Region overview

Since entering the Canadian market in 1995, Apache Canada Ltd. has grown into one of the country’s top oil and gas producers.

Apache has 7.5 million gross acres across the provinces of British Columbia, Alberta and Saskatchewan. Our acreage base provides a significant inventory of both low-risk development drilling opportunities in and around a number of Apache fields and higher-risk, higher-reward exploration opportunities. At year-end 2011, our Canadian region represented approximately 26 percent of our estimated proved reserves. In 2011, we drilled or participated in 143 wells in Canada.

Our conventional oil assets comprise a wide variety of opportunities from southeastSaskatchewan to northwest Alberta. An increased focus on these assets during 2011 resulted in drilling 70 wells, enabling us to take advantage of current strong oil price realizations. We utilized advanced reservoir modeling and horizontal drilling technology to identify and exploit unswept oil in existing waterflood projects in the House Mountain, Leduc, Snipe Lake and Provost areas. Additionally, we continued efforts on our enhanced oil recovery project at Midale with expansion of CO₂ injection and assessment of new seismic data.
In the Kaybob and West 5 areas, the region continues to have success in the development of liquids-rich natural gas plays. These areas have focused primarily on the Bluesky, Montney and Glauconite formations through horizontal drilling and multi-stage fracture completions. In addition, drilling costs have been driven down throughout the year. Horizontal oil plays in the Viking, Dunvegan and Cardium formations are emerging, and we expect to further develop these opportunities as part of our 2012 drilling program.

The region’s near-term natural gas drilling activity will likely be focused in three large growth plays in British Colombia: shale gas in the Horn River basin, Cadomin conglomerates and sands in the Noel area, and fractured reservoirs in the Ojay area. Drilling activity focused on natural gas will be driven by investment decisions surrounding Apache’s ownership in the Kitimat LNG facility. Apache Canada Ltd., Encana Corporation, and EOG Resources Canada, Inc. plan to build the Kitimat LNG facility on Bish Cove near the Port of Kitimat, 400 miles north of Vancouver, British Columbia.

In 2012, the Canadian region plans to drill 170 wells.

Unconventional thinking

Unconventional growth opportunities are expected to drive the future of Apache in Canada, moving beyond the conventional plays of Alberta, British Columbia and Saskatchewan that have been the foundation of our activities for more than 15 years.
Apache shares an interest in more than 400,000 acres in the Horn River Basin shale play, which has evolved into one of the highest-quality unconventional shale gas plays in North America.  Our investment in innovation has made this possible, and Apache is leading the industry in shale gas completions technology and operations.

Alternative markets

Apache recognizes the significant resource potential of Canadian shale gas and we will therefore continue to foster innovative development in that area. The magnitude of the Horn River Basin prompted Apache to seek alternative markets. We currently have a 40 percent ownership and throughput capacity in the proposed Kitimat Liquefied Natural Gas (LNG) terminal in northern British Columbia – the only LNG export facility under development in North America.  The front-end engineering and design study is well underway, with a final investment decision expected in 2012. If we proceed with the development, which will have a capacity of 700 million cubic feet per day, Apache’s net capacity in the facility has the potential to provide an outlet for 350 million cubic feet per day of gas from the Horn River or other areas in Canada and access to markets that receive worldwide LNG prices.

To learn more about the Kitimat LNG project, please visit www.kitimatlngfacility.com.

Enhancing recovery

Apache derives benefit from the Earth and we take our environmental responsibility seriously. We support the identification and development of cost-effective emission-reduction projects that are economic to implement, yet result in significant reductions in greenhouse gases. Apache operates two CO₂ enhanced oil recovery (EOR) projects in Canada, in Zama, Alberta, and Midale, Saskatchewan. This is the most of any producer in Canada.

Committed to reducing the use of surface water in hydraulic fracturing, Apache partnered to design and build an innovative water treatment plant in the Horn River Basin. The plant recovers and re-uses fracture stimulation fluids to create a sustainable cycle of water use. Apache also works with stakeholders, First Nations and government to reduce our overall environmental footprint and maximize efficient infrastructure development.

Outreach

Apache Canada Ltd. is proud to support the communities in which we work. 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 and civic improvement.

Apache’s corporate giving program is region-based and employee-driven. In each of our communities, Apache employee committees determine which programs and projects will receive Apache funding.

The same sense of urgency, commitment and dedication that drives Apache’s operational progress is apparent in our employees’ participation in their communities through their involvement with their children’s education, participation in youth activities and support for local charities and community institutions.