FILE: EXTREACH2 -A Wellsite Perspective- Improvements In Oil Base Mud Technology Enhances Drilling Efficiencies On Extended Reach Wells -A Wellsite Perspective-

Developing The Mud Program Factors to Be Considered For ERD FILE: EXTREACH2 Developing The Mud Program Factors to Be Considered For ERD Hole Stability - What Mud Weight Is Required? Pore Pressure Fracture Gradient Hole Inclination Formation Characteristics Lithology Mechanical Strength Chemical Reaction smax Wellbore Collapse smin P Tensile Fracturing

Developing The Mud Program Factors to Be Considered For ERD FILE: EXTREACH2 Developing The Mud Program Factors to Be Considered For ERD Formation Mud Weight Pipe Eccentricity Pipe Rotation Cuttings Size Velocity Profile Hole Cleaning Hole Angle ROP Section Length Fluid Rheology Flow Regime Annular Velocity

Developing The Mud Program Factors to Be Considered For ERD FILE: EXTREACH2 Developing The Mud Program Factors to Be Considered For ERD Wellbore Path Rate Of Build / Drop Max. Angle Azimuth Changes Section Lengths How Much Steering? Lubricity Torque & Drag DP Make-up Torque Ratings Computer Simulations Top Drive Rating (Do You Have a Top Drive?) COF Of The Mud COF Of Formations

Avg. COF of Various Fluids FILE: EXTREACH2 Avg. COF of Various Fluids WBM Synthetics OBM 0.00 0.05 0.10 0.15 0.20 0.25 0.30 0.35 Coefficient Of Friction Lubricant Enhanced

Developing The Mud Program Factors to Be Considered For ERD FILE: EXTREACH2 Developing The Mud Program Factors to Be Considered For ERD Hydraulics Pressure Requirements/Limitations Pumping Capability Number of Pumps Pressure Rating ECD Concerns Motors, Downhole Tools Drillpipe Size (65/8, 5½, 5) Mud Rheology (Minimization of PV’s) Liner Instead of Casing?

Hydraulic Analysis 6-5/8” vs 5” DP FILE: EXTREACH2 Hydraulic Analysis 6-5/8” vs 5” DP

Developing The Mud Program Factors to Be Considered For ERD FILE: EXTREACH2 Developing The Mud Program Factors to Be Considered For ERD Daily Operational Cost Logistics Rig Mud Mixing System Displacements Procedures Completion Technique Environmental Issues Marine Toxicity HES Discharge Restrictions

Selection of Mud System What To Use? FILE: EXTREACH2 Selection of Mud System What To Use? Marine Environment Hole Stability Hydraulics Lubricity Safety Wellbore Trajectory Logistics Hole Cleaning Formation Damage WATER BASE Inhibition KCL, Salts Glycols (DCP Product Line) Lubricants Rheologically Engineered INVERT EMULSION Arctic Diesel #2 Diesel Low Toxic Mineral Oil Synthetic Lubricants

Invert Systems Oil-Based Muds FILE: EXTREACH2 Invert Systems Oil-Based Muds Advantages Shale Stability Lubricity Temperature Stability Drill Solids Tolerant Chemical Contamination Tolerant (CO2, H2S) Re-usable Reduce Sticking Potential Near Gauge Hole Corrosion Protection Cost Effective (Drilling and Mud Cost) Disadvantages Lost Circulation Promotes Fracture Propagation Reduced Re-opening pressure Slow Self Healing Expensive (Especially Synthetics) Potential Disposal Problems HES Concerns Environmental Discharge Elastomer Compatibility Kick Detection (Gas Solubility) Cleanliness

Synthetic Fluid Options FILE: EXTREACH2 Synthetic Fluid Options BAROID PETROFREE - (Henkel Ester) XP07 Linear Parafin Oil M-I NOVADRIL - Polyalfaolefin (PAO) ESTERDRIL - Ester (finagreen) NOVALITE - Linear Olefin (LAO) NOVAPLUS - Internal Olefin (IO) ANCHOR AQUAMUL II - Acetal Anchogreen - (Pronova Ester) B.H.I. BIO-MUL - LAB (Phasing out In UK) SYNTEQ - IO DOWELL Finagreen - Ester ULTIDRIL - LAO/IO B.W. MUD ECODRIL - LAO/PAO Regulatory Authorities > Commercial > Technical

Base Fluid Properties 0.85 5-7 179 -30 25 0.80 5-7 175 -65 107 0.78 FILE: EXTREACH2 Base Fluid Properties FLUID DENSITY VISCOSITY FLASH POUR ANALINE (SG) cst @ 40°C POINT °C POINT °C POINT °C ESTER 0.85 5-7 179 -30 25 PAO 0.80 5-7 175 -65 107 LAO (16/18) 0.78 3.08 146 3 N/A IO (16/18) 0.78 3.1 137 -24 81 LAO (14/16) 0.78 2.1 114 -12 69 ETHER 0.83 6 166 -10 40 LTOM 0.80 2-3 100 -18 76 DIESEL 0.85 3-4 66 -10 65

HES Issues - Oil Vapours FILE: EXTREACH2 HES Issues - Oil Vapours New Norwegian Guidelines Oil Mist 1 mg/m³, Oil Vapour 50 mg/m³

Oil-Base Fluids Development Rheological Engineered Systems FILE: EXTREACH2 Oil-Base Fluids Development Rheological Engineered Systems Early - Mid 80’s, ERD Wells Drilled With OBM Experienced Severe Problems: Using Existing Mechanical Technology No Top Drive No MWD Etc. Hole Cleaning “Mud Engineer, Increase That Yield Point!” Barite Sag Static Problem Gotta Raise That YP and Gels!

Oil-Base Fluids Development Hole Cleaning Studies - MI’s ERL FILE: EXTREACH2 Oil-Base Fluids Development Hole Cleaning Studies - MI’s ERL Conclusions Of Study Annular Velocity (No Substitute For The Pump) Pipe Rotation Critical (Hard to Clean Without It!) Elevated Low Shear Rate Reduces Cuttings Bed Thickness High Viscosity Sweeps DO NO GOOD! Turbulent Flow Sweeps Agitate Beds Turbulent Flow Cleans Better IF.... If Turbulence Is Not Achievable, Go Laminar With Elevated LSRV. Cuttings Move In Helical Flow Pattern Viscoelastic Coupling Of Mud & Pipe Rotation Rule Of Thumb: LSRV = 1.0 to 1.5 * Hole Dia.

Oil-Base Fluids Development Rheological Engineered Systems FILE: EXTREACH2 Oil-Base Fluids Development Rheological Engineered Systems LSRV Modifier Development

Oil-Base Fluids Development Barite Sag - MI’s ERL FILE: EXTREACH2 Oil-Base Fluids Development Barite Sag - MI’s ERL

Oil-Base Fluids Development Barite Sag - MI’s ERL FILE: EXTREACH2 Oil-Base Fluids Development Barite Sag - MI’s ERL Conclusions Of Sag Study Phenomena Independent of Mud Type Occurs In OBM & WBM Dynamic Settling A Major Contributing Factor Previously Thought To Be A Static Problem Sag Is NOT SOLELY A MUD RELATED PROBLEM Slow Circulation Rates (Coring, Liner On Bottom) Elevation Of LSRV & Gel Strengths Are Helpful In MINIMIZING The Problem Development of Field Testing Procedures Viscometer Sag Test (VST) Sag Index (VST, MW, Angle, Hole Dia. & Length, Flow Rate)

FILE: EXTREACH2 Oil-Base Fluids Development Rheology Testing - Fann Model 70 HTHP Viscometer

ERD Experience With OBM Southern Norwegian Sector - North Sea FILE: EXTREACH2 ERD Experience With OBM Southern Norwegian Sector - North Sea Platform Set In 1981 Geology Overpressured Shale Weak “Gas Cloud” Section In the Shale (Low Frac) Depleting Chalk/Limestone Reservoir 7.2 ppg In the Center 14.5 ppg In the Flanks Subsidence In the Overburden (Stressed) Early Drilling History Started With Water-Based Fluids Quickly Turned to OBM Stuck Pipe Unstable Hole Conditions

Early Experiences With OBM FILE: EXTREACH2 Early Experiences With OBM Diesel Þ Low Toxic Mineral Oil No Major Problems When Drilling Low Angle Wells Major Difficulties With Angles Over 50° Hole Cleaning Barite Sag Rotating Mud Companies Mud

Mud Weight Requirements FILE: EXTREACH2 Mud Weight Requirements

Introduction Of New OBM Technology FILE: EXTREACH2 Introduction Of New OBM Technology Begin Hole Cleaning Studies Identify Hole Cleaning Parameters Elevated LSRV Rotation Rheological Modifiers Improves Hole Cleaning Reduce Sagging Tendencies 1989

Continuous Operation Last 5 Years FILE: EXTREACH2 Continuous Operation Last 5 Years All Wells Now Horizontal Through The Reservoir Casing Deformation Due To Subsidence Casing Pulling/Window Milling - Sidetracks TVD vs. MD Typically 1:1.5 to 1:2.8 Max. 2500 mTVD 7200 mMD Integral Part Of Drilling Team With Other Contractors Max. Input Into Drilling Programs Incentive Drilling Program

Lessons Learned ERD With OBM FILE: EXTREACH2 Lessons Learned ERD With OBM Hole Cleaning LSRV 16” Hole 15-20 12¼” Hole 11-15 8½” >10 Maintain minimum pump rate of 850 GPM Interrupt Drilling Circulate & Rotate Do Not Orient More Than 2 Joints Per Stand Back Ream/Rotate (100-150 rpm)....Continue To Drill Circulate A Minimum Of 1.5 Times B/U Before POOH May Circulate Up To 3-4 Times B/U Max. usage of 6-5/8” DP More Flow, More AV, Less Pressure Pump Pills IF NECESSARY! Lo-Vis/Hi-wt <850 gpm DON`T DRILL

Lessons Learned ERD With OBM FILE: EXTREACH2 Lessons Learned ERD With OBM Drilling Practices When POOH.... Begin By Just Pumping If Tight Hole Encountered...Begin Backreaming When Backreaming Start With 3m/min.....increase gradually Bring Up RPM`s Slowly to 120 - 150 Start Pumping In A Controlled Manner No Arbitrary Wiper Trips Only As Hole Conditions Dictate

Lessons Learned ERD With OBM FILE: EXTREACH2 Lessons Learned ERD With OBM Platform Practices Monitoring Of Drilling Parameters Plotting Torque, Drag Againts Predicted & Measured Values Monitoring Of Cuttings Return Parameters Done With Cuttings Injection System (Predicted vs. Measured) Gunk Squeeze Pill Ready As Depleted Chalk Formation Is Approached Pump Gunk Immediatedly When Losses Are Encountered “Do Not Try To Establish Circulated” 2-3 Gunk Squeezes Maybe Required (100% Success Rate) Gilsonite Additions Aids When Sliding In 8-1/2” Hole Section May Improve Wellbore Stability in 12-1/4” Hole Section? Barite Sag Minimized If... 3 RPM > 10 10s Gel > 15

Hard Lesson Learned ERD With OBM FILE: EXTREACH2 Hard Lesson Learned ERD With OBM Experienced Personnel Is The Key The Learning Curve Very Expensive!

Future Development OBM For ERD Wells FILE: EXTREACH2 Future Development OBM For ERD Wells Improved Hydraulic Calculation Virtual Hydraulics (Temp. & Press. Accountability) Base Oil Specific Lubricant Development OBM & Synthetic Fluids Drag Reducers Improve Hydraulics (Pressure Reduction, Hole Cleaning) Hole Cleaning & Barite Sag Non Rotation, Slow Annular Velocities Ultra-Low Shear Rate Viscosity Analysis (Oil Base FLO-PRO) Product Development (Elevated LSRV, Low PV) Basic Emulsifier Package Low shear Rate Modifiers