$95M PROJECT INCREASES OIL RECOVERY REDUCES CO2

The southeast Saskatchewan community of Midale will soon be home to a world-scale, enhanced oil recovery operation that increases oil production and simultaneously reduces greenhouse gas emissions that would otherwise enter the environment.

The provincial government today welcomed Apache Canada Ltd.'s decision to invest $95 million over the next five years to recover additional oil from its Midale Unit oilfield by injecting and trapping carbon dioxide (CO2) deep inside the Earth.

"The oil and gas industry continues to invest in Saskatchewan, confirming the province is a good place to do business," Industry and Resources Minister Eric Cline said. "By supporting Apache and the other owners in this project, we are extending the life of the Midale operation by over two decades with minimal environmental impact. The additional oil will generate significant royalty and tax revenue for the province and valuable jobs and income for our residents."

Almost half of the funds will be invested this year in new construction, including 26 kilometres of pipeline to tie into the existing 325-kilometre pipeline that delivers CO2 to the EnCana operation in Weyburn.

This is Saskatchewan's second full-scale CO2 enhanced oil recovery project. The province encouraged Apache's investment by offering special enhanced oil recovery royalty and production tax provisions. Apache expects to recover an additional 45-46 million barrels of oil from the Midale Unit, increasing its production by approximately 50 per cent.

"By working together with the Saskatchewan government we are able to move forward on this exciting project that promises increased prosperity for all the players," Apache Canada Ltd.'s joint venture manager Bill Jackson said.

Apache Canada Ltd. estimates it will extend the life span of the Midale Unit by about 25 years, during which time up to 8.75 million tonnes of CO2 will be sequestered underground rather than being released into the atmosphere.

The CO2 will be purchased from a coal gasification plant that has piped CO2 from Beulah, North Dakota to Weyburn since 2000. Up to 1,350 tonnes of purchased CO2 will be injected deep into the ground on a daily basis over the next 20 years, making it the second largest CO2 flood operation in Canada.

The oil and gas industry continues to be the largest contributor to the provincial economy, investing an estimated $1.7 billion last year in new exploration and development activity and maintaining 24,000 direct and indirect jobs in the province.

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For More Information, Contact:

Jennifer Redston Industry and Resources Regina Phone: (306) 787-1691

Bill Jackson Apache Canada Ltd. Calgary Phone: 403) 261-1321 Cell: (403) 850-6799