Examining the Technology of CBM Multiple-lateral Horizontal Well

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1 Examining the Technology of CBM Multiple-lateral Horizontal Well Dr. S. K. Singh VP & Head-Technical-Unconventional Unconventional Gas Asia Summit (UGAS 2013) New Delhi, April 2013

2 Agenda Essar CBM Portfolio Key CBM Success Factors Well completion types, Traditional approach & its limitation Horizontal Well types & its Criteria Horizontal vs. Vertical Well Horizontal Well Design Key Challenges in CBM Multi-lateral Economics Application of horizontal well technology in India Conclusion

3 Essar Portfolio CBM: CBM Resources c. 13 TCF

4 Essar Leading in the Unconventional Energy Space Pioneering CBM E&P work in India Among the largest CBM acreage & resources Successful CBM venture at Raniganj Technical manpower & reservoir understanding

The Raniganj CBM Success so far Field overview Location : Raniganj Coalfield State : West Bengal Reserves/ Resources 113 BCF of (Proved+2P reserves,) 2C resources of 445 BCF, Un-risked Prospective is

5 The Raniganj CBM Success so far Field overview Location : Raniganj Coalfield State : West Bengal Reserves/ Resources 113 BCF of (Proved+2P reserves,) 2C resources of 445 BCF, Un-risked Prospective is 297 BCF. Peak Prod. Estimate of about 3.0 mmscmd Current status Phase I & II successfully completed and block is currently in Phase III (since May, 2012). Presently block producing c. 55,000 scmd One GGS is Completed and operational,revamp under Progress. 2 nd is being commissioned and 3 rd is under progress. Key milestones About 350 more development wells in coming years for achieving full production Surface facilities like GGS, MCS and Gas pipeline being laid down under a BOO model Provisional Gas sales approval received from DGH, India. Final approval expected soon. Gas sales tied-up in both small and bulk scale.

$CBM Hydrofrac Unit$ PC Pumps running at

6 The Raniganj CBM Success So Far Drilling Rig For CBM Hydrofrac Unit PC Pumps running at test wells Separators installed at test wells CSR: Plantation at test well site Essar Gas sales customer end-point Completed GGS at site Model Well site

2. Gas Content and Gas saturation Biogenic and Thermogenic sourcing Coal Rank and Type:

$Permeability Governed by presence of cleats and natural fractures Coal Rank: 0.$

7 Key CBM Success Factors 1. Coal Thickness Number, thickness and extent of coal seams Typically need > 3m in aggregate 2. Gas Content and Gas saturation Biogenic and Thermogenic sourcing Coal Rank and Type: bituminous/sub-bituminous Gas content and composition: > 2 m3/t, 92+% CH4 Sorption properties of coal: >60% saturation 3. Permeability Governed by presence of cleats and natural fractures Coal Rank: 0.4 < Rvmax > 1.6 to promote cleating Stress Setting: to promote cleat/fracture opening 4. Dewatering capability Isolation from pervasive aquifers

8 Global CBM Plays Reservoir Characteristics Basin Raniganj East India Black Warrior Basin US North Appalachian Basin US Powder River Basin US San Juan Basin US Quinshui Basin China Bowen Basin Australia Depth (ft) Thickness of coal formation (ft) Coal Rank HV Bit HV LV Bit HV LV Bit Lignite - Sub Bit Sub Bit - LV Anthracite Bit Gas Content (scf/tn) Permeability (md) Reservoir Fluid Saturation (%) Reservoir Pressure (psi)/(psi/ft) No of coal seams Reserves (Bscf/well) Source: SPE

9 Schematic of CBM Well 20 Casing 9 5/8 Casing 5 1/2 Casing Cement behind 9 5/8 Casing, up to surface PCP & NTT PCP & NTT

10 Different Completion Types Open Hole Completion Simple, cheap & Fracturing not required Generally in high permeability and high thickness areas No Casing is left to obstruct mining activities Cementing does not damage the coals Gives unobstructed access to the coal face from the wellbore

11 Different Completion Types Open Hole Cavitation Increases well radius Thick seams. Good permeability. Extensive cleating. Ranks of coal beyond the coalification break. Low ash content. Over pressured zones High in-situ stress

12 Different Completion Types Cased Hole Completion Multiple seams per well. Thin seams of inches to a few feet thick. Marginal economics for producing. Large volumes of water produced early in the life. Normally pressured (some under pressured). Depth (1,000 4,500 ft). Coal fines. Optimum coal rank, hvab-lvb. Good permeability.

13 Successful Well Completion Types Open-hole (Barefoot) e.g. Powder River (USA) Cavitation e.g. San Juan (USA) Under-reamed e.g. Powder River (USA) Surat Basin (Australia) Fracture Stimulation e.g. San Juan,Powder River Quinshui Basin (China)

14 Different Technologies; Pad Drilling, Directional well

to 20 ft coal exposure per well Complex gathering system Individual

15 Challenges of Vertical wells in CBM Low gas rate High well density: 16 wells per section on 40 acre spacing Partial reserve recovery: 10 to 20 ft coal exposure per well Complex gathering system Individual well pumps Large expensive locations Large scale logistic rig movement

16 Horizontal Wells Different Completion Types Lateral in Single zone / Multi zone Multilaterals e.g. Qinshui Basin (China) In seam & production from vertical e.g. Bowen basin (Australia) Multilateral pinnate pattern e.g. Bowen basin (Australia)

$Criteria for Vertical, Directional and Horizontal Wells Well Type Vertical/Directional Cased hole, hydraulic fracture$ md) Horizontal or Multi-lateral Single or few thick coals Desire for rapid degasification Restricted surface access When

md) Horizontal or Multi-lateral Single or few thick coals Desire for rapid degasification Restricted surface access When

17 Criteria for Vertical, Directional and Horizontal Wells Well Type Vertical/Directional Cased hole, hydraulic fracture Common Scenarios Low-medium permeability (1-30 md) Multiple coals / low net/gross ratio Low-medium permeability (<1 to 10 md) Horizontal or Multi-lateral Single or few thick coals Desire for rapid degasification Restricted surface access When to choose Horizontal Well Source: Schlumberger, Challenges in Developing Coalbed Methane Resources using Horizontal Drilling

$well Better connectivity of cleats and fractures exposure, increased permeability.$ Increased production, better recovery of coal seam gas, 50-75% in 1.5 to 4.

Increased production, better recovery of coal seam gas, 50-75% in 1.5 to 4.

18 Advantages of CBM multiple lateral Horizontal wells Increased exposure inside reservoir coal seam per well Better connectivity of cleats and fractures exposure, increased permeability. Increased production, better recovery of coal seam gas, 50-75% in 1.5 to 4.5 md Dewatering time reduction thereby faster production Fewer wells results reduction in surface facility and land requirement Lower CAPEX / OPEX improved returns

19 Horizontal Well Types Design selection for placement of horizontal drain hole in reservoir Multi-Seam lateral Single seam Multi-lateral, duel, triple, quadi, pinnet Horizontal Length of laterals Spacing between laterals

20 Process : CBM Multilateral design Multilateral drain hole placement Design options based on TVD of coal seams, Number of seams and thickness Vertical separation between Coal seam Areal extent of coal seam, and structural dip Proximity to adjacent formations, like aquifer sand, fractures barrier In-situ -stress orientation, directly affect permeability Stability of roof and floor formation of coal seam Completions design based on Suitable for placement of drain hole design as per reservoir characteristics Dewatering and gas production requirement Future work over requirement Cased hole completions tubing and casing sizes design based on maximizing required flow rate.

Process : Directional Trajectory Directional trajectory design: Long Radius angle build rates : 2 to 6 deg/30 m. (long horizontal intervals): 1500 to 2000 m.

21 Process : Directional Trajectory Directional trajectory design: Long Radius angle build rates : 2 to 6 deg/30 m. (long horizontal intervals): 1500 to 2000 m. Medium Radius angle build rates : 8 to 20 deg/30 m. (horizontal intervals): 1200 to 1300 m. Short Radius angle build rates : deg/30 m. (horizontal intervals) : 300 to 400 m. CBM Multilaterals, Medium Radius Profile are most suitable, with wide range of DLS 6-20deg/30m, for placing drain hole within available TVD

22 Key Consideration CBM multilaterals Finding optimal design for drain-hole placement for reservoir Prediction of In situ stress orientation Selection of simplest trajectory to achieve the drain hole placement objectives with minimizing torque / drag and hole cleaning issue. Maintaining well trajectory inside coal seam, with help of real time logs. Selection of drilling fluid to stabilize formation without damaging flow characteristics of reservoir Ensuring Hole stability while drilling horizontal sections in coal seams Cost effective completions design to achieve higher multilateral length in reservoir Selection for dewatering equipment appropriate for selected multilateral design

23 Fracture Orientation and Horizontal Well Placement Horizontal well to be drilled in the direction of minimum horizontal stress (minimum permeability), perpendicular to maximum horizontal stress direction.

Key Challenges - Geosteering with LWD Use of advanced error model survey techniques for proper landing of the well in the reservoir with minimum deviation from Geological marker Use

24 Key Challenges - Geosteering with LWD Use of advanced error model survey techniques for proper landing of the well in the reservoir with minimum deviation from Geological marker Use of near bit inclination and Azimuthal Gama and geosteering technique for placement of drain hole inside coal seam Selection of logging tool parameter specific for identification of coal

Well Cost : Vertical-Deviated-Horizontal Vertical Well : 1100-1400 m

Completion 53% Completion 22% Surface Facility 20% Surface Facility

25 Well Cost : Vertical-Deviated-Horizontal Vertical Well : m Directional Well : m 16% Drilling 14% Drilling 11% HF 13% HF 51% Completion 53% Completion 22% Surface Facility 20% Surface Facility Horizontal Well : 500 m lateral, 1200 m depth 10% 0% 10% Drilling HF Completion Surface Facility 80%

26 Worldwide CBM Well Costs Surface Facilities Stimulation Completion Drilling Comparitive CBM Well Costs US$ Australia USA China Australia USA China Australia USA China Australia Australia USA China Core Hole Vertical m Vertical m Single Lateral Dual Lateral Tri Lateral Tri Lateral Marked difference observed in drilling and completion costs for vertical and horizontal wells Source: RISC Analysis, Geof Barker, 5th annual CBM & Unconventional Gas June 2012

27 Cost Analysis of CBM Horizontal Well Performance Gas Rate M3/D Horizontal vs Vertical well Horizontal Well 240 Acre Vertical Welll 40 Acre 4 Vertical Wells 40 Acre Days Porosity Permeability 2% 10 md Gas Content 7.5 m3/ton Gas Saturation Lateral Length Depth Thickness Bulk Density 80% 500 m 1200 m 10 md 1.41 g/cc 15 g/cc 583 psi Vl Pl

28 Application of Horizontal Well Technology in India Horizontal multilateral wells have advantages 1 horizontal well gas recovery equivalent to 4 vertical wells gas recovery Smaller surface requirement for horizontal wells 1 horizontal well cost equivalent to 2 vertical wells cost Performance of Horizontal wells in multi-seam reservoirs? Surface Casing Up-Stock Operation Carrier String With Up stock on bottom EDT - 02 RL ~ ~ ~ ~ ~ ~ ~ ~ TD Top Soil Tertiary Panchet Ironstone Shale RN-4 Raniganj RN-3 RN-1&2 Upper Coal Seam Lower Coal Seam

Possibility of Horizontal Wells in Indian CBM Basins Jharia (2) 2 horizontal wells 1000 m depth, 1000 m lateral, Side -lateral/pinnate Wells 2000 m side-laterals Seam thickness 5 m, permeability 3-5

29 Possibility of Horizontal Wells in Indian CBM Basins Jharia (2) 2 horizontal wells 1000 m depth, 1000 m lateral, Side -lateral/pinnate Wells 2000 m side-laterals Seam thickness 5 m, permeability 3-5 md Side-lateral collapsed ~5 MSCMD production from upper zone after isolations Tertiary coal sequence Typical Gondwana multi-seam thickness Bokaro (3) 1 horizontal well 1000 m depth, 1000 m lateral Good gas production Sohagpur (6) In-seam well m lateral Seam thickness 8 m, permeability 200 md Peak production ~4 MSCMD but couldn t sustain due to very high water production

30 Conclusion Structured data gathering for planning horizontal wells during exploration phase Need integrated approach for planning of horizontal well involving geology, reservoir, completion and drilling teams; detailed simulations need to be done for arriving at cost effective horizontal well solutions In Indian basins, there are potential locales with application of horizontal wells for faster CBM production With proper planning, horizontal wells could be a very cost effective tool for field development

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