1. Interstate Oil and Gas Commission May 21-23, 2006 Billings, MT Jim Barnes NETL Project Manager U.S. DOE Marginal Expense Oil Well Wireless Surveillance (MEOWS)

2. J. Barnes – April 2006 Technology Development with Independents Program  Program Goals:  Find solutions for production problems experienced by small independents  Provide support for untried or unfamiliar technologies  Slow well abandonment rate to preserve industry infrastructure  Use field demonstrations to broaden information exchange and applications  Program Benefits:  Maintain current domestic production levels  Curtail premature loss of domestic production due to fluctuating economic conditions  Increase ultimate recovery in known fields using advanced technologies

3. J. Barnes – April 2006 Estimated Independent Operators in Various PTTC Regions

4. J. Barnes – April 2006 Our Economy Runs On Oil Total U.S. Energy Consumption is 100.4 Quadrillion Btu (2004). Oil is the largest source of U.S. energy (41%). Transportation Needs Total U.S. Energy Consumption

5. J. Barnes – April 2006 Domestic Reserves  IOGCC 2005 Marginal Oil and Marginal Gas Report  397,000 marginal wells in US  Marginal wells produce 311 million barrels of oil per year (<10 bopd per well average)  Marginal wells are candidates for improved well monitoring  Reduction of well downtime through more effective monitoring could improve production by 5% to 10%

6. J. Barnes – April 2006 Develop a Wireless Marginal Expense Oil Well Surveillance (MEOWS) System Operator: Vaquero Energy/The Hunter Living Trust Santa Barbara, California Project Location: Edison Field, Kern County, California Background:  The field’s 225 marginal wells all operate on time clocks and produce into common flow lines  Cost effective well production and efficiency monitoring is difficult to accomplish  Frequent manual inspection of systems at each well site is uneconomic  Individual well test units or gathering system production manifolds are cost prohibitive  Conventional remote well monitoring systems are expensive

7. J. Barnes – April 2006 Operator and Contractor  Vaquero Energy (formerly Hunter Living Trust)  Donald G. Nelson - P.O. Box 308, Edison, CA 93220 (661)363-7240  Field test - Edison Field, Kern County CA  Petrolects, LLC  Dr. Mason M. Medizade – 128 Twin Ridge Drive San Luis Obispo, CA 93405 (805)543-1010  Dr. John R. Ridgely

8. J. Barnes – April 2006 Phase I Vibration Sensing  Reduced electrical costs  Increased oil production  Reduce surveillance costs  Sensor units installed on four wells

9. J. Barnes – April 2006 MEOWS Components  Involved proprietary flow sensor  Programmable transmitting unit  Base Receiver  Receiving antenna  Base station computer  Interpretative software

10. J. Barnes – April 2006 Phase I Successes  Field testing demonstrated that acceleration sensors were able to detect well performance anomalies  Low power spread-spectrum radio transmitters from the sensors were successful, sending signals over one-half mile from the well site to a computer  Modifications, testing and up-grading was continued in Phase II

11. J. Barnes – April 2006 Phase I Benefits  Monitoring pumping unit vibrations allowed deviations from the desirable pump off condition to be identified early and corrected  production was restored in timely fashion  power waste was reduced  equipment damage was reduced

12. J. Barnes – April 2006 MEOWS  Goals  Monitor system performance and production  Real time data from rod- pumped wells  Improve efficiency  Prevent marginal wells from being shut-in

13. J. Barnes – April 2006 Phase II  Evaluation of sensor placement  Evaluate use of solar cell to eliminate batteries  Extended use radio transmitters  Developed low cost radio receiver connected to “smart” computer  Develop Well Performance Surveillance Unit (WPSU)  Real-time functionality  High reliability, low maintenance  Low cost to manufacture and install

14. J. Barnes – April 2006 Microcontroller and Radio Modem Circuits

15. J. Barnes – April 2006 Field Test of Well Performance Surveillance Unit (WPSU)

16. J. Barnes – April 2006 Base Station Antenna and Radio Modem

17. J. Barnes – April 2006 Phase II Benefits  Increased oil production  Reduced well servicing costs  Reduced electricity costs  Reduced well testing costs  Reduced manual surveillance costs  Low cost – less than $1,000 per unit

18. J. Barnes – April 2006 Conclusions  A low cost, real time wireless surveillance system has been successfully designed and field tested  The heart of the unit is the proprietary flow sensor. Self- contained Well Performance Surveillance Unit (WPSU)  Hardware systems were designed and tested  Software was designed to convert signals for flow sensor  High frequency radio systems were designed  Three surveillance units were installed in the Edison field

19. J. Barnes – April 2006 Radio Transmitter and Water Meter  Vaquero developed wireless water meter  Low gas-liquid-ratio wells have more accurate results  Meters tested have pressure limits of 150 psi  Meters are not designed for cyclic steam application  Meters worked in field tests under normal oilfield conditions

20. J. Barnes – April 2006 First Highly Efficient Hybrid CT Rig Built and Operating on U.S. Soil

21. J. Barnes – April 2006 Microhole Program’s Goal Greater Domestic Oil Resource Recovery  407 billion barrels not economically recoverable with current technology  218 billion barrels from shallow development alone  Conservative recovery estimate = 10 years of OPEC imports offset

22. J. Barnes – April 2006 Future MHT Applications? Enabling Extended-Reach Drilling and Environmental Access via Pad Drilling

23. J. Barnes – April 2006 Enabling Extended Reach Drilling and Environmental Access via Pad Drilling www.netl.doe.gov