13 - Baker Hughes - Kennedy En

September, 2010

© 2009 Baker Hughes Incorporated. All Rights Reserved.1

Shale Gas Challenges / Technologies Over the Asset Life Cycle

U.S.–China Oil and Gas Industry Forum

Robert ‘Bobby’ Kennedy – Baker Hughes inc

AGENDA

•Shale Gas Reservoir and U.S. Shale Gas Basics

•Challenges / Technologies Over the Shale Gas Asset Life Cycle

EXPLORATION

APPRAISAL

DEVELOPMENT

PRODUCTION

REJUVENATION


The Shale Gas ‘Reservoir’• Shale Gas - Unconventional natural gas ‘reservoir’ contained

in fine-grained sedimentary rocks, dominated by shalecontaining clay and other minerals like quartz, calcite

• Continuous Formation - No Trap - Not a true ‘Reservoir’ Gas Sourced and Remains in Same formation

• Total Organic Carbon, Thermal Maturity, Mineralogy,and Natural Fractures are Key- Porosity & micro/nanoDarcy-Permeability, secondary

• Gas stored in three ways:1. Free Gas

a. In Rock Matrix Porosityb. In Natural Fractures

2. Sorbed Gasa. Adsorbed on organic and mineral surfaces w/in Nat Fracturesb. Absorbed on organic and mineral surfaces w/in Matrix

3. Dissolved - In HC liquids present (bitumen)

Total Gas = Free + Sorbed + Dissolved


Source: EIA

http://upload.wikimedia.org/wikipedia/en/b/bb/GasDepositDiagram.jpg�

Key Reservoir Parameters

•Brittle Rock – Helps maximize extent of induced fracture network (Brittle Rock will Frac like Glass = better SRV)

•Stress Regime – Relates to pattern orientation and well spacing

•Over-pressure – May require high strength Frac proppants

•Local Lithology Variations •Faults, Karsts, Water•Organic Content•Micro-porosity •Thermal Maturity (Ro) - >Mature = Dry Gas <Mature = Wet Gas


Relates to gas in placeTOC decreases at higher Ro

Relates to well productivity

Total Porosity increases at higher TOC

Gas Shale Basics (U.S. Basins)•Formation Thickness, 20 – 600 ft (net)

•Depth, 6,500 – 13,500 ft•Well IP’s, 2 – 10+ MMcfd•Primarily Dry Gas •Some produce small amounts of water•Typical Decline:

- Initial Flush Flow- 1st Yr Steep Decline (65-80 %)- Produces slowly over time, 25+ Yrs


0

2

4

6

8

10

12

1 3 5 7 9 1113151719212325

Pro

duct

ion

, MM

CFD

Shale Gas Type Curves

Haynesville

Woodford

Barnett

Marcellus

Fayetteville

All Shales Are Not the Same (Geology Varies Even in

the Same Basin)

Developing Shale Gas

• Gas Shales must be Fracture stimulated to produce commercially– Artificial Reservoir is achieved by:

1. Multi-Stage Fracturing 2. Horizontal Wells

• Effectiveness of Hydraulic Fracturing determines:- Production rates- Drainage area - Recovery

• Vertical Wells to define play and collect reservoir data

• Horizontal Wells to develop– Laterals 3,000 - 6,000 ft

• Well Spacing Avg. 80 acres

‘All Shale Gas Reservoirs are Not the Same’


How Many Wells for 1TCF (30 BCM) of Shale Gas?

0

200

400

600

800

1000

1200

1400

0.9 1.8 3.5 5.3 7.1 8.8 10.6

0.025 0.05 0.1 0.15 0.2 0.25 0.3

Wel

l Cou

nt

Ultimate Gas Recovery Per Well

BCM/Well

BCF/Well

Barnett-Fayetteville-Woodford-Marcellus-Haynesville-Horn River44 42 11 262 251 100

Typical Scenarios200 - 250 Wells/TCF

© 2009 Baker Hughes Incorporated. All Rights Reserved.

Ultimate Gas Recovery Per Well, BCF (BCM)

Shale Gas Development Requires Large Number of Wells

Total TCF

7


Shale Gas Asset Life Cycle


Determine the Economic Value and Reservoir Potential

Understand Field Wide Well Placement and Architecture

Reservoir Characterization

EXPLORATIONChallenges / Technologies

TECHNOLOGIES -• Reservoir Analysis• Geomechanics• Formation Evaluation• Economic Evaluation

Reservoir Analysis• Conventional reservoir modeling/analyses Not effective for Shale Gas

- Complex reservoir characteristics and gas flow regime introduce difficulty in predicting GIP, recovery, production profiles, well placement, and design fracturing programs/completions

• An Integrated Multidicipline Approach is required to forecast production, recovery, design fracture stimulations, and well placement for use in Economic Evaluations

• BHI through Reservoir Development Services currently provides Integrated Approach and employs Shale Engineering to analyze/design optimized completions and stimulation for maximum

Producing Rates and Recovery used in determining Shale Reservoir Potential


BHI Integrated Approach - Workflow

GeomechanicalModel

Better drilling and completion

design

Optimized Production

Better stimulation

Petrophysics:•Mineralogy•Rock Mechanics

CalibrationMonitoring (Microseismic)

C. Jenkins,2010Improved Predictions

•Where•Number of stages•Frac design

“Shale Engineering”

Disciplines: Geomechanics, Geochemistry, Petrophysics, Rock Properties, Seismology,Reservoir, Well, Stimulation Modeling

© 2009 Baker Hughes Incorporated. All Rights Reserved11


Validate the Economics of the Reservoir Generate a Field Development Plan Refine and Optimize Completion Design

APPRAISALChallenges / Technologies

TECHNOLOGIES -• Reservoir Analysis• Geomechanics• Formation Evaluation• Economic Evaluation

http://images.google.co.uk/imgres?imgurl=http://i122.photobucket.com/albums/o264/lazarus305/money.jpg&imgrefurl=http://www.everythingicafe.com/forum/iphone-modifications/stocks-icon-request-7803.html&usg=__4U9RVF4aAWgc8eRRlGG0tyZNIfU=&h=600&w=600&sz=46&hl=en&start=16&um=1&tbnid=61Stgtdz861jCM:&tbnh=135&tbnw=135&prev=/images?q=money+icon&hl=en&lr=&rlz=1G1GGLQ_ENUS291&sa=N&um=1�

Pre-Drill Modeling and Analysis for: Wellbore Stability Management

Pore Pressure Prediction

Determining In-Situ Stress

Comprehensive Well Planning

Geomechanics Models for Hydraulic Fracturing Design (propagation, stages, perfs), Well Placement, and Completion Design

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Geomechanics Important in Exploration, Appraisal, and Development Phases of Life Cycle

@ 2009 Baker Hughes Incorporated. All Rights Reserved

Reservoir Characterization Challenge

PorosityPermeabilityWater SaturationMineralogyShale LithofaciesTotal Organic ContentMaturity Level (Thermal)GIP (adsorbed and free)

• Run in Vertical Wells

Fracture CharacterizationDynamic and Static Geomechanical Rock PropertiesPressure GradientStress RegimeSiliceous IndexSWC Analysis


• No single Log or Core provides all the Answers• Conventional Log Suites can Not provide all characterization data required for Shale Gas

Solution - BHI Shale Gas Evaluation Suite Provides:

An Integrated Petrophysical Approach Using Logs and Analyses to Characterize Highly Complex Shale Gas Reservoirs

IntelliFracMicro-seismic

15 © 2009 Baker Hughes Incorporated. All Rights Reserved

Log & Analyses Identifies: Optimum “Fracturable”

Intervals Formations to Drill

Horizontal LateralsPotential Barriers for

Frac Containment

300+ Evaluation Suites run in US Shale Gas, 40+ in Canada

BHI Shale Gas Evaluation Suite

Lithology

Mineralogy

Th/U for Carbonclassification

Minimize Drilling Costs Optimize Completion and Fracturing

Design Minimize Environmental Impact


DEVELOPMENTChallenges / Technologies

TECHNOLOGIES -• Well Design / Drilling• Hydraulic Fracturing• Well Completion• Environmental

Reducing Days on Well by Drilling Optimization


Downhole Tools, Analytical Tools and

Modeling

Structured Processes & Engineering

Training

Offset Well and Dull Bit Analysis

RPM change

Stabilizer in this section at RPM change

RPM near critical speed,

then BHA enters hard formation

Appears to result from stabilizers

hanging on ledges and allowing bit to

side cut

Fria

ble

Form

atio

nFr

iabl

e Fo

rmat

ion

BHA Modeling

Torque, Drag, Hydraulics Modeling

AXIAL LATERAL TORSIONAL

Downhole dynamics measurement

DF Designs & ECD

Reducing Risk/Cost (Additional Trips)

•Drill Bits– Quantec™ PDC & Tricone

Bits specifically designed for Shale Gas - Vertical, Curve, and Laterals

•Directional Services– Custom BHA’s– Ultra™ Motor Technology– Rotary Steerable – AutoTrak

eXpress™– TeleTrak™ (MWD) & MWD

Tools


Goal – Drill the Curve & Lateral with Single Bit and BHA Trip

Optimizing Wellbore Placement –Reservoir Navigation Services (RNS)

RNS - Real-time LWD to detect adjacent formations (AziTrak™ & GR)

- Ensure optimal reservoir entry- Maintain optimal position

within reservoir- Avoid reservoir exit- Steer to ‘sweet spot’

• Reduced Number Wells/ST’s

• Reduced overall Costs

• Increased Production & EUR


Deep Resistivity Image

Well Path

Cap Rock

Reservoir

Top

Top

Bottom

Distance to Bed Boundary

Depth of Detection

Reservoir Navigation Services

• Decrease risk– Improves borehole quality for

lower risk associated with running casing in long laterals

• Reduce rig time– Eliminates orientation and slide

time associated with steerable motor drilling

– Improves overall effective ROP

20

Steerable MotorRotary Steerable

Rotate

Slide

High Efficiency Rotary Steerable Systems


Optimizing Drilling Fluid Programs For Increased ROP and Reduce Environmental Impact

•Drilling Fluid– Barnett: WBM, OBM/Brines (some cases)– Haynesville: WBM to KOP, then OBM– Marcellus: Air/Mist to KOP, then WBM or SBM– Eagle Ford: Fresh Water for Surface, then OBM

•Density– Barnett: < 10.0 ppg– Haynesville: 12.0 – 16.5 ppg– Marcellus: 11.5 – 14.0 ppg– Eagle Ford: 11.0 – 12,0 ppg

•Environmentally Friendly Fluids- BHI TERRA MAX™ ‘Environmentally Acceptable Alternative to OBM’ - NEXT-DRILL™ ‘Synthetic Invert Emulsion’

21 @ 2009 Baker Hughes Incorporated. All Rights Reserved

Reduce Cost and Environmental Risk with Centralized Dewatering• Recycle processed water for drill or wash water• More efficient disposal after dewatering• Remove suspended solids in WBM

BHI can help make operation Green:.- Reduce fluid waste, disposal costs, transportation fees, environmental impact

- Reuse fluid in future well operations


23

Shale Gas Drill Pads – Logistics & Environment(Shale Gas Factory)

DRILL PAD

Developing a “Shale Gas Factory”• 10 + wells from a single pad• Shared rig access, mud pits• Skid-mounted Frac-pumps• Gas conditioning & compression• Gas export • Minimize Environmental Impact

- Footprint- Fit for Purpose Eco-Centre™for Solids and Waste

• Alliance with service provider (BHI) to capture learning curve benefits


Eco-Centre™

23

Hydraulic Fracturing Process 1. Pump Pad

- Causes rock to fracture- Creates fractures to accept Proppant

2. Pump SlurryProppant (size-graded particles, spherical white sand / man-made) mixed into fluid Slurry; pumped in to prop open created fractures

3. FlushClean fluid to clear surface lines & well tubulars of proppant; pumps shut down

4. Bleed Off well pressure to allow fractures to close on proppant

5. Recover injected fluid by flowing/lifting well (Typically recover <30% of frac fluid)


Fracturing FluidFracturing Fluid = Base Fluid + Additives + Proppant Base fluid – water or oil Additives – Gelling Agents, Crosslinkers (polymers), Friction

Reducers, Breakers, Surfactants & Non-emulsifiers, BiocidesProppants – White Sand (for Shales), Brown Sand, Low Density

Ceramics, Resin-coated Sand, Sintered Bauxite


SHALE STAGES*Xf COMPLETION FLUID TYPE

FLUID VOLUME

PROPPANT PROPPANT

ft METHOD Bbls/Stage TYPE Total Lbs.

BARNETT 7-9 300-400 Plug-N-Perf Acid, SW 14,000 Ottawa/Lite 550,000

FAYETTEVILLE 8-11 250-300 Plug-N-Perf/OH Acid, SW 6,500 Ottawa 300,000

HAYNESVILLE 8-11 300 Plug-N-Perf/OH Acid, SW /Poly 11,400 Other 330,000

MARCELLUS 6-8 300-400 Plug-N-Perf/OH Acid, SW 16,000 Ottawa 785,000

WOODFORD 8-10 250 Plug-N-Perf/OH Acid, SW 18,500 Bauxite/Other 255,000

EAGLE FORD 8-10 350 Plug-N-Perf Acid, SW 12,800 Ottawa/DC 300,000

Typical Shale Frac Basic Materials Per Stage

* Fracture half length estimated SW = Slickwater OH = Openhole

Fracture Treatment Monitoring Methods

• Conventional Temperature and Tracer Surveys- Data near well-bore vicinity- Fluids & proppants ‘traced’

• Distributed Temperature Sensing (DTS)

- Fiber Optic • Production Logging - Spinner surveys- Flow & Temperature

• Microseismic Monitoring- During fracture treatment / Near real-time- Managing treatment and post-treatment analysis



Typical Shale Gas Completion Options –(For Hydraulic Fracturing the Well)

•Cemented Liner– Plug-N-Perf Method

•Openhole Completion Systems– BHI FracPoint™– Others (Frac Sleeves & Isolation Packers)

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Plug-N-Perf Method


• Cased Hole - Perforate & Produce Multiple pay zones• Hydraulic Fracture each individual zone• Set Plugs for zonal isolation• Drill Out Plugs and Produce

8,000+ Composite Plugs run by BHI in Barnett

FracPoint™ Completion System


•One-trip system – Up to 24 stages•Continuous Multi-zone Frac (Shortest overall Time)

•Drop a Ball To: - Shift sleeve - Isolate previous Frac- Open new zone

•Versatile system- Eliminates perforating & liner cementing operations- Primary and Re-fracturing applications- Reduced Cost vs Plug-N-Perf

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450+ InstallationsShale Gas & Bakken (oil)

Reduce Environmental Risk Maintain Production RatesReduce Scaling, Corrosion, and

Microbial ContaminationMeet Gas Pipeline Specifications

TECHNOLOGIES -• Frac Chemicals• Production Chemicals• Environmental


PRODUCTIONChallenges / Technologies

Shale Fracturing (Fluid) Challenges• Large Slickwater Fracs: Water stored in lined/unlined earthen pits open

to atmosphere for days/months

• Frac Water Sources:– Fresh water supply wells, chlorinated city water, rain– Ponds, rivers, streams, lakes– Re-used frac flow back water

• Frac Process & Slurry allows Bacteria to form downhole• Different waters mixed - Scale formed & severe Bacteria/Algae• Frac water Not Treated, Problems:- Microbial Influenced Corrosion - Generation of Hydrogen Sulfide- Scale deposits (Radioactive)



BHI AddFRAC™ Fracturing Chemical Program

1. Survey

2. Chemical Selection- Biocides- Scale Inhibitors- Corrosion Inhibitors- Oxygen Scavengers- Flow Stimulators & Friction Reducers - Surfactants- Clay Stabilizers

3. Implementation

AddFRAC™ Program- Monitoring - Testing - Reporting - Optimization

3,000+ AddFRAC Programs in Shale Gas

Production – Chemical Management

•During Production - Effective corrosion, scale, and bacteria monitoring and treatment are required

•Water Management and gas deliquification Necessary- BHI F.O.A.M.™ production stimulation / deliquification- BHI Continuous Optimization (Automation) of chemical injection rates

through effective Monitoring and Reporting - Chemicals for water treatment


Reduce Production Decline Remediate Sub-Economic WellsDetermine Recompletion and

Workover Strategy


REJUVENATIONChallenges / Technologies

TECHNOLOGIES -• Remediation• Restimulation• Recompletion

Rejuvenation Solutions

•Chemical and Mechanical Remediation•Coil Tubing Intervention and Recompletions•Restimulation/Re-Frac “Fracs Do Not last Forever”

Fractures Close, Proppants Fail, Stress Regime Changes w/Production

•Revised Field Development Plan •Re-entry and InFill Drilling, Multilaterals



Shale Gas Challenges/Technologies Over the Asset Life Cycle

THANK YOU谢谢

13 - Baker Hughes - Kennedy En

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