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A NEW APPROACH TOA NEW APPROACH TO

COALBED METHANE EXPLORATIONCOALBED METHANE EXPLORATIONIN THE UPPER SILESIAN COAL BASININ THE UPPER SILESIAN COAL BASIN

EurEnergy Resources PolandEurEnergy Resources PolandAl.Al. JerozolimskieJerozolimskie3030

0000--024 Warszawa024 Warszawa

Eurenergy Resources Corporation1755 Wittington Place, Suite 340

Dallas, Texas 75234

Jerzy HadroJerzy Hadro


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PRESENTATION OVERVIEWPRESENTATION OVERVIEW History of CBM operations in the USCBHistory of CBM operations in the USCB

Exploration technologyExploration technology Results of drilling and testing operationsResults of drilling and testing operations

Causes of failureCauses of failure

New CBM activities in the USCBNew CBM activities in the USCB EurEnergy exploration programEurEnergy exploration program

New drilling and completion technologyNew drilling and completion technology

Horizontal, multilateral drillingHorizontal, multilateral drilling UnderUnder--balanced drillingbalanced drilling

Completion technologyCompletion technology

Application of new technology to the USCBApplication of new technology to the USCB


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HISTORY OF CBMHISTORY OF CBM OPERATIONSOPERATIONS ININTHE UTHE UPPER SILESIAN COAL BASINPPER SILESIAN COAL BASIN

The interest in CBM started in the early 90The interest in CBM started in the early 90ss

Huge coal resource and high mine emissionsHuge coal resource and high mine emissionsattracted the attention of foreign investorsattracted the attention of foreign investors

CBM concessions were granted in the yearsCBM concessions were granted in the years

19911991 19971997 4 concession holders actually performed drilling4 concession holders actually performed drilling

and testing operations with the intention ofand testing operations with the intention ofcommercial development of CBM resourcescommercial development of CBM resources PolPol--Tex Methane (1991Tex Methane (1991--1996)1996)

Amoco (1994Amoco (1994--1997)1997)

MetanelMetanel (1995(1995--1996)1996)

Texaco (1997Texaco (1997--1998)1998)


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AmocoAmocoMetanelMetanel

PolPol--TexTex//TexacoTexaco

KRUPISKI


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CBM EXPLORATIONCBM EXPLORATION

TECHNOLOGYTECHNOLOGY

Drilling and production testing usingDrilling and production testing using

vertical wellsvertical wells:: Single well production testingSingle well production testing Amoco,Amoco,

MetanelMetanel

Five spot production pilotFive spot production pilot TexacoTexaco

Typical completion methodTypical completion method:: multiplemultiple

seam stimulationseam stimulation


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TYPICAL WELLBORE SCHEMATICTYPICAL WELLBORE SCHEMATIC

13-3/8 casing

9-5/8 casing

7 casing

TD


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RESULTS OF DRILLING ANDRESULTS OF DRILLING AND

TESTING OPERATIONSTESTING OPERATIONS

None of the concessionNone of the concession operatoroperatorss

was able to establish commercialwas able to establish commercialproductionproduction

After 1998 there was no interest inAfter 1998 there was no interest in

CBMCBM

New CBM concession applicationsNew CBM concession applications

were not filed for several years towere not filed for several years to

comecome


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CAUSES OF FAILURECAUSES OF FAILURE

Low permeability reservoirLow permeability reservoir (


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NEWNEW CBM ACTIVITIESCBM ACTIVITIES

IN THE USCBIN THE USCB

After several years of stagnation in CBMAfter several years of stagnation in CBM

activities, new concessions have been grantedactivities, new concessions have been grantedrecentlyrecently

The interest in CBM was revived because of oilThe interest in CBM was revived because of oilprice increase as well as new developments inprice increase as well as new developments in

CBM drilling and completion technologyCBM drilling and completion technology In October, 2006 a US based companyIn October, 2006 a US based company

EurEnergy Resources was awarded a CBMEurEnergy Resources was awarded a CBM

concession in the Main Syncline of the USCBconcession in the Main Syncline of the USCB The license area covers 508 kmThe license area covers 508 km22 and mostlyand mostly

overlaps with the former Amoco and Texacooverlaps with the former Amoco and Texacoacreageacreage


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EURENERGY EXPLORATIONEURENERGY EXPLORATION

PROGRAMPROGRAM

Use the latest CBM drilling andUse the latest CBM drilling and

completion technology, especiallycompletion technology, especially

horizontal drillinghorizontal drilling

IdentifyIdentify sweet spotssweet spots

Keep the cost lowKeep the cost low


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OBJECTIVES OF COAL GASOBJECTIVES OF COAL GAS

DRILLING & COMPLETIONDRILLING & COMPLETION

ByBy--passpass wellborewellbore formation damageformation damage

More effectively connect theMore effectively connect the wellborewellbore to theto thenatural fracture system of the coal reservoirnatural fracture system of the coal reservoir

Stimulate production and thereby accelerateStimulate production and thereby acceleratedewatering (to increase the rate of gasdewatering (to increase the rate of gasdesorptiondesorption))

Widely distribute the nearWidely distribute the near wellborewellbore pressurepressuredrop (and reduce fines production)drop (and reduce fines production)


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CBMCBM DRILLING TECHNOLOGYDRILLING TECHNOLOGY

OVERVIEWOVERVIEW

VerticalVertical conventionalconventional technologytechnology

Horizontal/directionalHorizontal/directional newnew technologytechnology MultilateralMultilateral newnew technologytechnology

UnderUnder--balanced drillingbalanced drilling


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Second Target

First Target

Surface Casing

Intermediate

Casing

Injection annulus

Carrier String With Up stock on bottom

Return Annulus

HORIZONTAL MULTI ZONE FIRST TARGET


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First Target

HORIZONTAL MULTI ZONE SECOND TARGET

Second Target


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HORIZONTAL DRILLING PATTERNSHORIZONTAL DRILLING PATTERNS

Singlelateral Duallateral TrilateralQuadlateral Pinnate

Adopted from Marcic N., et al., 2005


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ADVANTAGES OFADVANTAGES OF

DIRECTIONAL & HORIZONTAL WELLSDIRECTIONAL & HORIZONTAL WELLS

Directional drillingDirectional drilling -- parallel target reservoirparallel target reservoir

Productivity enhancement (as much as 10 toProductivity enhancement (as much as 10 to20 fold higher)20 fold higher)

Faster deFaster de--wwateringatering rates (gas to surfacerates (gas to surfacesooner)sooner)

Lower environmental/financial impactLower environmental/financial impact

Fewer wells per sectionFewer wells per section

Fewer gathering systemsFewer gathering systems


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HORIZONTALHORIZONTAL CBM WELLSCBM WELLSAREARE

SUCCESSFULLY BEING USED IN USASUCCESSFULLY BEING USED IN USA,,CANADACANADAANDANDAUSTRALIAAUSTRALIA

Adopted from CDX GAS


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TYPICAL CBM HORIZONTALTYPICAL CBM HORIZONTAL

RIG IN SAN JUAN BASIN, USRIG IN SAN JUAN BASIN, US


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UNDERUNDER--BALANCEDBALANCED DRILLINGDRILLING

UnderUnder--balanced (UB) drilling occurs when thebalanced (UB) drilling occurs when the

pressure of the drilling fluid column is lesspressure of the drilling fluid column is lessthan the pressure of the formation being drilledthan the pressure of the formation being drilled

UB Drilling has the potential to substantiallyUB Drilling has the potential to substantially

improve gas / hydrocarbon production.improve gas / hydrocarbon production.

UB drilling is applied to mitigate formationUB drilling is applied to mitigate formation

damagedamage UB drilling is used in combination withUB drilling is used in combination with

horizontal drillinghorizontal drilling best resultsbest results


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COMPLETION TECHNOLOGYCOMPLETION TECHNOLOGY Horizontal well completionHorizontal well completion open hole oropen hole or

slotted liner completionslotted liner completion

Mechanical completion methodsMechanical completion methods --Electric Submersible PumpElectric Submersible Pump (ESP)(ESP),,Expandable Sand ScreenExpandable Sand Screen (ESS)(ESS)

Hydraulic fracturing treatments (e.g.Hydraulic fracturing treatments (e.g.acidizationacidization, water, water fracfrac, water, water fracfrac withwithproppantproppant, other fluids with, other fluids with proppantproppant))

Drilling & completion fluid / rockDrilling & completion fluid / rockcompatabilitycompatability studies (e.g. swelling clays)studies (e.g. swelling clays)


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CBM DEVELOPMENT IN POLANDCBM DEVELOPMENT IN POLAND

WILL REQUIRE STATE OF THE ARTWILL REQUIRE STATE OF THE ART

DRILLING SYSTEMS AND PEOPLEDRILLING SYSTEMS AND PEOPLE


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TYPICAL DRILLING OPERATIONSTYPICAL DRILLING OPERATIONS

Drilling rigs and underDrilling rigs and under--balanced drillingbalanced drilling

systemssystems

Directional drilling and MWD systemsDirectional drilling and MWD systems

Coring rigs and conventional andCoring rigs and conventional andwirelinewireline retrievable coring systemsretrievable coring systems

Continuous technology developmentContinuous technology developmentand application for the areaand application for the area


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SPECIALIZED EQUIPMENTSPECIALIZED EQUIPMENT

Horizontal drilling rigs with top drive/pullHorizontal drilling rigs with top drive/pull

down capabilitiesdown capabilities

Coring rigs/coring equipment/toolsCoring rigs/coring equipment/tools EMEM--MWD equipmentMWD equipment

Downhole drilling motorsDownhole drilling motors

Adopted fromLightfoot J., 2007


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NEED HIGHLY TRAINEDNEED HIGHLY TRAINED

PROFESSIONALSPROFESSIONALS

Drilling RigPersonnel

Directional

& EM-MWDPersonnel

Coring

Personnel

Logistics &Procurement

Well PlanningPersonnel


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ANTICIPATEDANTICIPATED GEOLOGICALGEOLOGICAL CHALLANGESCHALLANGES

FORFORHORIZONTAL DRILLING APPLICATIONHORIZONTAL DRILLING APPLICATION

IN THE UPPER SILESIAIN THE UPPER SILESIA

Coal continuity problems due toCoal continuity problems due to

complicated tectonicscomplicated tectonics do seismic todo seismic toidentify faultsidentify faults

Borehole stability problemBorehole stability problem performperformborehole stability analysis prior to drillingborehole stability analysis prior to drilling

horizontal wellshorizontal wells


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SUMMARY AND CONCLUSIONSSUMMARY AND CONCLUSIONS CBM operations using vertical wells with multiple seamCBM operations using vertical wells with multiple seam

completion were not successful in the USCBcompletion were not successful in the USCB

For several years CBM resource was considered to beFor several years CBM resource was considered to beuneconomic for commercial developmentuneconomic for commercial development

Recent, stateRecent, state--ofof--thethe--art drilling and completion technologyart drilling and completion technologybrought fresh hopes and encouraged companies to acquirebrought fresh hopes and encouraged companies to acquireCBM concessions in PolandCBM concessions in Poland

EurEnergy acquired a sizeable acreage in the USCB and isEurEnergy acquired a sizeable acreage in the USCB and is

determined to implement new CBM technology in order todetermined to implement new CBM technology in order todemonstrate a commercial value of the projectdemonstrate a commercial value of the project

The key to success should be horizontal, multilateral wellsThe key to success should be horizontal, multilateral wellscombined with UB drilling and completion technologycombined with UB drilling and completion technology

CBM development in Poland will require specialized equipmentCBM development in Poland will require specialized equipmentand highly trained personneland highly trained personnel

Anticipated geological challengesAnticipated geological challenges coal seam continuity andcoal seam continuity andborehole stability problemsborehole stability problems


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THANK YOU FOR YOURTHANK YOU FOR YOURATTENTIONATTENTION

QUESTIONS ???

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