Presentation Outline

Advanced Technology Development for Oil and Gas

Petroleum Prospects and Politics
Chicago Society The University of Chicago Brian C. Gahan, PE
May 19, 2007

Background/History Location of Resources Steps to Recovering Hydrocarbons Supply Scenario Unconventional Resources Technology Examples Example: Laser Applications for Drilling and Completion
2

Background

Drakes Folly

Sources of Rock Oil Oil

Drake Drakes Folly

Natural Seeps, Springs, Pits (Pre(Pre-Colonial)

Cribbing Medicine,

and Skimming Paint

Byproduct of Salt Wells (before1859)

Gravitational

Col. Edwin Drake near Oil City, PA Struck Oil at 69.5 ft on August 27, 1859 $20/bbl; 20 bbl/day CableCable-Tool Drilling

Separation from Brine Medicine, Fuel, Lubrication, caulking

Direct Drilling for Oil (1859 today)

Cable Petrochemicals,

Tool to Rotary Methods Plastics, Fuel, Fertilizers, .

3 4

Oil Boom in Pennsylvania

Birth of the Modern Oil Industry

PA produced half of the WORLD WORLDS production until Spindletop (Lucas Gusher) 1/10/1901 First Gusher in America First Rotary Drilled Well First Use of Drilling Mud
6

Modern Drilling Technology

Transporting Barrels of Oil

More on Industry History

Where to Find Petroleum

10

Geology

Underground Lakes of Oil and Gas? Not Quite

Rocks

Fluids fill the pore spaces of sedimentary rock

Igneous from molten rock

Granite,

Basalt
25.9% 47.6% >47.6%

Sedimentary from sediment particles

Sandstone,

Shale, Limestone

Metamorphic from extreme pressure

Marble,

Slate

Permeability describes the ease with which a fluid can flow through rock

11

12

Structural Traps

13

14

Gas Exploration, Production, and Storage

RESOURCE ASSESSMENTS - Quantifying the nature and potential of gas resources EXPLORATION TECHNOLOGIES - Enabling effective natural fracture detection DRILLING, COMPLETION, & STIMULATION - Reducing the costs and risks of extracting natural gas PRODUCTION TECHNOLOGIES - Maximizing recovery of gas from discovered fields GAS STORAGE - High deliverability for tomorrows high demand METHANE HYDRATES - The next frontier in energy

Exploration
Geology and Geophysics

Exploration Phases

Wildcatting Expansion Field FillFill-In Direct Detection (Seismic) Subsurface Mapping Conceptual Modeling Remote Sensing

Cost Reduction Reduced Formation Damage

Secondary Recovery

Conventional Storage

Advanced Concepts

Seafloor Stability Climate Change Production Strategies Resources

Detection Methods

Strategies for Low-Perm Production Deep Drilling

15

16

Infield Natural Gas Reserve Growth

-- Development Strategies for Recovery of Secondary Natural Gas -Reservoir/Compartment Terminology

Crosswell Seismic Imaging

2500 ft D epth 10,000 ft
Top seal O il N on pay For m at ion w at er Sea w at er Perforat i ons

10,500 ft

Receivers Transmitters

After Ed Stoessel / BP

High Bandwidth Depth Referenced No Surface Path

17

DRILLING FOR OIL AND GAS IN THE US

DRILLING FOR OIL AND GAS IN THE US

Drilling Technologies
Cable Tool Drilling (Dates back about 4000 years)

Drilling Technologies
Rotary Drilling (dates to around 1900) Laser Drilling Concept (2010?)

Spring Pole Method Steam-powered Rig 2000 BC 1800

19

1900

2000
20

Drilling and Completion

Drilling Technologies

Derrick Power Mud/Fluid Casing/Tubing Logging/Coring Cementing Perforation

21

Offshore vs. Onshore Slimhole/Microhole Deviated/Horizontal Wells Reservoir Specific (i.e. Coal) Fluid Chemistry Casing/Tubulars Casing/Tubulars Computer Technology
22

Enough Natural Gas to Meet Demand?

35 30

Marchettis Energy Substitution

Demand

Natural Gas (Tcf)

e hang ate C Hydrates Clim al su U ess as Busin New Resources

- Sands, Shales - Deep Gas - Deep Gulf

25 20 15
orts Imp

Supply
10 5 0 1970 1985 2000 2015 2030 Conventional Gas Resources

Year
23 24

M> King Hubbert Curve

North American Resource Base is Large and Diverse

303

284

Technically Recoverable Resource Base 1,969 Tcf

329

25

26

Production History Confirms a Maturing Resource Base

2.0

Modest Production Response from Increased Drilling

Lower-48 Gas Production and Rig Count
60
GAS PRODUCTION

1200 1000 800 600

RIGS

Gas Recovery per Well

1.5
Lower 48

50 40 BCFD 30 20

1.0

400 200 0

0.5

Western Canada

10 0 1990 1992 1994 1996 1998 2000

27

0.0

1990

1992

1994

1996

1998

2000

2002

GAS RIGS
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Bcf

DRILLING FOR OIL AND GAS IN THE US

DRILLING FOR OIL AND GAS IN THE US

Drilling Trends: 1985-2000

Oil and Gas Wells Drilled, 1985-2000
Exploratory and Development
350 300 Total Footage Drilled (Oil, Gas, & Dry Holes) Petroleum Total Wells Completed 80 70 60 50 40 150 100 50 0 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 30 20 10 0

Average Well Depth and Cost

140 120 Dollars per Foot 100 80 60 40 20 0 1959
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7000 6000 5000

Average Depth per Well

4000 3000 2000

Estimated Cost Per Foot and Average Depth Per Well of All Wells (Oil, Gas and Dry) Drilled Onshore in the U.S. from 1959 - 1999 (DeGolyer and MacNaughton, 2000)

Total Footage Drilled (Millions of Feet)

250 200

Total Wells Drilled Per Year (000)

Average Cost per Foot

1000 0

1964

1969

1974

1979

1984

1989

1994

30

Depth (ft)

Gas Production vs. Gas Production Capacity

L o w e r-4 8 D ry G a s P ro d u c tio n v s . D ry G a s P ro d u c tiv e C a p a c ity
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Potential Price Range

Annual Average Henry Hub Prices, $/MMBTU ($2002) $8.00 $7.00 $6.00 Reactive Path Balanced Future

50

Bcf/D

$5.00 $4.00

45

Gas Production Production Capacity

$3.00 $2.00 $1.00

40 J an-95 Jan-96 J an-97 Jan -98 J an-99 Jan -00 Jan-01 J an-02 Jan-03 J an-04
G a s P ro d u ctio n P ro d u ctive C a p a city

$0.00 1995
31

2000

2005

2010

2015

2020

2025
32

Future Supplies Come from Traditional and New Sources

35 30 25 20 Tcf 15 10 5 0 1990 1995 2000 2005
NON-ARCTIC CANADA ROCKIES GOM DEEPWATER GOM SHELF OTHER LOWER-48 LNG ALASKA

Technology Effects on U.S. Lower48 Gas Production (tcf)

Component Lost Due to Zero Technology = 10 tcf

30 25 20 15 10 5

New Technology Component Technology Frozen at 1998 Levels

2010

2015

2020

2025

0 1998 2005 2010 2015

34 33

2003 NPC Study

NPC Gas Supply Findings

Traditional North American producing areas will provide 75% of long-term U.S. gas needs, but will be unable to meet projected demand.

Unconventional Gas Growth

Non-Arctic U.S. and Canadian Production Outlook
30 25

Increased access to U.S. resources (excluding designated wilderness areas and national parks) could save consumers $300 billion in natural gas costs over the next 20 years.

20 Tcf 15 10

NONCONVENTIONAL

CONVENTIONAL

New, large-scale resources such as LNG and Arctic gas are available and could meet 20%-25% of demand, but are higher-cost, have longer lead times, and face major barriers to development.
35

5 0 2000
ASSOCIATED

2005

2010

2015

2020

2025

2003 NPC Study

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U.S. Coalbed Methane Resources

703 Tcf Coalbed Methane Resources
Wind River Western Washington Basin Powder River Forest City Basin 6 Tcf Coal Region Basin 39 Tcf 24 Tcf 1 Tcf Greater Green River Basin 314 Tcf Uinta Basin 10 Tcf Piceance Basin 99 Tcf San Juan Basin 84 Tcf Raton Basin 10 Tcf Cherokee Basin 6 Tcf

Coalbed Methane Gas Production

1800 1600 1400 1200 1000 800 600 400 200 0
83 8 5 87 8 9 9 1 93 9 5 9 7 99 0 1 1 9 1 9 19 1 9 19 19 1 9 19 19 2 0

180.8 Tcf Total Producible Coalbed Methane Resource Base

Illinois Basin 21 Tcf

Northern Appalachian Basin 61 Tcf Central Appalachian Basin 5 Tcf Black Warrior Basin 20 Tcf

CBM Production - Bcf

ts, y. os nt t c tai en cer pm n lo d u ve , an de g eds sin ne ea gy cr In nolo ch te

Produced 7 Tcf Proved Reserves 11.5 Tcf

Arkoma Basin Appalachian Basin Warrior Basin Emerging Basins San Juan Basin

Arkoma Basin 4 Tcf

Cahaba Basin 1.75 Tcf

Economic Recoverable 52.1 Tcf

Undiscovered 110.2 Tcf

Ref. GRI-98/0003

Critical Factors:

Ref. GRI-99/0131

Large Resource Base Good Quality Reservoirs Favorable Economics

U.S. Lower-48 CBM Resource Pyramid

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U.S. Deep Gas

Natural Gas Hydrates

Objective

Develop Faster, Cheaper, Cleaner Technologies 7% of U.S. gas production 1999 - 14% in 2010 Depths > 16000 ft Resource Assessment:

Resource

Current Activities

USGS prioritization/evaluation effort is underway New Drill Bit Technology Smart Smart Drilling Systems

Technology Development

100-0083_MVI.AVI

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What are natural Gas Hydrates

Natural gas hydrates are formed through entrapment of hydrocarbon molecules inside the cage of ice crystals. These crystals contain natural gas up to 170 times their volumes.
Methane Hydrate Phase Diadgram
80 70 60
Temperature F

Hydrates Resource Estimates

Worldwide:

Oceanic: 30,000 to 49,100,000 Tcf Continental: 5,000 to 12,000,000 Tcf Compare to Conventional Gas Resource: 13,000 Tcf If 1% of hydrates are recoverable: 3,200 Tcf Conventional Natural Gas Technically Recoverable Resource: 1,301 Tcf

Methane Hydrate Stability Zone

Domestic:

50 40 30 20 10 0 -10 0 1000 2000 3000 4000 5000

Pressure PSI

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Key Issues Constraining Hydrate Development

Distribution of Natural Gas Hydrates in the United States

Region Atlantic Ocean Gulf of Mexico Offshore Alaska Onshore Alaska Pacific Ocean Total Volume (TCF) 51,831 38,251 168,449 590 61,071 320,192
Source: US Department of Energy, Methane Hydrates Program Plan, 1998
Offshore Estim ated US Natural Gas Resources From Hydrates (TCF)

Onshore Alaska 590

`

A tlantic

Ocean Gulf of 51,831 Mexico 38,251 Pacific Ocean 61,071

Alaska 168,449

Note: Latest estimate has been revised to 200,000 TCF

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Drilling, Completion & Stimulation Objectives

Advanced Drilling Technologies

Faster

New bit technology/slim hole High temperature & pressure Develop smarter drilling systems Increase penetration rates in hard rock Reduce cost of drilling in shale, lowlow-perm, & deep water Develop cheaper horizontal and multilateral wells Develop cost effective, environmentally friendly drilling technologies to increase access to federal lands using a small footprint.
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Drilling Systems/Components

Deeper

Cheaper

Cleaner

High pressure coiled tubing Hydraulic pulse drilling system Microwave processing New aggressive TSP cutter designs Integrated downhole hammer engine Horizontal well technology Underbalanced drilling technology Coiled tubing and slimslim-hole technology

46

Gas Storage Technology Areas

Cement Pulsation - Gas Migration

Conventional Storage Reservoirs

Deliverability Enhancement Gas Measurement Reservoir Management

As Cement Gels, Loses its Hydrostatic Pressure Creating Potential for Gas Migration Transition from Liquid Slurry to a Solid (Hydration) Moves through a Gel Stage
Slight Volume Decrease Reduced Head

Advanced Storage Concepts

Lined Rock Cavern Refrigerated Mined Cavern Hydrates Salt Caverns Basalt Aquifers Chilled Gas in Salt

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Microseismic Fracture Mapping (M-Site 6C Injection)

Hydraulic Fracture Technology

Wellbore

Ideal World
600 MWX-3 500 INJECTION 6C
4200 4100 INJECTION 6C MWX-2

Pay

SOUTH-NORTH (ft)

DEPTH (ft)

400 300 200 100 MONITOR WELL 0 -700 -500 -300 -100 100 300 500

Wellbore
4300 C SAND

MWX-2

4400

Real World
4500 -600 -400 -200 0 200 400 600

Pay

WEST-EAST (ft)

DISTANCE ALONGFRACTURE (ft)

50

CO2 Capture and Storage

CO2 Emissions CO2 Capture Technology
Morphysorb G/L Membrane

Geophysical Imaging
InSpect
High-resolution spectral decomposition for seismic data

Geologic Sequestration Technology

Imaging Aquifer Technology CBM Sequestration Hydrate Displacement

20 Hz

CH4 Produced

Oil Produced

CH4 Produced

Advantages
Allows use of frequency-dependent effects to discriminate gas zones

Coal Seam

Depleted Fields Saline Aquifers

Methane Hydrates

30 Hz
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High Power Fiber Laser (HPFL) Application Concept

Comparison of SE Values

SE =

Energy Input P = Volume Removed dV/dt = kW kJ = 3 cm /sec cm3

Lower SE Value = Higher Efficiency

Field Applications Concept
53

Reference: SPE 77627

54

Downhole Laser Applications

Yb-Doped HPFL

Drilling Perforating Seismic Shot Holes Casing Cutting/ Abandonment Offshore Platform Abandonment Casing Windows for Multi-Laterals Downhole Slotted Liners/Screens
55

Power: Up to 36 kW + /unit Wavelength: Yb: 1070 nm E/O Efficiency: 20-30% Size (10kw): 60 x 80 x 160 cm Footprint: 0.5 m2 Weight: 400 kg
56

High Power Military Lasers

Q: Can Lasers Penetrate All Rock? A: Yes, But Inefficient and Expensive
Type Power (kW) (m) Location

High Power Industrial Lasers

Q: How Much Energy Does it Take? A: Much Less Than Literature Predicted
Type Power (kW) (m) Location

COIL CO2 MIRACL

6.8 50,150 1600

1.34 10.6 3.4

USAF USAF US Army

Nd:YAG CO2 Diode

1.6 6 4

1.06 10.6 0.8

ANL ANL NA Tech

97

98

99

00

01

02

03

04
57

05

97

98

99

00

01

02

03

04
58

05

Reference: SPE 56625

Reference: SPE 71466, 84353

High Power Fiber Lasers

Q: Can HPFL Achieve Downhole Goals? A: Results to Date Suggest Yes.
Type Power (kW) (m) Location

Perforating With Lasers

HPFL

5.34

1.07

GTI

Non-Explosive Technology Real-Time Control: Input vs. Output Open Geometry Solutions Potential for Extended Perforation and Other Completion Methods Improves Flow Conditions

No Mass Transfer Into Tunnel Permeability/Porosity Improvements

60

97

98

99

00

01

02

03

04
59

05

Reference: SPE 90661

10

Material Removal Mechanisms

HPFL Perforation: Limestone

Lased Tunnel

Several Methods Observed Function of Thermal Properties

Carbonates Dissociation CaCO3 CaO + CO2 Sandstones Spallation Shales Spallation Steel - Melt

12.2

HPFL Perforation in Quarry Limestone Length: 12.2 inches Power: 5.34 kW Beam: CW
61 62

HPFL Large Block Test

12.0 in

HPFL Post-Laser Results

12.0 in

12.0 in

1-inch Grid for Data Acquisition Before and After Lasing

Micrograph of Tunnel Wall Tunnel Cutaway Tunnel with Cutaway 2-D Permeability Map
64

63

HPFL Large Block Test

HPFL Post-Laser Results

700 600 Temperature ( C) 500 400 300 200 100 0 Profile along LIO1
o

Shaped Before Charge Lasing Perf

After Lasing

Temperature Profile During Lasing

65

Thin Section Comparison of Tunnel Surface

66

11

In-Situ Pressure Cell for HPFL

In-Situ Pressure Effects

High Pressure Cell for Laser Applications

Simulates Downhole Pressure Conditions Initial Tests Successful (Triaxial) Testing Under Various Configurations

Configuration of High Pressure Laser Perforation Cell

67 68

HP Perf Tests Clad Test CT

Simulated Wellbore
0.5 Steel Disc

HP Perf Tests Clad Test CT

1.5 inch cement plug (super yield 250)

Cement

Berea Sandstone
4.5 inch penetrating hole

Rock Core Bedford Limestone

69

0.5 inch steel disc

Perspective view of X-ray CT scan image of laser perforated limestone core sample
70

HPFL Field Application Example

US Army ZEUS Humvee

HPFL Field Application Example

Earthquake Retrofit of CA Hospital
Controller, Chiller and Power Conditioning HPFL

Processing Head

Source: EWI

Laser Pilot Bit: 265 mm holes for up to 19.0 mm diameter rebar

71 72

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Meeting Future Energy Needs from Oil and Gas

Technology Advancement Unconventional Resource Development Energy / Environment / Economics

Advanced Technology Development for Oil and Gas

Petroleum Prospects and Politics
Chicago Society The University of Chicago Brian C. Gahan, PE
May 19, 2007

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