1. A Case History from Kansas Application of Horizontal Wells in Mature Basins: A Case History from Kansas Tulsa Geological Society September 5, 2000

2. Acknowledgements  US Department of Energy  Mull Drilling Company Inc.  Ritchie Exploration Inc.  Sperry-Sun Drilling  CMG (Computer Modeling Group)  Security DBS  Baroid  Norseman  Art Merrick Consulting  Scientific Drilling  Weatherford

3. University of Kansas  Saibal Bhattacharya  Tim Carr  John Doveton  Paul Gerlach  Bill Guy  Richard Pancake

4. Presentation Outline + Introduction, Overview, Results Why Identify Horizontal Candidates in Mature Basins ? Remaining Oil and Gas Reserves Economic Impact Tools for Identifying Candidate Reservoirs, Leases and Locations Large and Numerous Targets One Kansas Target: Mississippian Reservoir Heterogeneity (Vertical & Horizontal)

5. Presentation Outline + Reservoir Characterization & Simulation Work with Sparse and Old Data PC-Based + Case Study of Horizontal Well Operational Success Economic Success ?$?$?$?$? + The Learning Curve http://www.kgs.ukans.edu/PTTC

6. Potential Targets   Numerous Targets   State Level   Numerous Targets   State Level Compartmentalized Reservoirs Mississippian “Meramecian” Thin Beds Lansing - Kansas City Shoaling Carbonates Attic Oil Sub Unconformity Ordovician and Mississippian SAGD Cherokee Sandstones in Eastern Kansas EOR Injectors Multiple Reservoirs Fractured Reservoirs Arbuckle, Chat Low Permeability Gas Reservoirs Mississippian “Cowley Facies” Gas / Water Coning Central Kansas Reservoirs Modified from Paul Gerlach

7. Why Identify Horizontal Candidates in Mature Basins ? Exploit Remaining Oil and Gas Reserves Remaining Mobile Oil in Place/Quarter Section Welch-Bornholdt-Wherry Fields Rice County, Kansas Discovered: 1924 Producing Formation: Mississippian Trap Type: Stratigraphic Cumulative Oil Production: 60 MMBO CI: 500 MBO Color Grid Red = 7 MMBO Blue = 2.5 MMBO Modified from Paul Gerlach

8. Production Rate (STB/Mnth) STB/mnth Oppy South Field Hodgeman County, Kansas Discovered: 1962 Impact of Horizontal Well Producing Formation: Mississippian Cum. Oil Prod.: 800 MBO Why Identify Horizontal Candidates in Mature Basins ? Economic Impact 1000 Modified from Paul Gerlach

9. Large Potential Target Ness County Schaben Cumulative Production 6.6+ Billion Barrels   Numerous Targets   Mississippian   Numerous Targets   Mississippian

10. Kansas Regional Cross-Section

11. Cost Effective High Technology for the Independent Producer In the Past.... » Performed on Core Assets of Large Companies » Required Expensive Hardware and Software At the Present.... » Advances in PC-Based Hardware Software and Databases » Within Reach of Independent Producer

12. Mapping Field Level Volumetrics Remaining Mobile Oil in Place / Quarter Section Welch-Bornholdt-Wherry Fields Rice County, Kansas Discovered: 1924 Producing Formation: Mississippian Trap Type: Stratigraphic Cumulative Oil Production: 60 MMBO CI: 500 MBO Color Grid Red = 7 MMBO Blue = 2.5 MMBO Modified from Paul Gerlach

13. Welch-Bornholdt-Wherry Fields Cumulative Production per Quarter Section CI: 100 mbo / quarter section = 1.5 mmbo= 0.4 mmbo Mapping Field Level Volumetrics Cumulative Production / Quarter Section Modified from Paul Gerlach

14. Welch-Bornholdt-Wherry Fields Recovery Efficiency per Quarter Section CI: 2% = 18% = 2% Mapping Field Level Volumetrics Recovery Efficiency / Quarter Section Modified from Paul Gerlach

15. Lease Level Analysis Volumetric Recovery Efficiency

16. Horizontal Well Application in a Lease with Low Recovery Efficiency Lease Level Analysis Volumetric Recovery Efficiency

17. Large Potential Target Ness County Ness County Schaben Field

18.   Numerous Targets   Regional Level   Numerous Targets   Regional Level

19. Production Data Analysis Schaben Field High Vertical Permeability Result Poor Horizontal Sweep

21. Reservoir Heterogeneity  Strong Vertical Heterogeneity  3” Interval  Facies Controlled  Result Poor Lateral Drainage  Strong Vertical Heterogeneity  3” Interval  Facies Controlled  Result Poor Lateral Drainage

22. Depositional Model

23. Geologic Reservoir Description

24. Reservoir Facies Skeletal Wackestone - Packstone Ritchie 2 Schaben P

25. Spicule-Rich Mudstone -Wackestone Facies Ritchie 1 Moore B

26. Perforation: 4400-4404. Produced 85 bopd & 132 bwpd Super Pickett Plot Reservoir Porosity Saturation Pay Height BVW Super Pickett Plot Reservoir Porosity Saturation Pay Height BVW Petrophysical Analysis

27. NMR Analysis Core Plugs

28. Schaben Field Effective Porosity NMR Effective Porosity Core Porosity

29. Average Reservoir Pressure

30. Reservoir Simulation Reservoir Heterogeneity  Poor Lateral Drainage

31. Reservoir Simulation Performance Prediction Best Areas for Infill Drilling So > 40% & Payheight > 20 ft. Schaben Field

32. Vertical Infill vs. Horizontal InfillSchaben Field Reservoir Simulation Performance Prediction

33. 3 Vertical Infills vs. 1 Horizontal Infill Boast VHS Performance Prediction Reservoir Simulation Performance Prediction

34.   Numerous Targets   Regional Level   Numerous Targets   Regional Level

35. Ness City North Field   Numerous Targets   Local Level   Numerous Targets   Local Level

36. Reservoir Heterogeneity   Strong Horizontal Heterogeneity   10’ - 100’ Interval   Karst Controlled   Result Poor Lateral Drainage   Strong Horizontal Heterogeneity   10’ - 100’ Interval   Karst Controlled   Result Poor Lateral Drainage

37. Economic Success $?$?$? IP: 85 BOPD & 54 BWPD Daily Prod: 55 BO& 50 BW 1000’ of fluid over pump Current Daily Prod: 18 BO & 32 BW Pumped off Cum Prod: 3,417 BO (7/31/00) Plan to work over in September

38. Lessons Learned for Horizontal Well  Operational Flexibility (Maintain Your Options)  New Well vs. Reentry  Hole Size  Drilling Fluids  Case off the Curve  Well Operations  Good Planning  Communication  “The Lateral is a Piece of Cake”  Reservoir Heterogeneity

39. Reservoir Characterization Geologic Model Geologic model: log (GR, Res), core, production, DST data Maps & cross- sections of Mississippian sub-units: 5 layered reservoir model

40. Reservoir Characterization Petrophysical Model 41 core plugs from wells in study area

41. Reservoir Characterization Initial Reservoir Model Sparse porosity logs DST and IP average K HP1>HP2>LP2 >LP1& LP3 Assumption uniform K for each layer

42. Reservoir Characterization Initial Reservoir Model Identification of dominant lithofacies - core studies LP1, LP2, LP3 – Moldic Wackestone HP1 & HP2 – Moldic Packstone Layer porosity – from phi-K correlation, and dominant lithofacies

43. Reservoir Characterization S wi - Core Plugs S wi @ 150 ft above OWC

44. Reservoir Characterization S orw - Core Plugs S orw averaged in each cluster

45. Reservoir Characterization Relative Permeability Honarpour’s correlation - intermediately wet carbonates

46. Reservoir Characterization Capillary Pressure

47. Engineering Analysis DST Interpretation Pressure declined by 450 psi over a period of 17 years

48. Engineering Analysis Production History Reconstruction Limited water production data available

49. Engineering Analysis Production History Reconstruction Lease production - allocated to wells Water production approximated when data unavailable - Ummel #2

50. Engineering Analysis Reservoir Simulation - History Match

51. Reservoir Simulation Residual Potential - So-ft, 2000

52. Performance Prediction Performance Prediction - Infill

53. Original Plugged Well

55. Drill Out Cement & Set CIBP

56. Set Whipstock - Mill Casing

58. Drill Build Section

61. Drill Lateral Section

63. Set Liner

64. Final Completion

65. Rig Time & Job Costs

66. Lessons Learned for Horizontal Well  Operational Flexibility (Maintain Your Options)  New Well vs. Reentry  Hole Size  Drilling Fluids  Case off the Curve  Well Operations  Good Planning  Communication  “The Lateral is a Piece of Cake”  Horizontal Heterogeneity

67. The Learning Curve 3042 1100 271 28 0 500 1000 1500 2000 2500 3000 3500 SaskatchewanNorth DakotaMontanaKansas Total Horizontal Wells, Jan-1998 Where We Are in Kansas