fresh water sources lakes, rivers and dugouts Water use per well 2,000 to 70,000 m 3 One-time water use Produces for 40 to 50 yrs Future sources (lower quality water) Saline groundwater Flow back water Produced water Municipal wastewater Water quality Application of Technology is key to decreasing use of fresh water sources

7 Water Sources In-Situ Bitumen Production Primary sources Non-saline (fresh) and saline (non-fresh) groundwater 85% of water recycled Future trends Increased production with saline sources technology to reduce steam-to-oil ratio Ref 3: 2010 CAPP RCE Fresh and Non-Fresh Water Used by In-Situ Projects (million m 3 and barrels)

8 What is the oil and natural gas industry doing to address the energy-water nexus?

9 Energy-Water Nexus Industry Initiatives CAPP 2011 Water Conservation Efficiency Production Plan (6) Projected fresh water productivity by 2015 ( baseline): Oil Sands mining (total fresh water) - 30% Oil Sands in-situ – 47% Conventional oil (including EOR) – 15% Projections depend on Availability and treatability of saline water Net environmental benefit from using saline sources Canada’s Oil Sands Innovation Alliance (7) – announced in 2012 CAPP Guiding Principles and Operating Practices for Hydraulic Fracturing (8)

10 CAPP Guiding Principles for Hydraulic Fracturing We will safeguard the quality and quantity of regional surface and groundwater resources, through sound wellbore construction practices, sourcing fresh water alternatives where appropriate, and recycling water for reuse as much as practical. We will measure and disclose our water use with the goal of continuing to reduce our effect on the environment. We will support the development of fracturing fluid additives with the least environmental risks. We will support the disclosure of fracturing fluid additives We will continue to advance, collaborate on and communicate technologies and best practices that reduce the potential environmental risks of hydraulic fracturing.

11 CAPP Operating Practices for Hydraulic Fracturing

12 Energy-Water Nexus ConocoPhillips Global Water Initiatives Minimize Environmental Impacts Our commitment Develop plans to address local freshwater scarcity understanding local needs What we’ve done Fresh water strategy, best practices and developing technologies Fresh water supply risk assessment (WBCSD Global Water Tool) Global Water Sustainability Center focused on water treatment What we plan to do Review and implement (by priority) site strategies Where feasible use treated municipal wastewater as alternative supply New technologies - reduce fresh water to drill and complete wells ConocoPhillips Onshore Well Management Principles Global standards for protecting water resources ConocoPhillips Water Sustainability Position Baseline corporate expectation for managing water resources

13 Energy-Water Nexus ConocoPhillips Canada Business Unit Western Canada Business Unit water and energy management initiatives Plans to improve water use productivity and decrease fresh water use Water source and watershed studies Assess centralized management and treatment of water Oil Sands Assets water and energy management initiatives Saline water source assessments Technology and process optimization Reduced steam-oil-ratio (SOR) from 2.92 to 2.36 (from 2008 to 2010) Retrofitted Surmont 1 - direct steam injection technology (reduce makeup water) Evaluating several technologies to reduce footprint Desalination technology Enhanced steam-assisted gravity drainage Centrifuge technology Ceramic membrane technology

14 Future Trends Accurate forecasts for water availability and demand Sourcing from saline, wastewater and low quality water Environmental net affects assessments to evaluate water source alternatives Balance energy, economic, environmental and social outcomes Technology improvements in water treatment and re-use Collaboration on regional water management Collectively advance initiatives and technology to address the energy-water nexus

15 Thank You

16 Background Slides

17 Power Generation and Water Intensity Source: U.S. Department of Energy, “Energy Demands on Water Resources”, December 2006; Chesapeake for shale gas water use * Assumes closed loop cooling tower **Other use includes water for other process uses such as emissions treatment, facilities. Gallons / MWh Gas-fired combined cycle power plants use much less water than thermal power plants with only a small contribution from gas production n Natural Gas is a low carbon and low water energy source Ref 11: U.S Department of Energy Ref 11A: 2006 Chesapeake Energy

18 List of References 1. World Meteorological Association U.S Energy Information Association (DOE/EIA 0484(2011) 3. CAPP 2010 RCE Report Harvard Kennedy School Belfer Center - Water Consumption of Energy Resource Extraction, Processing and Conversion (discussion paper# ) 5. CAPP 2011 Crude Oil Forecast, Markets & Pipelines 6. CAPP 2010 Water CEP Plan

19 List of References 7. COSIA Website Link 8. CAPP Hydraulic Fracturing Guiding Principles and Operating Practices 9. ConocoPhillips Global Sustainable Development Web Page ConocoPhillips Canada Sustainable Development Portal U.S. Department of Energy, “Energy Demands on Water Resources” 11A Chesapeake Energy (data) for shale gas water use