International Shale Development Optimization

Unconventional Resources Development Completion Quality Reservoir Quality

Controls for Reservoir Productivity Defining Reservoir Quality TOC and maturation Mineralogy Pore Pressure Petrophysics: porosity, saturations, permeability, thickness Gas in place: adsorbed, interstitial Defining Completion Quality Structure: faults, natural fractures, curvature Hydraulic fracture containment: geomechanical anisotropy, in-situ stress Rock fracturability: surface area per reservoir volume, texture, complexity Retention of surface area and fracture conductivity: stress, mechanical properties Fracturing fluid sensitivity: mineralogy, fluid chemistry   Good Reservoir Quality + Good Completion Quality = Economic Success

Shales are Vertically Variable Each Shale is Unique Woodford Barnett Fayetteville Haynesville Marcellus Eagle Ford Eagle Ford (oil) Shales are Vertically Variable Each Shale is Unique

Core/Log Petrophysical Analysis RHOB RHOM ECS XRD Sw Porosity TOC Perm Gas in Place GR Res Porosity ELAN 250 ft thick organic shale stimulated in a single frac stage. The microseismic results shows that the lower section of the shale was not effectively stimulated. Interestingly, this section has a higher clay volume (high stress). This indicates that organics in this lower section may not be effectively produced. Effective phi: 4 to 12 pu TOC: > 2 wt % Saturations: Sliquid < 45% Permeability: > 100 nd

Shale in Perspective: Permeability 100 nD = 0.0000001 D = 1 ten millionth of a Darcy

Shale in Perspective: Permeability 100 nD = 0.0000001 D = 1 ten millionth of a Darcy Consequence of Extremely Low Matrix Permeabilities: Majority of Pressure Drop at Fracture Face At Initial Reservoir Pressure 10s of meters from fracture for years Hydraulic Fracturing is a REQUIREMENT Hydraulic Fracture Complexity can induce a pressure drop from multiple directions 10 ft 10 Year Pressure Profile Hydraulic Fractures at 250 ft Spacing (400 nd)

Shale in Perspective: Large Stimulation Treatments

Initial Completion Quality Evaluation: Vertical Fracture Height Growth 300 m 80 m 250 ft thick organic shale stimulated in a single frac stage. The microseismic results shows that the lower section of the shale was not effectively stimulated. Interestingly, this section has a higher clay volume (high stress). This indicates that organics in this lower section may not be effectively produced.

Initial Completion Quality Evaluation: Vertical Fracture Conductivity 80 m RA tracer of the same frac job. The high clay volume interval in the middle may be a fracture barrier. Note, the upper perfs and lower perfs were fracced at the same time. Even if the frac grows through the interval it may be a fracture conductivity barrier during production. A horizontal well may not effectively produce gas across this barrier.

Completion Quality Variability Fayetteville Shale Outcrop Fayetteville shale outcrop showing vertical variability. Image logs from multiple shale reservoirs showing countless laminations and continuous variability. Formation Micro-Imaging Logs (FMI) Reservoir 1 Reservoir 2 Reservoir 3

Lateral Heterogeneity – Horizontal Image Logs Reservoir 1 600 m Reservoir 2 500 m Reservoir 3 Same image logs as the previous slides, plus the addition of a LWD GVR. The depiction on the previous slide visually infers that the logs are from vertical pilot holes (note, nothing states this on the slide or in the notes). In reality, all of these images are from laterals. The lateral with the GVR is in zone over much of the wellbore. But the borehole still crossed many beds. This visually portrays the task we face when trying to correlate beds encountered in laterals with beds from vertical wells. It also visually demonstrates the variability that is solely due to bedding that we will likely see in cores from horizontal wells. 700 m

Production Along the Lateral is Not Uniform Clusters producing no more than 2% of total production 51% Non-producing clusters Well 1 54% 14% 31% Well 2 53% 47% Well 3 Well 4 18% 37% This slide shows a snapshot of some of the results of a horizontal shale production log analysis that we have performed. Each graph represents a horizontal well and the bars on the graph denote the percent of flow from a perforation cluster along the lateral.

Addressing Variable Completion Quality Wireline Horizontal Geomechanical Analysis Quantify lateral stress variation Indentify stress anisotropy Group frac stages in “Like Rock” Perforate similarly stressed rock Stage 4 Stage 3 Stage 2 Stage 1

Addressing Variable Completion Quality 4/22/2017 Addressing Variable Completion Quality LWD Horizontal Geomechanical Analysis Gamma Ray Resistivity Den /Neu Porosity Den Image Static Dynamic GR Image G H I H G F E D C B A Formation Dips from Images Planned Trajectory Actual Trajectory

Addressing Variable Completion Quality 4/22/2017 Addressing Variable Completion Quality Images can Identify Natural Fractures Ÿ Ÿ Ÿ Ÿ Ÿ Ÿ Ÿ Ÿ Ÿ Ÿ Ÿ Ÿ Ÿ Ÿ Ÿ Ÿ Ÿ Ÿ Ÿ Ÿ Ÿ Ÿ Ÿ

Putting it All Together 4/22/2017 Putting it All Together Den Image Spectroscopy Volumetric Porosity / Saturations TOC HC in Place Reservoir, Pay Reservoir Quality Completion Quality Rock Strength Frac gradient

Addressing Variable Completion Quality Eagle Ford Shale Example – Geometrical Staging SPE134827

Addressing Variable Completion Quality Eagle Ford Shale Example – Selective Staging SPE134827

Completion Optimization to Maximize Production New wells used Reservoir Quality and Completion Quality to optimize completions 33% increase in 3 month average cumulative BOE on new wells compared to offsets SPE134827

3 Dimensional View of Reservoir

Integrating Seismic Attributes with Fracture Geometry SPE131779 Microseismic event locations along with the azimuth of most negative curvature (arrows) and magnitude of most positive curvature (background color)

Coupling Fracture Geometry to Reservoir Simulation Evaluation of Completion Quality Unconventional Fracture Geometry Model shmax shmin Eclipse Reservoir Simulation Petrel platform allows stress heterogeneity integration A more rigorous numerical fracturing simulator is being developed as well. These simulators require additional information as determined via log, core and/or seismic interpretation, but they allow for integration of all of this data to more accurately predict the fracture network that is created during the stimulation treatments.

Eclipse Reservoir Simulation Production History Match Production Match Pressure Match

Reservoir Exploitation Completion Quality Optimization Estimated Ultimate Recoveries Recovery Factors Reservoir Development

What is the right model for success? 4/22/2017 What is the right model for success? Model 1… Model 2… Minimum data utilized Accept statistical variation in well performance Compensate by drilling more wells Factory approach to drilling and completion Large footprint – high rates & large fluid volumes Collect optimum data Understand the reservoir and completion quality Reservoir based well placement Utilize technology to improve drilling & completion efficiency Reduced equipment footprint and fluid volumes Good Reservoir Quality + Good Completion Quality = Economic Success 26

Thank You Contour map of Completion Quality Contour map of Reservoir Quality Good Reservoir Quality + Good Completion Quality = Economic Success