1. Horizontal Wells - Applications in Mature Production Areas & A Kansas Field Demonstration by Saibal Bhattacharya Richard Pancake Paul Gerlach

2. Outline  Tools for identifying candidate applications  Production data analysis  Geologic mapping  Integration of production and geologic data  Field level volumetrics  Lease level volumetrics  Field demonstration - horizontal infill well  Reservoir characterization and Simulation  Details of well work

3. Identifying candidate applications Production data - oil cut changes  Heterogeneity  Vertical K  Compartments  Poor sweep  Residual reserves Schaben Field Ness County, Kansas

4. Identifying candidate applications Production data - IP & Cumulative data Welch-Bornholdt-Wherry Field, Rice County, Kansas Producing Formation: Mississippian

5. Identifying candidate applications Primary & Infill Production data Aldrich Field, Ness County, Kansas Discovered: 1929 Producing Formation: Mississippian Cum Prod: 1,044 MSTB 15 wells - 40 acre Primary production: 70 MSTB/well 8 Vertical Infill Wells Infill Well Original Well

6. Identifying candidate applications Primary & Infill Production data 8 Vertical Infill Wells Additional Production: 553 MSTB Approx: 70 MSTB / Infill well Excessive Spacing and Inadequate Drainage

7. Identifying candidate applications Geologic mapping - structure & derivative Fold Induced Fractures Welch-Bornholdt-Wherry Field, Rice County, Kansas

8. Identifying candidate applications Geologic mapping - structure & derivative Axis of Anticlinal Attic Hollow-Nikkel Field, Harvey County, Kansas

9. Identifying candidate applications Integrating Production & Geologic data Poor Sweep - Vertical Wells in Updip Stratigraphic Trap Welch-Bornholdt- Wherry Field Rice County, Kansas

10. Identifying candidate applications Field level volumetrics - OOIP/Qtr section Welch-Bornholdt-Wherry Fields Discovered: 1924 Producing Reservoir: Mississippian Osage Trap Type: Stratigraphic Cumulative Production: 60 MMBO Original Oil in Place per Quarter Section CI: 500 MBO / qtr. section Using data from one type well per 1/4 section = 10 MMBO = 5 MMBO

11. Identifying candidate applications Field level volumetrics - Rec. Eff/Qtr section Recovery Efficiency per Quarter Section CI: 2% = 18% Welch-Bornholdt-Wherry Fields = 2%

12. Identifying candidate applications Lease Level Volumetrics - Recovery factors Hodgeman County, Kansas Mississippian

13. Identifying candidate applications Lease Level Volumetrics - Recovery factors Horizontal Well Application in a Lease with Low Recovery Efficiency

14. Outline  Tools for identifying candidate applications  Field demonstration - horizontal infill well  Reservoir characterization & Simulation Geologic model Reservoir model Engineering analysis Reservoir simulation History match Map residual reserves Performance prediction  Details of well work

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

16. Reservoir Characterization Reservoir Model Identification of dominant lithofacies - core studies LP1, LP2, LP3 - moldic pack- wackestone HP1 & HP2 - moldic packstone Layer porosity - lower of that calculated from phi-K correlation, and the highest value measured on plugs with same dominant lithofacies

17. Reservoir Characterization - Storativity Layer LP1 Layer LP3 Layer LP2 Layer HP1 Layer HP2

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

19. Engineering Analysis Reservoir Simulation - History Match

20. Reservoir Simulation Mapping Residual Potential

21. Performance Prediction Performance Prediction - Infill

22. Outline  Tools for identifying candidate applications  Field demonstration - horizontal infill well  Reservoir characterization and simulation  Details of well work Original Plugged Wellbore Drill Out Cement Plugs & Set CIBP Set Whipstock & Mill Casing Drill Build Section Drill Lateral Section Set Liner Final Completion Coiled Tubing Workover

23. Original Plugged Well

24. Set Whipstock - Mill Casing

25. Running whipstock and starting mill Starting mill Shear bolt Whipstock

26. Drill Build Section

27. Drill Lateral Section

28. Directional Drilling Assembly Motor angle Drill bit screws here

29. Installing MWD Tool Pulpit transmits readings to surface by generating pressure pulses

30. Directional Drilling Trailer MWD computers MWD workbench

31. 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

32. Final Completion

33. Breakdown of Rig Time Approximate % of Work PerformedRig HoursTotal Drilling out cmt & setting CIBP82.023.5 Setting whipstock & milling csg84.5 24.2 Drilling build section120.0 34.4 (actual drilling time)(27.8) (8.0) Drilling lateral section52.0 14.9 (actual drilling time)(32.8) (9.4) Setting liner through the curve10.0 2.9 Total348.5100

34. Drilling & Completion Costs Intangible Drilling Costs$317,497 Intangible Completion Costs$ 32,422 Equipment$ 44,765 Total$394,684 DOE Reimbursement$116,776 Net Cost to Mull Drilling Co.$277,908

35. Initial Production IP: 85 BOPD & 54 BWPD (4/29/00) Daily Prod: 55 BO& 50 BW for 2-1/2 months (May to mid-July) with 1000’ of fluid over pump

36. Initial Production Problems July 31 st production: 18 BOPD & 32 BWPD, pumped off

37. Complete Production Loss

38. Workover Operations

39. Halliburton coiled tubing and nitrogen foam equipment

40. Weatherford 2.6” mill and mud motor Mud motor 2.6” mill

41. Testing 1-1/2” jetting nozzle

42. Workover Operations

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

44. Applying What We Learned  Horizontal Well Supported Reservoir Characterization  Mechanical Failure Made Horizontal Well Uneconomic  Application of Reservoir Characterization Resulted in Extremely Successful Workover in the Field