1. Honeywell Proprietary Honeywell.com  1 Document control number Applying Automation Technology to Shale Gas Production Jerry Stanek Sanjay Sharma Jeff Renfro Ravi Nath Honeywell International World Shale Gas Conference Nov. 7 – 11, 2011 Houston, TX

2. Honeywell Proprietary Honeywell.com  2 Document control number Gas Plant Advanced Process Control (APC) Gas Plant APC - introduction ShaleFieldShaleField Gas Plant C1 product C2+ product Objective: Max. Profit Ethane recovery or ethane rejection? Setpoints for the Manipulated Variables?

3. Honeywell Proprietary Honeywell.com  3 Document control number Gas Plant APC Gas Plant APC - Introduction ? ? ? ?

4. Honeywell Proprietary Honeywell.com  4 Document control number Gas Plant APC Gas Plant APC - Technology MPC Model Predictive Controller (MPC): Model based control MIMO dynamic model Honeywell Profit Controller minimum move solution linear & quadratic optimization patented algorithm

5. Honeywell Proprietary Honeywell.com  5 Document control number Benefits to Gas Processing Improve NGL Recovery from 2% to 3% Increase throughput from 3% to 5% Reduction in off-spec events Improved operational flexibility and consistency Reduced utility consumption up to 10% Proven track record Gas Plant APC - Benefits

6. Honeywell Proprietary Honeywell.com  6 Document control number Shale gas Ultimate Recovery Optimization (SURO) SURO – Introduction Shale field Well Choke Separator ? ? ? Objective: Max. shale gas ultimate recovery Setpoint for wellhead chokes? Gas Condensate Water

7. Honeywell Proprietary Honeywell.com  7 Document control number Shale Production Example (Petrohawk, Haynesville) Lessons Learned From the First Two Years in the Haynesville and Eagle Ford, Petrohawk Energy Corporation, paper presented at the Oilfield Breakfast Forum, Galveston, Texas, (Dec. 2010). SURO – Introduction

8. Honeywell Proprietary Honeywell.com  8 Document control number SURO Example Benefit Estimate Increased recovery = 7.3 – 5.7 = 1.6 Bcfe Average expected NG price = 2 – 3 $/mcf Conservative estimate: Using lower energy value No credit for condensate = 1.6 Bcf * 2 $/mcf > 3 million $/well SURO – benefits

9. Honeywell Proprietary Honeywell.com  9 Document control number Shale gas Ultimate Recovery Optimization (SURO) SURO – trade offs Objective: Max. ultimate recovery (UR) in prescribed time horizon. Choke setting – large higher initial production lower UR Lower profit Choke setting – small lower production higher UR Lower profit Choke setting – optimum Optimized production Maximum profit But, optimal choke setting is not static, it is dynamic …

10. Honeywell Proprietary Honeywell.com  10 Document control number Shale gas Ultimate Recovery Optimization (SURO) SURO - model Honeywell solution 1 : Long Range, multi period optimizer. Objective: MAX t f Profit = ∫ 1/(1+r) t. Prod t. Cgas t dt 0 whereCgas t shale gas credit Prod t production Profittotal discounted gross margin rthe discount rate t f is the optimization horizon 1 Patent Pending

11. Honeywell Proprietary Honeywell.com  11 Document control number Shale gas Ultimate Recovery Optimization (SURO) SURO - model Model highlights; Reservoir model − comprises gas and adsorbed phases − built-in fundamental engineering model − can use external production models Mass transfer from adsorbed phase to gas phase Pressure dependent permeability Fluid flow − sonic and subsonic

12. Honeywell Proprietary Honeywell.com  12 Document control number Shale gas Ultimate Recovery Optimization (SURO) SURO – example

13. Honeywell Proprietary Honeywell.com  13 Document control number Shale Gas Supply Network Optimization Gas Plant Well Pad Sales point Shale Gas Supply Network

14. Honeywell Proprietary Honeywell.com  14 Document control number Shale Gas Supply Network Optimization Network comprises: Multiple well pads –Each pad with multiple wells and separators Pipe network connecting gas product from each pad to a gas plant One or more gas plants Pipe network connecting C1 product from each gas plant to a Sales point –May have compressor(s) One or more Sales points –Each sales point with custody transfer meter for sales accounting Shale Gas Supply Network - components

15. Honeywell Proprietary Honeywell.com  15 Document control number Shale Gas Supply Network Optimization Network economics: Gas sales contracts –Fixed rate –Take or pay –Two tier pricing, volume discount, penalty for excess draw –Multi tier pricing Condensate pricing Production costs variations –Gas lift requirements –Utility consumption –Water disposal costs Shale Gas Supply Network - Economics

16. Honeywell Proprietary Honeywell.com  16 Document control number Shale Gas Supply Network Optimization Objective: Max. Gross Margin over the optimization horizon Inputs –Demand forecast from each buyer –Production forecast from each well pad –Major equipment maintenance plans Outputs –Gas network routing –Production plan for each gas plant –Infeasibility forecast, if any –Incremental “supply opportunity” forecast –Shadow prices Shale Gas Supply Network - Optimization

17. Honeywell Proprietary Honeywell.com  17 Document control number Shale Gas Supply Network Optimization Network Optimization model in RPMS –LP / MILP based –Multi-period, multi-plant capable –Model library –Can integrate with external simulators –Interactive –Asset changes/investment evaluations –Long experience base & implementation record Shale Gas Supply Network Optimization using RPMS

18. Honeywell Proprietary Honeywell.com  18 Document control number Conclusions Automation technology can enhance safety, reliability and profitability of Shale Gas production. Examples include; APC for gas plant control & optimization –2 to 3 % throughput increase, 10% energy reduction, NGL recovery optimization SURO for shale gas ultimate recovery maximization –30+ % increase in ultimate recovery RPMS for shale gas supply network optimization –5+ % margin gain by network debottlenecking and business optimization

19. Honeywell Proprietary Honeywell.com  19 Document control number Q / A