The Russell Kansas CO2 Pilot The Russell Kansas CO2 Pilot –– The Strangest ThingThe Strangest Thing

Rich Pancake Rich Pancake Murfin Drilling CompanyMurfin Drilling Company

TORP Oil Recovery Conference Wichita, Kansas

April 5, 2007

PartnersPartners

OverviewOverview

• Background

• Dead in the Water

• Resurgence

• Recent Activity

• Discussion

Location of Ethanol Plant & Location of Ethanol Plant & CO2 Pilot SiteCO2 Pilot Site

Kansas Geological SurveyKansas Geological SurveyKansas Geological Survey

Kansas Geological SurveyKansas Geological Survey

Many Variations Came & Went

Kansas Geological SurveyKansas Geological Survey

Preferred Choice Before Funding Issues

Kansas Geological SurveyKansas Geological Survey

CO2 Pilot Area

Tank Battery & CO2 Injection Equipment

Type Log CO2#18

L-KC “C” divided into 6 Layers-three flooding cycles

• General Properties*– C1: 8 md, 18.8%– C2: 150 md, 25.8%– C3: 40 md, 22.0%– C4: 6 md, 19.4%– C5: 2 md, 14.7%– C6: 0.3 md, 12.0%

• *- CO2#18 exhibits better properties than average for site

0.0 0.5 1.0Neutron

C1C2C3C4C5C6D

Gamma10

Geologic Geologic OverviewOverview

Work TimelineWork Timeline• Phase One – DOE Contribution 45%DOE Contribution 45%

– March 2000 to January 2004

– Perform Reservoir Characterization and Simulation

– Develop Working Interest Partnerships and Other Working Agreements (CO2 Supply, CO2 Transport, and CO2 Injection – Summer, Fall, Winter 2002)

– Conduct Field Studies to Determine if CO2 Pilot Implementation Feasible (Included Well Workoversand Water Injection Facilities – Winter, Spring 2003)

– Pre-startup Activities (Tank Battery Upgrade and CO2 Injection Equipment Set-up – Fall 2003)

– CO2 Injection Commences December 1, 2003

Work TimelineWork Timeline• Phase Two – DOE Contribution 35%DOE Contribution 35%

– February 2004 to December 2008

– Implement, Operate, and Monitor CO2 Pilot - present

– CO2 Injection Terminated June 17, 2005

– Water Injection Commences June 21, 2005

• Phase Three – DOE Contribution 10%DOE Contribution 10%– January 2009 to March 2010

– Post Flood Monitoring

– Continue Tech Transfer Activities

Workover CO2 #18 $ 58 MDrill & Complete CO2 I-1 $284 MRun Liner in CO2 #12 $ 50 MWorkover CO2 #10 $ 93 MDrill Deeper CO2 #16 $122 MConstruct Freshwater Plant $ 71 MRun Liner in CO2 #13 $ 50 MSet-up CO2 Skid & Tank $ 11 MMiscellaneous $ 11 MTotal $750 M

Murfin & WI Partners (55 %) $412.5 MDOE (45 %) $337.5 M

Summary of Implementation CostsSummary of Implementation Costs

WI WI Profit/Year Income Oper Cost Loss .2002 $ 0 $ 10,160 ($ 10,160)2003 $ 8,641 $ 175,718 ($ 167,077)2004 $ 28,621 $ 105,446 ($ 76,825)2005 $ 53,755 $ 71,171 ($ 17,416)2006 $ 98,370 $ 119,439 ($ 21,069)

Total $ 189,387 $ 481,934 ($ 292,547)

Summary of Operating CostsSummary of Operating Costs

Russell CO2 PilotTotal Daily Production & Injection

0.1

1.0

10.0

100.0

1000.0

Jun-03 Jan-04 Aug-04 Feb-05 Sep-05 Mar-06 Oct-06

Oil (bpd) Water (bpd) Gas (mcfd) CO2 Injected (mcfd)

Dead in the Water?

March 2006 – Pilot On Last Legs?

– Still no oil kick

– Pilot Area loosing +/- $6,000 per month

– Everyone (but one) thought Project done

Dead in the Water?Dead in the Water?

Guess who? (It wasn’t me.)

Fast Forward to August 2006

– KIOGA Annual meeting Wichita, KS

– Marlin Robinson of Mar-Lou Oil approaches KU Booths

– “Not sure I want to tell you this, but …”

ResurgenceResurgence

Graham A Lease Monthly Oil Production

0

50

100

150

200

250

300

350

Aug-0

4Se

p-04

Oct-0

4No

v-04

Dec-0

4Ja

n-05

Feb-0

5Ma

r-05

Apr-0

5Ma

y-05

Jun-0

5Ju

l-05

Aug-0

5Se

p-05

Oct-0

5No

v-05

Dec-0

5Ja

n-06

Feb-0

6Ma

r-06

Apr-0

6Ma

y-06

Jun-0

6Ju

l-06

Aug-0

6Se

p-06

Oct-0

6bp

m

Where Did the CO2 Go?Where Did the CO2 Go?

Kansas Geological SurveyKansas Geological Survey

Russell CO2 PilotTotal Daily Production & Injection

0.1

1.0

10.0

100.0

1000.0

Jun-03 Jan-04 Aug-04 Feb-05 Sep-05 Mar-06 Oct-06 Apr-07

Oil (bpd) Water (bpd) Gas (mcfd) CO2 Injected (mcfd)

Resurgence?

It Only Makes Sense To:It Only Makes Sense To:

Kansas Geological SurveyKansas Geological Survey

It Only Makes Sense To:

– Release the packer in Colliver 7 & produce from LKC (August 28, 2006)

– Knock-out CIBP in Colliver 3 & RTP well in LKC (October 11, 2006)

SemiSemi--Recent ActivityRecent Activity

Colliver A Lease Oil Production

1

10

100

12/14

/05

2/2/06

3/24/0

6

5/13/0

6

7/2/06

8/21/0

6

10/10

/06

11/29

/06

1/18/0

7bo

pd

Colliver A Lease Oil Production

Colliver A 7 packer released, 8/28/06

Colliver A 7 SPM from 11.3 to 12.5, 9/28/06

Colliver A 3 RTP'd, 10/11/06

5 wells producing, #1, #5, #6, #7, & #14

Long stroked Colliver A 3, 10/17/06

As of mid-November 2006

As of March 2007:

– Continue to maximize pilotproduction (pump-off #12, pump #16 more often, maintain pressure bubble)

– RTP Carter 2 in LKC (March 7, 2007)

– Knock-out CIBP in Colliver 14 & RTP in LKC (March 13, 2007)

Recent ActivityRecent Activity

Colliver A Lease Oil Production

1

10

100

12/14

/2005

3/24/2

006

7/2/20

06

10/10

/2006

1/18/2

007

4/28/2

007

bopd

Colliver A Lease Oil Production

Colliver A 7 packer released, 8/28/06

Colliver A 7 SPM from 11.3 to 12.5, 9/28/06

Colliver A 3 RTP'd, 10/11/065 wells producing,

#1, #5, #6, #7, & #14

Long stroked Colliver A 3, 10/17/06

Colliver Lease as of April 2, 2007

Russell CO2 PilotTotal Daily Production & Injection

0.1

1.0

10.0

100.0

1000.0

Jun-03 Jan-04 Jul-04 Feb-05 Aug-05 Mar-06 Sep-06 Apr-07

Oil (bpd) Water (bpd) Gas (mcfd) CO2 Injected (mcfd)

Resurgence?

Graham A Lease Monthly Oil Production

0

50

100

150

200

250

300

350

Aug-0

4Se

p-04

Oct-0

4No

v-04

Dec-0

4Ja

n-05

Feb-0

5Ma

r-05

Apr-0

5Ma

y-05

Jun-0

5Ju

l-05

Aug-0

5Se

p-05

Oct-0

5No

v-05

Dec-0

5Ja

n-06

Feb-0

6Ma

r-06

Apr-0

6Ma

y-06

Jun-0

6Ju

l-06

Aug-0

6Se

p-06

Oct-0

6No

v-06

Dec-0

6bp

m

Colliver A 7bbl tests

1

10

100

1000

7/1/98

7/1/99

7/1/00

7/1/01

7/1/02

7/1/03

7/1/04

7/1/05

7/1/06

7/1/07

DATE

BPD

bopd bwpd

Colliver A 3bbl tests

0.1

1

10

100

1000

1/1/03

1/1/04

1/1/05

1/1/06

1/1/07

DATE

BPD

bopd bwpd

Well is pumped ff

Colliver A LeaseMonthly Gauged Production

7-year Production

1.0

10.0

100.0

Jan-0

0

Jan-0

1

Jan-0

2

Jan-0

3

Jan-0

4

Jan-0

5

Jan-0

6

Jan-0

7

Jan-0

8

DATE

Avg

BO

PD

RTP'd LKC in Colliver A 7, 8/28/06

RTP'd LKC in Colliver A 3, 10/11/06

Colliver lease since 2000

Should More Be Done?• Should commercial project be attempted?

• Would commercial project be economic?

• Would operators pool their resources?

• Is there sequestration angle?

General CommentsGeneral Comments

Kansas Geological SurveyKansas Geological Survey

Thanks!Thanks!

Geologic OverviewGeologic Overview

Gonzalez & Eberli (1997)

Tidal Channel Spillover Lobe

Ripples on Top ofSand Bars

Prograding ForesetsSand WaveBase Level

Ripples on Channel Floor

Gonzalez & Eberli (1997)

Tidal Channel Spillover Lobe

Ripples on Top ofSand Bars

Prograding ForesetsSand WaveBase Level

Ripples on Channel Floor

Higher Permeability100’s md

Moderate Permeability10’s md

Higher Permeability100’s md

Moderate Permeability10’s md

Low k contact

CO2 I-1 CO2 #13

Drill and Complete CO2 IDrill and Complete CO2 I--1 1 into LKC Cinto LKC C

• September & October 2000

• Total Cost = $284,000

Drilling CO2 I-1

CO2 #10

Drilling CO2 I-1

Tank Battery

Costs to DateCosts to DateWorkover CO2 #18 to isolate LKC CWorkover CO2 #18 to isolate LKC C

• May & June 2000

• Cement squeeze several zones, reperfLKC C

• Total Cost = $58,000

Costs to DateCosts to DateRun liner in CO2 #12 to isolate LKC CRun liner in CO2 #12 to isolate LKC C

• February & March 2003

• Plug back LKC G w/ cement

• Cmt 4-1/2” liner in 6”, left LKC C openhole

• Total Cost = $50,000

Workover CO2 #10 to isolate Workover CO2 #10 to isolate LKC CLKC C

• March 2003

• Cement LKC C & G openhole

• Redrill LKC C and perforate

• Run tandem packer across shallow zones

• Total Cost = $93,000

CO2 #12 Liner Installation

Tank Battery

CO2 #10

CO2 #12

Old Colliver 16 LinerRunning KGS VSP Cable into 16 Fishing KGS VSP Cable from 16

Costs to DateCosts to DateDrill Deeper CO2 #16 into LKC CDrill Deeper CO2 #16 into LKC C

• March & April 2003

• Remove existing shallow liner (Jan ’03)

• Drill deeper into LKC C & G, cmt 4-1/2” csgto surface, perforate LKC C, acidize

• Total Cost = $122,000

Tank Battery

Drilling Freshwater Well Injection Tank & Treatment Chemical

Injection Pump & Filters

Laying Line to CO2 #10

Costs to DateCosts to DateConstruct Freshwater Injection PlantConstruct Freshwater Injection Plant

• April 2003

• Drill freshwater supply well

• Lay lines, construct shed, set pump & tanks

• Total Cost = $71,000

Tank Battery

Running Liner in CO2 #13Perforating CO2 #13 Acidizing CO2 #13

Costs to DateCosts to DateRun liner in CO2 #13 to isolate LKC CRun liner in CO2 #13 to isolate LKC C

• May 2003

• Cmt 4-1/2” liner (to surface in 6”) across LKC C & G

• Perforate & acidize LKC C

• Total Cost = $50,000

Tank Battery

CO2 Injection Skid & Tank CO2 Injection SkidCO2 Storage Tank

Upgraded Tank Battery

Before, Fall 2000 After, Fall 2003CO2 #12 Wellhead CO2 I-1 Wellhead

Costs to DateCosts to DateSetSet--up CO2 Skid and Upgrade TBup CO2 Skid and Upgrade TB

• November 2003

• Set-up CO2 injection skid & storage tank

• Install gas separator, FWKO, and water disposal tank at tank battery

• Total Cost = $11,000 (install CO2 skid only)

Tank Battery

Operational Issues– CO2 Injection Pump too Big

• Excessive CO2 recycle and venting• Pump requires overhaul July 2004; Smaller

plungers inserted• Venting problem eliminated

Current OperationsCurrent Operations

Operational Issues– Metering Inaccuracies

• CO2 rate measurement at skid inaccurate• Pump pulsation creates backflow through turbine

meter• CO2 rate, temperature, and pressure measurement

relocated to CO2 I-1 June 2004• Metering accuracy improves significantly

Current OperationsCurrent Operations

Russell CO2 PilotCumulative Production and Injection

1

10

100

1,000

10,000

100,000

Oct-03 Jan-04 Apr-04 Aug-04 Nov-04 Feb-05 May-05

Cum Oil Prod (bbl) Cum Water Prod (bbl)Cum Gas Prod (mcf) Cum CO2 Inject (mmcf)

CO2 injection commenced December 1, 2003

Monthly Costs– Lease Operating Expense (LOE)

• Average $11,900/month without DOE cost-share• Average $ 8,900/month with DOE 35% cost-share

– Economic Limit at Current LOE (w/ DOE cost-share)

• 8.4 bopd @ $40/bbl oil price• 7.4 bopd @ $45/bbl oil price

– Emphasize Cost-Sharing

Current OperationsCurrent Operations

The Russell Kansas CO2 Pilot – The Strangest ThingOverviewLocation of Ethanol Plant & CO2 Pilot SiteMany Variations Came & WentPreferred Choice Before Funding IssuesGeologic Overview