1

OUTLINE

• Belmont Background and History• New Contracts• Belmont Development Plan• Drilling Results -1st Well• Drilling Challenges and Solutions• Redevelopment – Upper, Lower Zones• Belmont Redevelopment Recap• Overview and Opportunities

California State Lands Commission Prevention First 2006Belmont Island Removal and Field Revitalization

Aerial View during Island Removal Activity

Los Angeles

LBU

Belmont

Belmont Island Removal and Field Revitalization

• Located 8,100 feet offshore Seal Beach, CA in 42 feet of water depth

• Construction completed in 1962

• Oil production ceased 1995. 28 million barrels of oil and 24 billion cubic feet of natural gas. The State $40M revenue and the operation grossed over $240M

• All wells abandoned by 1996

• Complete removal of the platform structure was accomplished in 2002.

Belmont Island Background/History

Belmont Island Removal Activities• Wells Plugged and Abandoned• Cut and Prepare Well Conductors• Decommission Electrical Cable• Decommission Pipelines• Remove South Span and South Tower• Remove Caisson Deck and Wall Structures• Remove Hydrocarbon-Impacted Fill, Well Conductors and Wooden

Piles• Remove East Wharf• Remove Boat Landing• Remove Strut Supports- West Face• Remove North Wharf• Remove Caisson and Rip-Rap• Debris Recovery

1

10

100

1000

10000

100000

1947 1957 1967 1977 1987 1997 2007

BPD Oil

Injection

Water

Producers

Injectors

Belmont Upper (Ranger) Performance

Oil Prod: 789 BOPDWater Prod: 4150 BWPDWater cut: 84 %WOR: 5Water Inj: 2843 BWIPDProducers: 3Injectors: 2

Pipeline restricted

Storm destroyed island

Waterflood

Belmont Contracts

Three Contracts• Oil and Gas Lease Between OLBI and State of California

• Facilities Agreement Between OLBI and City of Long Beach

• Pass-Through Agreement Between OLBI and City of Long Beach

Key Terms• State receives 17.9% royalty

• City of Long Beach receives 2.5% “Pass-thru”

Belmont Offshore Redevelopment

-2500 -3000 -3500

-2500

-3000

-3500

IslandChaffee

MontereyIsland

EstherIslandEastern Boundary

of the Long BeachUnit

State PRC 186

State 3095(Operated by DCOR)

City of Seal Beach

Extent of Ranger OilColumn

One Mile

3-D View of Long Beach Unit & Belmont Offshore Field Wellpaths

Pier J

Grissom White

Chaffee

Belmont

Freeman

ISLAND CHAFFEE

Island ChaffeeSpill Prevention Equipment and Containment

Equipment Type Quantity

• Oil boom (30” Expandi 3000) 1000 ft• Oil boom (16” foam filled) 900 ft• Anchors 4• Crew and tug boats available on call• Vacuum Truck 1• Sorbent pads 75 bales• Sorbent blankets 15 rolls• Sorbent drums (55 gal) 25

• 12” curb height• 54” cellar walls• 7 cellars – 23,000 barrel capacity

13

Phase 1 Producer

Phase 2 Producer

Phase 2 Injector

Existing LBU Injector

Original Belmont Development Plan

Drill in low WOR area

Offset good rate wells

Peripheral injection

C332A

C-332rd1 Open Hole Log (M1 Sand)

RESISTIVITY

POROSITYGAMMA RAY

Flow Unit Boundary

2 Oil Columns with Partial Sweep at Base

C-332rd1First Producer • ‘Standard LBU vertical’ (50o)

redrilled OHGP completion (7”intermediate casing & 3-1/2” WWS)

• 73o sail section for 4300’• 500’ completion interval• Running casing was difficult• Initial oil rate 450 bopd• Reservoir pressure higher than

expected• Repressurization after 10 years• Higher rates, recoveries, fewer

wells needed

Drilling Challenges

• Must deal with anti-collision (LBU & P&A’d Belmont wells)• Maintain high penetration rates & drill high quality hole• Minimize tripping for bits & logging tools• Overcome torque & drag effects on drilling/running casing

– Long reach, high angle sail sections (almost 5000’ to the near lease line, 8000’ to the far lease line)

– Slide drilling is required in horizontal completion intervals & to drop angle at the end of the injectors

– Casing must get to bottom• Geological interpretation is critical

More difficult with directional survey depth uncertainty

Drilling Solutions

• Anti-collision Issues, Geological Interpretation:– Generated Belmont directional survey data base

from scratch• Drilling Performance (ROP, Minimizing Roundtrips):

– Used a steerable 5 blade Smith PDC bit, Top drive on 4th well and wells after

– Drilled surface shoe with directional assy & LWD built angle

– Used KCl/gelite mud (clay swelling) & high circ rate

Drilling Solutions (cont’d)• Torque and drag effects while drilling:

– Chose wellheads that allowed two dimensional well plans to be drilled, when targets allowed

– Modeled with torque & drag software– Set surface casing through the build section– Maximized rotational drilling– Adjusted BHL’s to minimize “late turns”

• Torque and drag effects while running casing: – Spotted lube pills prior to running casing– Stopped and circulated when running casing– Drilled larger hole in two wells (9-7/8” vs. 8-3/4”)

Belmont Field: Top M1 Structure Current Status

C-332A

C-232

C-237I

C-234I

C-230IC-301

C-247

Possible injector

C-236 Drilling

Redrillinjector

C-332A

SW NE

SW

NE

LOCATOR MAP: Structure Top M1

Plan for Sub-Horizontal Wells C-301st1, C247st1

Change of Plans (horizontal producers)Upper Zone Cross-Section showing three M1 sand lobes

C-301st1 & C-247st1Horizontal Producers

• Drilling horizontal OHGP producers has allowed:– longer completion intervals (1000’ to 1300’)– production from all three M1 sand lobes– oil rates to be accelerated– fewer wells to be drilled

• These are ‘Standard LBU horizontal’ new OHGP completions (7”intermediate casing & 3-1/2” wire wrapped screens)

• Completion angles are 82o to 85o

• Landing these horizontals was difficult because they needed to be ‘turned’ into the structure

• C-301st1 drilled fast, but had 3 tool failures & OH sidetrack • C-247st1 had great drilling performance, in spite of sidetrack• Oil rates were 300 bopd (C-301st1) & 800 bopd (C-247st1)

C-332rd1, C-301st1, C-247st1 Wellpaths

C-332rd1

C-301st1

C-247st1

MTS-116P&A’d

MTS-122P&A’d

MTS-114P&A’d

C-230I, C-234I, C-237IWater Injection Wells

• All are down dip water injectors on the far side of the lease • All have high angle sail sections (C-237I had 6300’ at > 70o)• All are long reach (C-237I had a 2.6:1 ratio of md/tvd)• Drilled “two dimensional” well plans from optimal wellheads• Decided to drill 9-7/8” hole in C-237I to decrease risk• Excellent drilling performance

Two Dimensional Well Plans

C-234I C-230IC-237I

Lower Zone (UP Ford) Drilling Status

• The Lower Zone producers will be completed as cased hole frac & fracpack completions

• Wells C-238 and C-354 were drilled and completed into the Lower Zone in June 2006

• Two injection wells are planned for this year

• Phase II and III Development to proceed and be evaluated based on results from first two producers and injectors.

-5500

-5450

-5400

350

0

5250

-5250

-52 00

-5350-5300

-5300

-5400

450

-6500-6450-6400-6350-6300

-6250-6200-6150

-6000 -5950

-5900

-5850

-5800 -5600-5550

-545

0

-5450

-540

0

-5500

-5500

-5500

-5550-5600

-5650-5700

-5750

C-239C-239

C-318C-318AC-318B

C-323

C-323IA

C-326C-326

C-339C-339A

C-357I

C-358C-403

403A403A

C-410B

C-440

-441441S

C-442

43IA

C-444C-444IS

C-447

C-448

MTS-13

MTS-14

MTS-15

MTS-16

MTS-17

MTS-18

MTS-19MTS-19

MTS-2

MTS-20

MTS-21

MTS-23

MTS-25OH

MTS-26

MTS-27

MTS-27A

MTS-28

MTS-29

MTS-3

MTS-4

MTS-6

MTS-7

MTS-9

4247000 4248000 4249000 4250000 4251000 4252000

4247000 4248000 4249000 4250000 4251000 4252000

4010

000

4011

000

4012

000

4013

000

4014

000

4015

000

4016

000

40100004011000

40120004013000

40140004015000

4016000

[ft]

[ft]

0 250 500 750 1000 1250ft

1:10732

Country

Block

License

Model name

Horizon name

Contour inc

User name

Date

SignatureCopy of UPF fault edit

50

morsem

01/23/2006

MJ MORSE

Map

UP Ford Belmont Area (AK1 Level)

MTS-24

MTS-5

MTS-10

MTS-22MTS-8

MTS-11

C-431IA C-354

C-238

CUFBELI1

CUFBELI2

Key

Last 6 active wells

Phase II

Phase III

Phase I

Belmont Drilling Program

230$1.13374’7554’July-06NOHGPUpperC-232

380$2.16378'9054'June -06NCH4FLowerC-354

90$2.06281'8978'June -06NCH4FLowerC-238

inj$1.03530'9153'July-06NCHSIUpperC-237I

inj$1.13490'8590'Feb-06NCHSIUpperC-234I

inj$0.93490'8114'Dec-05NCHSIUpperC-230I

800$1.13238'7583'Nov-05NOHGPHUpperC-247st1

300$1.23171'8060'Sep-05NOHGPHUpperC-301st1

450$1.53333'7365'Jun-05ROHWGPUpperC-332A

IPbopd

ActualCost, $M

TDtvd

TDmd

Compl.Date

WellTypeZone

WellNumber

Belmont Redevelopment Recap

• Six producing wells and three injection wells• Oil production is 240 MBO in less than 1 year• Current Oil Rate 1456 BOPD for August 2006 • Drilling performance is improving

– Best performance drilling production hole (1249 fpd)– Beat estimate by 7.5 drilling rig days (4 days < target)

• C-301st1 is longest horizontal from Islands (8060’ md)• Actual costs are 4% below estimate. Average drilling

rig time is 3.5 days below estimate (without C-332rd1)

Overview• Recovery of substantial oil reserves left behind• Oil Island and associated facilities removed• Oil spill risk minimized by transferring operation to state

of the art facility• Increased revenues to the State and City of Long Beach

Opportunities

•Develop unrecovered reserves using existing infrastructure•Develop new areas from existing offshore infrastructure or sites based onshore

Acknowledgements

• Belmont’s success is a team effort. The team includes:– Oxy Long Beach Inc. (OLBI) and Thums

Drilling Engineers, Reservoir Engineers, Geologists, and Drill Site Managers

– California State Lands Commission– Long Beach Gas and Oil Department– Ensign Drilling Crews– Inteq Planners and Directional Drillers – MI Drilling Fluids

Questions?

currans@slc.ca.gov (562) 590-5266