Directional Surveys and Associated Issues Keith May Technical Permitting Engineering Unit

Presentation Overview Introduction Survey Requirements Submission Procedures Engineering Review Special Field Rules/SWR 86 changes

Directional Drilling Advancements in drilling technology give drillers incredible control and precision Bolstered by Shale plays, and frack technology

Directional Drilling Measurement while drilling or MWD tools allow driller to “steer” the drill bit Positional data transmitted up the wellbore Gives us X, Y, and Z coordinates

Where does the RRC come in? RRC requires survey and inclination data be reported. Insures lease line and wellbore spacing rules are followed Protection of oil and gas reservoirs

Applicable Rules SWR 11 SWR 12 Rule 86 Outlines requirements for surveys SWR 12 Requirements for Survey certification Rule 86 Horizontal wells

Where can I find the Rules?

Where can I find the Rules?

Where can I find the Rules?

Where can I find the Rules?

Presentation Overview Introduction Survey Requirements Submission Procedures Engineering Review Special Field Rules/SWR 86 changes

Relevant Rule: SWR 3.11 Statewide Rule(SWR) 11 outlines requirements for surveys The purpose is to accurately depict wellbore’s location in 3-D space Different wellbore profiles require different survey types

Survey Types Inclination Surveys Directional Surveys Inclination and offset data only No coordinates or directional data Directional Surveys Provide coordinate data (X, Y, and Z) Give most accurate picture of wellbore path

Inclination Surveys Required for any well drilled/deepened with rotary tools Data point requirements: First data point less than 500’ deep Data points need to be less than 1000’ apart Last point within 1000’ of Total depth (TD) There are some exceptions provided by the rule. For example: Inclination surveys are not required for wells that are less than <2000’ deep provided the well is located at least 150’ from nearest lease line and the well is not intentionally deviated from the vertical. The well is deepened no more than 300’ or the distance from the well location to the nearest lease line, whichever is lesser, again, provided the well was not intentionally deviated from the vertical at any time. Also, inclination surveys are not required for wells that are completed as dry holes and permanently PA’d . However if the well is reentered at a latter date and completed as a producer or injector, the inclination survey will be required.

Form W-12

Inclination Surveys Submitted on Form W-12 by operator Performed by drilling company Certified by both The questions on Form give the operator and Commission a indication of whether or not the well may be in compliance. Item 18 is the data summary or “accumulative total displacement at the total depth of the well”. The number in 18 is compared to the numbers in items nos. 20 and/or 21 which are “distance from the well location to the nearest lease line”, and “the minimum distance to lease line prescribed by field rules” If the number in 18 is greater than the number in 20 or 21, that is an indication that the well may or may not be in compliance because the bottom hole location is too close to, or crossing, the lease line. But being the inclination survey provides the accumulative displacement, which is usually greater than the true, and it doesn’t provide direction, a more accurate direction survey will be required to know for sure.

Form W-12 Accumulative displacement is given without a compass direction, must not exceed distance to nearest lease line.

Ideal Vertical Well 150’ 300’

Actual Vertical Well 45’ 85’ 25’ 300’ Cumulative Total Displacement: 150’ 300’ 45’ 85’ 25’ Cumulative Total Displacement: 45’+85’+25’=155’ 155’ Cumulative total displacement is greater than the nearest lease line by 5’. Will require a directional survey to be run, since we have to assume the displacement was in the least favorable position.

Directional Surveys Required for any intentionally-deviated well Data points less than 200’ apart Also required if W-12 shows possibility of crossing lease line

Horizontal Well W-12 acceptable through surface casing Gyro or MWD required for rest of well

Directional Well Gyro or MWD required through entirety S-Curve is a special case, requires permission

Survey Common Mistakes WRONG SURVEYS for wellbore profile Surveys missing completely Surveys lacking certification Surveys don’t tie-in Surveys attached for wrong well Solution Survey Company must correct and Resubmit

Certification Requirements Survey Company Name Name and title of individual performing survey Date survey was performed Type of survey conducted Complete well identification Depths surveyed Drilling permit plat with bottom hole location

Example Certification I, name, an authorized employee of THE SURVEY COMPANY, have verified the GYRO/MWD survey performed on 04/01/2013 to 04/02/2013, from 200’ to 15000’. The data are true, correct, complete and within the limitations of the tool. This survey was conducted at the request of OPERATOR for LEASE WELL# (API#) drilled in TRAVIS COUNTY, Texas.

Certification Common Mistakes Uploading cover letter instead Double-certifying another company’s interval Certification completely missing Solution: Survey company must correct and resubmit

Presentation Overview Introduction Survey Requirements Submission Procedures Engineering Review Special Field Rules/SWR 86 changes

Submission Procedures Submission of directional surveys done by survey company Survey Companies: Must appear on list of approved survey companies Must have active P-5 Must upload certification letter as separate file

Submission Procedures Surveys may be submitted hardcopy through the mail or through RRC Online System Hard copy submittals may take up to 2 weeks Online submittals are immediately available for review

Submission Procedures

Submission Procedures

Submission Procedures

Submission Procedures

Presentation Overview Introduction Survey Requirements Submission Procedures Engineering Review Special Field Rules/SWR 86 changes

Reviewed Items Survey Completeness Spacing Entirety of wellbore covered Tie-ins line up correctly* Certification statements Spacing Lease line spacing* Between well spacing* Permitted Location* NPZ’s

Reviewed Items Well Construction Wellbore Profile Abandoned wellbore* Required plugs and cementing* Off-lease Penetration points

Survey Completeness: Tie-Ins RRC accepts combination of surveys that represent complete picture of wellbore Surveys must tie in at given depths, with identical coordinates

Survey Completeness: Tie-Ins Last shot point of the shallow survey must match the first shot of the next survey MD: 6296’ N/S: 24.56’ E/W: 14.42’

Survey Completeness: Tie-Ins Compare to proceeding survey Last shot point MD: 6296’ N/S: 24.56’ E/W: 14.42’ Exactly the same, therefore proper tie-ins

Spacing Considerations SHL

Lease line Spacing All points of well must satisfy spacing rule SHL

Between Well Spacing Vertical as well as horizontal SHL

Permitted location Submitted surveys used to plot the well location Compared against the As-drilled plat Surface hole location must be within 10’ of permitted location

Wellbore Construction Occasionally surveys indicate abandoned sections of wellbore which may require plugs Crucial to communicate to the D.O. intentions to abandon portions of wellbore in advance

Wellbore Construction FTP PP LTP BHL

Wellbore Construction Situation when a plug would not be required Penetration point above the Kickoff Point (KOP) PP FTP LTP BHL KOP

Wellbore Construction Situation when a plug would be required Penetration point below the Kickoff Point (KOP) PP FTP LTP BHL KOP

Plugging Requirements Goal is to isolate and protect usable water and productions formations from migration Minimum plug dimensions 100’ think, centered on penetration point Additional 10’ per 1000’ TVD

W-15 Plug Plugging record on page 2 of the W-15 Used to calculate plug thickness

Wellbore Construction Appropriate plug? KOP Plug

SWR 14 Violation Contact District Office: Acknowledge/advise of SWR 14 violation Explain circumstances of violation Make a case for adequate isolation Formally request an exception to the rule Forward District Office response to Engineering Letter from operator to District may not resolve issue Repeat violations may result in recommendation for administrative penalty action Here’s a list of information the District might want when an exception is requested. Notification and requests should be timely. It hard to do anything with an abandoned section of wellbore after the well is completed. So you want contact the District ASAP whether you plan to plug or request an exception.

SWR 14 Violation Contact District Office Acknowledge and notify D.O. Explain circumstances of violation Make a case for adequate isolation Formally request exception Forward D.O. response to Engineering Repeat violations may result in recommendation for Administrative penalty action

SWR 14 Exceptions 10 9 8A 7B 5 6 7C 8 3 1 2 4 Oil and Gas Division District Offices: Abilene Corpus Christi Houston Kilgore Midland Pampa San Angelo San Antonio Wichita Falls 9 8A 7B 5 6 7C 8 3 1 2 4

Contacting the District Office

Contacting the District Office

Contacting the District Office

Engineering Review Online Messages Attached if an issue arises Dispatched at end of day No notification is sent when operators respond

Presentation Overview Introduction Survey Requirements Submission Procedures Engineering Review Special Field Rules/SWR 86 changes

Special Field Rules Custom created rules approved by the Commission for various fields Due to wide array of geologies, industry need and other factors, “one size doesn’t fit all”

Where to find Special Field Rules

Where to find Special Field Rules Shows key information, and link to Docket

Statewide Rule 86 SWR 86 outlines requirements for horizontal drainhole wells ADP requires for all horizontal wells Off-lease PP (if permitted) Box rule Take point provision

Spacing Requirements (SWR 86) 1200’ between well spacing 467’ from take points to lease line FTP 467’ LTP SHL BHL

Off-Lease Penetration Points Enables operators to have SHL and penetration points off lease Must be permitted as such Involves notice to offset operators SHL/PP FTP LTP BHL 467’

Box/Rectangle Rule Box is created around FTP and LTP, width 50ft or 10% of spacing rule, whichever is greater If wellbore stays within the box, no SWR 37 issues 50’ FTP LTP

Heel and Toe Provisions Reduces spacing requirements of take points parallel to the drainhole Not added to SWR 86, only a special field rule FTP 467’ 200’ LTP SHL

Common Online Messages

In Summation Know your required surveys Certify and submit accordingly Remarks are helpful Special Field Rules are your friend Notify the D.O. for any plugging/abandoned sections of wellbore

Contact Information

How is Max Acreage Calculated? Engineering Unit calculates max possible acreage for drainholes Standard calculation is based on the attached graphic

An Example Well in Eagleville (Eagle Ford-1) field with an 7000’ lateral. Eagleville (Eagle Ford-1) is 80 acres per unit Therefore we use bottom table. Each 827 ft increment equals 40 acres 40 7000’ Lateral

Example Continues Divide the drainhole length by 827 7000 827 =8.46 Round up to 9 additional increments Additional acreage=9x40 acres Therefore total acreage=9x40+80 Max acreage=440 acres