K l a d ldera Rolller Cone Bit T h no o gy for Drilling in High Temperature Applications

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Kld Kaldera Roller Cone Bit Technology for Drilling in High Temperature Applications Dan Risnita, Johann Obermair Szolnok, 6 th of June 2012 Smith Bits, A Schlumberger Company www.slb.com/kaldera 1

2012 Schlumberger. All rights reserved. An asterisk is used throughout this presentation to denote a mark of Schlumberger. Other company, product, and service names are the properties of their respective owners. 2

Designed for High Temperature Applications Roller cone technology enhanced for geothermal and high temperature environments Innovative elastomer composites deliver improved wear and thermal resistance New grease formulation provides greater load bearing capacity Advanced cutting structure development through the IDEAS* drill bit design system Improved performance in harsh downhole conditions delivers lower drilling costs 3

Geothermal Gradient Average geothermal gradient is 2.5 to 3 C per 100 meters Higher gradients are observed in geothermal and HT wells Cooper Basin in Australia, has recorded temperatures exceeding 280 C at 5 kilometers (530 F at 16,400 ft) 2.5 C/100m >6 C/100m 4

Geothermal Today Electricity generated from geothermal power >10% of the population served by electricity from geothermal power The Electricity Needs of 52 Million People Are Being Met by Geothermal Power, in over 30 countries Source: GEA International geothermal market update, May 2011 5

High Temperature (HT) Definition High temperature reservoirs (St atic) Reservoir r Temperature (F) 600 500 400 300 200 100 0 260 degc 205 degc 150 degc HPHT Ultra HPHT 68.95 MPa 137.9 MPa 241.32 MPa 0 5000 10000 15000 20000 25000 30000 35000 40000 (Static) Reservoir Pressure (psi) High pressure reservoirs High temperatures (HT) environments generally accepted as >150 C (>300 F) HPHT classification as temperatures >150 C and pressures >10,000 psi Extreme conditions in Ultra HPHT and beyond Conventional reservoirs 6

Development Goals Focus on reducing drilling costs Deliver lower cost through: Increase on-bottom drilling hours Minimize bit related trips Improve interval drilled & ROP Enhance roller cone bit reliability In geothermal projects, reduce overall development costs 7

Harsh Environment Conditions Cooked Cooked grease reservoir Heavy o-ring wear Severe discoloration ( t l properties (steel ti altered) lt d) Hard and brittle elastomer Normal grease reservoir 8

Kaldera Development High temperature composites Seals Grease New synthetic compound Optimize cutting structure Bit design Inserts Geometry & materials 9

Seals High temperature composites Seals Grease New synthetic compound Optimize cutting structure Bit design Inserts Geometry & materials 10

Seals - High Temperature Composites Highly Saturated Nitrile (HSN) elastomers used in oilfield products Suitable for environments up to 150 C (300 F) Fluoroelastomer (FKM) material Fabric reinforced elastomer composites Excellent resistance to heat and chemicals Improved wear resistance Rated up to 290 C (550 F) New, soft EnergizerCenter FKM energizer layer FKM wear layer Abrasive resistant wear layer FKM coated fabric layer Fabric (Kevlar) Wear Layer 11

Seals - Material Evaluation FKM seal after 15 hrs at 205 C HSN seal after 15 hrs at 205 C 12

Seals - FEA Geometry Optimization Finite element analysis (FEA) design tool Optimized seal design and gland geometry Designed to provide desired d sealing pressure, sealing force and contact profile Bullet seal geometry proven reliability performance in multiple applications 13

Seals - Application Specific Designs FKM coated fabric bullet seal Harder, more wear resistant FKM elastomer on OD FKM coated fabric layer on ID for extreme wear and temperature resistance Bit size range: 5⅞-in to 9⅞-in Twin FKM coated fabric bullet seal Twin FKM coated fabric bullets seals Two tasks: - secondary seal prevents contamination - primary seal to retain lubrication Bit size range: 12¼-in to 22-in 14

Grease High temperature composites Seals Grease New synthetic compound Optimize cutting structure Bit design Inserts Geometry & materials 15

Grease - New Synthetic Compound Critical element in the sealing system Prevents physical damage to opposing surfaces Reduces friction between moving surfaces New High Temperature Grease (HTG) developed Synthetic base oils Li-based soap thickener Extreme pressure/wear additives Compatible with new elastomer materials 16

Grease Laboratory Testing Four-Ball Weld Method ASTM standard test for measurement of extreme- pressure properties of lubricating fluids 17

Grease - Synergistic Evaluation Not a simple component solution FKM material Synergistic performance evaluated in the laboratory Manufacturing excellence HT grease Customized test apparatus to simulate downhole conditions High temperature package Positive results proved success of the new system Reservoir components Seal hub & gland design Seal geometry 18

Grease - Synergistic Evaluation Not a simple component solution Synergistic performance evaluated in the laboratory Customized test apparatus to simulate downhole conditions Positive results proved success of the new system 19

Bit Design High temperature composites Seals Grease New synthetic compound Optimize cutting structure Bit design Inserts Geometry & materials 20

Bit Design - Optimize Cutting Structure IDEAS, Integrated Dynamic Engineering ganalysis System, involves a fully integrated systems methodology, able to deliver application specific bit designs 21

Bit Design - IDEAS Modeling & Simulation Specialized p rock mechanics laboratoryy Advanced simulation and analysis y tool Enables the bit designer g to explore p fundamental drill bit characteristics Full 3D dynamic & static modeling Bit / Rock interaction Vibrations Stresses Rate of penetration 22

Inserts High temperature composites Seals Grease New synthetic compound Optimize cutting structure Bit design Inserts Geometry & materials 23

Inserts - Geometry & Materials Broadest selection of insert geometries available Optimized through detailed dull analysis, FEA and IDEAS modeling Finely tuned tungsten carbide material grades IDEAS modeling assists with optimal insert placement 24

Kaldera Development High temperature composites Seals Grease New synthetic compound Optimize cutting structure Bit design Inserts Geometry & materials 25

Field Testing Evaluation of new system Initial testing completed in geothermal applications Ongoing runs to monitor performance improvement 26

Italy Geothermal Application Hole size and Bits 8½-in tungsten carbide insert (TCI) bits Depths Lithology Unconfined Compressive Strength Abrasion Index Impact Index 2,300m to 3,800m (7,500ft to 12,500ft) Formation Igneous and Metamorphic rocks Rock properties UCS 15,000 to 27,0000 psi Temperature 150 to 280 C (300 to 540 F) 27

Bit Component Analysis Offset bit Kaldera bit 8½-in IADC 637Y 8½-in IADC 647Y 68m (223ft) in 15 hours 240m (789ft) in 77 hours Dull: 3-5-CC-A-FFF-1-LT-HP Dull: 6-8-WT-A-EEE-1-BT-HR #2 cone o-ring seal #2 cone bullet seal 28

New Material Performance Offset bit Kaldera bit 8½-in IADC 637Y 8½-in IADC 647Y 68m (223ft) in 15 hours 240m (789ft) in 77 hours Dull: 3-5-CC-A-FFF-1-LT-HP Dull: 6-8-WT-A-EEE-1-BT-HR Reservoir boot condition Reservoir boot condition 29

Bit Performance Analysis Average interval drilled and drilling hours Meters Hours 250 65% increase in meters drilled Doubled on-bottom drilling hours 80 70 200 67 60 Interv val drilled (mete er) 150 100 50 34 141 50 150 59 192 233 50 40 30 20 rilling hours D 10 0 Well A (all bits) Well B (std bits) Well B (all bits) Well B (Kaldera bits) 0 30

Reliability Performance Analysis Average bit revolutions SF = 37% 144,000 SF = 66% 223,000 SF = 38% 245,000 SF = 11% 266,000 31

Conclusions Focused bit development on design and materials delivers clear results Composite seal materials increase reliability for longer drilling hours Newly developed synthetic grease optimized for high temperature conditions Advanced bit design tools ensure superior cutting structure design Increased bit performance with improved reliability lowers drilling costs 32

Kaldera Roller Cone Bit Technology for Drilling in High Temperature Applications Thank You Smith Bits, A Schlumberger Company www.slb.com/kaldera 33