Unconventional Rod Nelson Schlumberger IPAA 75 th Annual Meeting Oct 28, 2004

2 IPAA 75 th Annual Meeting What is Conventional? Finding and producing oil and gas at “great” depths? Producing hydrocarbons safely in “deep” water? Drilling extended reach horizontal wells? Purposely producing coal bed methane? Isn’t it only Unconventional until we understand things better?

3 IPAA 75 th Annual Meeting Unconventional Thinking Creating an unconventional team to look at an old problem Work on the right wells Understanding the reservoir at a whole new level Finding novel ways or smarter places to apply new or existing technology

4 IPAA 75 th Annual Meeting Can we Apply Better Engineering to Work on the Right Wells?

5 IPAA 75 th Annual Meeting Historical Development Plot Shows When Wells Were Drilled and Quality of Wells

6 IPAA 75 th Annual Meeting Historical Re-Work Wells Identified

7 IPAA 75 th Annual Meeting Quickly Highlight Better and Poorer Parts of the Study Area Best year Mcf/month Dry Holes

8 IPAA 75 th Annual Meeting Depletion Indicator Map New wells worse than old wells New wells better than old wells

9 IPAA 75 th Annual Meeting Re-Frac Candidate Identification— a Better Workflow Post fracture pressure-history match provides an estimate of fracture geometry Transient production analysis provides an estimate of frac geometry and permeability Production simulator confirms transient analysis and estimates re-frac potential Re-Frac Fracture treatment designed to achieve production improvement

10 IPAA 75 th Annual Meeting Understanding Tight Reservoirs— at a New Level Can we get pressure measurements where we could not before? Can we reduce the risk of tool sticking and minimize operating time? Can we avoid fracturing depleted zones and maximize the production and value of the treatment dollars?

11 IPAA 75 th Annual Meeting We Can and in One Run in The Hole The PressureXpress service – is combinable with almost all Schlumberger openhole services – measures reservoir pressure and fluid mobilities, even those as low as 0.01 mD/cp. The PressureXpress Advisor* grades zones according to their suitability for testing using Platform Express log data. PressureXpress Advisor

12 IPAA 75 th Annual Meeting PressureXpress in Tight Gas Tight gas reservoir, South Texas PressureXpress was combined with the Platform Express and CMR-Plus* logging tools to identify depleted zones 8 successful pressure tests out of 8 attempted Mobilities ranging from 0.01–2.85 mD/cp 46 seconds “Significant savings in rig and testing times … excellent tool for high-density drilling areas. I can get pressures from low-perm gas (zones) that I would never have attempted before.”

13 IPAA 75 th Annual Meeting PressureXpress Optimizes Completion Depleted reservoir with high overbalance Well penetrated 10 producing zones 56 successful pressure tests out of 58 attempted Mobilities ranging from 0.01–14.5 mD/cp PressureXpress and Platform Express data used as input for PowerSTIM* fracturing design Fracture stimulation optimized to 4 stages Production increased 50% compared to similar wells in which pressure data was not obtained Depleted Zones Normal pressure gradient “We saved over $400,000 on the completion of this well.”

14 IPAA 75 th Annual Meeting Better frac jobs thru RT monitoring Better Application of New and Existing Technology to Improve Efficiency What is microseismicity? – Pressure/stress changes induce fracturing, resulting in microseismic signals. How is it recorded? – Passive monitoring with wireline geophone array detects low-level induced micro earthquakes. What information is produced? – Database of location, sequence, size and mechanism of the fracturing. Applications – Visual-stage by stage fracture geometry – Calibrated fracture design models – Enhanced well performance – Improved NPV, ROI, F&D via optimized reservoir planning/development

15 IPAA 75 th Annual Meeting MicroSeismic Mapping Example

16 IPAA 75 th Annual Meeting StimMap and PowerStim 27% 40% 25%

17 IPAA 75 th Annual Meeting B C D A Cumulative Production A D B C Fracture Geometry vs Reservoir Performance

18 IPAA 75 th Annual Meeting The “Unconventional” prize is large…500+TCF SAH TGS Shale CBM

19 IPAA 75 th Annual Meeting Unconventional Thinking—Conclusions The US has a vast resource base still to be developed – Recovery rates even in gas reservoirs are too low Keys include – Working on the right wells – Understanding the reservoir at a whole new level – Finding novel ways or smarter places to apply new or existing technology There is a role for the service companies to develop and deploy cost effective, innovative solutions to unconventional problems