Case Study – Reducing Drilling hours by up to

54% in the Barnett Shale Douglas Gust P.Eng., Q’Max Solutions Inc.

Scott Marquess, Q’Max Solutions Inc.

Lane Dunham, Savanna Drilling USA

March 31, 2009

2

Barnett Shale Drilling Optimization Project

• Introduction• Project Scope• Achievements• Conclusions

3

Project Overview

• GOAL – Reduce well construction cost - $/ft

• Scope of Project– Build on what others had done – bits/directional etc.– Optimization of Drilling Fluid

• “Solids Free Drilling Fluid” – “SFDF”• Solids Control• Waste Management

– Reduction of hole sizes– “New Technology Drilling Rigs” – NTDRs

• Time Frame– 20 month project 3Q 2006 to 1Q 2008

4

SFDF

• Solids Free <1% suspended solids• Density up to 10.5 ppg in solution

– Typically 8.8 – 9.5 ppg – averaged 9.2 ppg on this project

• Inhibitive– Used Calcium Nitrate or Production Brine

• Easily converted to Polymer fluid when necessary– Well control – densities > 10.5 ppg

• Low rheology – Low ECD– Viscosity = 28 to 31– YP = 1 to 3

• 100% reusable

5

Solids Control – MudStripper™

Designed for SFDF• Remove 99.5% drill solids• Footprint = 15’ x 60’• Operates as “Closed Loop”• Sludge density range:

– 14.5 to 17.5 ppg

Shaker Cuttings MudStripper™

Sludge

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Cuttings Handling

Old Style Pit150’ x 100’ x 6’

14,000 bbls

Sludge Pit30’ x 12’ x 8’

500 bbls

Auger Tank Solids collection / Dump truck disposal

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Well Construction

• Hole size Reduction– Surface hole

• Reduced from 12 ¼” to 8 ¾”

• Reduced Casing from 9 5/8” to 7”

– Main Hole• Reduced from

7 7/8 – 8 ¾” to 6 1/8”• Reduced Casing from

7” to 4 ½”

• Benefits– Reduced cuttings volume– Reduced cement volume– Lower cost casing– Increased casing

availability

• Concerns– ROP– Tool Reliability– Cement quality

8

NTDR

NTDR – “New Technology Drilling Rig”

• Integrated top drive / pipe handling system– Some rigs drill with coil

tubing

• Small footprint• Fast moving (12

to 15 loads)

Benefits• Safety – reduced

risk for crews• Improved ROP

– Drill with Coil• No connections

– Drill with Range 3 pipe

• Smaller location sizes

• Fast Rig up/Tear down

• Shorter move times

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Accomplishments

• 41% reduction in average Drilling Hours– 226 hours/well to 133 hours/well

• 41% reduction in average Well Days– 20 days/well to 12.5 days/well

• 83% reduction in average Fluid Volume– 10,000 bbls/well to 1,729 bbls/well

• 100% reduction in Dilution Volume– Dilution was eliminated

• 75% reduction in surface area of drilling site– 400 ft x 400 ft to 200 ft x 200 ft

10

Average Drilling Hours

• Project Start– 226 hours/well

• Conventional Rig – 44 wells– 155 hours/well

• NTDR – 96 wells– 123 hours/well

• Best 2 rigs – 34 wells– 103 hours/well

• One NTDR w/ & w/o SFDF– 31 wells w/SFDF

• 131 hours/well

– 7 wells w/o SFDF• 153 hours/well

Average Drilling Hours

0

50

100

150

200

250

ProjectStart

ConvRig

NTDR Best 2Rigs

Dri

llin

g H

ou

rs

SFDF

NTDR Drilling Hours (31 wells with SFDF & 7 wells w/o SFDF)

120

125

130

135

140

145

150

155

Non SFDF SFDF

Dri

llin

g H

ou

rs

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Average Days / Well

• Project Start 20 days/well

• 157 wells 12.5 days/well

• SFDF– 149 wells

11.9 days/well– 97 wells NTDR

10.5 days/well– 77% of wells

< 15 days

Number of Wells by Days

0

2

4

6

8

10

12

14

16

5 10 15 20 25 30 35Well Days

Num

ber of

Wel

ls

NTDR SFDF

Conv Rig SFDF

NTDR w/o SFDF

Conv Rig w/o SFDF

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Average Drilling Performance

• Average Performance based upon “well days”670 ft/day

• SFDF700 ft/day

• Best 2 Rigs848 ft/day

NOTE: Op #2 calculated from assumed 10,000 ft well depth and days from Spud to TD

Drilling Performance in the Barnett Shale

0

100

200

300

400

500

600

700

800

900

2005 2006 2007 2005 2006 2007 2007 2007 2006 2007 2006 2007 2007

Drilli

ng P

erfo

rman

ce (ft/d

ay)

Op #1 Well days

Op #2Spud to TD

Op #3 This ProjectWell days

SFDF Best 2 rigs

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Drilling Performance by Bit Diameter

Bit Diamete

r (in)

# wells

Average Drilling

Performance (ft/day)

SFDF

6 1/8” to

6 ¾”125 692 719

7 7/8” to

8 ¾”32 577 613

157 670 700

Drilling Performance

0

100

200

300

400

500

600

700

800

6 1/ 8 to 6 3/ 4 7 7/ 8 to 8 3/ 4Main Hole Diameter (in)

Drilli

ng P

erfo

rman

ce (ft/d

ay)

Non-SFDF SFDF

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Fluid Volume Reduction

• SFDF & MudStripper™ is a “Closed Loop” system

• SFDF is 100% reusable

• Reduced hole sizes reduces volumes– Seepage loss– Fluid on

cuttings

1,729 bbls8,000 bbls

1,000 bbls

2,000 bbls

5,000 bbls

Average Volume Used / well Change in Hole SizeElimination of Dilution Elimination of Sump

Fluid Volume Reduction

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Reduced Location Size

• Location reduced from 400’ x 400’ to 200’ x 200’– 75% reduction in surface

area

• NTDR– Small footprint

• MudStripper™– “Closed Loop” system

with small footprint0

50

100

150

200

250

300

350

400

0 50 100 150 200 250 300 350 400

Original Location Size400 ft x 400 ft

Reduced Location Size200 ft x 200 ft

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Conclusion

• KEY Success Factors– Project Integration & Execution– SFDF– NTDR– Hole Size Reduction

• Significant reduction in $/ft achieved– Some individual costs (product and services)

increased– Variable cost – time related decreased– Some costs (casing) decreased

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Conclusion – Project Milestones

2.3 % average suspended solids (<1% typical)

4.6 days – Spud to TD on fastest well (8,400 ft)

6 1/8 inch bit used to drill main hole (97 wells)

7 “one bit” runs from surface casing to TD

8 counties in project

11.9 days/well average using SFDF (149 wells)

31 wells with average footage > 1,000 ft/day

157 wells in the dataset

700 ft/day average with SFDF

1,729 bbls/well average fluid volume

4,240ft – most footage drilled in one 24 hour period