1. 2012 AAPL ANNUAL MEETING SPONSORS PLATINUM GOLD SILVER SAN FRANCISCO SEMINAR GOLF A wholly owned subsidiary of ExxonMobil BRONZE

2. 58 th Annual Meeting - San Francisco June 13-16, 2012 Downhole Drilling Problems: Drilling Mysteries Revealed! Kelli Fereday, BP AAPL - Copyright © 2012. All Rights Reserved.

3. Todays Goal Drillers have a term for downhole problems that can not be diagnoosed or understood: The objective of this session is to turn these mysteries into understandable and solvable opportunities for improvement AAPL - Copyright © 2012. All Rights Reserved.

4. Downhole Drilling Problems Industry Prevalence Types of Drilling Trouble Time Impact on Well Safety, Time, and Cost Causes and Diagnosis of Drilling Problems Examples and Remedies for Common Problems –Downhole Failures –Stuck Pipe –Lost Circulation –Wellbore Stability –Well Control –Q&A AAPL - Copyright © 2012. All Rights Reserved.

5. Typical Drilling Time Breakdown Making Hole! Inefficient Drilling Problems

6. Impact on the Industry Biggest Impact - HSE –Many drilling problems are also associated with increased risk to personnel Example: Stuck Pipe May Require Jarring which can lead to dropped objects Example: Lost Circulation may lead to Lost of Well Control, resulting in potential Damage to the Environment, Fire and/or Harm to Personnel

7. Impact on the Industry Efficiency –Estimates are as much as 10-40% (25% on average) of drilling time is non-productive time! –US Rig Count ~1980 rigs, projected need by 2017 is 2500, or approximately a 25% increase –Imagine being able to close that gap through improvements in drilling performance alone. –US E&P Budget is about $170BB annually - > $$$ Baker Hughes Rig Count www.bakerhughes.com

8. How do we diagnose NPT? Drilling Reports –Rig Morning Reports –Mud Reports –Cuttings Analysis Downhole and Surface Measurements Benchmarking

9. Sources of NPT – Deepwater Industry Example Downhole Problems Equipment Problems

10. Top Sources of Downhole Problems 1.Downhole Equipment Failures 2.Downhole Cement Problems 3.Stuck Pipe 4.Lost Circulation 5.Wellbore Stability 6.Well Control Likely Related to Geology

11. Downhole Equipment Failures A single equipment failure can –Compromise the integrity of the well –Cost Millions of Dollars to Repair Common Equipment Failures –Casing –Drillpipe –Downhole Motors –Downhole Measurement Tools MWD LWD Vector Motors www.nov.com

12. Downhole Cement Problems Cement Left in Pipe –Premature Setting –Surface Equipment Pump Failures Cement Not Setting Properly –Cement never sets – Bad Shoe or No Shoe Test –Cement allows for gas migration –Cement seeps away into faults or fractures – Partial or Total Losses Picture from Halliburton website: generic example of a cemented wellbore

13. Stuck Pipe 1.Differential Sticking –Pressure-related –The pipe is sucked up against the formation due to a difference in pressure 2.Mechanical Sticking –A mechanical obstruction –Could be from the formation, wellbore geometry, or tool failure

14. Differential Sticking – A Pressure Problem

15. Mechanical Sticking – Dirty Wellbore Too many solids in the wellbore! – Indications: higher pump pressure fill on bottom more pull required to move pipe excessive cuttings on shakers restricted circulation Why? –Unconsolidated Formations –Poor Hole Cleaning Prevention – maximise flow rates and rpm –Better mud properties –drill more slowly Formations Fall in on the pipe!

16. Mechanical Sticking – Obstructions Obstructions –Indications: more pull required to move pipe can still circulate Increased torque Unable to make hole Why? –Junk in the Wellbore –Hole Geometry Prevention – equipment QA/QC –housekeeping –correct drillstring/BHA design Tool Failures or Junk in Hole Doglegs or Underguage Hole

17. Stuck Pipe – How do we get free? Pull Harder (but dont break it) Jar on Pipe Cut Pipe and Fish Increase or decrease circulation Pump other types of fluids or chemicals

18. Lost Circulation Conventional drilling utilizes continuous fluid flow down the drillpipe to: –Remove cuttings –Maintain pressure –Cool the bit Key indicator in understanding what is happening downhole Circulation must be maintained at all times If the circulation is interrupted because fluid is flowing into the formation, that is called Lost Circulation

19. Lost Circulation - Causes Induced Natural

20. Lost Circulation - Solutions Prevention LCM

21. Wellbore Stability An unstable wellbore can result in: –Stuck Pipe –Lost Circulation –Loss of the entire wellbore 2 Main causes are: –Chemical Instability Reactive Formations –Mechanical failure of wellbore Faults Insufficient Mud Weight

22. Well Control Well Control means the ability to keep the hydrocarbons where they belong at all times – in the ground. Common terms –Taking a Kick –Blowout Most dangerous downhole problem

23. Well Control What causes loss of well control? –Multiple Barrier Failures Equipment Failures Loss of fluid pressure in the pipe counteracting the natural pressure existing in the formation Industry Methods dealing with Well Control –Wellbore Monitoring –Well Kill Methods - how to safely remove hydrocarbons from the wellbore Circulating Methods Non-circulating Methods MudBOP Pressure

24. Industry Challenges The Great Crew Change Well Complexity Pete Stark, VP of industry relations for IHS

25. Technology Game-Changers Rig Automation Advanced Downhole Tools Real-time montioring Managed Pressure Drilling Simulators for Training www.weatherford.com

26. Q&A