How$An$Operator$Is$Developing$A$Systema7c$Sourcing$Strategy$To$ Guarantee$Water$Availability$At$Minimal$Costs

Katharine$A.$ Fredriksen Senior!Vice!President—Environmental!Strategy!and!Regulatory!Affairs!

### About$CONSOL$Energy

• Founded!in!1860,!began!operaCons!in!1864! • $6.1!billion!revenue! • Member!–!Fortune!500;!S&P!500! • Largest!underground!coal!producer!in!the!U.S.! • Among!the!largest!natural!gas!producers!in!Appalachia! • 12!mining!complexes!in!four!states,!including!the!3!largest!underground!mines!in!the! world! • 4.5!billion!tons!of!proven!and!recoverable!coal!reserves!and!3.5! tcf !natural!gas! reserves!! • Marcellus!Shale!partnership!with!Noble!Energy;!UCca!Shale!partnership!with!Hess! CorporaCon! • Private!R&D!facility!working!with!U.S.!DOE!and!others!on!advanced!technology!for!coal! and!CBM!producCon!and!uClizaCon! • Over!9,000!employees!
2!

### CONSOL$Energy$3$Core$Values$and$2$Priori7es$ 

### Core$Values$ • Safety! • Compliance! • ConCnuous!Improvement! Priori7es$ • ProducCon! • Cost! Values$are$not$priori7es$–$priori7es$change$while$values$remain$ constant$ 3!

### CONSOL’s$Unique$Perspec7ve$

CONSOL$Energy$is$the$only$company$that$operates$across$all$of$these$$ different$horizons.$$ 8,000!^! - 8,000 ft Upper Devonian Sands - – 1,750 – 5,500 ft

Utica Shale – 11,500 ft Rhinestreet Shale - – 7,400 – 7,800 ft Marcellus Shale – 8,000 ft Surface Sewickley Coal Seam – 900 ft Pittsburgh Coal Seam – 1,000 ft Freeport Coal Seam – 1,650 ftCONSOL$Energy$Corporate$Responsibility$Report$for$2011$
• First!Report!Completed! • Used!Global!ReporCng! IniCaCve!(GRI)!principles! • Highlighted!our!performance! in!

– Safety!

– Environment!

– Health!&!Wellness!

– Community! Will$publish$annually$in$concert$with$our$annual$report$

### Water$Fundamentals$ • Sustainability!of!water! resources! • Water!for!HF!can!come! from:!

– Public!water!sources!

– Groundwater!

– Surface!waters!

– Reduse! flowback !water!

– Use!treated!mine!and! shale!gasdproduced!water! Approximately$5$million$gallons$per$well$may$be$used$depending$on$site$

### CONSOL$Approach—First$Reduce$
• Step!OneddSeek!to!reduce!our!impact! on!the!watershed!

– Steps!taken!in!developing!our!water! management!plans!include:! • Plan!water!needs!along!with!well! development!schedule • Assess!makeup!water!sources— potable?!Surface!water!withdrawal?!! • Plan!for!seasonal!drought!

– In!cooperaCon!with!USGS,!installed! permanent!monitors!on!streams! CONSOL$takes$a$holis7c$approach$to$water$management$planning$across$its$ coal$and$gas$opera7ons$to$capture$efficiencies$and$opportuni7es$

### CONSOL$Energy$Water$Use$$
• Gas!OperaCons!–!2011!

– Total!Water!Withdrawn!(in! thousands!of!gallons)dd180,250!! • Municipal!Sources!–!66,838! • Surface!Water!–!113,412!

CONSOL$tracks$and$reports$annually$on$its$water$use$in$our$CR$Report$

### CONSOL$Approach—Next$Re[Use$ 

### CONSOL’s!policy!is!to!reduse!100%! of!its!shale! flowback !water!

– Requires!a!planned!system!of! pipelines!and!centralized! impoundments!to!meet!drilling! and!compleCon!schedules.!

– CONSOL!redused!56,299!(in! thousands!of!gallons)!or!31%!of! its!total!water!used! CONSOL$recycles$100%$of$its$Marcellus$water,$and$is$currently$on$track$to$ recycle$all$of$its$U7ca$water$

## Opera7onal$Expecta7ons$

• Assure!control!&!safe! storage!of!all! frac !fluids! on!the!surface! • Spill!Containment! • Erosion!and! SedimentaCon!Controls! • Complete!well!casing! and!cemenCng! • Final!disposal! underground!in!UIC!

### Centralized$Surface$Impoundments$

• Centralized! impoundments!are! necessary!for!reduse! • Double!lined!with!leak! detecCon!system! • Designed!and!operated! for!5d14!million!gallons!of! frac !water! • Connected!through!a! series!of!buried!pipelines! that!connect!each!well! pad!

### CONSOL—Recycle
• Recycle!opCons!include:!

– Use!of!treated!mine!water!

– Treatment!and!reduse!of!brine! water!through!advanced! technology!

– Use!of!effluent!from!advanced! waste!water!treatment!plants!
CONSOL’s$holis7c$approach$allows$for$mul7ple$op7ons$for$recycling$

## Use$of$Acid$Mine$Drainage$(AMD)$
• CONSOL!treats!36!billion!gallons! annually! • Minimal!treatment!–!high!potenCal! use!in!gas!well!development! applicaCons! • PA!leading!the!way!promoCng!use!of! AMD!in!gas!well!water!management! plans!

– US!EPA!acceptance?! 

### • LocaCon!and!!dissolved!solids!profile–! biggest!challenges! CONSOL$is$the$first$company$to$successfully$ frac $a$well$using$AMD$water$

### CONSOL[Epiphany$Solar$Water$Systems$$ 

### • June!25,!2012!CONSOL! announced!a!JV!with!Epiphany! Solar!Water!Systems!!

– Process!uses!ondsite! concentrated!solar!to!disCll! produced!water!from!our!shale! operaCons,!removing!90%!of!the! contaminants! CONSOL’s$goal$is$to$minimize$our$water$footprint$in$our$shale$opera7ons$Zero[Liquid$Discharge$Reverse$Osmosis$Treatment$ 

### • CONSOL!has!and!is!installing!RO! treatment!plants!for!our!large! underground!mines!

– The!clean!water!which!exits!the! system!can!be!used!in!our!own! operaCons!or!sold!for!use!by!other! operators.!

– Over!5000! gpm !of!purified!water! will!be!available,!along!with!a!salt! product!that!is!sold!for!commercial! use! CONSOL$captures$value$from$the$synergies$of$our$business$opera7ons$

### Conclusion$
• CONSOL!uClizes!a!holisCc! approach!in!planning!its!shale!gas! development! • Goal!is!to!minimize!our!water! footprint!

– Water!needs!are!calculated,!sources! idenCfied,!infrastructure!put!in! place!to!enable!reduse,!and!recycle! opCons!employed!to!deliver!a!sound! water!management!plan! Water$management$planning$up$front$helps$minimize$environmental$ impacts$