Buenos Aires, 9 de agosto de 2012

Drilling Experience and Lessons Learned from Key US Shale Plays

Quan Guo and Jim FriedheimM-I SWACO, A Schlumberger Company

Agenda

Introduction Gas shale is different from conventional shale Every gas/oil shale is different

Drilling experience from key US shale plays Eagle Ford Haynesville Marcellus

Lessons learned from US shale play drilling Summary and Conclusions

Key Challenges for Shale Gas

Key Challenges Technical Economic Environmental

Gas/Oil Shale is Different

High Reactivity Shale

• Massive structure • Lack of bedding planes

or evident laminations • Soft • Plastic • Sticky• CEC >20 meq/100g• Predominance of

Smectite

Moderate Reactivity shale

• Moderate laminated structure

• Bedding structure• Easily broken • Not plastic• CEC 10-20 meq/100 g • Presence of smectite

and Illite approximately similar proportion

Low Reactivity Shale

• Strongly laminated structure

• Fissile • Brittle (Break along

lamination) • Hard and firm

consolidation • Not sticky • CEC <10 meq/100g• Predominance of illite

Unconventional resource requires unconventional thinking

Every Shale Play is Different

Haynesville Depth = 10,500 – 13,500 ft

TVD MW = 15 – 16 ppg Temperature = 300 – 325° F Total Clay Content = 33%

Fayetteville Depth = ~ 1,000 – 7,000 ft TVD MW = 9 – 10 ppg Temperature= ~ 135 ° F Total Clay Content = 12%

Marcellus Depth = 5,000 – 8,500 ft TVD MW = 12 – 14.5 ppg Temperature= ~ 180° F Total Clay Content = 29%

Eagle Ford Depth = 6,000 – 14,000 ft TVD MW = 10 – 14 ppg Temperature = 225 – 250° F Total Clay Content = 8%

Barnett Depth = 6,500 – 8,500 ft TVD MW = 9.5 – 10.5 ppg Temperature= ~ 180 – 220 ° F Total Clay Content = 27%

Bakken Depth = 11,000 ft TVD MW = 10.5 ppg Temperature= ~ 150° F Total Clay Content = 16%

Agenda

IntroductionGas/oil shale is different from conventional shaleEvery gas/oil shale is different

Drilling experience from key US shale plays Eagle Ford Haynesville Marcellus

Lessons learned from US shale play drilling Summary and Conclusions

Eagle Ford Shale

Over 200 horizontal wells from 31 operators

80% OBM & 20% WBM

Eagle Ford varies from 6000 to 14,000 ft TVD

Lateral length from 4000 to 6000 feet

Eagle Ford Shale

Drilling days varies from 15 to 36 days for WBM, or 15 to ~30 days for OBM, depending well length

OBM shows advantages for longer wells, but not so for shorter wells

4,000 6,000 8,000 10,000 12,000 14,000 16,000 18,000 20,0000

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60

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100

120Total Drilling Days vs. Total Measured Depth

OBM

WBM

Total Measured Depth (ft)

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lling

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Eagle Ford Shale

The industry is making progress over the years – Learn from the US experience!

Some operator performs significantly better than others – Learn from others!

Haynesville Shale

Over 200 horizontal wells from 17 operators

85% OBM & 15% WBM

Haynesville shale varies 10,500 – 13,500 ft TVD

Lateral length from 3000 to 7000 feet

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Haynesville: Interval Total Measured Depth (ft)

Oil Base MudWater Base Mud

Haynesville Shale

WBMs are mostly used for shallow wells.

OBMs are mostly for deep wells, because of HTHP.

Drilling days vary from 35 to ~50 days, depending on well length.

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4,000 6,000 8,000 10,000 12,000 14,000 16,000 18,000 20,000 22,000To

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Total Measured Depth (ft)

Haynesville Wells: Total Drilling Days vs Total Measured Depth

OBM

WBM

WBM Wells - P50

OBM Wells - P50

Total Drilling DaysWater Based Mud Wells

TD P10 P50 P908000 n/a 19 n/a11000 27 30 4113000 20 32 53

Oil Based Mud WellsTD P10 P50 P90

15000 27 35 5116500 27 36 5017500 32 42 6319000 35 53 96

Haynesville Shale

Haynesville shale is a HTHP shale gas play.

Again, the industry is making progress over the years – Learn from the US experience!

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Haynesville Wells, OBM: Total Drilling Days vs Total Measured Depth

2009

2010

2011

P50 - All Years

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Interval Maximum Mud Weight (ppg)

Haynesville Wells: Mud Weight vs Total Well Depth

Oil Base Mud

Water Base Mud

Marcellus Shale

Over 200 horizontal wells from 13 operators

Most of the surface & intermediate holes are drilled with air or mist.

60% SBM & 40% WBM Marcellus shale varies

5,000 – 8,500 ft TVD Lateral length from

3000 to 8000 feet

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Interval Total Measured Depth (ft)

Interval True Vertical Depth vs Interval Total Measured Depth

Synthetic Base Mud

Water Base Mud

Air

17-1/2“, 12-1/4” Surface Hole13-3/8“, 9-5/8” Surface Casing

12-1/8“, 8-3/4” Intermediate Hole 9-5/8“, 7” Intermediate Casing

8-3/4“, 6-3/4” Curve and Lateral Section5-1/2“, 5”, Production Casing

MD/TVD – 1,000 - 2,000 ft

MD/TVD - 5,000 - 7,000 ft

MD - 9,000 - 14,000 ftTVD - 6,000 - 9,000 ft

Marcellus Well Design

Marcellus Shale

WBM and SBM perform equally well.

OBM shows advantages for very long wells.

Large gap between gap among the better and worse performers for wells with similar depths.

The industry is still learning & has a large opportunity for improvement.

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Total Measured Depth (ft)

Marcellus Wells: Total Drilling Days vs Total Measured Depth

SBM

WBM

Agenda

IntroductionDrilling experience from key US shale plays

Eagle FordHaynesvilleMarcellus

Lessons learned from US shale play drilling Summary and Conclusions

In-Depth Analysis & Lessons Learned

Summary of Lessons Learned

Eagle Ford Shale Over 200 wells from 31 operators were analyzed Key wellbore instability issues are reactive Midway shale

and mud loss in the Austin Chalk These issues are managed by well design, drilling fluids

selection and wellbore strengthening Grinding and hole cleaning is a common problem for long

horizontal wells The industry is making progress over the years – Learn from

the US experience Some operator performs significantly better than others –

Learn from others and know which partners to work with!

Summary of Lessons Learned

Haynesville Shale Over 200 wells from 17 operators were analyzed Key wellbore instability issues are gas kicks and loss

circulation when transitioning to the Hosston and Cotton Valley formations

Drilling days varied from 25 to 50 days in majority of the investigated wells, depending on well length

Downhole tool failures due to HTHP, were the main causes for drilling days significantly over 50 days

OBM is the drilling fluids of choice, again, due to HTHP The industry is making progress over the years Some operator performs significantly better than others

Summary of Lessons Learned

Marcellus Shale Over 200 wells from 13 operators were analyzed Drilling days with WBM and SBM were very close Key issues are wellbore instability while drilling the curve

section and hole cleaning problems while drilling the horizontal section

Failure mechanisms from shale-drilling fluid interaction were de-lamination, resulting in “coffee-ground”-like cuttings

Removing “coffee-ground” cuttings from drilling fluids was difficult and made drilling fluids re-use a challenge and increased the cost of drilling waste disposal

No clear progress over the years in drilling days, or the industry is still learning to improve

Summary and Conclusions

Every shale play is different Drilling data of over 1000 wells from key US shale plays have

been analyzed, particularly with respect to drilling fluids (OBM vs WBM)

Key drilling issues and solutions have been identified for each of the shale plays

The industry is making progress over the years – Learn from the US experience

Some operator performs significantly better than others – Learn from others and know which partners to work with

Cutting grinding, hole cleaning and lubricity are the common problems for long horizontal wells

The total drilling days or well costs for similar wells can vary significantly, indicating a large opportunity for improvement

Gracias