1. 16/April/2007© Donovan Brothers Inc. Automated Mudlogging Systems SM Slide 1 of 46 MUDLOGGING UNCONVENTIONAL GAS RESERVOIRS Bill Donovan, PE Donovan Brothers Incorporated Automated Mudlogging Systems Our Corporate Motto “WE DON’T PASS GAS”

2. 16/April/2007© Donovan Brothers Inc. Automated Mudlogging Systems SM Slide 2 of 46 Mudlogging Unconventional Gas Reservoirs Field study results Definitions and theory Resource comparison Mudlogging gas content Factors influencing mudlogging Calibrating the system OVERVIEW

3. 16/April/2007© Donovan Brothers Inc. Automated Mudlogging Systems SM Slide 3 of 46 Common form of volumetric gas in place for shale and coal G = gas in place (MCF) A = drainage area (acres) H = thickness (feet) ρ b = bulk density (gm/cc) GC = gas content (scf/ton) Mudlogging Unconventional Gas Reservoirs Field Study Results

4. 16/April/2007© Donovan Brothers Inc. Automated Mudlogging Systems SM Slide 4 of 46 Mudlogging Unconventional Gas Reservoirs Field Study Results Back calculated gas content is based on cumulative production and/or estimated ultimate recovery (EUR) G is cumulative production or EUR A is the spacing unit H and ρ b are from logs

5. 16/April/2007© Donovan Brothers Inc. Automated Mudlogging Systems SM Slide 5 of 46 Mudlogging Unconventional Gas Reservoirs Field Study Results 55 wells with Mudlog GC (green)

6. 16/April/2007© Donovan Brothers Inc. Automated Mudlogging Systems SM Slide 6 of 46 Mudlogging Unconventional Gas Reservoirs Field Study Results 55 wells with Mudlog GC (green) Cumulative Production GC (blue)

7. 16/April/2007© Donovan Brothers Inc. Automated Mudlogging Systems SM Slide 7 of 46 Mudlogging Unconventional Gas Reservoirs Field Study Results 55 wells with Mudlog GC (green) Cumulative Production GC (blue) Estimated Ultimate Recovery GC (red)

8. 16/April/2007© Donovan Brothers Inc. Automated Mudlogging Systems SM Slide 8 of 46 Mudlogging Unconventional Gas Reservoirs Field Study Results 55 wells with Mudlog GC (green) Cumulative Production GC (blue) Estimated Ultimate Recovery GC (red) Isotherm Estimated GC (purple)

9. 16/April/2007© Donovan Brothers Inc. Automated Mudlogging Systems SM Slide 9 of 46 Mudlogging Unconventional Gas Reservoirs Define mudlogging Define mudlogging gas measurements Percent Equivalent Methane in Air (% EMA) and “Units EMA” Explain why mudlogging is effective Compare resources for different reservoirs Definitions and Theory

10. 16/April/2007© Donovan Brothers Inc. Automated Mudlogging Systems SM Slide 10 of 46 Mudlogging Unconventional Gas Reservoirs EQUIVALENT METHANE IN AIR (% EMA) is a measure of methane in air at the measurement point (the mudlogging unit) expressed as a percent of methane in the air sample or expressed differently as10,000 parts per million methane by volume Calibrated and measured at the mudlogging unit, the whole system is not calibrated Although related to mudlogging gas content, % EMA is not a measure of gas in the formation Other hydrocarbon gases are presented as methane Typically 100 “Units EMA” equals 1% EMA Definitions and Theory

11. 16/April/2007© Donovan Brothers Inc. Automated Mudlogging Systems SM Slide 11 of 46 Definitions and Theory Mudlogging Unconventional Gas Reservoirs MUDLOGGING IS EFFECTIVE BECAUSE: Gas is measured at the surface under STP Gas is insoluble in water and drilling mud Gas expands as it travels to the surface Mudlogging is independent of theories and models

12. 16/April/2007© Donovan Brothers Inc. Automated Mudlogging Systems SM Slide 12 of 46 MUDLOGGING IS EFFECTIVE BECAUSE: Gas is measured at the surface under STP Gas is insoluble in water and drilling mud Gas expands as it travels to the surface Mudlogging is independent of theories and models Mudlogging Unconventional Gas Reservoirs Definitions and Theory

13. 16/April/2007© Donovan Brothers Inc. Automated Mudlogging Systems SM Slide 13 of 46 Mudlogging Unconventional Gas Reservoirs MUDLOGGING IS EFFECTIVE BECAUSE: Gas is measured at the surface at STP Gas is insoluble in water and drilling mud Gas expands as it travels to the surface Mudlogging is independent of theories and models Definitions and Theory

14. 16/April/2007© Donovan Brothers Inc. Automated Mudlogging Systems SM Slide 14 of 46 Mudlogging Unconventional Gas Reservoirs MUDLOGGING IS EFFECTIVE BECAUSE: Gas is measured at the surface at STP Gas is insoluble in water and drilling mud Gas expands as it travels to the surface Mudlogging is independent of theories and models Definitions and Theory

15. 16/April/2007© Donovan Brothers Inc. Automated Mudlogging Systems SM Slide 15 of 46 Mudlogging Unconventional Gas Reservoirs The next five slide present the amount of gas liberated and brought to the surface for coal, shale, oil and gas reservoirs. The red and blue colored bars to the left show gas (red) and water (blue) values relative to the reservoirs. All slides have the same format and vertical scales Again the conclusion reached is that both conventional and unconventional hydrocarbon reservoirs liberate gas in quantities significantly higher than reservoirs containing water Resource Comparison

16. 16/April/2007© Donovan Brothers Inc. Automated Mudlogging Systems SM Slide 16 of 46 Mudlogging Unconventional Gas Reservoirs Resource Comparison

17. 16/April/2007© Donovan Brothers Inc. Automated Mudlogging Systems SM Slide 17 of 46 Mudlogging Unconventional Gas Reservoirs Resource Comparison

18. 16/April/2007© Donovan Brothers Inc. Automated Mudlogging Systems SM Slide 18 of 46 Mudlogging Unconventional Gas Reservoirs Resource Comparison

19. 16/April/2007© Donovan Brothers Inc. Automated Mudlogging Systems SM Slide 19 of 46 Mudlogging Unconventional Gas Reservoirs Resource Comparison

20. 16/April/2007© Donovan Brothers Inc. Automated Mudlogging Systems SM Slide 20 of 46 Mudlogging Unconventional Gas Reservoirs Resource Comparison

21. 16/April/2007© Donovan Brothers Inc. Automated Mudlogging Systems SM Slide 21 of 46 Mudlogging Unconventional Gas Reservoirs The requirements to calculate gas volume liberated/bulk volume drilled, gas content and reservoir bulk volume mudlog gas are: Data typically gathered while mudlogging Calibrated calcium carbide lags to determine gas volumes liberated Simple calculations using a spreadsheet and LAS files Mudlogging Gas Content Methodology

22. 16/April/2007© Donovan Brothers Inc. Automated Mudlogging Systems SM Slide 22 of 46 Mudlogging Unconventional Gas Reservoirs A measured amount of Calcium Carbide reacts with water to make determinable amount of acetylene gas: CaC 2 + H 2 0 = C 2 H 2 +CaO Before mudlogging a calibration using both acetylene and methane establishes a relationship between the gases for the gas sensors in the mudlogging unit. Before and after the zone of interest is drilled a known amount of Calcium Carbide (acetylene) is put in the drill string during connections and pumped to the surface. The peak gas value is recorded. Using this data, a gas show in units EMA can be converted to SCF of gas liberated while drilling. Mudlogging Gas Content Methodology

23. 16/April/2007© Donovan Brothers Inc. Automated Mudlogging Systems SM Slide 23 of 46 Mudlogging Unconventional Gas Reservoirs If the hole volume is known, SCF/formation bulk volume (ft 3 ) can be calculated along with BCF/section or MCF/acre-foot. If the formation density is known, SCF/T can be calculated. If Bg, the gas expansion factor is known reservoir gas volume along with Bvg or reservoir gas porosity can be calculated. Mudlogging Gas Content Methodology

24. 16/April/2007© Donovan Brothers Inc. Automated Mudlogging Systems SM Slide 24 of 46 Mudlogging Unconventional Gas Reservoirs 0.5 cup of calcium carbide yields 1.268 SCF acetylene 125 “units” of acetylene reads 250 units EMA in the mudlogging unit 0.5 cup of calcium carbide in a connection before the zone yields 200 “units” of acetylene Calculate a conversion factor from the above data and Avogadro's Law Conversion factor 0.01268 SCF CH 4 /1 UNIT EMA Mudlogging Gas Content Methodology

25. 16/April/2007© Donovan Brothers Inc. Automated Mudlogging Systems SM Slide 25 of 46 Mudlogging Unconventional Gas Reservoirs Mudlogging Gas Content Methodology Calculate a conversion factor from data on the last slide and Avogadro's Law Conversion factor = Conversion factor = 0.01268 SCF CH4 /1 UNIT EMA

26. 16/April/2007© Donovan Brothers Inc. Automated Mudlogging Systems SM Slide 26 of 46 Mudlogging Unconventional Gas Reservoirs Gas reading in the zone 570 UNITS EMA/minute Calculate gas liberated per minute in the zone by multiplying gas reading by the conversion factor 570 UNITS EMA /minute X 0.01268 SCF/UNIT EMA= 7.23 SCF/Minute Mudlogging Gas Content Methodology

27. 16/April/2007© Donovan Brothers Inc. Automated Mudlogging Systems SM Slide 27 of 46 Mudlogging Unconventional Gas Reservoirs Penetration rate in the zone is 0.5 minutes/foot Hole diameter is 8.5 inches Calculate the hole bulk volume (BV) drilled per minute Hole Volume/Minute = 0.78813 BV Cubic Feet/Minute Mudlogging Gas Content Methodology

28. 16/April/2007© Donovan Brothers Inc. Automated Mudlogging Systems SM Slide 28 of 46 Mudlogging Unconventional Gas Reservoirs Divide the gas liberated per minute by the hole volume drilled per minute 7.23(SCF/Minute) / 0.78813(BV CF/Minute) = 9.17 SCF/BV CF Conversion factors can be used to calculate BCF/Section foot or MCF/Acre foot Mudlogging Gas Content Methodology

29. 16/April/2007© Donovan Brothers Inc. Automated Mudlogging Systems SM Slide 29 of 46 Mudlogging Unconventional Gas Reservoirs Zone density is 1.4 gms/cc Convert hole BV CF to Tons by using density Gas content 210 SCF/Ton Zone depth 1,000’, Bg = 36.4 Convert SCF to Reservoir CF by using Bg Bulk Volume Mudlog Gas 0.25 CF/BV or 25% Mudlogging Gas Content Methodology

30. 16/April/2007© Donovan Brothers Inc. Automated Mudlogging Systems SM Slide 30 of 46 Mudlogging Unconventional Gas Reservoirs The factors which influence mudlogging can be grouped into two general categories: Deterministic factors (hole size, drilling rate, etc.) Indeterminate factors (flushing, background gas, surface losses, gas trap performance) Carbide calibration accounts for all factors Factors Influencing Mudlogging

31. 16/April/2007© Donovan Brothers Inc. Automated Mudlogging Systems SM Slide 31 of 46 Mudlogging Unconventional Gas Reservoirs Deterministic factors affecting mudlog gas are: Gas in the formation Hole size Drilling rate Mud pump rate Gas expansion Factors Influencing Mudlogging

32. 16/April/2007© Donovan Brothers Inc. Automated Mudlogging Systems SM Slide 32 of 46 Mudlogging Unconventional Gas Reservoirs If all other factors are equal, doubling the gas in the formation doubles the gas show Factors Influencing Mudlogging

33. 16/April/2007© Donovan Brothers Inc. Automated Mudlogging Systems SM Slide 33 of 46 Mudlogging Unconventional Gas Reservoirs If all other factors are equal, doubling the hole diameter, quadruples the gas show Factors Influencing Mudlogging

34. 16/April/2007© Donovan Brothers Inc. Automated Mudlogging Systems SM Slide 34 of 46 Mudlogging Unconventional Gas Reservoirs If all other factors are equal, doubling the drilling rate, doubles the gas show Factors Influencing Mudlogging

35. 16/April/2007© Donovan Brothers Inc. Automated Mudlogging Systems SM Slide 35 of 46 Mudlogging Unconventional Gas Reservoirs If all other factors are equal, doubling mud pump rate, decreased by one half the gas show Factors Influencing Mudlogging

36. 16/April/2007© Donovan Brothers Inc. Automated Mudlogging Systems SM Slide 36 of 46 Mudlogging Unconventional Gas Reservoirs If all other factors are equal, doubling the depth of the formation doubles the gas show in conventional reservoirs Factors Influencing Mudlogging

37. 16/April/2007© Donovan Brothers Inc. Automated Mudlogging Systems SM Slide 37 of 46 Indeterminate factors are: Recycled gas in the drilling mud (minor) Contamination of mix water or mud chemicals (seldom) Flushing or flowing in the formation being drilled (minor) Flushing or flowing in the formations above the formation being drilled (minor) Mudlogging Unconventional Gas Reservoirs Factors Influencing Mudlogging

38. 16/April/2007© Donovan Brothers Inc. Automated Mudlogging Systems SM Slide 38 of 46 Mudlogging Unconventional Gas Reservoirs More indeterminate factors are: Cuttings not fully releasing gas (minor) Surface losses (major) Gas trap design (major) Temperature (major) Wind (seldom) Miscalibrated sensors (seldom) Factors Influencing Mudlogging

39. 16/April/2007© Donovan Brothers Inc. Automated Mudlogging Systems SM Slide 39 of 46 Mudlogging Unconventional Gas Reservoirs Gas trap efficiency and measurement stability is the largest cause of mudlogging error. See the SPE, Williams and Ewing article. GAS IN THE MUD GAS AT THE MUDLOGGING UNIT Factors Influencing Mudlogging

40. 16/April/2007© Donovan Brothers Inc. Automated Mudlogging Systems SM Slide 40 of 46 Mudlogging Unconventional Gas Reservoirs “Improved Methods for Samplings Gas and Drill Cuttings”, Williams and Ewing, SPE FE, June 1989 Factors Influencing Mudlogging

41. 16/April/2007© Donovan Brothers Inc. Automated Mudlogging Systems SM Slide 41 of 46 Mudlogging Unconventional Gas Reservoirs GRI Gas Measurements During Mud Logging Operations Factors Influencing Mudlogging

42. 16/April/2007© Donovan Brothers Inc. Automated Mudlogging Systems SM Slide 42 of 46 Mudlogging Unconventional Gas Reservoirs Factors Influencing Mudlogging

43. 16/April/2007© Donovan Brothers Inc. Automated Mudlogging Systems SM Slide 43 of 46 Mudlogging Unconventional Gas Reservoirs GRI Gas Measurements During Mud Logging Operations Factors Influencing Mudlogging

44. 16/April/2007© Donovan Brothers Inc. Automated Mudlogging Systems SM Slide 44 of 46 Notice all the potential errors: 100 units of gas in the mud could read as high as 200 units or as low as 3 units due to gas trap design Gas losses as much as 40% due to loss in the flow line Gas losses as much as 50% due to wind A six fold change in methane solubility in water from 40ºF to 180ºF All of these losses can be normalized or compensated for by the use of calibrated carbide lagging. The next slide shows that acetylene behaves like methane over a wide range of conditions. If carbide lag results are consistent, it indicates good quality mudlogging Mudlogging Unconventional Gas Reservoirs Factors Influencing Mudlogging

45. 16/April/2007© Donovan Brothers Inc. Automated Mudlogging Systems SM Slide 45 of 46 Mudlogging Unconventional Gas Reservoirs Calibrating the System

46. 16/April/2007© Donovan Brothers Inc. Automated Mudlogging Systems SM Slide 46 of 46 Mudlogging is an effective evaluation tool If you have questions or comments contact me Bill Donovan (303) 794-7470 donovan@mudlogger.com donovan@mudlogger.com www.mudlogger.com Mudlogging Unconventional Gas Reservoirs