Jeff Meisenhelder

VP Unconventional Resources

Unconventional Gas:

Efficient and Effective Appraisal

and Development

The Barnett Story – Perserverence and Technology Make the Difference

*IHS Database

0

500

1000

1500

2000

2500

3000

85 90 95 00 05 10

Mil

lio

n C

ub

ic F

ee

t

Date of First Production

Vertical Wells

Deviated Wells

Horizontal Wells

Key Success Factors for Unconventional Development

3

High potential

resources

Enabling fiscal

& regulatory

regime

Land access &

operability

Open &

extensive gas

distribution

network

Growing

demand

Fair price

Capable

service sector

Successful

Unconventional

Development

Little

competition

from

conventional

New Long Term Energy Resources

Large Resource Base

Energy Security & Independence

Economy Benefits

>1,600,000 Potential Jobs

Local Business Growth

Social Benefits

Lower Energy Costs

Reduced CO2 Emissions (1997 level)

Shale Gas Revolution – N. American Story

4

Benefits

0

40

80

120

160

200

D&

C S

pend

$B

Year

US Drilling and Completion Spend

Land Offshore

US Drilling and Completion Spend

Source : Spears Drilling & Production Outlook Dec 2011

Execution efficiency improves economics on development projects

Improving Economics through Efficiency

Source: Talisman Investor Relations

Drilling Technologies – Creating Efficiency

6

Planning: High Efficiency Rigs, BHA’s, Optimized Fluid Design, applied geomechanics

RT optimization: RPM, WOB, GPM, T&D, hydraulics, vibration, PP, ECD

Drilling Automation: Next Generation of High Efficiency Rigs

11

12

13

14

15

16

17

0 5 10 15 20 25 30 35 40 45

50 Days

De

pth

k

fee

t

Drilling Performance

Drilling

: 48

days

Efficiency = Reliability

Efficiency vs Effectiveness

*IHS Database

0

500

1000

1500

2000

2500

3000

85 90 95 00 05 10

Mil

lio

n C

ub

ic F

ee

t

Date of First Production

Vertical Wells

Deviated Wells

Horizontal Wells

05

101520253035

% U

npro

ductive P

erf

ora

tions SPE 144326

Brewster and MacKay 2008 DGS/RMAG 3-D Seismic Symposium

Heterogeneity

8

Photo courtesy D. Spratt

Challenges for Effective Shale Development

All Gas Shales Are Different

Shale

Reservoirs

Conventional

Grains >4 μm

Argillaceous

CalcareousSiliceous

Matrix

Composition

Marcellus

Eagleford

Barnett

All shales are different and complex –

there is no “Plug and Play”

You must understand:

Reservoir quality

Completion quality

Lateral Heterogenity

Application of appropriate technology

leads to improved:

Production

Effective use of capital

Economic results

Schlu

mb

erge

r Private

10

Effective Drilling Use technology to land well laterally and vertically

80ft displacement from center targetSPE 138438

Integrating Data Placing the well for the best performance

Reservoir Quality

Completion Quality

17 Geometric stages

17 Optimized stages

Eagle Ford Optimization: Engineered Approach

Mangrove Applications: Completion Design

Shalle basins w defined

resources

Shale Basins, unassessed

Emerging Worldwide Plays (2013)

12

“Factory” Approach

High number of wells

Surface disturbance

Service intensity / well

Heavy truck traffic

Extensive Resources

Produced water mgmt

Air emission reporting

Noise control

Need improvement for

Complex reservoirs

Production economics

Technology development focused on reducing impact

Will this work outside North America?

14

Efficient and Effective Approach for Shale Reservoirs

More Knowledge

Less Uncertainty

− Advanced basin modeling

− Integrate core/log/seismic

− Define reservoir quality

− Define completion quality

− Sweet spots

More Pay Zone

Less Rig Time

− Engineered bit/BHA

− Hole cleaning & quality

− Longer laterals, > ROP

− Cuttings and mud logs

− Wellbore placement

More Reservoir Contact

Less Environment Impact

− Engineered frac design

− Efficient stim hardware

− Green chemistry

− Reduce water/proppant

− Well integrity

Focus of Research and Application of Technology - Producing More with Less

More Recovery

Less Waste

− Manage flowback/cleanup

− Optimize pressure / rate

− Coiled tubing interventions

− Measure zone contribution

− Maximize recovery

Evaluate Drill Complete Produce