Petroleum Supply and Natural Gas and Oil Environmental

Office of Fossil Energy

Dexter Sutterfield, Director, Office of Petroleum,Strategic Center for Natural Gas & Oil, National Energy Technology Laboratory

FY 05 Priority Milestones and Expected Accomplishments

January 26, 2005

Petroleum SupplyExploration and Production

Reservoir Life Extension Microhole Technologies Field Demonstrations / Tech Transfer

Crosscutting New Technology Development

Microhole TechnologiesNotable Milestones

Low-Cost Deepwater Well Demo Onshore Hybrid Microhole Rig Demo Advanced Monobore Concept Self-Expanding Sandscreen High-Power Turbodrill for Microdrilling Friction Reduction for Coiled Tubing Drilling Low Torque Counter-Rotating Drilling System MWD/LWD Measurement System for MHT Mechanically-Assisted Waterjet Drilling Tool Microhole Wireless Steering While Drilling

Demonstration of Low-Cost Deepwater Wells

Benefit: Anticipated cost reduction of >50% vs. conventional; first offshore MHT well drilled.

Date: Q4 2005 Place: Houston/GOM Participants: Geoprober Drilling Inc.,

ChevronTexaco

Milestone Description: First use of MHT concepts to drill low-cost wells in deepwater (5,000’) Gulf of Mexico (GOM)

Deepwater semi-submersibledrill vessel

Onshore Field Demonstration of MHT

Benefit: Anticipated cost reduction of >50% vs. conventional; establish economic potential to revitalize most U.S. mature fields

Date: Q4 2005 Place: Kansas Participants: GTI, Coiled Tubing Solutions,

Rosewood Resources

Milestone Description: First use of hybrid MHT coiled tubing drill rig to drill low-cost land wells <3,000’

Photo: Tom Gibson, Coiled Tubing Solutions

MHT land drilling rig

Advanced Monobore Concept

Benefit: First use of elastic phase self-expanding casing to enable monobore concept for microholes; expected 30% reduction in well cost

Date: Q4 2005 Place: Houston, TX Participants: Confluent Filtration Systems, AMET

Inc., Buhler, Southwest Research

Milestone Description: Completion of design model

Field Demonstrations / Tech TransferNotable Milestones

Kansas Geological Survey 4-D Seismic monitoring of CO2

University of Kansas CO2

Integrated Multi-Scale Procedure for Improved CO2 EOR Using High-Res 3-D Reservoir Characterization

Use of Casing Head Gas for Distributed Power Generation in California

Systems Approach to Identifying Exploration and Development Opportunities in the Illinois Basin

Enhanced Oil Recovery by Horizontal Waterflooding Multicomponent Seismic Analysis and Calibration to

Improve Recovery from Algal Mounds

4-D Seismic Monitoring of CO2

Benefit: First thin bed (<8 ft) imaging; first image of shallow reservoir (<3,000 ft); first 3D “high” resolution with small footprint & low energy in Kansas

Date: Q1, Q2, and Q4 2005 Place: Kansas Participants: Kansas Geological Survey, University

of Kansas, Murfin Drilling, Kansas Dept. of Commerce

Milestone Description: Seismic shoot using time-lapse monitoring of CO2 EOR

Kansas CO2 EOR Flood

Benefit: Potential of 600 million bbls additional oil over 20 years; about 250k tons of CO2 used over 20 years to produce oil

Date: Q4 2005 Place: Kansas Participants: University of Kansas, Kansas

Geological Survey, Murfin Drilling, Kansas Dept. of Commerce

Milestone Description: Demonstrate technical feasibility of first CO2 flood in the state

Photo: A. Byrnes, Kansas Geological Survey

Kansas field demonstration and nearby ethanol plant that produces CO2

Integrated Multi-Scale Procedure for Improved CO2 EOR Using High-Res 3-D Reservoir

Characterization

Benefit: Developed techniques when applied to 5% of the Permian Basin expected to add 53 million barrels to the recoverable reserves

Date: Q2 2005 Place: SACROC Unit, Midland, TX Participants: Advanced Resources International,

Kinder Morgan

Milestone Description: Drill and core 4 wells

Distributed Generation Power Units atCalifornia Marginal Oil Well Sites

Utilizing Oil-Field Casing-Head Gas as a Fuel Source

Benefit: Determine the potential of utilized stranded gas, defined as natural gas that cannot be produced due to regulatory or gas pipeline restrictions. This stranded gas, if utilized, is capable of generating electricity to run oil well pumps by burning the poor quality gas. By correctly utilizing this resource, these thought to be useless wells can now produce the oil that otherwise would be shut-in or abandoned.

Date: February 2005 Place: Los Angeles, CA Participants: IOGCC, COPE, CEC, SCAQMD

Milestone Description: Publication of semi-annual results; Test casinghead medium BTU off-gas in distributed generation as an electrical power source in California

New Technology DevelopmentNotable Milestones

Developing Improved Coiled Tubing Using Microwave Technology

Quantification Program for Understanding Casing Integrity of Through-Salt and Near-Salt Wells

Development of Compact Multiphase Separator

Developing Improved Coiled TubingUsing Microwave Technology

Benefit: Significantly more durable coiled tubing for drilling applications; enables industry use of superior, cost effective alloys

Date: Q3 2005 Place: Houston, TX Participants: Penn State University,

Dennis Tool Company

Milestone Description: Completion of third party test verification of diffusion bonded tubing establishing feasibility of microwave process for making superior coiled tubing

Tubing made from microwave processed “greenbodies”,

pressed powder metal

Well Integrity of Sub-Salt GOM Casing

Benefit: By knowing the exact casing strengths required to prevent collapse or shear, oil companies can save millions by eliminating the very expensive practice of over-engineering.

Date: Q3 2005 Place: Albuquerque, NM Participants: Sandia National Lab.,

BP,ChevronTexaco, ConocoPhillips, Kerr-McGee, BHP, ExxonMobil, Shell, and Petrobras

Milestone Description: Determine which stress analysis calculations accurately predict sub-salt and near-salt casing stress

Compact Multiphase Separator (CMS)

Benefit: Reduces oil separation capital costs and size while increasing reliability; CMS is cheaper (>40%) and smaller (>30%).

Date: Q3 2005 Place: Tulsa, OK Participants: Tulsa Univ., ChevronTexaco,

Daniel Instruments, ExxonMobil, NATCO

Milestone Description: Complete development of CMS

CMS installed in California

Natural Gas and Oil Environmental

Coal Bed Methane Best Practices – A.L.L. Consulting Federal Lands Technology Partnership – BLM/FS/TBD Treatment of Produced Water Using Surfactant

Modified Produced Water – UT Austin Produce More Oil & Gas via e-Business Data Sharing

– GWPC Managing Coal Bed Methane Water for Beneficial Use

– Sandia National Laboratory Adaptive Management and Planning Models for

Cultural Resources in Oil & Gas Fields in New Mexico and Wyoming – Gnomon, Inc.

Collaborative Streamlining with States – IOGCC

Federal Lands Technology Partnership

Milestone Description: DOE along with BLM and the Forest Service expect to sign an MOU to jointly pursue research related to the environmental impacts of oil and gas development on Federal lands

Benefit: The MOU represents a multi-agency commitment to ensure that environmental protection standards for Federal lands are based on sound science. This MOU will help to ensure that the nation’s oil and gas resources are produced while protecting the environment.

Date: July 2005 Place: Washington, D.C. Participants: DOE, Bureau of Land Management,

Forest Service

Produce More Oil & Gas via e-Business Data Sharing

Milestone Description: Beta-test of an on-line permitting and data management system for the State of California.

Benefit: The system is designed to allow the state to make better permitting decisions faster and allow operators to receive their permits without waiting for the mail. A side-benefit of having the State’s data on-line is that operators from across the country can evaluate well and production data to evaluate development and investment prospects.

Date: May 2005 Place: Sacramento and Bakersfield, California Participants: Ground Water Protection Council, State

of California

Adaptive Management and Planning Models for Cultural Resources in Oil & Gas Fields in New

Mexico and Wyoming Milestone Description: Release beta-test version of the

cultural resources model for use by the Wyoming State Historic Preservation Office (SHPO) and BLM

Benefit: The model will allow faster access to oil and gas resources on Federal lands by allowing operators to locate their pads in areas that are less likely to require extensive surveys. The model also allows the SHPO to concentrate its effort on those projects that are more likely to encounter artifacts. This project will provide greater protections and reduce time and costs for operators.

Date: December 2005 Place: Cheyenne, WY Participants: Gnomon, Inc., Wyoming SHPO