2. DESIGN AND IMPLEMENTATION OF A CO2 FLOOD UTILIZING ADVANCED RESERVOIR CHARACTERIZATION AND HORIZONTAL INJECTION WELLS IN A SHALLOW SHELF CARBONATE APPROACHING WATERFLOOD DEPLETION Based On DOE Report # DOE/BC/14991R36 Presented by M. K. Moshell, P.E. 12/12/02

3. Cooperative Agreement Number:DE-FC22-94BC14991 Participant Organization:Phillips Petroleum Company 4001 Penbrook Odessa, Texas 79762 (Now ConocoPhillips) Date of Report:09/01/2002 Award Date:06/03/1994 Completion Date:07/01/2001

4. Special “Thanks” to Michelle Navarette

5. Project Purpose: To economically design an optimum carbon dioxide (CO 2 ) flood for a mature waterflood nearing its economic abandonment. The original project utilized advanced reservoir characterization and CO 2 horizontal injection wells as the primary methods to redevelop the South Cowden Unit (SCU), Ector County, Texas.

6. The Unit was a mature waterflood with water cut exceeding 95%. Oil must be mobilized through the use of a miscible or near-miscible fluid to recover significant additional reserves. Also, because the unit is relatively small, it does not have the benefit of economies of scale inherent in normal larger scale projects. Thus, new and innovative methods are required to reduce investment and operating costs.

7. Two primary methods planned to accomplish improved economics were use of : 1)Reservoir characterization to design and restrict the flood to the higher quality rock in the unit, and 2)Use of horizontal injection wells to cut investment and operating costs

8. Property Details Low permeability San Andres reservoir, 4,600’ At Eastern edge of San Andres productive trend on Central Basin Platform ~ 2200 Acres in Unit, ~500 Acres CO2 Flood area 20 Acres /wellbore on edges 10 Acres/wellbore in thicker pay area of Unit Slow waterflood processing rate Economic limit and abandonment was predicted for 1999

17. Early Results The first two lateral CO2 injectors were drilled in the thickest portion of the reservoir Oil production response to that injection was less than predicted Laterals were drilled from existing producers Additional injectors were drilled as vertical wells

19. Challenges – Phase 2 Inject CO2 at higher rates to improve flood economics Keep CO2 injection within the target reservoir layers Increase total production rate without fracturing out of zone

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35. Oil Recovery Summary MMSTBO% OOIP PROJECT AREA Estimated Original Oil in Place, Project Area86.5 Most Likely Estimated Ultimate Tertiary recovery3.74.3 UNIT Estimated Original Oil in Place, Unit*117100 Estimated ultimate oil recovery, Primary + Secondary**35.8 30.6 Cumulative recovery to 6/30/0236.331.0 Cumulative Tertiary recovery to 6/30/020.60.5 Est. Ultimate Primary + Secondary + Tertiary39.533.8 Most Likely Estimated Ultimate Tertiary recovery3.73.2 High Side Estimated Ultimate Tertiary recovery4.53.8

36. 12/11/02 Update Current Production 680 BOPD 2,800 MCFD 5,500 BWPD Oil production has been rising steadily since April 2002 (April 2002 = 600 BOPD)

37. Conclusions Reservoir characterization partially successful Simulation provided a forecast which was too optimistic on total liquid production and BOPD Ultimate Tertiary Oil recovery ~ 40% of predicted Liquid production rate still too low

38. Conclusions Oil response good where CO2 Injection rate is maintained at target injection rates Overall oil response is poor due to inability to maintain CO2 injection rate in-zone in most injectors Water injection for gas mobility control in the future will slow flood even more