1. SPE DISTINGUISHED LECTURER SERIES is funded principally through a grant of the SPE FOUNDATION The Society gratefully acknowledges those companies that support the program by allowing their professionals to participate as lecturers.

2. Slim Hole Technology Roger Hough Shell Canada

3. This presentation will: n Give an overview of slim hole technology n Define why it is only now gathering momentum n Provide some case histories n Explore the prospects for the future

4. Slim Hole Technology n What is slim hole? n Types of slim hole drilling n Why slim hole? n Problems and solutions

5. What is Slim Hole? n SHDEC: Drilling, evaluation and completion technology which allows fully engineered 6 1/4" and smaller holes at TD. n Slimline well: Well with a cost-effective design around an optimal production conduit. n Logging: Anything smaller than 4 3/4", or minimum 2 7/8". Tool OD 2 1/4"

6. Types of slim hole drilling: n Shallow Rotary n Continuous coring n Downsized Conventional n Combination n Small horizontal sidetracks n Coiled tubing drilling

7. Why Slim Hole? n Exploration in immature areas n Exploration in mature areas n Production applications n High pressure / temperature wells n Safety n Environmental n Logistics n Economics

8. Why Slim Hole? n Exploration in immature areas n Exploration in mature areas n Production applications n High pressure / temperature wells n Safety n Environmental n Logistics n Economics

9. Why Slim Hole? n Exploration in immature areas n Exploration in mature areas n Production applications n High pressure / temperature wells n Safety n Environmental n Logistics n Economics

10. Why Slim Hole? n Exploration in immature areas n Exploration in mature areas n Production applications n High pressure / temperature wells n Safety n Environmental n Logistics n Economics

11. Completion Technology 13 “ 3 / 8 20” 9 “ 5 / 8 10 “ 3 / 4 7 “ L 5 / 8 5 “ L 1 2 / Rotating liner hanger 3 “ tubing 1 2 / ConventionalMonobore PBR tie-back 7”

12. Monobore Toolkit RestrictionFull bore Jet cleaner PLT High rate jet cleaner Full-bore CT mill Under reamer TTBP Straddle packer Retrievable straddle Electro line set bridge plug Packer flow meter

13. Typical 3 1/2 ” monobore completion 5 1/2” 17 lb/ft production casing 3 1/2” 9.2 lb/ft production liner Standard 3 1/2” flow control equipment with 2.813 seal bore ID Side pocket mandrels with 2.813” seal bore ID Liner hanger complete with tubing tieback Retrievable straddle Retrievable or permanent bridge plug

14. Slim hole producers n A 3 1/2” monobore can produce 4000 b/d or 50MMscf/d n Downsizing a completion from 7” to 3 1/2” can reduce well costs by 15-40%

15. Production Rate vs Tubing Size 100000 50000 25000 10000 500 0 2500 1000 500 20 4060 8080 10 0 120 14016 0 180 100 50 25 10 4 1/2 ” 5 1/2 ”7”3 1/2 ” Gross Rate b/d Wet Gas Rate MMscf/d mm inch

16. Well Productivity vs Diameter 1.05 1. 1 1.0 0.95 0.9 0.85 5 10 15 20 0 Relative PI Bit Diameter (inches)

17. Slim hole producers n For Shell’s existing reservoirs on a worldwide basis: –40% of the oil originally in place would be produced by existing technology –20% would be bypassed –20% would be residual oil saturation n Recovery of half the remaining oil would increase recoverable reserves by 50%.

18. Why Slim Hole? n Exploration in immature areas n Exploration in mature areas n Production applications n High pressure / temperature wells n Safety n Environmental n Logistics n Economics

19. Why Slim Hole? n Exploration in immature areas n Exploration in mature areas n Production applications n High pressure / temperature wells n Safety n Environmental n Logistics n Economics

20. Why Slim Hole? n Exploration in immature areas n Exploration in mature areas n Production applications n High pressure / temperature wells n Safety n Environmental n Logistics n Economics

21. Why Slim Hole? n Exploration in immature areas n Exploration in mature areas n Production applications n High pressure / temperature wells n Safety n Environmental n Logistics n Economics

22. Why Slim Hole? n Exploration in immature areas n Exploration in mature areas n Production applications n High pressure / temperature wells n Safety n Environmental n Logistics n Economics

23. Problems and Solutions n ProblemSolution n CementingEnhanced liners, improved slurries n FishingFishing tools n Drillstring failuresVibration mitigation, high torque drillstring n Well controlAccurate flow in / out measurement n Limited evaluationSlim hole logging and testing tools n Small clearances,Shear thinning fluids / high ECDs, holeformates, thruster to problemsreplace DC n Bit life, poor PDC bits, anti-whirl bits, penetration rate

24. Problems and Solutions n ProblemSolution n CementingEnhanced liners, improved slurries n FishingFishing tools n Drillstring failuresVibration mitigation, high torque drillstring n Well controlAccurate flow in / out measurement n Limited evaluationSlim hole logging and testing tools n Small clearances,Shear thinning fluids / high ECDs, holeformates, thruster to problemsreplace DC n Bit life, poor PDC bits, anti-whirl bits, penetration rate

25. Slim hole fluid pressure drops 3 1/2” DP 2 7/8” DP 7” 5” 4 1/8” Bit 0 5000 m 0 250 bar Formate mud Chalk mud

26. Problems and Solutions n ProblemSolution n CementingEnhanced liners, improved slurries n FishingFishing tools n Drillstring failuresVibration mitigation, high torque drillstring n Well controlAccurate flow in / out measurement n Limited evaluationSlim hole logging and testing tools n Small clearances,Shear thinning fluids / high ECDs, holeformates, thruster to problemsreplace DC n Bit life, poor PDC bits, anti-whirl bits, penetration rate

27. Problems and Solutions n ProblemSolution n CementingEnhanced liners, improved slurries n FishingFishing tools n Drillstring failuresVibration mitigation, high torque drillstring n Well controlAccurate flow in / out measurement n Limited evaluationSlim hole logging and testing tools n Small clearances,Shear thinning fluids / high ECDs, holeformates, thruster to problemsreplace DC n Bit life, poor PDC bits, anti-whirl bits, penetration rate

28. Kick detection system P P Computer Alarm Max Min SPM BNP SPP Flow in Flow out BOP

29. Problems and Solutions n ProblemSolution n CementingEnhanced liners, improved slurries n FishingFishing tools n Drillstring failuresVibration mitigation, high torque drillstring n Well controlAccurate flow in / out measurement n Limited evaluationSlim hole logging and testing tools n Small clearances,Shear thinning fluids / high ECDs, holeformates, thruster to problemsreplace DC n Bit life, poor PDC bits, anti-whirl bits, penetration rate

30. Standard Thruster No thruster Thruster in use Hookload Mud Motor Drillpipe Drillcollars Thruster Bit

31. Soft Torque Rotary Table SCR Rotary Drillpipe Drive motor

32. Field Validation of MKII STRS ON Time = 60s

33. Problems and Solutions n ProblemSolution n CementingEnhanced liners, improved slurries n FishingFishing tools n Drillstring failuresVibration mitigation, high torque drillstring n Well controlAccurate flow in / out measurement n Limited evaluationSlim hole logging and testing tools n Small clearances,Shear thinning fluids / high ECDs, holeformates, thruster to problemsreplace DC n Bit life, poor PDC bits, anti-whirl bits, penetration rate

34. Problems and Solutions n ProblemSolution n CementingEnhanced liners, improved slurries n FishingFishing tools n Drillstring failuresVibration mitigation, high torque drillstring n Well controlAccurate flow in / out measurement n Limited evaluationSlim hole logging and testing tools n Small clearances,Shear thinning fluids / high ECDs, holeformates, thruster to problemsreplace DC n Bit life, poor PDC bits, anti-whirl bits, penetration rate

35. Integration is important  pd  pc  pt  pm  pb  pda  pca mud viscosity mud density mud temperature mwd bit TFA bit aggressiveness ecd pump strokes WOB pp dp RPM GPM torque

36. BP - West Africa Case Histories - Exploration

37. Slim Hole Well Configuration SPE/IADC 25724 20 in conductor 6 10 in cond 4.8 3.8 12 1 / 4 17 1 2 / 8 1 2 / 6 3 / 8 3 / 4 9 7 / 8 Reservoir 3000 m

38. Hole diameters reduced by 50% Mud consumption and cuttings reduced by 75% Site reduced by 75% Overall costs reduced between 40% and 50% 60 m 75 m Slimhole site Conventional site Slim Hole Wellsite Environmental Impact SPE/IADC 25724 120 m 150m

39. Guatemala Case Histories - Exploration

40. Positive Learnings n Lower day rate n Lower material costs n Lower location preparation costs n Lower Mob/ demob costs n Less waste disposal n Smaller crew

41. Negative Learnings n Poor hydraulics n High ECDs - unable to get desired mud weight n Hole erosion due to high annular velocities n Limited choice of bits n Non standard tools n 3 1/2” logging tools unsuitable for 4 1/4” hole

42. Madagascar Case Histories - Exploration

43. Madagascar Slim vs Conventional 2500m2200m8.1/2”4.1/4” 9 “ 5 / 8 7” 5” MDZ-1 MDS-1 Cost 100% 60%

44. Madagascar Cost Comparisons $US millions Well 1Well 2Well 3 Slim-hole well 0 4 8 12

45. Positive Learnings n Reduced tonnage, location, construction work and waste material n Reduced driving hazards (1/2 the trucks) n Reduced environmental impact n Kick detection - 20L detected n Antivibration technology -> gauge 4 1/4” hole n Good quality logs

46. Negative Learnings n Assorted rig packages n 5000 psi design - 3600psi available n Bit TFA too high - bit selection poor n Mud pump used for cementing

47. Case Histories - Production Germany

48. Field Experience Retrofit SHD 24 ” 18 ” 9 “ 7 ” L 18 “ 7 ” L 5 ” L 13 “ 7 “ L 5” L 1 2 / 3 “ L 1 2 / 3 / 8 13 ” 3 / 8 9 “ 5 / 8 5 / 8 5 / 8 Well costs Cuttings volume 100% 75% 60% 30% 8 “ OH 5 “ OH 4 “ OH 5 / 8 1 2 / 7 / 8 1 / 8 5000 m 13 “ 3 / 8 5 / 8

49. Case Histories - Production House Mountain

50. Hole Geometry 565 m 2120m 25 deg/30 m 3 “ 7 / 8

51. Where is slim-hole going? n Slim hole technologies are proven and reliable. n The industry is beginning to embrace slim hole - first operators and service companies, now the drilling contractors. n A start can be made with retrofit systems before committing to a dedicated rig. n New applications are emerging.

52. New Applications n Coiled tubing drilling –Ultra Short Radius Jetting –Underbalanced drilling –Expandable Tubulars –Coiled Tubing Completions n Dedicated Slim Hole Rigs

53. Typical slim hole casing schemes RE-ENTRYEXPLORATION 4" - 3.1/2" 12.1/4" 4.3/4" - 4.1/8" 4.1/4" - 4.1/8" 7.5/8" - 7" 5.1/2" - 5" 6.3/4" - 5.3/4" 3.3/8" - 2.5/8" 10.3/4" or 9.5/8” 9.7/8" - 8.3/8" 7" 5" 6.1/4" - 5.7/8" 3.1/2" 2.7/8" - 2.5/8" 8.3/4" - 8.3/8" 2.7/8" - 2.5/8" 3.1/2" Tubing Monobore 5.1/2" - 5" 3.1/2" 7.5/8" - 7" DEVELOPMENT / PRODUCTION 10.3/4" or 9.5/8” BHI SH manual

54. Case Histories - Production Peace River

58. New Generation Slim Hole Rigs n Euroslim (Forasol / Elf / Total / DBS) n Simpler (Sedco-Forex) n Kenting Rig 11 n Hybrid CT units

59. 60 m 75 m Slimhole Conventional site Slim Hole Wellsite - the shrinkage continues 120 m 150 m 32m 26m 44 16.5 Simpler Foraslim

60. Multidisciplinary Crew n Rig Team8 (15) n Maintenance Team3 (5) n MWD / Logging1 (3) n Total 13 (23) n Conventional Operations (40)

61. Next Steps n Good planning and integration of a slim-hole campaign is needed with all parties. n Design the well from inside out. n Compromises may be needed, but the result should be better information for less cost, reduced finding / lifting costs, increased reserves, better safety and S.D. n Slim hole is coming - it’s up to oil company and contractor alike to benefit from it.