Developing International

Shale Reservoirs

Rod Nelson

Achieve Produce and Evaluate

Unconventional Projects

Tight Gas

CBM

Shale

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Factors in Europe Shale Gas

Source: Yale University (http://epi.yale.edu), SBC Analysis

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Development Will Be Different

Evolving the Approach for Superior Performance

Utilize existing geophysical data

Accept statistical variation in well

performance

Compensate by drilling more wells

Measurements for reservoir

quality and letion quality

Technology to drive efficiency

– Operation efficiency

– Flow efficiency

Reservoir Quality, Completion Quality, Efficiency and Environment

Drill nly best wells

Production is Not Uniform

Analysis of 220+ Production Logs run in the Woodford, Barnett,

Fayetteville, Haynesville, Eagle Ford and Marcellus confirmed

the following:

• Production is not uniform in horizontal shale gas reservoirs (US L48)

• 30% of perforation clusters are not contributing

• Results vary by Basin

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–

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20

Perforation Clusters

Pro

du

ctio

nP

erc

en

tage

30%

0.0%

2.0%

4.0%

6.0%

8.0%

1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 33 35 37 39

Perforation Clusters

Pro

du

ctio

nP

erc

en

tage

43%

Engineered Solutions

TECHNOLOGY OPERATIONS

Integrated Workflow for Shale Reservoirs

More Recovery

Less Waste

Manage flowback/cleanup

Optimize pressure / rate

Coiled tubing interventions

Measure zone contribution

Maximize recovery

More Knowledge

Advanced basin modeling

Integrate core/log/seismic

Define reservoir quality

Define completion quality

Sweet spots

Evaluate

More Pay Zone

Less Rig Time

Engineered bit/BHA

Hole cleaning & quality

Longer laterals, > ROP

Cuttings and mud logs

Wellbore placement

Drill

More Reservoir Contact

Less Environment Impact

Engineered frac design

Efficient stim hardware

friendly chemistry

Reduce water/proppant

Complete Produce

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Channel Fracturing (HiWAY): More with Less

552500

887

0

100

200

300

400

500

600

700

800

900

1,000

All Eagle Ford w/o HiWAY

(2,923 Wells)

Hawkville w/o HiWAY

(404 Wells)

Hawkville HiWAY

(82 Wells)

Production Max-Month Average, BOE/D

High Level of Environmental Performance

Fully disclosed fracturing fluids Comply with Environmental Standards

Non Toxic Disinfecting Systems

On-site generation from sodium chloride

Salt Water Power Mixed Oxidant

Solution

MIOX provides oxidants from NaCl

Residual disinfectant

“On-the-fly” disinfection

Zero impact on fluid performance

OPERATIONS: Environmental Stewardship

PRODUCTION

WATER

PROCUREMENT

FRACTURING

PROCESSES OPERATIONS

WELL

CONSTRUCTION

FLOWBACK & PRODUCED

WATER

CONSTRUCTION – DRILLING AND COMPLETION

Vaporizer

Transportation

Bi-Fuel Engines - Natural Gas powered

─ 50-70% reduction in Diesel consumption

─ > 50% reduction in engine emissions

Ongoing Operations:

─ Safe operation for over 1.5 years

─ > 350 stages successfully completed

Electric driven mobile equipment

─ Variable Fuel Source ( Natural Gas, Diesel, Grid )

─ Performance Improvement

─ Low noise, Zero local emission for populated areas

Reduced Emission Power Systems Produced Natural Gas

LNG Plant

Bi Fuel Engine

Technology To Unleash Shale Reservoirs

Minimum data utilized

Accept variations in well performance

Compensate by drilling more wells

Factory approach

Large footprint high rates & large fluid volumes

Collect optimum data

Understand the Reservoir and Completion Quality

Targeted well placement

Flexible factory utilizing technology for efficiency

Reduced footprint and environmentally friendly fluids

Summary

There is large potential for

International Shale development Numerous Studies and Projects

Driven by strong demand for “local” gas

Biggest Risks Are Not Subsurface Regulatory/Fiscal

Market

Cost Base/Infrastructure

Internationally, the integration of

Technology will make the difference Evaluate

Execute

Achieve „More for Less‟

Landing of Lateral

Well Placement

Formation Evaluation

Reservoir Access

Production Management

Design & Placement of Stimulation

Water Management & Environmental Issues

Surface Efficiency

Basin & Reservoir Modeling

Downhole Efficiency

Bottomhole Temperature

Industry‟s License to Operate From the Community