The International Center for Applied Energy Technology ® Program Partners
The International Center for Applied Energy Technology ® Presentation Overview Key Bakken and Three Forks Issues Bakken Optimization Program Goals Program Focus Areas –Downhole –Wellsite Operations Example Project
The International Center for Applied Energy Technology ® Why Optimization Is Important… World-class resource Currently, only 3%– 10% recovery factor. A 1% increase translates to as much as 9 billion barrels of recovered oil (or more). Bakken Petroleum System Total Oil in Place Reserve Estimates The International Center for Applied Energy Technology ®
We Need a Paradigm Shift Issues related to oil and gas development should not be the sole responsibility of industry. EVERYONE benefits from (relatively) inexpensive, abundant supplies of oil and gas. Optimizing production of this resource benefits everyone – let’s tackle it collectively. The International Center for Applied Energy Technology ®
Current Downhole Hurdles Incomplete understanding of the resource, its potential, and how to best extract the oil with current technology. –Optimal well spacing? –Communication between formations/benches? –Identification of sweet spots. –Influence of fracture networks? –Optimal completion and stimulation techniques? –How to best expand the run life of downhole production equipment.
The International Center for Applied Energy Technology ® Current Operational Hurdles Flaring and associated gas collection (and utilization). Solid waste management. Water minimization, recycling, and reuse. Other issues, such as truck traffic, dust, road maintenance, and air emissions. Many “issues” are driven by public perception and/or misconception. Some of the challenges are a result of regulatory requirements, such as pitless drilling. The International Center for Applied Energy Technology ®
Benefits of Optimization Production Optimization –Increases revenue to industry and the state (and associated benefits to residents). –Facilitates continued investment of the oil and gas industry into the oil and gas resources of the region. –Assures conservation by optimizing the efficient and effective recovery of the oil and gas resource. Image: Popular Mechanics
The International Center for Applied Energy Technology ® Benefits of Optimization Wellsite Operation Optimization –Reduce costs and improve efficiency. –Reduce development and operation impacts to surrounding landowners. –Reduce demands on surrounding infrastructure and water sources.
The International Center for Applied Energy Technology ® Industry and the State Are Making Progress… Improved drilling practices Multiwell pads, reduced surface impacts More advanced completion techniques (multistage fractures, improved proppants and fluid systems) Improved characterization and understanding of the resource and fracture networks
The International Center for Applied Energy Technology ® Industry and the State Are Making Progress… Improved gas pipeline networks. Increased collection and utilization of associated gas (bifuel engines, natural gas liquid [NGL] extraction, compression, and use). Improved solid waste management and strategies for beneficial reuse. Increased focus with the state to address issues and develop sound and sustainable solutions. Image: The Bakken Magazine
The International Center for Applied Energy Technology ® Program Goals To facilitate ongoing efforts by industry and the state to optimize Bakken/Three Forks production: –Advanced reservoir characterization and more accurate resource estimates. –Improved drilling/stimulation/completion/production techniques and sequences. –Optimization of wellsite surface operations and reduced surface impacts. Image: http://blogs/calgaryherald.com
The International Center for Applied Energy Technology ® Key Roles EERC –Optimization of wellsite operations –Work with program partners to implement viable options –Dissemination of program activities and results, reporting Continental –Improved characterization of the Three Forks reservoir –Evaluation of fracture patterns and sweet spots –Design more effective completion and production strategies Current and Future Partners –Help steer program activities and priorities –Provide real-world advice and experience –Relay program findings internally
Production Optimization: Hawkinson Project
Charlotte 1-22H core photos (UV light) 308’ with 154’ of oil fluorescence Bakken Petroleum System Redefined
Upper Bakken shale Lower Bakken shale Middle Bakken Three Forks 10,000’ below surface Past: Dual Reservoir Development MB and TF wells on 320 acre spacing
Dual Zone TestsTests Medicine Hole 14-27H and 2-27H wells Dunn Co., North Dakota
Conclusion from Dual Zone Tests Neither zone can be adequately drained by completion in another zone Limited connectivity will require wells in both zones to adequately harvest the reserves Reserves from MB and TF are similar in magnitude
BROCKTON-FROID FAULT ZONE North Dakota Montana 25 Miles Three Forks Isopach Map CLR Core Location Other Lower TF Producer 160-acre development320-acre development 160 320 160 320 TF 2,3 CLR Lower TF Producer TF Angus 2-9H-2 2,107 Boepd Angus 2-9H-2 2,107 Boepd TF 2,3 TF 2,3,4 TF 2,3,4 10-well coring program (2012) Lower TF exploration net capex 2013 Productivity Project Exploratory and appraisal: $123MM net cost (20 gross wells) Pilot Density Projects Three 320-acre density tests: $161MM net cost (34 gross wells) One 160-acre density test: $36MM net cost (13 gross wells) Charlotte 2-22H Charlotte 3-22H Stedman 2-24-H-2 Stedman 3-24-H-3 Stedman 2-24-H-2 Stedman 3-24-H-3 Barney 2-29-H TF 2,3 TF 2 TF 2,3 CLR: Deep Three Forks Development
660’ 2 Miles 660’1320’ Multiple fracture stages Three Forks 1 st Bench Middle Bakken Upper Bakken shale Lower Three Forks 2 nd Bench Lower Bakken shale Lower Three Forks 3 rd Bench Lower Three Forks 4 th Bench Middle Bakken LODGEPOLE NISKU OVERPRESSURED BAKKEN PETROLEUM SYSTEM BAKKEN (BKKN) TECHNICALLY RECOVERABLE ADDITIONAL INDICATED PAY THREE FORKS (TFS) Upper Three Forks 1 st Bench 10,000’ below surface Three Forks 2 nd Bench Three Forks 4 th Bench Three Forks 3 rd Bench Current Development: Bakken & Three Forks
Montana CLR density projectsIndustry density projects BROCKTON-FROID FAULT ZONE TF 2,3 North Dakota TF 2,3 BROCKTON-FROID FAULT ZONE 25 Miles KOG WLL Three Forks Thickness Map Tangrsud Hawkinson Wahpeton Rollefstad Charlotte TF 2,3 Rosenvold/Farver TF 2,3,4 TF 2 Angus Barney TF 2,3 320 160 320 WLL Stedman TF2 TF3 TF2 Industry LTF Producer Delineation of the Three Forks Lower Three Forks activity delineates potential productive footprint of 3,800 square miles in the Bakken 18 Lower Three Forks producers By operator: CLR: 13 wells EOG, COP, XTO, ZEN: 5 wells Total wells tested: TF2: 10 wells TF3: 6 wells TF4: 2 wells Results consistent with expectations based on core work and areas tested 21 Productive Footprint
Multiple Bench Testing - Charlotte Unit CHARLOTTE COLTER NESSON ANTICLINE 20 Miles Bakken Structure- 200’ Contours LB NSKU MB UB TF1 TF2 TF4 2 MILES 2,640 1,320 FEL 1,320 FWL TF3 LDGP 1 MILE W E TF1 Target: 11,375’ TVD TF2 Target: 11,428’ TVD TF3 Target: 11,465’ TVD MB Target: 11,294’ TVD 81’ 53’ 37’ Recently Completed Interference Wells 68 MBOE produced / 6 months 123 MBOE produced / 18 months Existing Wells McKenzie County, ND 22 TF2 and TF3 proven productive Charlotte 2-22H and 3-22H have cumulatively produced 123,000 Boe and 68,000 Boe No evidence of production interference between wells in the Charlotte unit
1280-acre unit 45 ft net pay 8.4% porosity 6900 psi 1,000 psi FBHP 1,100 BFPD IP Third-Party* Simulation Supports 160-Acre Spacing 8 wells per zone 1 st well recovers 1.0 MMBoe 8 wells recover 5.6 MMBoe 8 wells average 700 MBoe per well (70% of 1-well scenario) *Ryder Scott Co. LP, Reservoir Solutions, June-August 2012 /Vol. 15 No. 2 Conclusions of third party simulation:
Project Scope Two parts 1 – Drilling and Completions (Eleven new 2 mile horizontal wells) 2 – Research and Development Core Logs Vertical Seismic Profiles Microseismic Pressure data 3 D seismic acquisition
14 wells in 1280 unit ( 4 MB, 3 TF1, 4 TF2, 3 TF3 ) M / BAKKEN TF1 TF2 TF3 TF4 2 MILES 1 MILE ? ? 200 ‘ +/- 1320’ 1320’ inter-well spacing between same-zone wells 660’ 68’ Monitor well as of 11/20/12 Established producing wells 10 frac’d wells microseismic program Wells frac’d from W, C & E Pads 5 8 3 13 1 10 2 4 7 11 14 6 9 12 Continental Resources Hawkinson (Sec. 22 & 27-147N-96W) 1,280 Acre Unit Full Development Project
Goals Define reservoir drainage of the MBK, TF1, TF2 & TF3 Confirm whether these formations are distinct and separate from each other Determine appropriate well spacing required for most efficient reservoir drainage Increase spacing unit ultimate recovery Predict areas of future reservoir sweetspots
Optimization of Wellsite Operations
The International Center for Applied Energy Technology ® Areas to Be Addressed Project specifics will be steered by program partners. Focus areas: –Flare gas collection and utilization –Improved waste handling and options for beneficial reuse –Options for water recycling, treatment, and reuse –Other surface and downhole operational issues (corrosion, scaling, casing integrity)
The International Center for Applied Energy Technology ® Success Stories The EERC has learned that successful projects entail involvement and partnership with industry and other key stakeholders (i.e., North Dakota Petroleum Council, Oil and Gas Research Council, North Dakota Division of Mineral Resources). The Bakken Optimization Program is following the same model. Project example related to flaring: –Evaluation of Associated Gas Use
The International Center for Applied Energy Technology ® Qualitative Summary of Evaluated Technologies Technology Gas Use Range, Mcfd NGL Removal Requirement Scalability to Resource Ease of Mobility Likelihood of Deployment at Small Scale Power – Grid Support1000–1800MinimalVery scalableVery easyVery likely Power – Local Load300–600MinimalVery scalableVery easyVery likely Compressed Natural Gas (CNG) 50+YesScalableVery easyPossible Chemicals1,000,000*NoNot scalableNot mobileVery unlikely Fertilizer300–2000NoScalableNot easyPossible * Typical commercial-scale plant.
The International Center for Applied Energy Technology ® Summary of Evaluated Technologies TechnologyCapital Cost Annual RevenueBasis NGL Recovery$2,500,000$700,800600 Mcf/day Power – Grid Support$7,500,000$1,665,000 +$1,170,000 NGL value Reciprocating engine, 5-MW Power – Local Load$3,200,000$158,000 +$700,800 NGL value Reciprocating engine, 1-MW CNG$3,900,000$306,000 +$700,800 NGL value 1-million-mile fleet Fertilizer $17,000,000– $52,000,000 $3,700,000– $23,000,000 20–90 ton/day production
The International Center for Applied Energy Technology ® Updated Flare Gas Data – May 2013 Flaring Allocation by Number of Wells Flaring Allocation by Total Gas Flared
The International Center for Applied Energy Technology ® New Flare Data Analysis – May 2013
The International Center for Applied Energy Technology ® Evaluation of Associated Gas Use Bifuel Rig Demonstration – assessment of fuel savings and operational impacts of associated gas–diesel mix Image: http://infinitosrl.net/ EERC Study and Final Project Report www.undeerc.org/Bakken/researchstudies.aspx Associated Gas Alternative Use Study – analysis of gas use options upstream of gas- processing plants –Small-scale gas processing –CNG/liquefied natural gas (LNG) for vehicles –Electric power production –Chemical production
The International Center for Applied Energy Technology ® A Use for Flared Natural Gas Power production for drilling rigs is a near-term opportunity. Diesel engines properly outfitted with bifuel systems can utilize a mixture of diesel and natural gas. Significant fuel savings can be achieved: –30%–60% reduced fuel costs –Reduced fuel delivery and associated traffic, engine emissions, and fugitive dust Image: www.drillingcontractor.org
The International Center for Applied Energy Technology ® Summary of Results Diesel fuel consumption reduced by 18,000 gallons for two wells over a period of 47 days. Fuel-related net cost savings of nearly $60,000. Reduced delivery truck traffic. Reduced NO x emissions and increased CO and HC emissions compared to diesel-only operation. Mitigation achievable with exhaust gas treatment. Seamless engine operation using the GTI Bi-Fuel ® system. Currently ECO-AFS has Bi-Fuel ® on 21 rigs and 200 generators in North Dakota.
The International Center for Applied Energy Technology ® Impact of Widespread Use Nearly 200 drilling rigs in operation at any given time 1,800,000 Mcf of wellhead gas used per year 18,000,000 gallons of diesel fuel saved per year $72,000,000 diesel fuel cost saved per year 3600 fuel deliveries avoided per year
The International Center for Applied Energy Technology ® Path Forward Continental’s efforts are well under way. Initial scopes of work have been formulated to address some of industry’s operational issues and are being reviewed by program partners: –Characterization of Bakken/Three Forks waste streams –Bakken well failure analysis and mitigation –Flaring mitigation via gathering system optimization –Evaluation of water-recycling and reuse options, applicability, and costs This program is just starting, so NOW is a good time to become a member!
The International Center for Applied Energy Technology ® Thanks to Our Partners
The International Center for Applied Energy Technology ® For More Information… Check out the EERC’s booth in the exhibit area! John Harju, Associate Director for Research Energy & Environmental Research Center (701) 777-5157; firstname.lastname@example.org Stan Wilson, Manager, Resource Development Continental Resources, Inc. (405) 234-9163; Stan.email@example.com