Title ldquoImproved Miscible Nitrogen Flood Performance Utilizing Advanced Reservoir Characterization and Horizontal Laterals in a Class I Reservoir ndash East Binger (Marchand) Unitrdquo

Type of Report Quarterly Technical Progress (Report No 15121R25)

Reporting Period Start April 1 2006

Reporting Period End June 30 2006

Principal AuthorInvestigator Joe Sinner

Report Date October 6 2006

Cooperative Agreement No DE-FC26-00BC15121

Contractor Name amp Address Binger Operations LLC P O Box 2850 Cody Wyoming 82414

DOE Project Manager Chandra Nautiyal National Petroleum Technology Office

Disclaimer

ldquoThis report was prepared as an account of work sponsored by an agency of the United States Government Neither the United States Government nor any agency thereof nor any of their employees makes any warranty express or implied or assumes any legal liability or responsibility for the accuracy completeness or usefulness of any information apparatus product or process disclosed or represents that its use would not infringe privately owned rights Reference herein to any specific commercial product process or service by trade name trademark manufacturer or otherwise does not necessarily constitute or imply its endorsement recommendation or favoring by the United States Government or any agency thereof The views and opinions of authors expressed herein do not necessarily state or reflect those of the United States Government or any agency thereofrdquo

Abstract

The reservoir characterization and investigation of the benefits of horizontal wells in the East Binger Unit miscible nitrogen flood as been completed A significant work program was implemented from 2002 to 2005 in an effort to reduce gas cycling and economically increase ultimate oil recovery Horizontal and vertical infill wells were drilled and existing producers were converted to injection Due to successful infill drilling based on the improved flow characterization more drilling was done than originally planned and further drilling will occur after the project is completed

Through the drilling of wells and reservoir characterization work it was determined that poor areal sweep efficiency is the primary factor causing nitrogen cycling and limiting oil recovery This is in contrast to the perception prior to the initiation of development which was that gravity segregation was causing poor vertical sweep efficiency

Although not true of all infill wells most were drilled in areas with little sweep and came online producing gas with much lower nitrogen contents than previously drilled wells in the field and in the pilot area Seven vertical and three horizontal wells were drilled in the pilot area throughout the project As previously reported the benefits of horizontal drilling were found to be insufficient to justify their increased cost

Nitrogen recycle defined as nitrogen production as a percentage of injection decreased from 72 prior to initiation of the project to about 25 before rising back to a current rate of 40 Injection into the pilot area despite being limited at times by problems in the Air Separation Unit of the Nitrogen Management Facility increased 60 over levels prior to the project Meanwhile gas production and nitrogen content of produced gas both decreased

TABLE OF CONTENTS

INTRODUCTION 1

EXECUTIVE SUMMARY 1

EXPERIMENTAL 1

RESULTS AND DISCUSSION 2

TASK 131 ndash CONTINUE MONITORING PROGRAM TASK 133 ndash TECHNOLOGY TRANSFER ACTIVITIES ndash CONTINUE UPDATING WEB SITE

2 4

CONCLUSION 4

REFERENCES 5

LIST OF GRAPHICAL MATERIALS

FIGURE 1 MAP OF THE CENTRAL PORTION OF THE EAST BINGER UNIT THE PILOT AREA IS INDICATED BY THE BLUE POLYGON WELL WORK IMPLEMENTED IN THE

PROJECT IS HIGHLIGHTED IN RED 6

FIGURE 2 PRODUCTION DATA FOR ALL WELLS IN THE PILOT AREA 7

FIGURE 3 PRODUCTION DATA FOR WELLS IN THE PILOT AREA THAT EXISTED BEFORE DOE PROJECT DEVELOPMENT 8

FIGURE 4 PRODUCTION DATA FOR NEW WELLS IN THE PILOT AREA 9

FIGURE 5 OIL NGL AND RESIDUE GAS FORECASTS WITHOUT AND WITH DEVELOPMENT SHADED ldquoWEDGESrdquo REFLECT INCREMENTAL RESERVES DEVELOPED WITH THE

PROJECT 10

FIGURE 6 COMPARISON OF PRODUCTION DATA FOR RECENT HORIZONTAL AND VERTICAL WELLS IN OR NEAR THE PILOT AREA HORIZONTAL WELLS ARE DESIGNATED

WITH AN ldquoHrdquo IN THEIR NAMES 11

FIGURE 7 COMPARISON OF AVERAGE PRODUCTION DATA FOR TWO HORIZONTAL AND FIVE VERTICAL WELLS IN OR NEAR THE PILOT AREA 12

FIGURE 8 PILOT AREA GAS SAMPLE DATA ndash PERCENT NITROGEN IN PRODUCED GAS NEW WELLS ARE SHOWN IN BLUE AT THE BOTTOM OF THE TABLE LIMITED DATA WAS

OBTAINED IN THE FOURTH QUARTER OF 2005 DUE TO A SAMPLING PROBLEM 13

Quarterly Technical Progress Report ndash 2nd Quarter 2006

Introduction

The DOE-sponsored project in the East Binger Unit (ldquoEBUrdquo) miscible nitrogen injection project has been completed A significant work program was implemented from 2002 to 2005 in an effort to reduce gas cycling and economically increase ultimate oil recovery Horizontal and vertical infill wells were drilled and existing producers were converted to injection Overall project results have been encouraging with reductions in nitrogen production and cycling and fluid flow in the reservoir is better understood Due to successful infill drilling based on the improved flow characterization more drilling was done than originally planned and further drilling will occur after the project is completed Data gathering specifically in the form of produced gas analyses from producers in the project area continued throughout the project

Executive Summary

The reservoir characterization and investigation of the benefits of horizontal wells in the East Binger Unit miscible nitrogen flood as been completed A significant work program was implemented from 2002 to 2005 in an effort to reduce gas cycling and economically increase ultimate oil recovery Horizontal and vertical infill wells were drilled and existing producers were converted to injection Due to successful infill drilling based on the improved flow characterization more drilling was done than originally planned and further drilling will occur after the project is completed

Through the drilling of wells and reservoir characterization work it was determined that poor areal sweep efficiency is the primary factor causing nitrogen cycling and limiting oil recovery This is in contrast to the perception prior to the initiation of development which was that gravity segregation was causing poor vertical sweep efficiency

Although not true of all infill wells most were drilled in areas with little sweep and came online producing gas with much lower nitrogen contents than previously drilled wells in the field and in the pilot area Seven vertical and three horizontal wells were drilled in the pilot area throughout the project As previously reported the benefits of horizontal drilling were found to be insufficient to justify their increased cost

Nitrogen recycle defined as nitrogen production as a percentage of injection decreased from 72 prior to initiation of the project to about 25 before rising back to a current rate of 40 Injection into the pilot area despite being limited at times by problems in the Air Separation Unit of the Nitrogen Management Facility increased 60 over levels prior to the project Meanwhile gas production and nitrogen content of produced gas both decreased

Experimental

There were no experimental methods used in the work completed during this reporting period

DE-FC26-00BC15121 Page 1

Results and Discussion

The following is a detailed review of the work conducted in this reporting period

Task 131 ndash Continue Monitoring Program

Binger Operations LLC (ldquoBOLrdquo) continues to monitor new well and overall pilot area performance Figure 1 shows the well work implemented during the project For the second quarter of 2006 pilot area production averaged 478 bopd a net increase of 235 bopd over the projected current rate without development and an increase of 27 bopd over the previous quarter Overall production from new wells in the project area added 277 bopd but was offset by the loss of 42 bopd from wells converted to injection See Figures 2 (all wells in pilot area) 3 (pre-existing wells) and 4 (new wells)

Figure 4 shows the component rate streams of various wells and packages of wells that have been brought on line throughout the project The recent increase of 27 bopd over the average rate of the prior quarter was largely driven by increases at two wells EBU 46-3 and EBU 64-3H EBU 46-3 increased following a period of lower than expected production associated with poor wellbore hydraulics which was resolved by installing and lining out a rod pump The increase at EBU 64-3H is a classical injection response in addition to the increase in oil rate (from 40 to 60 bopd over a seven month period) the associated hydrocarbon gas has caused the overall nitrogen content in the wellrsquos produced gas to drop from 52 to 31

Gas cycling is increasing but is still well below pre-project levels as shown in Figure 2 Injection has leveled off at about 63 MMscfd about 58 higher than before the project began Meanwhile total nitrogen produced from the pilot area has declined from 29 MMscfd (42 MMscfd total gas with a nitrogen content of 69) to 25 MMscfd (43 MMscfd total gas with a nitrogen content of 59) As shown in the table that follows this represents a total change in gas recycle from 72 prior to development to about 40 over the past six months Gas production and gas nitrogen content will continue rise but this clearly represents an improvement in flood performance

DE-FC26-00BC15121 Page 2

Pilot Area Gas Recycle

[A] [B] [C] = [A][B] [D] [C] [D] Total Gas Nitrogen Nitrogen Production Percent Production Injection Percent

Rate Nitrogen Rate Rate Recycle(MMscfd) () (MMscfd) (MMscfd) ()

Pre-Development Baseline (1H 2001) 42 69 29 40 72 Fourth Quarter 2003 31 55 17 69 25 First Quarter 2004 29 56 16 60 27 Second Quarter 2004 34 53 18 62 29 Third Quarter 2004 36 54 19 70 28 Fourth Quarter 2004 37 56 21 51 40 First Quarter 2005 34 58 20 44 46 Second Quarter 2005 37 60 22 68 33 Third Quarter 2005 43 62 26 61 44 Fourth Quarter 2005 42 64 27 64 42 First Quarter 2006 38 65 25 64 39 Second Quarter 2006 43 59 25 63 40 Plant problems limited the supply of nitrogen for injection from November 2004 through February 2005

Based on the pre-project decline and the rate at the end of the reporting period the project has added 19 million barrels of oil reserves 08 million barrels of NGL reserves and 31 BCF of residue gas reserves See Figure 5

A secondary aspect of Pilot Area performance monitoring is the comparison of the performances of horizontal wells to vertical wells Figure 6 is a plot of the rate performances of the new wells drilled in the project excluding EBU 37-3H the horizontal well drilled in Budget Period 1 and EBU 43-2 and EBU 60-2 two recently completed vertical wells As previously reported these three wells were drilled in areas with much higher gas saturation EBU 37 G-3H and EBU 43-2 have been converted to injection and EBU 60-2 is awaiting conversion

Comparisons of wells in similar reservoir environments (thickness and gas saturation) show that vertical wells have performed nearly as well as the horizontal wells

DE-FC26-00BC15121 Page 3

Figure 7 shows the averages of the following horizontal and vertical wells

Average GOR amp N2 Average GOR amp N2 6 - 9 Months 15 - 18 Months

Well Net Pay (reflect gas saturation) (reflect gas saturation)

Horizontal EBU 63-2H 70rsquo - 75rsquo 43 Mcfbbl amp 21 49 Mcfbbl amp 24 EBU 64-3H 55rsquo - 60rsquo 56 Mcfbbl amp 17 39 Mcfbbl amp 29 Average Horizontal 65rsquo 50 Mcfbbl amp 19 44 Mcfbbl amp 27

Vertical EBU 44-3 66rsquo 24 Mcfbbl amp 3 29 Mcfbbl amp 4 EBU 46-3 80rsquo 16 Mcfbbl amp 3 13 Mcfbbl amp 4 EBU 47-2 69rsquo 59 Mcfbbl amp 54 Not there yet EBU 67-2 62rsquo 116 Mcfbbl amp 50 159 Mcfbbl amp 52 EBU 74-2 45rsquo 16 Mcfbbl amp 10 17 Mcfbbl amp 17 Average Vertical 63rsquo 46 Mcfbbl amp 24 55 Mcfbbl amp 19

Most of the new wells have low GORs and nitrogen contents in produced gas as indicated above and shown in Figure 8 The relative lack of nitrogen at the infill well locations indicates poor areal sweep ndash EBU 60-2 being a significant exception to this For most new wells current trends of nitrogen content data suggest it will be years before the nitrogen contents in their produced gas approach the current field average

Task 133 ndash Technology Transfer Activities ndash Continue Updating Web Site

Additional technical progress reports have been posted on the project web site wwweastbingerunitcom A review of the project was presented to the Big Horn Section of the Society of Petroleum Engineers in Cody Wyoming on May 4 2006

Conclusion

The reservoir characterization and investigation of the benefits of horizontal wells in the East Binger Unit miscible nitrogen flood as been completed Through the drilling of wells and reservoir characterization work it was determined that poor areal sweep efficiency is the primary factor causing nitrogen cycling and limiting oil recovery This is in contrast to the perception prior to the initiation of development which was that gravity segregation was causing poor vertical sweep efficiency Although not true of all infill wells most were drilled in areas with little sweep and came online producing gas with much lower nitrogen contents than previously drilled wells in the field and in the pilot area Seven vertical and three horizontal wells have been drilled in the pilot area

DE-FC26-00BC15121 Page 4

Disclaimer

ldquoThis report was prepared as an account of work sponsored by an agency of the United States Government Neither the United States Government nor any agency thereof nor any of their employees makes any warranty express or implied or assumes any legal liability or responsibility for the accuracy completeness or usefulness of any information apparatus product or process disclosed or represents that its use would not infringe privately owned rights Reference herein to any specific commercial product process or service by trade name trademark manufacturer or otherwise does not necessarily constitute or imply its endorsement recommendation or favoring by the United States Government or any agency thereof The views and opinions of authors expressed herein do not necessarily state or reflect those of the United States Government or any agency thereofrdquo

Abstract

The reservoir characterization and investigation of the benefits of horizontal wells in the East Binger Unit miscible nitrogen flood as been completed A significant work program was implemented from 2002 to 2005 in an effort to reduce gas cycling and economically increase ultimate oil recovery Horizontal and vertical infill wells were drilled and existing producers were converted to injection Due to successful infill drilling based on the improved flow characterization more drilling was done than originally planned and further drilling will occur after the project is completed

Through the drilling of wells and reservoir characterization work it was determined that poor areal sweep efficiency is the primary factor causing nitrogen cycling and limiting oil recovery This is in contrast to the perception prior to the initiation of development which was that gravity segregation was causing poor vertical sweep efficiency

Although not true of all infill wells most were drilled in areas with little sweep and came online producing gas with much lower nitrogen contents than previously drilled wells in the field and in the pilot area Seven vertical and three horizontal wells were drilled in the pilot area throughout the project As previously reported the benefits of horizontal drilling were found to be insufficient to justify their increased cost

Nitrogen recycle defined as nitrogen production as a percentage of injection decreased from 72 prior to initiation of the project to about 25 before rising back to a current rate of 40 Injection into the pilot area despite being limited at times by problems in the Air Separation Unit of the Nitrogen Management Facility increased 60 over levels prior to the project Meanwhile gas production and nitrogen content of produced gas both decreased

TABLE OF CONTENTS

INTRODUCTION 1

EXECUTIVE SUMMARY 1

EXPERIMENTAL 1

RESULTS AND DISCUSSION 2

TASK 131 ndash CONTINUE MONITORING PROGRAM TASK 133 ndash TECHNOLOGY TRANSFER ACTIVITIES ndash CONTINUE UPDATING WEB SITE

2 4

CONCLUSION 4

REFERENCES 5

LIST OF GRAPHICAL MATERIALS

FIGURE 1 MAP OF THE CENTRAL PORTION OF THE EAST BINGER UNIT THE PILOT AREA IS INDICATED BY THE BLUE POLYGON WELL WORK IMPLEMENTED IN THE

PROJECT IS HIGHLIGHTED IN RED 6

FIGURE 2 PRODUCTION DATA FOR ALL WELLS IN THE PILOT AREA 7

FIGURE 3 PRODUCTION DATA FOR WELLS IN THE PILOT AREA THAT EXISTED BEFORE DOE PROJECT DEVELOPMENT 8

FIGURE 4 PRODUCTION DATA FOR NEW WELLS IN THE PILOT AREA 9

FIGURE 5 OIL NGL AND RESIDUE GAS FORECASTS WITHOUT AND WITH DEVELOPMENT SHADED ldquoWEDGESrdquo REFLECT INCREMENTAL RESERVES DEVELOPED WITH THE

PROJECT 10

FIGURE 6 COMPARISON OF PRODUCTION DATA FOR RECENT HORIZONTAL AND VERTICAL WELLS IN OR NEAR THE PILOT AREA HORIZONTAL WELLS ARE DESIGNATED

WITH AN ldquoHrdquo IN THEIR NAMES 11

FIGURE 7 COMPARISON OF AVERAGE PRODUCTION DATA FOR TWO HORIZONTAL AND FIVE VERTICAL WELLS IN OR NEAR THE PILOT AREA 12

FIGURE 8 PILOT AREA GAS SAMPLE DATA ndash PERCENT NITROGEN IN PRODUCED GAS NEW WELLS ARE SHOWN IN BLUE AT THE BOTTOM OF THE TABLE LIMITED DATA WAS

OBTAINED IN THE FOURTH QUARTER OF 2005 DUE TO A SAMPLING PROBLEM 13

Quarterly Technical Progress Report ndash 2nd Quarter 2006

Introduction

The DOE-sponsored project in the East Binger Unit (ldquoEBUrdquo) miscible nitrogen injection project has been completed A significant work program was implemented from 2002 to 2005 in an effort to reduce gas cycling and economically increase ultimate oil recovery Horizontal and vertical infill wells were drilled and existing producers were converted to injection Overall project results have been encouraging with reductions in nitrogen production and cycling and fluid flow in the reservoir is better understood Due to successful infill drilling based on the improved flow characterization more drilling was done than originally planned and further drilling will occur after the project is completed Data gathering specifically in the form of produced gas analyses from producers in the project area continued throughout the project

Executive Summary

The reservoir characterization and investigation of the benefits of horizontal wells in the East Binger Unit miscible nitrogen flood as been completed A significant work program was implemented from 2002 to 2005 in an effort to reduce gas cycling and economically increase ultimate oil recovery Horizontal and vertical infill wells were drilled and existing producers were converted to injection Due to successful infill drilling based on the improved flow characterization more drilling was done than originally planned and further drilling will occur after the project is completed

Through the drilling of wells and reservoir characterization work it was determined that poor areal sweep efficiency is the primary factor causing nitrogen cycling and limiting oil recovery This is in contrast to the perception prior to the initiation of development which was that gravity segregation was causing poor vertical sweep efficiency

Although not true of all infill wells most were drilled in areas with little sweep and came online producing gas with much lower nitrogen contents than previously drilled wells in the field and in the pilot area Seven vertical and three horizontal wells were drilled in the pilot area throughout the project As previously reported the benefits of horizontal drilling were found to be insufficient to justify their increased cost

Nitrogen recycle defined as nitrogen production as a percentage of injection decreased from 72 prior to initiation of the project to about 25 before rising back to a current rate of 40 Injection into the pilot area despite being limited at times by problems in the Air Separation Unit of the Nitrogen Management Facility increased 60 over levels prior to the project Meanwhile gas production and nitrogen content of produced gas both decreased

Experimental

There were no experimental methods used in the work completed during this reporting period

DE-FC26-00BC15121 Page 1

Results and Discussion

The following is a detailed review of the work conducted in this reporting period

Task 131 ndash Continue Monitoring Program

Binger Operations LLC (ldquoBOLrdquo) continues to monitor new well and overall pilot area performance Figure 1 shows the well work implemented during the project For the second quarter of 2006 pilot area production averaged 478 bopd a net increase of 235 bopd over the projected current rate without development and an increase of 27 bopd over the previous quarter Overall production from new wells in the project area added 277 bopd but was offset by the loss of 42 bopd from wells converted to injection See Figures 2 (all wells in pilot area) 3 (pre-existing wells) and 4 (new wells)

Figure 4 shows the component rate streams of various wells and packages of wells that have been brought on line throughout the project The recent increase of 27 bopd over the average rate of the prior quarter was largely driven by increases at two wells EBU 46-3 and EBU 64-3H EBU 46-3 increased following a period of lower than expected production associated with poor wellbore hydraulics which was resolved by installing and lining out a rod pump The increase at EBU 64-3H is a classical injection response in addition to the increase in oil rate (from 40 to 60 bopd over a seven month period) the associated hydrocarbon gas has caused the overall nitrogen content in the wellrsquos produced gas to drop from 52 to 31

Gas cycling is increasing but is still well below pre-project levels as shown in Figure 2 Injection has leveled off at about 63 MMscfd about 58 higher than before the project began Meanwhile total nitrogen produced from the pilot area has declined from 29 MMscfd (42 MMscfd total gas with a nitrogen content of 69) to 25 MMscfd (43 MMscfd total gas with a nitrogen content of 59) As shown in the table that follows this represents a total change in gas recycle from 72 prior to development to about 40 over the past six months Gas production and gas nitrogen content will continue rise but this clearly represents an improvement in flood performance

DE-FC26-00BC15121 Page 2

Pilot Area Gas Recycle

[A] [B] [C] = [A][B] [D] [C] [D] Total Gas Nitrogen Nitrogen Production Percent Production Injection Percent

Rate Nitrogen Rate Rate Recycle(MMscfd) () (MMscfd) (MMscfd) ()

Pre-Development Baseline (1H 2001) 42 69 29 40 72 Fourth Quarter 2003 31 55 17 69 25 First Quarter 2004 29 56 16 60 27 Second Quarter 2004 34 53 18 62 29 Third Quarter 2004 36 54 19 70 28 Fourth Quarter 2004 37 56 21 51 40 First Quarter 2005 34 58 20 44 46 Second Quarter 2005 37 60 22 68 33 Third Quarter 2005 43 62 26 61 44 Fourth Quarter 2005 42 64 27 64 42 First Quarter 2006 38 65 25 64 39 Second Quarter 2006 43 59 25 63 40 Plant problems limited the supply of nitrogen for injection from November 2004 through February 2005

Based on the pre-project decline and the rate at the end of the reporting period the project has added 19 million barrels of oil reserves 08 million barrels of NGL reserves and 31 BCF of residue gas reserves See Figure 5

A secondary aspect of Pilot Area performance monitoring is the comparison of the performances of horizontal wells to vertical wells Figure 6 is a plot of the rate performances of the new wells drilled in the project excluding EBU 37-3H the horizontal well drilled in Budget Period 1 and EBU 43-2 and EBU 60-2 two recently completed vertical wells As previously reported these three wells were drilled in areas with much higher gas saturation EBU 37 G-3H and EBU 43-2 have been converted to injection and EBU 60-2 is awaiting conversion

Comparisons of wells in similar reservoir environments (thickness and gas saturation) show that vertical wells have performed nearly as well as the horizontal wells

DE-FC26-00BC15121 Page 3

Figure 7 shows the averages of the following horizontal and vertical wells

Average GOR amp N2 Average GOR amp N2 6 - 9 Months 15 - 18 Months

Well Net Pay (reflect gas saturation) (reflect gas saturation)

Horizontal EBU 63-2H 70rsquo - 75rsquo 43 Mcfbbl amp 21 49 Mcfbbl amp 24 EBU 64-3H 55rsquo - 60rsquo 56 Mcfbbl amp 17 39 Mcfbbl amp 29 Average Horizontal 65rsquo 50 Mcfbbl amp 19 44 Mcfbbl amp 27

Vertical EBU 44-3 66rsquo 24 Mcfbbl amp 3 29 Mcfbbl amp 4 EBU 46-3 80rsquo 16 Mcfbbl amp 3 13 Mcfbbl amp 4 EBU 47-2 69rsquo 59 Mcfbbl amp 54 Not there yet EBU 67-2 62rsquo 116 Mcfbbl amp 50 159 Mcfbbl amp 52 EBU 74-2 45rsquo 16 Mcfbbl amp 10 17 Mcfbbl amp 17 Average Vertical 63rsquo 46 Mcfbbl amp 24 55 Mcfbbl amp 19

Most of the new wells have low GORs and nitrogen contents in produced gas as indicated above and shown in Figure 8 The relative lack of nitrogen at the infill well locations indicates poor areal sweep ndash EBU 60-2 being a significant exception to this For most new wells current trends of nitrogen content data suggest it will be years before the nitrogen contents in their produced gas approach the current field average

Task 133 ndash Technology Transfer Activities ndash Continue Updating Web Site

Additional technical progress reports have been posted on the project web site wwweastbingerunitcom A review of the project was presented to the Big Horn Section of the Society of Petroleum Engineers in Cody Wyoming on May 4 2006

Conclusion

The reservoir characterization and investigation of the benefits of horizontal wells in the East Binger Unit miscible nitrogen flood as been completed Through the drilling of wells and reservoir characterization work it was determined that poor areal sweep efficiency is the primary factor causing nitrogen cycling and limiting oil recovery This is in contrast to the perception prior to the initiation of development which was that gravity segregation was causing poor vertical sweep efficiency Although not true of all infill wells most were drilled in areas with little sweep and came online producing gas with much lower nitrogen contents than previously drilled wells in the field and in the pilot area Seven vertical and three horizontal wells have been drilled in the pilot area

DE-FC26-00BC15121 Page 4

Abstract

The reservoir characterization and investigation of the benefits of horizontal wells in the East Binger Unit miscible nitrogen flood as been completed A significant work program was implemented from 2002 to 2005 in an effort to reduce gas cycling and economically increase ultimate oil recovery Horizontal and vertical infill wells were drilled and existing producers were converted to injection Due to successful infill drilling based on the improved flow characterization more drilling was done than originally planned and further drilling will occur after the project is completed

Through the drilling of wells and reservoir characterization work it was determined that poor areal sweep efficiency is the primary factor causing nitrogen cycling and limiting oil recovery This is in contrast to the perception prior to the initiation of development which was that gravity segregation was causing poor vertical sweep efficiency

Although not true of all infill wells most were drilled in areas with little sweep and came online producing gas with much lower nitrogen contents than previously drilled wells in the field and in the pilot area Seven vertical and three horizontal wells were drilled in the pilot area throughout the project As previously reported the benefits of horizontal drilling were found to be insufficient to justify their increased cost

Nitrogen recycle defined as nitrogen production as a percentage of injection decreased from 72 prior to initiation of the project to about 25 before rising back to a current rate of 40 Injection into the pilot area despite being limited at times by problems in the Air Separation Unit of the Nitrogen Management Facility increased 60 over levels prior to the project Meanwhile gas production and nitrogen content of produced gas both decreased

TABLE OF CONTENTS

INTRODUCTION 1

EXECUTIVE SUMMARY 1

EXPERIMENTAL 1

RESULTS AND DISCUSSION 2

TASK 131 ndash CONTINUE MONITORING PROGRAM TASK 133 ndash TECHNOLOGY TRANSFER ACTIVITIES ndash CONTINUE UPDATING WEB SITE

2 4

CONCLUSION 4

REFERENCES 5

LIST OF GRAPHICAL MATERIALS

FIGURE 1 MAP OF THE CENTRAL PORTION OF THE EAST BINGER UNIT THE PILOT AREA IS INDICATED BY THE BLUE POLYGON WELL WORK IMPLEMENTED IN THE

PROJECT IS HIGHLIGHTED IN RED 6

FIGURE 2 PRODUCTION DATA FOR ALL WELLS IN THE PILOT AREA 7

FIGURE 3 PRODUCTION DATA FOR WELLS IN THE PILOT AREA THAT EXISTED BEFORE DOE PROJECT DEVELOPMENT 8

FIGURE 4 PRODUCTION DATA FOR NEW WELLS IN THE PILOT AREA 9

FIGURE 5 OIL NGL AND RESIDUE GAS FORECASTS WITHOUT AND WITH DEVELOPMENT SHADED ldquoWEDGESrdquo REFLECT INCREMENTAL RESERVES DEVELOPED WITH THE

PROJECT 10

FIGURE 6 COMPARISON OF PRODUCTION DATA FOR RECENT HORIZONTAL AND VERTICAL WELLS IN OR NEAR THE PILOT AREA HORIZONTAL WELLS ARE DESIGNATED

WITH AN ldquoHrdquo IN THEIR NAMES 11

FIGURE 7 COMPARISON OF AVERAGE PRODUCTION DATA FOR TWO HORIZONTAL AND FIVE VERTICAL WELLS IN OR NEAR THE PILOT AREA 12

FIGURE 8 PILOT AREA GAS SAMPLE DATA ndash PERCENT NITROGEN IN PRODUCED GAS NEW WELLS ARE SHOWN IN BLUE AT THE BOTTOM OF THE TABLE LIMITED DATA WAS

OBTAINED IN THE FOURTH QUARTER OF 2005 DUE TO A SAMPLING PROBLEM 13

Quarterly Technical Progress Report ndash 2nd Quarter 2006

Introduction

The DOE-sponsored project in the East Binger Unit (ldquoEBUrdquo) miscible nitrogen injection project has been completed A significant work program was implemented from 2002 to 2005 in an effort to reduce gas cycling and economically increase ultimate oil recovery Horizontal and vertical infill wells were drilled and existing producers were converted to injection Overall project results have been encouraging with reductions in nitrogen production and cycling and fluid flow in the reservoir is better understood Due to successful infill drilling based on the improved flow characterization more drilling was done than originally planned and further drilling will occur after the project is completed Data gathering specifically in the form of produced gas analyses from producers in the project area continued throughout the project

Executive Summary

The reservoir characterization and investigation of the benefits of horizontal wells in the East Binger Unit miscible nitrogen flood as been completed A significant work program was implemented from 2002 to 2005 in an effort to reduce gas cycling and economically increase ultimate oil recovery Horizontal and vertical infill wells were drilled and existing producers were converted to injection Due to successful infill drilling based on the improved flow characterization more drilling was done than originally planned and further drilling will occur after the project is completed

Through the drilling of wells and reservoir characterization work it was determined that poor areal sweep efficiency is the primary factor causing nitrogen cycling and limiting oil recovery This is in contrast to the perception prior to the initiation of development which was that gravity segregation was causing poor vertical sweep efficiency

Although not true of all infill wells most were drilled in areas with little sweep and came online producing gas with much lower nitrogen contents than previously drilled wells in the field and in the pilot area Seven vertical and three horizontal wells were drilled in the pilot area throughout the project As previously reported the benefits of horizontal drilling were found to be insufficient to justify their increased cost

Nitrogen recycle defined as nitrogen production as a percentage of injection decreased from 72 prior to initiation of the project to about 25 before rising back to a current rate of 40 Injection into the pilot area despite being limited at times by problems in the Air Separation Unit of the Nitrogen Management Facility increased 60 over levels prior to the project Meanwhile gas production and nitrogen content of produced gas both decreased

Experimental

There were no experimental methods used in the work completed during this reporting period

DE-FC26-00BC15121 Page 1

Results and Discussion

The following is a detailed review of the work conducted in this reporting period

Task 131 ndash Continue Monitoring Program

Binger Operations LLC (ldquoBOLrdquo) continues to monitor new well and overall pilot area performance Figure 1 shows the well work implemented during the project For the second quarter of 2006 pilot area production averaged 478 bopd a net increase of 235 bopd over the projected current rate without development and an increase of 27 bopd over the previous quarter Overall production from new wells in the project area added 277 bopd but was offset by the loss of 42 bopd from wells converted to injection See Figures 2 (all wells in pilot area) 3 (pre-existing wells) and 4 (new wells)

Figure 4 shows the component rate streams of various wells and packages of wells that have been brought on line throughout the project The recent increase of 27 bopd over the average rate of the prior quarter was largely driven by increases at two wells EBU 46-3 and EBU 64-3H EBU 46-3 increased following a period of lower than expected production associated with poor wellbore hydraulics which was resolved by installing and lining out a rod pump The increase at EBU 64-3H is a classical injection response in addition to the increase in oil rate (from 40 to 60 bopd over a seven month period) the associated hydrocarbon gas has caused the overall nitrogen content in the wellrsquos produced gas to drop from 52 to 31

Gas cycling is increasing but is still well below pre-project levels as shown in Figure 2 Injection has leveled off at about 63 MMscfd about 58 higher than before the project began Meanwhile total nitrogen produced from the pilot area has declined from 29 MMscfd (42 MMscfd total gas with a nitrogen content of 69) to 25 MMscfd (43 MMscfd total gas with a nitrogen content of 59) As shown in the table that follows this represents a total change in gas recycle from 72 prior to development to about 40 over the past six months Gas production and gas nitrogen content will continue rise but this clearly represents an improvement in flood performance

DE-FC26-00BC15121 Page 2

Pilot Area Gas Recycle

[A] [B] [C] = [A][B] [D] [C] [D] Total Gas Nitrogen Nitrogen Production Percent Production Injection Percent

Rate Nitrogen Rate Rate Recycle(MMscfd) () (MMscfd) (MMscfd) ()

Pre-Development Baseline (1H 2001) 42 69 29 40 72 Fourth Quarter 2003 31 55 17 69 25 First Quarter 2004 29 56 16 60 27 Second Quarter 2004 34 53 18 62 29 Third Quarter 2004 36 54 19 70 28 Fourth Quarter 2004 37 56 21 51 40 First Quarter 2005 34 58 20 44 46 Second Quarter 2005 37 60 22 68 33 Third Quarter 2005 43 62 26 61 44 Fourth Quarter 2005 42 64 27 64 42 First Quarter 2006 38 65 25 64 39 Second Quarter 2006 43 59 25 63 40 Plant problems limited the supply of nitrogen for injection from November 2004 through February 2005

Based on the pre-project decline and the rate at the end of the reporting period the project has added 19 million barrels of oil reserves 08 million barrels of NGL reserves and 31 BCF of residue gas reserves See Figure 5

A secondary aspect of Pilot Area performance monitoring is the comparison of the performances of horizontal wells to vertical wells Figure 6 is a plot of the rate performances of the new wells drilled in the project excluding EBU 37-3H the horizontal well drilled in Budget Period 1 and EBU 43-2 and EBU 60-2 two recently completed vertical wells As previously reported these three wells were drilled in areas with much higher gas saturation EBU 37 G-3H and EBU 43-2 have been converted to injection and EBU 60-2 is awaiting conversion

Comparisons of wells in similar reservoir environments (thickness and gas saturation) show that vertical wells have performed nearly as well as the horizontal wells

DE-FC26-00BC15121 Page 3

Figure 7 shows the averages of the following horizontal and vertical wells

Average GOR amp N2 Average GOR amp N2 6 - 9 Months 15 - 18 Months

Well Net Pay (reflect gas saturation) (reflect gas saturation)

Horizontal EBU 63-2H 70rsquo - 75rsquo 43 Mcfbbl amp 21 49 Mcfbbl amp 24 EBU 64-3H 55rsquo - 60rsquo 56 Mcfbbl amp 17 39 Mcfbbl amp 29 Average Horizontal 65rsquo 50 Mcfbbl amp 19 44 Mcfbbl amp 27

Vertical EBU 44-3 66rsquo 24 Mcfbbl amp 3 29 Mcfbbl amp 4 EBU 46-3 80rsquo 16 Mcfbbl amp 3 13 Mcfbbl amp 4 EBU 47-2 69rsquo 59 Mcfbbl amp 54 Not there yet EBU 67-2 62rsquo 116 Mcfbbl amp 50 159 Mcfbbl amp 52 EBU 74-2 45rsquo 16 Mcfbbl amp 10 17 Mcfbbl amp 17 Average Vertical 63rsquo 46 Mcfbbl amp 24 55 Mcfbbl amp 19

Most of the new wells have low GORs and nitrogen contents in produced gas as indicated above and shown in Figure 8 The relative lack of nitrogen at the infill well locations indicates poor areal sweep ndash EBU 60-2 being a significant exception to this For most new wells current trends of nitrogen content data suggest it will be years before the nitrogen contents in their produced gas approach the current field average

Task 133 ndash Technology Transfer Activities ndash Continue Updating Web Site

Additional technical progress reports have been posted on the project web site wwweastbingerunitcom A review of the project was presented to the Big Horn Section of the Society of Petroleum Engineers in Cody Wyoming on May 4 2006

Conclusion

The reservoir characterization and investigation of the benefits of horizontal wells in the East Binger Unit miscible nitrogen flood as been completed Through the drilling of wells and reservoir characterization work it was determined that poor areal sweep efficiency is the primary factor causing nitrogen cycling and limiting oil recovery This is in contrast to the perception prior to the initiation of development which was that gravity segregation was causing poor vertical sweep efficiency Although not true of all infill wells most were drilled in areas with little sweep and came online producing gas with much lower nitrogen contents than previously drilled wells in the field and in the pilot area Seven vertical and three horizontal wells have been drilled in the pilot area

DE-FC26-00BC15121 Page 4

TABLE OF CONTENTS

INTRODUCTION 1

EXECUTIVE SUMMARY 1

EXPERIMENTAL 1

RESULTS AND DISCUSSION 2

TASK 131 ndash CONTINUE MONITORING PROGRAM TASK 133 ndash TECHNOLOGY TRANSFER ACTIVITIES ndash CONTINUE UPDATING WEB SITE

2 4

CONCLUSION 4

REFERENCES 5

LIST OF GRAPHICAL MATERIALS

FIGURE 1 MAP OF THE CENTRAL PORTION OF THE EAST BINGER UNIT THE PILOT AREA IS INDICATED BY THE BLUE POLYGON WELL WORK IMPLEMENTED IN THE

PROJECT IS HIGHLIGHTED IN RED 6

FIGURE 2 PRODUCTION DATA FOR ALL WELLS IN THE PILOT AREA 7

FIGURE 3 PRODUCTION DATA FOR WELLS IN THE PILOT AREA THAT EXISTED BEFORE DOE PROJECT DEVELOPMENT 8

FIGURE 4 PRODUCTION DATA FOR NEW WELLS IN THE PILOT AREA 9

FIGURE 5 OIL NGL AND RESIDUE GAS FORECASTS WITHOUT AND WITH DEVELOPMENT SHADED ldquoWEDGESrdquo REFLECT INCREMENTAL RESERVES DEVELOPED WITH THE

PROJECT 10

FIGURE 6 COMPARISON OF PRODUCTION DATA FOR RECENT HORIZONTAL AND VERTICAL WELLS IN OR NEAR THE PILOT AREA HORIZONTAL WELLS ARE DESIGNATED

WITH AN ldquoHrdquo IN THEIR NAMES 11

FIGURE 7 COMPARISON OF AVERAGE PRODUCTION DATA FOR TWO HORIZONTAL AND FIVE VERTICAL WELLS IN OR NEAR THE PILOT AREA 12

FIGURE 8 PILOT AREA GAS SAMPLE DATA ndash PERCENT NITROGEN IN PRODUCED GAS NEW WELLS ARE SHOWN IN BLUE AT THE BOTTOM OF THE TABLE LIMITED DATA WAS

OBTAINED IN THE FOURTH QUARTER OF 2005 DUE TO A SAMPLING PROBLEM 13

Quarterly Technical Progress Report ndash 2nd Quarter 2006

Introduction

The DOE-sponsored project in the East Binger Unit (ldquoEBUrdquo) miscible nitrogen injection project has been completed A significant work program was implemented from 2002 to 2005 in an effort to reduce gas cycling and economically increase ultimate oil recovery Horizontal and vertical infill wells were drilled and existing producers were converted to injection Overall project results have been encouraging with reductions in nitrogen production and cycling and fluid flow in the reservoir is better understood Due to successful infill drilling based on the improved flow characterization more drilling was done than originally planned and further drilling will occur after the project is completed Data gathering specifically in the form of produced gas analyses from producers in the project area continued throughout the project

Executive Summary

The reservoir characterization and investigation of the benefits of horizontal wells in the East Binger Unit miscible nitrogen flood as been completed A significant work program was implemented from 2002 to 2005 in an effort to reduce gas cycling and economically increase ultimate oil recovery Horizontal and vertical infill wells were drilled and existing producers were converted to injection Due to successful infill drilling based on the improved flow characterization more drilling was done than originally planned and further drilling will occur after the project is completed

Through the drilling of wells and reservoir characterization work it was determined that poor areal sweep efficiency is the primary factor causing nitrogen cycling and limiting oil recovery This is in contrast to the perception prior to the initiation of development which was that gravity segregation was causing poor vertical sweep efficiency

Although not true of all infill wells most were drilled in areas with little sweep and came online producing gas with much lower nitrogen contents than previously drilled wells in the field and in the pilot area Seven vertical and three horizontal wells were drilled in the pilot area throughout the project As previously reported the benefits of horizontal drilling were found to be insufficient to justify their increased cost

Nitrogen recycle defined as nitrogen production as a percentage of injection decreased from 72 prior to initiation of the project to about 25 before rising back to a current rate of 40 Injection into the pilot area despite being limited at times by problems in the Air Separation Unit of the Nitrogen Management Facility increased 60 over levels prior to the project Meanwhile gas production and nitrogen content of produced gas both decreased

Experimental

There were no experimental methods used in the work completed during this reporting period

DE-FC26-00BC15121 Page 1

Results and Discussion

The following is a detailed review of the work conducted in this reporting period

Task 131 ndash Continue Monitoring Program

Binger Operations LLC (ldquoBOLrdquo) continues to monitor new well and overall pilot area performance Figure 1 shows the well work implemented during the project For the second quarter of 2006 pilot area production averaged 478 bopd a net increase of 235 bopd over the projected current rate without development and an increase of 27 bopd over the previous quarter Overall production from new wells in the project area added 277 bopd but was offset by the loss of 42 bopd from wells converted to injection See Figures 2 (all wells in pilot area) 3 (pre-existing wells) and 4 (new wells)

Figure 4 shows the component rate streams of various wells and packages of wells that have been brought on line throughout the project The recent increase of 27 bopd over the average rate of the prior quarter was largely driven by increases at two wells EBU 46-3 and EBU 64-3H EBU 46-3 increased following a period of lower than expected production associated with poor wellbore hydraulics which was resolved by installing and lining out a rod pump The increase at EBU 64-3H is a classical injection response in addition to the increase in oil rate (from 40 to 60 bopd over a seven month period) the associated hydrocarbon gas has caused the overall nitrogen content in the wellrsquos produced gas to drop from 52 to 31

Gas cycling is increasing but is still well below pre-project levels as shown in Figure 2 Injection has leveled off at about 63 MMscfd about 58 higher than before the project began Meanwhile total nitrogen produced from the pilot area has declined from 29 MMscfd (42 MMscfd total gas with a nitrogen content of 69) to 25 MMscfd (43 MMscfd total gas with a nitrogen content of 59) As shown in the table that follows this represents a total change in gas recycle from 72 prior to development to about 40 over the past six months Gas production and gas nitrogen content will continue rise but this clearly represents an improvement in flood performance

DE-FC26-00BC15121 Page 2

Pilot Area Gas Recycle

[A] [B] [C] = [A][B] [D] [C] [D] Total Gas Nitrogen Nitrogen Production Percent Production Injection Percent

Rate Nitrogen Rate Rate Recycle(MMscfd) () (MMscfd) (MMscfd) ()

Pre-Development Baseline (1H 2001) 42 69 29 40 72 Fourth Quarter 2003 31 55 17 69 25 First Quarter 2004 29 56 16 60 27 Second Quarter 2004 34 53 18 62 29 Third Quarter 2004 36 54 19 70 28 Fourth Quarter 2004 37 56 21 51 40 First Quarter 2005 34 58 20 44 46 Second Quarter 2005 37 60 22 68 33 Third Quarter 2005 43 62 26 61 44 Fourth Quarter 2005 42 64 27 64 42 First Quarter 2006 38 65 25 64 39 Second Quarter 2006 43 59 25 63 40 Plant problems limited the supply of nitrogen for injection from November 2004 through February 2005

Based on the pre-project decline and the rate at the end of the reporting period the project has added 19 million barrels of oil reserves 08 million barrels of NGL reserves and 31 BCF of residue gas reserves See Figure 5

A secondary aspect of Pilot Area performance monitoring is the comparison of the performances of horizontal wells to vertical wells Figure 6 is a plot of the rate performances of the new wells drilled in the project excluding EBU 37-3H the horizontal well drilled in Budget Period 1 and EBU 43-2 and EBU 60-2 two recently completed vertical wells As previously reported these three wells were drilled in areas with much higher gas saturation EBU 37 G-3H and EBU 43-2 have been converted to injection and EBU 60-2 is awaiting conversion

Comparisons of wells in similar reservoir environments (thickness and gas saturation) show that vertical wells have performed nearly as well as the horizontal wells

DE-FC26-00BC15121 Page 3

Figure 7 shows the averages of the following horizontal and vertical wells

Average GOR amp N2 Average GOR amp N2 6 - 9 Months 15 - 18 Months

Well Net Pay (reflect gas saturation) (reflect gas saturation)

Horizontal EBU 63-2H 70rsquo - 75rsquo 43 Mcfbbl amp 21 49 Mcfbbl amp 24 EBU 64-3H 55rsquo - 60rsquo 56 Mcfbbl amp 17 39 Mcfbbl amp 29 Average Horizontal 65rsquo 50 Mcfbbl amp 19 44 Mcfbbl amp 27

Vertical EBU 44-3 66rsquo 24 Mcfbbl amp 3 29 Mcfbbl amp 4 EBU 46-3 80rsquo 16 Mcfbbl amp 3 13 Mcfbbl amp 4 EBU 47-2 69rsquo 59 Mcfbbl amp 54 Not there yet EBU 67-2 62rsquo 116 Mcfbbl amp 50 159 Mcfbbl amp 52 EBU 74-2 45rsquo 16 Mcfbbl amp 10 17 Mcfbbl amp 17 Average Vertical 63rsquo 46 Mcfbbl amp 24 55 Mcfbbl amp 19

Most of the new wells have low GORs and nitrogen contents in produced gas as indicated above and shown in Figure 8 The relative lack of nitrogen at the infill well locations indicates poor areal sweep ndash EBU 60-2 being a significant exception to this For most new wells current trends of nitrogen content data suggest it will be years before the nitrogen contents in their produced gas approach the current field average

Task 133 ndash Technology Transfer Activities ndash Continue Updating Web Site

Additional technical progress reports have been posted on the project web site wwweastbingerunitcom A review of the project was presented to the Big Horn Section of the Society of Petroleum Engineers in Cody Wyoming on May 4 2006

Conclusion

The reservoir characterization and investigation of the benefits of horizontal wells in the East Binger Unit miscible nitrogen flood as been completed Through the drilling of wells and reservoir characterization work it was determined that poor areal sweep efficiency is the primary factor causing nitrogen cycling and limiting oil recovery This is in contrast to the perception prior to the initiation of development which was that gravity segregation was causing poor vertical sweep efficiency Although not true of all infill wells most were drilled in areas with little sweep and came online producing gas with much lower nitrogen contents than previously drilled wells in the field and in the pilot area Seven vertical and three horizontal wells have been drilled in the pilot area

DE-FC26-00BC15121 Page 4

LIST OF GRAPHICAL MATERIALS

FIGURE 1 MAP OF THE CENTRAL PORTION OF THE EAST BINGER UNIT THE PILOT AREA IS INDICATED BY THE BLUE POLYGON WELL WORK IMPLEMENTED IN THE

PROJECT IS HIGHLIGHTED IN RED 6

FIGURE 2 PRODUCTION DATA FOR ALL WELLS IN THE PILOT AREA 7

FIGURE 3 PRODUCTION DATA FOR WELLS IN THE PILOT AREA THAT EXISTED BEFORE DOE PROJECT DEVELOPMENT 8

FIGURE 4 PRODUCTION DATA FOR NEW WELLS IN THE PILOT AREA 9

FIGURE 5 OIL NGL AND RESIDUE GAS FORECASTS WITHOUT AND WITH DEVELOPMENT SHADED ldquoWEDGESrdquo REFLECT INCREMENTAL RESERVES DEVELOPED WITH THE

PROJECT 10

FIGURE 6 COMPARISON OF PRODUCTION DATA FOR RECENT HORIZONTAL AND VERTICAL WELLS IN OR NEAR THE PILOT AREA HORIZONTAL WELLS ARE DESIGNATED

WITH AN ldquoHrdquo IN THEIR NAMES 11

FIGURE 7 COMPARISON OF AVERAGE PRODUCTION DATA FOR TWO HORIZONTAL AND FIVE VERTICAL WELLS IN OR NEAR THE PILOT AREA 12

FIGURE 8 PILOT AREA GAS SAMPLE DATA ndash PERCENT NITROGEN IN PRODUCED GAS NEW WELLS ARE SHOWN IN BLUE AT THE BOTTOM OF THE TABLE LIMITED DATA WAS

OBTAINED IN THE FOURTH QUARTER OF 2005 DUE TO A SAMPLING PROBLEM 13

Quarterly Technical Progress Report ndash 2nd Quarter 2006

Introduction

The DOE-sponsored project in the East Binger Unit (ldquoEBUrdquo) miscible nitrogen injection project has been completed A significant work program was implemented from 2002 to 2005 in an effort to reduce gas cycling and economically increase ultimate oil recovery Horizontal and vertical infill wells were drilled and existing producers were converted to injection Overall project results have been encouraging with reductions in nitrogen production and cycling and fluid flow in the reservoir is better understood Due to successful infill drilling based on the improved flow characterization more drilling was done than originally planned and further drilling will occur after the project is completed Data gathering specifically in the form of produced gas analyses from producers in the project area continued throughout the project

Executive Summary

The reservoir characterization and investigation of the benefits of horizontal wells in the East Binger Unit miscible nitrogen flood as been completed A significant work program was implemented from 2002 to 2005 in an effort to reduce gas cycling and economically increase ultimate oil recovery Horizontal and vertical infill wells were drilled and existing producers were converted to injection Due to successful infill drilling based on the improved flow characterization more drilling was done than originally planned and further drilling will occur after the project is completed

Through the drilling of wells and reservoir characterization work it was determined that poor areal sweep efficiency is the primary factor causing nitrogen cycling and limiting oil recovery This is in contrast to the perception prior to the initiation of development which was that gravity segregation was causing poor vertical sweep efficiency

Although not true of all infill wells most were drilled in areas with little sweep and came online producing gas with much lower nitrogen contents than previously drilled wells in the field and in the pilot area Seven vertical and three horizontal wells were drilled in the pilot area throughout the project As previously reported the benefits of horizontal drilling were found to be insufficient to justify their increased cost

Nitrogen recycle defined as nitrogen production as a percentage of injection decreased from 72 prior to initiation of the project to about 25 before rising back to a current rate of 40 Injection into the pilot area despite being limited at times by problems in the Air Separation Unit of the Nitrogen Management Facility increased 60 over levels prior to the project Meanwhile gas production and nitrogen content of produced gas both decreased

Experimental

There were no experimental methods used in the work completed during this reporting period

DE-FC26-00BC15121 Page 1

Results and Discussion

The following is a detailed review of the work conducted in this reporting period

Task 131 ndash Continue Monitoring Program

Binger Operations LLC (ldquoBOLrdquo) continues to monitor new well and overall pilot area performance Figure 1 shows the well work implemented during the project For the second quarter of 2006 pilot area production averaged 478 bopd a net increase of 235 bopd over the projected current rate without development and an increase of 27 bopd over the previous quarter Overall production from new wells in the project area added 277 bopd but was offset by the loss of 42 bopd from wells converted to injection See Figures 2 (all wells in pilot area) 3 (pre-existing wells) and 4 (new wells)

Figure 4 shows the component rate streams of various wells and packages of wells that have been brought on line throughout the project The recent increase of 27 bopd over the average rate of the prior quarter was largely driven by increases at two wells EBU 46-3 and EBU 64-3H EBU 46-3 increased following a period of lower than expected production associated with poor wellbore hydraulics which was resolved by installing and lining out a rod pump The increase at EBU 64-3H is a classical injection response in addition to the increase in oil rate (from 40 to 60 bopd over a seven month period) the associated hydrocarbon gas has caused the overall nitrogen content in the wellrsquos produced gas to drop from 52 to 31

Gas cycling is increasing but is still well below pre-project levels as shown in Figure 2 Injection has leveled off at about 63 MMscfd about 58 higher than before the project began Meanwhile total nitrogen produced from the pilot area has declined from 29 MMscfd (42 MMscfd total gas with a nitrogen content of 69) to 25 MMscfd (43 MMscfd total gas with a nitrogen content of 59) As shown in the table that follows this represents a total change in gas recycle from 72 prior to development to about 40 over the past six months Gas production and gas nitrogen content will continue rise but this clearly represents an improvement in flood performance

DE-FC26-00BC15121 Page 2

Pilot Area Gas Recycle

[A] [B] [C] = [A][B] [D] [C] [D] Total Gas Nitrogen Nitrogen Production Percent Production Injection Percent

Rate Nitrogen Rate Rate Recycle(MMscfd) () (MMscfd) (MMscfd) ()

Pre-Development Baseline (1H 2001) 42 69 29 40 72 Fourth Quarter 2003 31 55 17 69 25 First Quarter 2004 29 56 16 60 27 Second Quarter 2004 34 53 18 62 29 Third Quarter 2004 36 54 19 70 28 Fourth Quarter 2004 37 56 21 51 40 First Quarter 2005 34 58 20 44 46 Second Quarter 2005 37 60 22 68 33 Third Quarter 2005 43 62 26 61 44 Fourth Quarter 2005 42 64 27 64 42 First Quarter 2006 38 65 25 64 39 Second Quarter 2006 43 59 25 63 40 Plant problems limited the supply of nitrogen for injection from November 2004 through February 2005

Based on the pre-project decline and the rate at the end of the reporting period the project has added 19 million barrels of oil reserves 08 million barrels of NGL reserves and 31 BCF of residue gas reserves See Figure 5

A secondary aspect of Pilot Area performance monitoring is the comparison of the performances of horizontal wells to vertical wells Figure 6 is a plot of the rate performances of the new wells drilled in the project excluding EBU 37-3H the horizontal well drilled in Budget Period 1 and EBU 43-2 and EBU 60-2 two recently completed vertical wells As previously reported these three wells were drilled in areas with much higher gas saturation EBU 37 G-3H and EBU 43-2 have been converted to injection and EBU 60-2 is awaiting conversion

Comparisons of wells in similar reservoir environments (thickness and gas saturation) show that vertical wells have performed nearly as well as the horizontal wells

DE-FC26-00BC15121 Page 3

Figure 7 shows the averages of the following horizontal and vertical wells

Average GOR amp N2 Average GOR amp N2 6 - 9 Months 15 - 18 Months

Well Net Pay (reflect gas saturation) (reflect gas saturation)

Horizontal EBU 63-2H 70rsquo - 75rsquo 43 Mcfbbl amp 21 49 Mcfbbl amp 24 EBU 64-3H 55rsquo - 60rsquo 56 Mcfbbl amp 17 39 Mcfbbl amp 29 Average Horizontal 65rsquo 50 Mcfbbl amp 19 44 Mcfbbl amp 27

Vertical EBU 44-3 66rsquo 24 Mcfbbl amp 3 29 Mcfbbl amp 4 EBU 46-3 80rsquo 16 Mcfbbl amp 3 13 Mcfbbl amp 4 EBU 47-2 69rsquo 59 Mcfbbl amp 54 Not there yet EBU 67-2 62rsquo 116 Mcfbbl amp 50 159 Mcfbbl amp 52 EBU 74-2 45rsquo 16 Mcfbbl amp 10 17 Mcfbbl amp 17 Average Vertical 63rsquo 46 Mcfbbl amp 24 55 Mcfbbl amp 19

Most of the new wells have low GORs and nitrogen contents in produced gas as indicated above and shown in Figure 8 The relative lack of nitrogen at the infill well locations indicates poor areal sweep ndash EBU 60-2 being a significant exception to this For most new wells current trends of nitrogen content data suggest it will be years before the nitrogen contents in their produced gas approach the current field average

Task 133 ndash Technology Transfer Activities ndash Continue Updating Web Site

Additional technical progress reports have been posted on the project web site wwweastbingerunitcom A review of the project was presented to the Big Horn Section of the Society of Petroleum Engineers in Cody Wyoming on May 4 2006

Conclusion

The reservoir characterization and investigation of the benefits of horizontal wells in the East Binger Unit miscible nitrogen flood as been completed Through the drilling of wells and reservoir characterization work it was determined that poor areal sweep efficiency is the primary factor causing nitrogen cycling and limiting oil recovery This is in contrast to the perception prior to the initiation of development which was that gravity segregation was causing poor vertical sweep efficiency Although not true of all infill wells most were drilled in areas with little sweep and came online producing gas with much lower nitrogen contents than previously drilled wells in the field and in the pilot area Seven vertical and three horizontal wells have been drilled in the pilot area

DE-FC26-00BC15121 Page 4

Quarterly Technical Progress Report ndash 2nd Quarter 2006

Introduction

The DOE-sponsored project in the East Binger Unit (ldquoEBUrdquo) miscible nitrogen injection project has been completed A significant work program was implemented from 2002 to 2005 in an effort to reduce gas cycling and economically increase ultimate oil recovery Horizontal and vertical infill wells were drilled and existing producers were converted to injection Overall project results have been encouraging with reductions in nitrogen production and cycling and fluid flow in the reservoir is better understood Due to successful infill drilling based on the improved flow characterization more drilling was done than originally planned and further drilling will occur after the project is completed Data gathering specifically in the form of produced gas analyses from producers in the project area continued throughout the project

Executive Summary

The reservoir characterization and investigation of the benefits of horizontal wells in the East Binger Unit miscible nitrogen flood as been completed A significant work program was implemented from 2002 to 2005 in an effort to reduce gas cycling and economically increase ultimate oil recovery Horizontal and vertical infill wells were drilled and existing producers were converted to injection Due to successful infill drilling based on the improved flow characterization more drilling was done than originally planned and further drilling will occur after the project is completed

Through the drilling of wells and reservoir characterization work it was determined that poor areal sweep efficiency is the primary factor causing nitrogen cycling and limiting oil recovery This is in contrast to the perception prior to the initiation of development which was that gravity segregation was causing poor vertical sweep efficiency

Although not true of all infill wells most were drilled in areas with little sweep and came online producing gas with much lower nitrogen contents than previously drilled wells in the field and in the pilot area Seven vertical and three horizontal wells were drilled in the pilot area throughout the project As previously reported the benefits of horizontal drilling were found to be insufficient to justify their increased cost

Nitrogen recycle defined as nitrogen production as a percentage of injection decreased from 72 prior to initiation of the project to about 25 before rising back to a current rate of 40 Injection into the pilot area despite being limited at times by problems in the Air Separation Unit of the Nitrogen Management Facility increased 60 over levels prior to the project Meanwhile gas production and nitrogen content of produced gas both decreased

Experimental

There were no experimental methods used in the work completed during this reporting period

DE-FC26-00BC15121 Page 1

Results and Discussion

The following is a detailed review of the work conducted in this reporting period

Task 131 ndash Continue Monitoring Program

Binger Operations LLC (ldquoBOLrdquo) continues to monitor new well and overall pilot area performance Figure 1 shows the well work implemented during the project For the second quarter of 2006 pilot area production averaged 478 bopd a net increase of 235 bopd over the projected current rate without development and an increase of 27 bopd over the previous quarter Overall production from new wells in the project area added 277 bopd but was offset by the loss of 42 bopd from wells converted to injection See Figures 2 (all wells in pilot area) 3 (pre-existing wells) and 4 (new wells)

Figure 4 shows the component rate streams of various wells and packages of wells that have been brought on line throughout the project The recent increase of 27 bopd over the average rate of the prior quarter was largely driven by increases at two wells EBU 46-3 and EBU 64-3H EBU 46-3 increased following a period of lower than expected production associated with poor wellbore hydraulics which was resolved by installing and lining out a rod pump The increase at EBU 64-3H is a classical injection response in addition to the increase in oil rate (from 40 to 60 bopd over a seven month period) the associated hydrocarbon gas has caused the overall nitrogen content in the wellrsquos produced gas to drop from 52 to 31

Gas cycling is increasing but is still well below pre-project levels as shown in Figure 2 Injection has leveled off at about 63 MMscfd about 58 higher than before the project began Meanwhile total nitrogen produced from the pilot area has declined from 29 MMscfd (42 MMscfd total gas with a nitrogen content of 69) to 25 MMscfd (43 MMscfd total gas with a nitrogen content of 59) As shown in the table that follows this represents a total change in gas recycle from 72 prior to development to about 40 over the past six months Gas production and gas nitrogen content will continue rise but this clearly represents an improvement in flood performance

DE-FC26-00BC15121 Page 2

Pilot Area Gas Recycle

[A] [B] [C] = [A][B] [D] [C] [D] Total Gas Nitrogen Nitrogen Production Percent Production Injection Percent

Rate Nitrogen Rate Rate Recycle(MMscfd) () (MMscfd) (MMscfd) ()

Pre-Development Baseline (1H 2001) 42 69 29 40 72 Fourth Quarter 2003 31 55 17 69 25 First Quarter 2004 29 56 16 60 27 Second Quarter 2004 34 53 18 62 29 Third Quarter 2004 36 54 19 70 28 Fourth Quarter 2004 37 56 21 51 40 First Quarter 2005 34 58 20 44 46 Second Quarter 2005 37 60 22 68 33 Third Quarter 2005 43 62 26 61 44 Fourth Quarter 2005 42 64 27 64 42 First Quarter 2006 38 65 25 64 39 Second Quarter 2006 43 59 25 63 40 Plant problems limited the supply of nitrogen for injection from November 2004 through February 2005

Based on the pre-project decline and the rate at the end of the reporting period the project has added 19 million barrels of oil reserves 08 million barrels of NGL reserves and 31 BCF of residue gas reserves See Figure 5

A secondary aspect of Pilot Area performance monitoring is the comparison of the performances of horizontal wells to vertical wells Figure 6 is a plot of the rate performances of the new wells drilled in the project excluding EBU 37-3H the horizontal well drilled in Budget Period 1 and EBU 43-2 and EBU 60-2 two recently completed vertical wells As previously reported these three wells were drilled in areas with much higher gas saturation EBU 37 G-3H and EBU 43-2 have been converted to injection and EBU 60-2 is awaiting conversion

Comparisons of wells in similar reservoir environments (thickness and gas saturation) show that vertical wells have performed nearly as well as the horizontal wells

DE-FC26-00BC15121 Page 3

Figure 7 shows the averages of the following horizontal and vertical wells

Average GOR amp N2 Average GOR amp N2 6 - 9 Months 15 - 18 Months

Well Net Pay (reflect gas saturation) (reflect gas saturation)

Horizontal EBU 63-2H 70rsquo - 75rsquo 43 Mcfbbl amp 21 49 Mcfbbl amp 24 EBU 64-3H 55rsquo - 60rsquo 56 Mcfbbl amp 17 39 Mcfbbl amp 29 Average Horizontal 65rsquo 50 Mcfbbl amp 19 44 Mcfbbl amp 27

Vertical EBU 44-3 66rsquo 24 Mcfbbl amp 3 29 Mcfbbl amp 4 EBU 46-3 80rsquo 16 Mcfbbl amp 3 13 Mcfbbl amp 4 EBU 47-2 69rsquo 59 Mcfbbl amp 54 Not there yet EBU 67-2 62rsquo 116 Mcfbbl amp 50 159 Mcfbbl amp 52 EBU 74-2 45rsquo 16 Mcfbbl amp 10 17 Mcfbbl amp 17 Average Vertical 63rsquo 46 Mcfbbl amp 24 55 Mcfbbl amp 19

Most of the new wells have low GORs and nitrogen contents in produced gas as indicated above and shown in Figure 8 The relative lack of nitrogen at the infill well locations indicates poor areal sweep ndash EBU 60-2 being a significant exception to this For most new wells current trends of nitrogen content data suggest it will be years before the nitrogen contents in their produced gas approach the current field average

Task 133 ndash Technology Transfer Activities ndash Continue Updating Web Site

Additional technical progress reports have been posted on the project web site wwweastbingerunitcom A review of the project was presented to the Big Horn Section of the Society of Petroleum Engineers in Cody Wyoming on May 4 2006

Conclusion

The reservoir characterization and investigation of the benefits of horizontal wells in the East Binger Unit miscible nitrogen flood as been completed Through the drilling of wells and reservoir characterization work it was determined that poor areal sweep efficiency is the primary factor causing nitrogen cycling and limiting oil recovery This is in contrast to the perception prior to the initiation of development which was that gravity segregation was causing poor vertical sweep efficiency Although not true of all infill wells most were drilled in areas with little sweep and came online producing gas with much lower nitrogen contents than previously drilled wells in the field and in the pilot area Seven vertical and three horizontal wells have been drilled in the pilot area

DE-FC26-00BC15121 Page 4

Results and Discussion

The following is a detailed review of the work conducted in this reporting period

Task 131 ndash Continue Monitoring Program

Binger Operations LLC (ldquoBOLrdquo) continues to monitor new well and overall pilot area performance Figure 1 shows the well work implemented during the project For the second quarter of 2006 pilot area production averaged 478 bopd a net increase of 235 bopd over the projected current rate without development and an increase of 27 bopd over the previous quarter Overall production from new wells in the project area added 277 bopd but was offset by the loss of 42 bopd from wells converted to injection See Figures 2 (all wells in pilot area) 3 (pre-existing wells) and 4 (new wells)

Figure 4 shows the component rate streams of various wells and packages of wells that have been brought on line throughout the project The recent increase of 27 bopd over the average rate of the prior quarter was largely driven by increases at two wells EBU 46-3 and EBU 64-3H EBU 46-3 increased following a period of lower than expected production associated with poor wellbore hydraulics which was resolved by installing and lining out a rod pump The increase at EBU 64-3H is a classical injection response in addition to the increase in oil rate (from 40 to 60 bopd over a seven month period) the associated hydrocarbon gas has caused the overall nitrogen content in the wellrsquos produced gas to drop from 52 to 31

Gas cycling is increasing but is still well below pre-project levels as shown in Figure 2 Injection has leveled off at about 63 MMscfd about 58 higher than before the project began Meanwhile total nitrogen produced from the pilot area has declined from 29 MMscfd (42 MMscfd total gas with a nitrogen content of 69) to 25 MMscfd (43 MMscfd total gas with a nitrogen content of 59) As shown in the table that follows this represents a total change in gas recycle from 72 prior to development to about 40 over the past six months Gas production and gas nitrogen content will continue rise but this clearly represents an improvement in flood performance

DE-FC26-00BC15121 Page 2

Pilot Area Gas Recycle

[A] [B] [C] = [A][B] [D] [C] [D] Total Gas Nitrogen Nitrogen Production Percent Production Injection Percent

Rate Nitrogen Rate Rate Recycle(MMscfd) () (MMscfd) (MMscfd) ()

Pre-Development Baseline (1H 2001) 42 69 29 40 72 Fourth Quarter 2003 31 55 17 69 25 First Quarter 2004 29 56 16 60 27 Second Quarter 2004 34 53 18 62 29 Third Quarter 2004 36 54 19 70 28 Fourth Quarter 2004 37 56 21 51 40 First Quarter 2005 34 58 20 44 46 Second Quarter 2005 37 60 22 68 33 Third Quarter 2005 43 62 26 61 44 Fourth Quarter 2005 42 64 27 64 42 First Quarter 2006 38 65 25 64 39 Second Quarter 2006 43 59 25 63 40 Plant problems limited the supply of nitrogen for injection from November 2004 through February 2005

Based on the pre-project decline and the rate at the end of the reporting period the project has added 19 million barrels of oil reserves 08 million barrels of NGL reserves and 31 BCF of residue gas reserves See Figure 5

A secondary aspect of Pilot Area performance monitoring is the comparison of the performances of horizontal wells to vertical wells Figure 6 is a plot of the rate performances of the new wells drilled in the project excluding EBU 37-3H the horizontal well drilled in Budget Period 1 and EBU 43-2 and EBU 60-2 two recently completed vertical wells As previously reported these three wells were drilled in areas with much higher gas saturation EBU 37 G-3H and EBU 43-2 have been converted to injection and EBU 60-2 is awaiting conversion

Comparisons of wells in similar reservoir environments (thickness and gas saturation) show that vertical wells have performed nearly as well as the horizontal wells

DE-FC26-00BC15121 Page 3

Figure 7 shows the averages of the following horizontal and vertical wells

Average GOR amp N2 Average GOR amp N2 6 - 9 Months 15 - 18 Months

Well Net Pay (reflect gas saturation) (reflect gas saturation)

Horizontal EBU 63-2H 70rsquo - 75rsquo 43 Mcfbbl amp 21 49 Mcfbbl amp 24 EBU 64-3H 55rsquo - 60rsquo 56 Mcfbbl amp 17 39 Mcfbbl amp 29 Average Horizontal 65rsquo 50 Mcfbbl amp 19 44 Mcfbbl amp 27

Vertical EBU 44-3 66rsquo 24 Mcfbbl amp 3 29 Mcfbbl amp 4 EBU 46-3 80rsquo 16 Mcfbbl amp 3 13 Mcfbbl amp 4 EBU 47-2 69rsquo 59 Mcfbbl amp 54 Not there yet EBU 67-2 62rsquo 116 Mcfbbl amp 50 159 Mcfbbl amp 52 EBU 74-2 45rsquo 16 Mcfbbl amp 10 17 Mcfbbl amp 17 Average Vertical 63rsquo 46 Mcfbbl amp 24 55 Mcfbbl amp 19

Most of the new wells have low GORs and nitrogen contents in produced gas as indicated above and shown in Figure 8 The relative lack of nitrogen at the infill well locations indicates poor areal sweep ndash EBU 60-2 being a significant exception to this For most new wells current trends of nitrogen content data suggest it will be years before the nitrogen contents in their produced gas approach the current field average

Task 133 ndash Technology Transfer Activities ndash Continue Updating Web Site

Additional technical progress reports have been posted on the project web site wwweastbingerunitcom A review of the project was presented to the Big Horn Section of the Society of Petroleum Engineers in Cody Wyoming on May 4 2006

Conclusion

The reservoir characterization and investigation of the benefits of horizontal wells in the East Binger Unit miscible nitrogen flood as been completed Through the drilling of wells and reservoir characterization work it was determined that poor areal sweep efficiency is the primary factor causing nitrogen cycling and limiting oil recovery This is in contrast to the perception prior to the initiation of development which was that gravity segregation was causing poor vertical sweep efficiency Although not true of all infill wells most were drilled in areas with little sweep and came online producing gas with much lower nitrogen contents than previously drilled wells in the field and in the pilot area Seven vertical and three horizontal wells have been drilled in the pilot area

DE-FC26-00BC15121 Page 4

Pilot Area Gas Recycle

[A] [B] [C] = [A][B] [D] [C] [D] Total Gas Nitrogen Nitrogen Production Percent Production Injection Percent

Rate Nitrogen Rate Rate Recycle(MMscfd) () (MMscfd) (MMscfd) ()

Pre-Development Baseline (1H 2001) 42 69 29 40 72 Fourth Quarter 2003 31 55 17 69 25 First Quarter 2004 29 56 16 60 27 Second Quarter 2004 34 53 18 62 29 Third Quarter 2004 36 54 19 70 28 Fourth Quarter 2004 37 56 21 51 40 First Quarter 2005 34 58 20 44 46 Second Quarter 2005 37 60 22 68 33 Third Quarter 2005 43 62 26 61 44 Fourth Quarter 2005 42 64 27 64 42 First Quarter 2006 38 65 25 64 39 Second Quarter 2006 43 59 25 63 40 Plant problems limited the supply of nitrogen for injection from November 2004 through February 2005

Based on the pre-project decline and the rate at the end of the reporting period the project has added 19 million barrels of oil reserves 08 million barrels of NGL reserves and 31 BCF of residue gas reserves See Figure 5

A secondary aspect of Pilot Area performance monitoring is the comparison of the performances of horizontal wells to vertical wells Figure 6 is a plot of the rate performances of the new wells drilled in the project excluding EBU 37-3H the horizontal well drilled in Budget Period 1 and EBU 43-2 and EBU 60-2 two recently completed vertical wells As previously reported these three wells were drilled in areas with much higher gas saturation EBU 37 G-3H and EBU 43-2 have been converted to injection and EBU 60-2 is awaiting conversion

Comparisons of wells in similar reservoir environments (thickness and gas saturation) show that vertical wells have performed nearly as well as the horizontal wells

DE-FC26-00BC15121 Page 3

Figure 7 shows the averages of the following horizontal and vertical wells

Average GOR amp N2 Average GOR amp N2 6 - 9 Months 15 - 18 Months

Well Net Pay (reflect gas saturation) (reflect gas saturation)

Horizontal EBU 63-2H 70rsquo - 75rsquo 43 Mcfbbl amp 21 49 Mcfbbl amp 24 EBU 64-3H 55rsquo - 60rsquo 56 Mcfbbl amp 17 39 Mcfbbl amp 29 Average Horizontal 65rsquo 50 Mcfbbl amp 19 44 Mcfbbl amp 27

Vertical EBU 44-3 66rsquo 24 Mcfbbl amp 3 29 Mcfbbl amp 4 EBU 46-3 80rsquo 16 Mcfbbl amp 3 13 Mcfbbl amp 4 EBU 47-2 69rsquo 59 Mcfbbl amp 54 Not there yet EBU 67-2 62rsquo 116 Mcfbbl amp 50 159 Mcfbbl amp 52 EBU 74-2 45rsquo 16 Mcfbbl amp 10 17 Mcfbbl amp 17 Average Vertical 63rsquo 46 Mcfbbl amp 24 55 Mcfbbl amp 19

Most of the new wells have low GORs and nitrogen contents in produced gas as indicated above and shown in Figure 8 The relative lack of nitrogen at the infill well locations indicates poor areal sweep ndash EBU 60-2 being a significant exception to this For most new wells current trends of nitrogen content data suggest it will be years before the nitrogen contents in their produced gas approach the current field average

Task 133 ndash Technology Transfer Activities ndash Continue Updating Web Site

Additional technical progress reports have been posted on the project web site wwweastbingerunitcom A review of the project was presented to the Big Horn Section of the Society of Petroleum Engineers in Cody Wyoming on May 4 2006

Conclusion

The reservoir characterization and investigation of the benefits of horizontal wells in the East Binger Unit miscible nitrogen flood as been completed Through the drilling of wells and reservoir characterization work it was determined that poor areal sweep efficiency is the primary factor causing nitrogen cycling and limiting oil recovery This is in contrast to the perception prior to the initiation of development which was that gravity segregation was causing poor vertical sweep efficiency Although not true of all infill wells most were drilled in areas with little sweep and came online producing gas with much lower nitrogen contents than previously drilled wells in the field and in the pilot area Seven vertical and three horizontal wells have been drilled in the pilot area

DE-FC26-00BC15121 Page 4

Figure 7 shows the averages of the following horizontal and vertical wells

Average GOR amp N2 Average GOR amp N2 6 - 9 Months 15 - 18 Months

Well Net Pay (reflect gas saturation) (reflect gas saturation)

Horizontal EBU 63-2H 70rsquo - 75rsquo 43 Mcfbbl amp 21 49 Mcfbbl amp 24 EBU 64-3H 55rsquo - 60rsquo 56 Mcfbbl amp 17 39 Mcfbbl amp 29 Average Horizontal 65rsquo 50 Mcfbbl amp 19 44 Mcfbbl amp 27

Vertical EBU 44-3 66rsquo 24 Mcfbbl amp 3 29 Mcfbbl amp 4 EBU 46-3 80rsquo 16 Mcfbbl amp 3 13 Mcfbbl amp 4 EBU 47-2 69rsquo 59 Mcfbbl amp 54 Not there yet EBU 67-2 62rsquo 116 Mcfbbl amp 50 159 Mcfbbl amp 52 EBU 74-2 45rsquo 16 Mcfbbl amp 10 17 Mcfbbl amp 17 Average Vertical 63rsquo 46 Mcfbbl amp 24 55 Mcfbbl amp 19

Most of the new wells have low GORs and nitrogen contents in produced gas as indicated above and shown in Figure 8 The relative lack of nitrogen at the infill well locations indicates poor areal sweep ndash EBU 60-2 being a significant exception to this For most new wells current trends of nitrogen content data suggest it will be years before the nitrogen contents in their produced gas approach the current field average

Task 133 ndash Technology Transfer Activities ndash Continue Updating Web Site

Additional technical progress reports have been posted on the project web site wwweastbingerunitcom A review of the project was presented to the Big Horn Section of the Society of Petroleum Engineers in Cody Wyoming on May 4 2006

Conclusion

The reservoir characterization and investigation of the benefits of horizontal wells in the East Binger Unit miscible nitrogen flood as been completed Through the drilling of wells and reservoir characterization work it was determined that poor areal sweep efficiency is the primary factor causing nitrogen cycling and limiting oil recovery This is in contrast to the perception prior to the initiation of development which was that gravity segregation was causing poor vertical sweep efficiency Although not true of all infill wells most were drilled in areas with little sweep and came online producing gas with much lower nitrogen contents than previously drilled wells in the field and in the pilot area Seven vertical and three horizontal wells have been drilled in the pilot area

DE-FC26-00BC15121 Page 4

throughout the project As previously reported the benefits of horizontal drilling were found to be insufficient to justify their increased cost Nitrogen recycle defined as nitrogen production as a percentage of injection decreased from 72 prior to initiation of the project to about 25 before rising back to a current rate of 40 Injection into the pilot area despite being limited at times by problems in the Air Separation Unit of the Nitrogen Management Facility has increased 60 over levels prior to the project Meanwhile gas production and nitrogen content of produced gas have both decreased

References

There are no references for this report

DE-FC26-00BC15121 Page 5

56

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020406080100

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Rat

eG

as P

rod

Rat

eG

as In

j Rat

e 44

-3 amp

46-

3 65-2

63-2

H

74G

-2

64-3

H37

-3H

37-3

H C

TI

65-2

CTI

47-2

amp 4

3-2

60-2

020406080100 Ja

n-99

Ja

n-00

Ja

n-01

Ja

n-02

Ja

n-03

Ja

n-04

Ja

n-05

Ja

n-06

Ja

n-07

m cf bbl or N2

N

2 in

Pro

d G

asG

OR

Figu

re 4

Pr

oduc

tion

data

for

new

wel

ls in

the

pilo

t are

a

DE-

FC26

-00B

C15

121

Page

9

Pilo

t Are

a R

ates

10

000

Star

t of D

evel

opm

ent

Oil

Rat

eP

re-P

roje

ct D

eclin

eD

eclin

e fro

m C

urre

nt R

ate

NG

L R

ate

Pre

-Pro

ject

Dec

line

Incr

emen

tal R

esid

ue G

asD

eclin

e fro

m C

urre

nt R

ate

1000

R

esid

ue G

as R

ate

bpd o r m cfd

Pre

-Pro

ject

Dec

line

Dec

line

from

Cur

rent

Rat

e

100

Incr

emen

tal N

GLs

Incr

emen

tal O

il

10 119

99

120

04

120

09

120

14

120

19

120

24

120

29

120

34

120

39

Figu

re 5

O

il N

GL

and

Res

idue

Gas

fore

cast

s with

out a

nd w

ith d

evel

opm

ent

Sha

ded

ldquowed

gesrdquo

ref

lect

incr

emen

tal r

eser

ves

deve

lope

d w

ith th

e pr

ojec

t

DE-

FC26

-00B

C15

121

Page

10

1000

O i l Rate (b d )

100

Con

verte

d to

Inje

ctio

n

10

New

Wel

l Com

paris

on -

Oil

Rat

e amp

GO

R

EBU

44-3

EB

U 46

-3

EBU

63-2

H

EBU

64-3

H

EBU

65-2

EB

U 67

-2

EBU

74-2

EB

U 47

-2

110100

GOR (m cf bbl )

EBU

44-3

EB

U 46

-3

EBU

63-2

H

EBU

64-3

H

EBU

65-2

EB

U 67

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EBU

74-2

EB

U 47

-2

0 2

4 6

8 10

12 14

16 18

Mon

ths

on P

rodu

ctio

n

Figu

re 6

C

ompa

riso

n of

pro

duct

ion

data

for

rece

nt h

oriz

onta

l and

ver

tical

wel

ls in

or

near

the

Pilo

t Are

a H

oriz

onta

l wel

ls

are

desi

gnat

ed w

ith a

n ldquoH

rdquo in

thei

r na

mes

DE-

FC26

-00B

C15

121

Page

11

New

Wel

l Com

paris

on -

Oil

Rat

e amp

GO

R

10100

1000

O il R at e ( b d)

Aver

age

Verti

cal

Aver

age

Hor

izon

tal

0246810 1

3 5

7 9

11

13 15

17 19

Pr

oduc

tion

Mon

th

GOR (mcfbbl)

Aver

age

Verti

cal

Aver

age

Hor

izont

al

Figu

re 7

C

ompa

riso

n of

ave

rage

pro

duct

ion

data

for

two

hori

zont

al a

nd fi

ve v

ertic

al w

ells

in o

r ne

ar th

e Pi

lot A

rea

DE-

FC26

-00B

C15

121

Page

12

--

--

--

--

--

--

--

--

--

--

--

--

--

--

--

--

--

--

--

East

Bin

ger U

nit P

ilot A

rea

N

itrog

en C

onte

nt in

Pro

duce

d G

as

Pilo

t Are

a Sa

mpl

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ata

1st Q

tr 2n

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tr 3r

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tr 4t

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tr 1s

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2nd

Qtr

3rd

Qtr

4th

Qtr

1st Q

tr 2n

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tr 4t

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2nd

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W

ell

4th

Qtr

20

03

2003

20

03

2003

20

04

2004

20

04

2004

20

05

2005

20

05

2005

20

06

2006

2001

35-2

-

63

67

63

-

66

-

67

-

70

-

-68

75

36

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58

46

47

44

45

50

58

70

74

77

80

86

-82

83

36

-2

65

-

20

-

18

-

22

-

18

-

20

-

-23

17

37

-2

25

80

79

80

81

81

83

84

83

83

85

85

-85

86

43

-1

83

7

-

6

-4

4

12

11

20

27

31

-33

32

44

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9

68

71

66

68

67

69

65

66

73

68

67

-

70

74

45-2

69

57

59

60

61

62

64

64

65

64

67

67

-

69

69

46-2

56

68

64

61

62

64

62

62

61

63

66

66

-

69

68

48-1

62

84

85

86

87

87

87

87

87

87

87

86

-

86

86

57-2

83

41

45

47

40

37

39

40

43

45

45

48

-

51

52

58-2

37

6

5

--

12

6

6

17

5

5

--

8

6

12

59

-2

48

45

43

39

45

48

49

52

54

55

53

-

56

54

61-1

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61

-

60

-

63

-

63

63

73-1

56

21

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21

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19

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24

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18

-

11

-

11

-

13

Av

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48

53

53

57

48

52

52

54

54

56

60

-

55

59

43-2

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93

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TI -

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3

4

4

4

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6

46

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5 -

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42

54

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60-2

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94

95

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H

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19

22

20

19

23

26

20

18

-29

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64

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17

16

23

25

36

36

30

43

45

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52

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31

65-2

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22

CTI

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-8

10

10

10

19

16

16

18

24

25

28

-

33

33

-

Avg

-13

13

16

18

20

15

16

19

21

16

34

-34

35

Fi

gure

8

Pilo

t Are

a ga

s sam

ple

data

ndash p

erce

nt n

itrog

en in

pro

duce

d ga

s N

ew w

ells

are

show

n in

blu

e at

the

bott

om o

f the

ta

ble

Lim

ited

data

was

obt

aine

d in

the

four

th q

uart

er o

f 200

5 du

e to

a sa

mpl

ing

prob

lem

DE-

FC26

-00B

C15

121

Page

13

Pilo

t Are

a Pe

rfor

man

ce --

All

W el

ls

100

1000

1000

0

bopd or m cfd

Oil

Rat

e G

as In

j Rat

e P

re-P

roje

ct D

eclin

e G

as P

rod

Rat

e

Air

Pla

nt

Dow

ntim

e

37-3H On

57-1 CTI

64-3H On

59-1 CTI

65-1 CTI

37-3H CTI

65-2 On

44-3 amp 46-3 On

63-2H On

74-2 On

65-2 CTI

47-2 amp 43-2 On 60-2 On

020406080100

120 Ja

n-99

Ja

n-00

Ja

n-01

Ja

n-02

Ja

n-03

Ja

n-04

Ja

n-05

Ja

n-06

Ja

n-07

m cf bbl or

N

2 in

Pro

d G

as

N2

Rec

ycle

GO

R

Figu

re 2

Pr

oduc

tion

data

for

all w

ells

in th

e pi

lot a

rea

DE-

FC26

-00B

C15

121

Page

7

Pilo

t Are

a Pe

rfor

man

ce --

W el

ls E

xist

ing

Bef

ore

DO

E Pr

ojec

t Dev

elop

men

t

100

1000

1000

0

bopd or m cfd

Oil

Rat

e G

as In

j Rat

eP

re-P

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ct D

eclin

e G

as P

rod

Rat

e

57-1 CTI

65-1 CTI

59-1 CTI

Air

Pla

nt

Dow

ntim

e

020406080100 Ja

n-99

Ja

n-00

Ja

n-01

Ja

n-02

Ja

n-03

Ja

n-04

Ja

n-05

Ja

n-06

Ja

n-07

m cf bbl or N2

N

2 in

Pro

d G

asG

OR

Figu

re 3

Pr

oduc

tion

data

for

wel

ls in

the

pilo

t are

a th

at e

xist

ed b

efor

e D

OE

Pro

ject

dev

elop

men

t

DE-

FC26

-00B

C15

121

Page

8

Pilo

t Are

a Pe

rfor

man

ce --

New

W el

ls

10100

1000

1000

0

bopd or m cfd

Oil

Rat

eG

as P

rod

Rat

eG

as In

j Rat

e 44

-3 amp

46-

3 65-2

63-2

H

74G

-2

64-3

H37

-3H

37-3

H C

TI

65-2

CTI

47-2

amp 4

3-2

60-2

020406080100 Ja

n-99

Ja

n-00

Ja

n-01

Ja

n-02

Ja

n-03

Ja

n-04

Ja

n-05

Ja

n-06

Ja

n-07

m cf bbl or N2

N

2 in

Pro

d G

asG

OR

Figu

re 4

Pr

oduc

tion

data

for

new

wel

ls in

the

pilo

t are

a

DE-

FC26

-00B

C15

121

Page

9

Pilo

t Are

a R

ates

10

000

Star

t of D

evel

opm

ent

Oil

Rat

eP

re-P

roje

ct D

eclin

eD

eclin

e fro

m C

urre

nt R

ate

NG

L R

ate

Pre

-Pro

ject

Dec

line

Incr

emen

tal R

esid

ue G

asD

eclin

e fro

m C

urre

nt R

ate

1000

R

esid

ue G

as R

ate

bpd o r m cfd

Pre

-Pro

ject

Dec

line

Dec

line

from

Cur

rent

Rat

e

100

Incr

emen

tal N

GLs

Incr

emen

tal O

il

10 119

99

120

04

120

09

120

14

120

19

120

24

120

29

120

34

120

39

Figu

re 5

O

il N

GL

and

Res

idue

Gas

fore

cast

s with

out a

nd w

ith d

evel

opm

ent

Sha

ded

ldquowed

gesrdquo

ref

lect

incr

emen

tal r

eser

ves

deve

lope

d w

ith th

e pr

ojec

t

DE-

FC26

-00B

C15

121

Page

10

1000

O i l Rate (b d )

100

Con

verte

d to

Inje

ctio

n

10

New

Wel

l Com

paris

on -

Oil

Rat

e amp

GO

R

EBU

44-3

EB

U 46

-3

EBU

63-2

H

EBU

64-3

H

EBU

65-2

EB

U 67

-2

EBU

74-2

EB

U 47

-2

110100

GOR (m cf bbl )

EBU

44-3

EB

U 46

-3

EBU

63-2

H

EBU

64-3

H

EBU

65-2

EB

U 67

-2

EBU

74-2

EB

U 47

-2

0 2

4 6

8 10

12 14

16 18

Mon

ths

on P

rodu

ctio

n

Figu

re 6

C

ompa

riso

n of

pro

duct

ion

data

for

rece

nt h

oriz

onta

l and

ver

tical

wel

ls in

or

near

the

Pilo

t Are

a H

oriz

onta

l wel

ls

are

desi

gnat

ed w

ith a

n ldquoH

rdquo in

thei

r na

mes

DE-

FC26

-00B

C15

121

Page

11

New

Wel

l Com

paris

on -

Oil

Rat

e amp

GO

R

10100

1000

O il R at e ( b d)

Aver

age

Verti

cal

Aver

age

Hor

izon

tal

0246810 1

3 5

7 9

11

13 15

17 19

Pr

oduc

tion

Mon

th

GOR (mcfbbl)

Aver

age

Verti

cal

Aver

age

Hor

izont

al

Figu

re 7

C

ompa

riso

n of

ave

rage

pro

duct

ion

data

for

two

hori

zont

al a

nd fi

ve v

ertic

al w

ells

in o

r ne

ar th

e Pi

lot A

rea

DE-

FC26

-00B

C15

121

Page

12

--

--

--

--

--

--

--

--

--

--

--

--

--

--

--

--

--

--

--

East

Bin

ger U

nit P

ilot A

rea

N

itrog

en C

onte

nt in

Pro

duce

d G

as

Pilo

t Are

a Sa

mpl

e D

ata

1st Q

tr 2n

d Q

tr 3r

d Q

tr 4t

h Q

tr 1s

t Qtr

2nd

Qtr

3rd

Qtr

4th

Qtr

1st Q

tr 2n

d Q

tr 3r

d Q

tr 4t

h Q

tr 1s

t Qtr

2nd

Qtr

W

ell

4th

Qtr

20

03

2003

20

03

2003

20

04

2004

20

04

2004

20

05

2005

20

05

2005

20

06

2006

2001

35-2

-

63

67

63

-

66

-

67

-

70

-

-68

75

36

-1

58

46

47

44

45

50

58

70

74

77

80

86

-82

83

36

-2

65

-

20

-

18

-

22

-

18

-

20

-

-23

17

37

-2

25

80

79

80

81

81

83

84

83

83

85

85

-85

86

43

-1

83

7

-

6

-4

4

12

11

20

27

31

-33

32

44

-1

9

68

71

66

68

67

69

65

66

73

68

67

-

70

74

45-2

69

57

59

60

61

62

64

64

65

64

67

67

-

69

69

46-2

56

68

64

61

62

64

62

62

61

63

66

66

-

69

68

48-1

62

84

85

86

87

87

87

87

87

87

87

86

-

86

86

57-2

83

41

45

47

40

37

39

40

43

45

45

48

-

51

52

58-2

37

6

5

--

12

6

6

17

5

5

--

8

6

12

59

-2

48

45

43

39

45

48

49

52

54

55

53

-

56

54

61-1

44

-56

-59

-63

61

-

60

-

63

-

63

63

73-1

56

21

-

21

-

19

-

24

-

18

-

11

-

11

-

13

Av

g 48

48

53

53

57

48

52

52

54

54

56

60

-

55

59

43-2

-

-91

93

C

TI -

44-3

-

4

3

3

3

4

4

4

-5

6

46

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54

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94

95

63-2

H

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19

22

20

19

23

26

20

18

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21

64

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-

17

16

23

25

36

36

30

43

45

-

52

-

18

31

65-2

-

--

25

22

CTI

--

-74

-2

-8

10

10

10

19

16

16

18

24

25

28

-

33

33

-

Avg

-13

13

16

18

20

15

16

19

21

16

34

-34

35

Fi

gure

8

Pilo

t Are

a ga

s sam

ple

data

ndash p

erce

nt n

itrog

en in

pro

duce

d ga

s N

ew w

ells

are

show

n in

blu

e at

the

bott

om o

f the

ta

ble

Lim

ited

data

was

obt

aine

d in

the

four

th q

uart

er o

f 200

5 du

e to

a sa

mpl

ing

prob

lem

DE-

FC26

-00B

C15

121

Page

13

Pilo

t Are

a Pe

rfor

man

ce --

W el

ls E

xist

ing

Bef

ore

DO

E Pr

ojec

t Dev

elop

men

t

100

1000

1000

0

bopd or m cfd

Oil

Rat

e G

as In

j Rat

eP

re-P

roje

ct D

eclin

e G

as P

rod

Rat

e

57-1 CTI

65-1 CTI

59-1 CTI

Air

Pla

nt

Dow

ntim

e

020406080100 Ja

n-99

Ja

n-00

Ja

n-01

Ja

n-02

Ja

n-03

Ja

n-04

Ja

n-05

Ja

n-06

Ja

n-07

m cf bbl or N2

N

2 in

Pro

d G

asG

OR

Figu

re 3

Pr

oduc

tion

data

for

wel

ls in

the

pilo

t are

a th

at e

xist

ed b

efor

e D

OE

Pro

ject

dev

elop

men

t

DE-

FC26

-00B

C15

121

Page

8

Pilo

t Are

a Pe

rfor

man

ce --

New

W el

ls

10100

1000

1000

0

bopd or m cfd

Oil

Rat

eG

as P

rod

Rat

eG

as In

j Rat

e 44

-3 amp

46-

3 65-2

63-2

H

74G

-2

64-3

H37

-3H

37-3

H C

TI

65-2

CTI

47-2

amp 4

3-2

60-2

020406080100 Ja

n-99

Ja

n-00

Ja

n-01

Ja

n-02

Ja

n-03

Ja

n-04

Ja

n-05

Ja

n-06

Ja

n-07

m cf bbl or N2

N

2 in

Pro

d G

asG

OR

Figu

re 4

Pr

oduc

tion

data

for

new

wel

ls in

the

pilo

t are

a

DE-

FC26

-00B

C15

121

Page

9

Pilo

t Are

a R

ates

10

000

Star

t of D

evel

opm

ent

Oil

Rat

eP

re-P

roje

ct D

eclin

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eclin

e fro

m C

urre

nt R

ate

NG

L R

ate

Pre

-Pro

ject

Dec

line

Incr

emen

tal R

esid

ue G

asD

eclin

e fro

m C

urre

nt R

ate

1000

R

esid

ue G

as R

ate

bpd o r m cfd

Pre

-Pro

ject

Dec

line

Dec

line

from

Cur

rent

Rat

e

100

Incr

emen

tal N

GLs

Incr

emen

tal O

il

10 119

99

120

04

120

09

120

14

120

19

120

24

120

29

120

34

120

39

Figu

re 5

O

il N

GL

and

Res

idue

Gas

fore

cast

s with

out a

nd w

ith d

evel

opm

ent

Sha

ded

ldquowed

gesrdquo

ref

lect

incr

emen

tal r

eser

ves

deve

lope

d w

ith th

e pr

ojec

t

DE-

FC26

-00B

C15

121

Page

10

1000

O i l Rate (b d )

100

Con

verte

d to

Inje

ctio

n

10

New

Wel

l Com

paris

on -

Oil

Rat

e amp

GO

R

EBU

44-3

EB

U 46

-3

EBU

63-2

H

EBU

64-3

H

EBU

65-2

EB

U 67

-2

EBU

74-2

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U 47

-2

110100

GOR (m cf bbl )

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44-3

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U 46

-3

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H

EBU

64-3

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U 67

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U 47

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0 2

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8 10

12 14

16 18

Mon

ths

on P

rodu

ctio

n

Figu

re 6

C

ompa

riso

n of

pro

duct

ion

data

for

rece

nt h

oriz

onta

l and

ver

tical

wel

ls in

or

near

the

Pilo

t Are

a H

oriz

onta

l wel

ls

are

desi

gnat

ed w

ith a

n ldquoH

rdquo in

thei

r na

mes

DE-

FC26

-00B

C15

121

Page

11

New

Wel

l Com

paris

on -

Oil

Rat

e amp

GO

R

10100

1000

O il R at e ( b d)

Aver

age

Verti

cal

Aver

age

Hor

izon

tal

0246810 1

3 5

7 9

11

13 15

17 19

Pr

oduc

tion

Mon

th

GOR (mcfbbl)

Aver

age

Verti

cal

Aver

age

Hor

izont

al

Figu

re 7

C

ompa

riso

n of

ave

rage

pro

duct

ion

data

for

two

hori

zont

al a

nd fi

ve v

ertic

al w

ells

in o

r ne

ar th

e Pi

lot A

rea

DE-

FC26

-00B

C15

121

Page

12

--

--

--

--

--

--

--

--

--

--

--

--

--

--

--

--

--

--

--

East

Bin

ger U

nit P

ilot A

rea

N

itrog

en C

onte

nt in

Pro

duce

d G

as

Pilo

t Are

a Sa

mpl

e D

ata

1st Q

tr 2n

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tr 3r

d Q

tr 4t

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tr 1s

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Qtr

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tr 2n

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tr 1s

t Qtr

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ell

4th

Qtr

20

03

2003

20

03

2003

20

04

2004

20

04

2004

20

05

2005

20

05

2005

20

06

2006

2001

35-2

-

63

67

63

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66

-

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75

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58

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70

74

77

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86

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83

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-2

65

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18

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22

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18

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20

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-23

17

37

-2

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80

79

80

81

81

83

84

83

83

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85

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86

43

-1

83

7

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4

12

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57

59

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61

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64

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67

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69

69

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62

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66

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69

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84

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86

86

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83

41

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51

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6

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5

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59

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48

45

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39

45

48

49

52

54

55

53

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56

54

61-1

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61

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60

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63

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56

21

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11

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13

Av

g 48

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53

53

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60

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55

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54

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60-2

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94

95

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25

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Avg

-13

13

16

18

20

15

16

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21

16

34

-34

35

Fi

gure

8

Pilo

t Are

a ga

s sam

ple

data

ndash p

erce

nt n

itrog

en in

pro

duce

d ga

s N

ew w

ells

are

show

n in

blu

e at

the

bott

om o

f the

ta

ble

Lim

ited

data

was

obt

aine

d in

the

four

th q

uart

er o

f 200

5 du

e to

a sa

mpl

ing

prob

lem

DE-

FC26

-00B

C15

121

Page

13

Pilo

t Are

a Pe

rfor

man

ce --

New

W el

ls

10100

1000

1000

0

bopd or m cfd

Oil

Rat

eG

as P

rod

Rat

eG

as In

j Rat

e 44

-3 amp

46-

3 65-2

63-2

H

74G

-2

64-3

H37

-3H

37-3

H C

TI

65-2

CTI

47-2

amp 4

3-2

60-2

020406080100 Ja

n-99

Ja

n-00

Ja

n-01

Ja

n-02

Ja

n-03

Ja

n-04

Ja

n-05

Ja

n-06

Ja

n-07

m cf bbl or N2

N

2 in

Pro

d G

asG

OR

Figu

re 4

Pr

oduc

tion

data

for

new

wel

ls in

the

pilo

t are

a

DE-

FC26

-00B

C15

121

Page

9

Pilo

t Are

a R

ates

10

000

Star

t of D

evel

opm

ent

Oil

Rat

eP

re-P

roje

ct D

eclin

eD

eclin

e fro

m C

urre

nt R

ate

NG

L R

ate

Pre

-Pro

ject

Dec

line

Incr

emen

tal R

esid

ue G

asD

eclin

e fro

m C

urre

nt R

ate

1000

R

esid

ue G

as R

ate

bpd o r m cfd

Pre

-Pro

ject

Dec

line

Dec

line

from

Cur

rent

Rat

e

100

Incr

emen

tal N

GLs

Incr

emen

tal O

il

10 119

99

120

04

120

09

120

14

120

19

120

24

120

29

120

34

120

39

Figu

re 5

O

il N

GL

and

Res

idue

Gas

fore

cast

s with

out a

nd w

ith d

evel

opm

ent

Sha

ded

ldquowed

gesrdquo

ref

lect

incr

emen

tal r

eser

ves

deve

lope

d w

ith th

e pr

ojec

t

DE-

FC26

-00B

C15

121

Page

10

1000

O i l Rate (b d )

100

Con

verte

d to

Inje

ctio

n

10

New

Wel

l Com

paris

on -

Oil

Rat

e amp

GO

R

EBU

44-3

EB

U 46

-3

EBU

63-2

H

EBU

64-3

H

EBU

65-2

EB

U 67

-2

EBU

74-2

EB

U 47

-2

110100

GOR (m cf bbl )

EBU

44-3

EB

U 46

-3

EBU

63-2

H

EBU

64-3

H

EBU

65-2

EB

U 67

-2

EBU

74-2

EB

U 47

-2

0 2

4 6

8 10

12 14

16 18

Mon

ths

on P

rodu

ctio

n

Figu

re 6

C

ompa

riso

n of

pro

duct

ion

data

for

rece

nt h

oriz

onta

l and

ver

tical

wel

ls in

or

near

the

Pilo

t Are

a H

oriz

onta

l wel

ls

are

desi

gnat

ed w

ith a

n ldquoH

rdquo in

thei

r na

mes

DE-

FC26

-00B

C15

121

Page

11

New

Wel

l Com

paris

on -

Oil

Rat

e amp

GO

R

10100

1000

O il R at e ( b d)

Aver

age

Verti

cal

Aver

age

Hor

izon

tal

0246810 1

3 5

7 9

11

13 15

17 19

Pr

oduc

tion

Mon

th

GOR (mcfbbl)

Aver

age

Verti

cal

Aver

age

Hor

izont

al

Figu

re 7

C

ompa

riso

n of

ave

rage

pro

duct

ion

data

for

two

hori

zont

al a

nd fi

ve v

ertic

al w

ells

in o

r ne

ar th

e Pi

lot A

rea

DE-

FC26

-00B

C15

121

Page

12

--

--

--

--

--

--

--

--

--

--

--

--

--

--

--

--

--

--

--

East

Bin

ger U

nit P

ilot A

rea

N

itrog

en C

onte

nt in

Pro

duce

d G

as

Pilo

t Are

a Sa

mpl

e D

ata

1st Q

tr 2n

d Q

tr 3r

d Q

tr 4t

h Q

tr 1s

t Qtr

2nd

Qtr

3rd

Qtr

4th

Qtr

1st Q

tr 2n

d Q

tr 3r

d Q

tr 4t

h Q

tr 1s

t Qtr

2nd

Qtr

W

ell

4th

Qtr

20

03

2003

20

03

2003

20

04

2004

20

04

2004

20

05

2005

20

05

2005

20

06

2006

2001

35-2

-

63

67

63

-

66

-

67

-

70

-

-68

75

36

-1

58

46

47

44

45

50

58

70

74

77

80

86

-82

83

36

-2

65

-

20

-

18

-

22

-

18

-

20

-

-23

17

37

-2

25

80

79

80

81

81

83

84

83

83

85

85

-85

86

43

-1

83

7

-

6

-4

4

12

11

20

27

31

-33

32

44

-1

9

68

71

66

68

67

69

65

66

73

68

67

-

70

74

45-2

69

57

59

60

61

62

64

64

65

64

67

67

-

69

69

46-2

56

68

64

61

62

64

62

62

61

63

66

66

-

69

68

48-1

62

84

85

86

87

87

87

87

87

87

87

86

-

86

86

57-2

83

41

45

47

40

37

39

40

43

45

45

48

-

51

52

58-2

37

6

5

--

12

6

6

17

5

5

--

8

6

12

59

-2

48

45

43

39

45

48

49

52

54

55

53

-

56

54

61-1

44

-56

-59

-63

61

-

60

-

63

-

63

63

73-1

56

21

-

21

-

19

-

24

-

18

-

11

-

11

-

13

Av

g 48

48

53

53

57

48

52

52

54

54

56

60

-

55

59

43-2

-

-91

93

C

TI -

44-3

-

4

3

3

3

4

4

4

-5

6

46

-3

--

2

3

4

4 -

5 -

4

5

47-2

-

--

42

54

54

54

60-2

-

--

-91

94

95

63-2

H

--

-16

19

22

20

19

23

26

20

18

-29

21

64

-3H

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17

16

23

25

36

36

30

43

45

-

52

-

18

31

65-2

-

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25

22

CTI

--

-74

-2

-8

10

10

10

19

16

16

18

24

25

28

-

33

33

-

Avg

-13

13

16

18

20

15

16

19

21

16

34

-34

35

Fi

gure

8

Pilo

t Are

a ga

s sam

ple

data

ndash p

erce

nt n

itrog

en in

pro

duce

d ga

s N

ew w

ells

are

show

n in

blu

e at

the

bott

om o

f the

ta

ble

Lim

ited

data

was

obt

aine

d in

the

four

th q

uart

er o

f 200

5 du

e to

a sa

mpl

ing

prob

lem

DE-

FC26

-00B

C15

121

Page

13

Pilo

t Are

a R

ates

10

000

Star

t of D

evel

opm

ent

Oil

Rat

eP

re-P

roje

ct D

eclin

eD

eclin

e fro

m C

urre

nt R

ate

NG

L R

ate

Pre

-Pro

ject

Dec

line

Incr

emen

tal R

esid

ue G

asD

eclin

e fro

m C

urre

nt R

ate

1000

R

esid

ue G

as R

ate

bpd o r m cfd

Pre

-Pro

ject

Dec

line

Dec

line

from

Cur

rent

Rat

e

100

Incr

emen

tal N

GLs

Incr

emen

tal O

il

10 119

99

120

04

120

09

120

14

120

19

120

24

120

29

120

34

120

39

Figu

re 5

O

il N

GL

and

Res

idue

Gas

fore

cast

s with

out a

nd w

ith d

evel

opm

ent

Sha

ded

ldquowed

gesrdquo

ref

lect

incr

emen

tal r

eser

ves

deve

lope

d w

ith th

e pr

ojec

t

DE-

FC26

-00B

C15

121

Page

10

1000

O i l Rate (b d )

100

Con

verte

d to

Inje

ctio

n

10

New

Wel

l Com

paris

on -

Oil

Rat

e amp

GO

R

EBU

44-3

EB

U 46

-3

EBU

63-2

H

EBU

64-3

H

EBU

65-2

EB

U 67

-2

EBU

74-2

EB

U 47

-2

110100

GOR (m cf bbl )

EBU

44-3

EB

U 46

-3

EBU

63-2

H

EBU

64-3

H

EBU

65-2

EB

U 67

-2

EBU

74-2

EB

U 47

-2

0 2

4 6

8 10

12 14

16 18

Mon

ths

on P

rodu

ctio

n

Figu

re 6

C

ompa

riso

n of

pro

duct

ion

data

for

rece

nt h

oriz

onta

l and

ver

tical

wel

ls in

or

near

the

Pilo

t Are

a H

oriz

onta

l wel

ls

are

desi

gnat

ed w

ith a

n ldquoH

rdquo in

thei

r na

mes

DE-

FC26

-00B

C15

121

Page

11

New

Wel

l Com

paris

on -

Oil

Rat

e amp

GO

R

10100

1000

O il R at e ( b d)

Aver

age

Verti

cal

Aver

age

Hor

izon

tal

0246810 1

3 5

7 9

11

13 15

17 19

Pr

oduc

tion

Mon

th

GOR (mcfbbl)

Aver

age

Verti

cal

Aver

age

Hor

izont

al

Figu

re 7

C

ompa

riso

n of

ave

rage

pro

duct

ion

data

for

two

hori

zont

al a

nd fi

ve v

ertic

al w

ells

in o

r ne

ar th

e Pi

lot A

rea

DE-

FC26

-00B

C15

121

Page

12

--

--

--

--

--

--

--

--

--

--

--

--

--

--

--

--

--

--

--

East

Bin

ger U

nit P

ilot A

rea

N

itrog

en C

onte

nt in

Pro

duce

d G

as

Pilo

t Are

a Sa

mpl

e D

ata

1st Q

tr 2n

d Q

tr 3r

d Q

tr 4t

h Q

tr 1s

t Qtr

2nd

Qtr

3rd

Qtr

4th

Qtr

1st Q

tr 2n

d Q

tr 3r

d Q

tr 4t

h Q

tr 1s

t Qtr

2nd

Qtr

W

ell

4th

Qtr

20

03

2003

20

03

2003

20

04

2004

20

04

2004

20

05

2005

20

05

2005

20

06

2006

2001

35-2

-

63

67

63

-

66

-

67

-

70

-

-68

75

36

-1

58

46

47

44

45

50

58

70

74

77

80

86

-82

83

36

-2

65

-

20

-

18

-

22

-

18

-

20

-

-23

17

37

-2

25

80

79

80

81

81

83

84

83

83

85

85

-85

86

43

-1

83

7

-

6

-4

4

12

11

20

27

31

-33

32

44

-1

9

68

71

66

68

67

69

65

66

73

68

67

-

70

74

45-2

69

57

59

60

61

62

64

64

65

64

67

67

-

69

69

46-2

56

68

64

61

62

64

62

62

61

63

66

66

-

69

68

48-1

62

84

85

86

87

87

87

87

87

87

87

86

-

86

86

57-2

83

41

45

47

40

37

39

40

43

45

45

48

-

51

52

58-2

37

6

5

--

12

6

6

17

5

5

--

8

6

12

59

-2

48

45

43

39

45

48

49

52

54

55

53

-

56

54

61-1

44

-56

-59

-63

61

-

60

-

63

-

63

63

73-1

56

21

-

21

-

19

-

24

-

18

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Page

13