xto energy aapl june 2007 horizontal drilling in the barnett shale andrée french griffin manager of...

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yAAPL June 2007

Horizontal Drilling in the

Barnett Shale Andrée French Griffin

Manager of Geology

Fort Worth Basin

XTO Energy

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yAAPL June 2007

Play Overview• Current activity – number of wells, production, the “feeding frenzy” is on!

Geological history of the Fort Worth Basin

Horizontal Drilling• Why does horizontal drilling work in the Barnett

• A geologist’s view of “how they do that!”

The other tools used to make the play economic• Induced Frac technology

• Seismic

Conclusions

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yLargest ‘Shale Gas Field’ in N. America

Low Risk

GAS-IN-PLACE (GIP) 150 BCF/640 acres

‘Unconventional’ resource play Covers 15 counties 6,445 producing wells Producing 2.2 Bcf/d (66 Bcf/month) 2.66 Tcf of gas produced (Nov 2006)

Huge upside potential - 26 TCF (USGS Estimate)

Large resource – low recovery

82% of current production from Core area

Take away capacity is expanding rapidly

Source: IHS current thru Nov 2006

Fort WorthWeatherford

Cleburne

WISE DENTON

PARKER TARRANT

HOOD JOHNSON

HILL35 wells

Ouachita Thrust Front

DALLAS

TIER 1

SOMERVELL

CORE~ 82% of current production

1790 wells950 BCF

2067 wells804 BCF

1005 wells440 BCF

450 wells62 BCF

136 wells20 BCF

9 wells.7 Bcf

4 wells0.15 Bcf

3.5 BcfBOSQUE

717 wells238 BCF

ERATH51 wells2.4 Bcf

TIER 2

Long-Term

Downspacing

COUNTYWells Cum. Bcf

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yXTO Energy: At Home in the Barnett Shale

Net acreage: 265,000 gross (~ 214,000 net)

Plan to drill 280 - 300 wells in 2007

Producing wells:

180 vertical

420 horizontal

95% of acreage covered by 3-D seismic by mid '07

Active drilling rigs: 24 rigs

19 in CORE

4-5 in Tier 1

1 in Tier 2

2007 drilling inventory:

1,800 - 2,000 wells

Still acquiring acreage and pursuing acquisitions

XTO acreage

Fort WorthWeatherford

WISE DENTON

PARKER TARRANT

HOOD JOHNSON

HILL Ouachita Thrust Front

DALLAS

SOMERVELL

BOSQUE

JACK

Cleburne

CORE110,000 acres(94,000 net)

TIER 176,000 acres(61,000 net)

TIER 279,000 acres(59,000 net)

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Wells Drilled per Year

0

500

1000

1500

2000

2500

1983

1985

1987

1989

1991

1993

1995

1997

1999

2001

2003

2005

Year

# D

rill

ed

Wells Drilled

Feeding Frenzy!

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yThe Feeding Frenzy is on!

1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 20080

20,000,000

40,000,000

60,000,000

80,000,000

NEWARK EAST

Time - Years

Pro

du

cti

on

Ra

tes

- M

CF

PM

Oil Production (bbl)Gas Production (mcf)Water Production (bbl)

2,664,411,669 mcf8,227,873 bbl

Oil Production (bbl)Gas Production (mcf)Water Production (bbl)

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yAAPL June 2007

Play Overview• Current activity – number of wells, production, the “feeding frenzy” is on!

Geological history of the Fort Worth Basin

Horizontal Drilling• Why does horizontal drilling work in the Barnett

• A geologist’s view of “how they do that!”

The other tools used to make the play economic• Seismic

• Induced Frac technology

Conclusions

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yGeology Overview

It is Mississippian-aged -345 mya

Organic-rich shale -contains a bunch of dead critters that when broken down form oil and gas

Continuous and thick - covering the entire Fort Worth Basin - average thickness 350’

It is a known hydrocarbon producer

It is not the same everywhere!

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y Formation of the Fort Worth Basin

Geological History

Deep Ocean – 345 MYA

Deep Subduction zone forms

Land mass approaches from SE, volcanoes

Basin Fills

Mountains in East Texas!! – 300 MYA

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y Mississippian Deposition – 345 MYA

From Ron Blakely Paleogography of North America 2005

http://jan.ucc.nau.edu/~rcb7/nam.html

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y Early Mississippian – FW Basin

Deep

basin

From Ron Blakely Paleogography of North America 2005

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ySubduction Zone

Northwest

Texas is under water!

Southeast

The Gulf is not the same!

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yLate Mississippian 325 MYA

From Ron Blakely Paleogography of North America 2005

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yEarly Pennsylvanian - 315

From Ron Blakely Paleogography of North America 2005

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yLate Pennsylvanian – 300 MY

From Ron Blakely Paleogography of North America 2005

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yAAPL June 2007

Play Overview

Geological history of the Fort Worth Basin

Horizontal Drilling• Why does horizontal drilling work in the Barnett

• A geologists view of “how they do that!”

The other tools used to make the play economic• Seismic

• Induced Frac technology

Conclusions

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yAAPL June 2007

Horizontal Drill is Effective in the Barnett

Geological reasons• Exposes the wellbore to more surface area

• Barnett thickness is about right ~350’ thick

• Intercepts natural fractures? – Austin Chalk Model

• Intercepts artificially induced fractures and hopefully reopens natural healed system

• Avoids karst and faults…not always true.

Cultural reasons• Allows for drilling under city, lakes, parks, schools . . .

• Multiple wells off of one pad – competition with developers is tough!

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yApplications Of Directional

DrillingDefinition of Directional Drilling:

Directional drilling is the science of directing a wellbore along a predetermined trajectory to intersect a designated sub-surface target

But How do they do it?

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yIt is not new!

Long Beach CA., Shoreline Drilling (1930’s)

First Openhole Single Shot Survey, Long Beach, CA.

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yReference Systems and

CoordinatesHow do you know where the wellbore is?Depth Reference

• Measured Depth• True Vertical Depth

Inclination Reference• Vertical Reference

Direction Measurement• Azimuth Reference• Quadrant Bearings

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Fixed Angle Build Motor

The right BHA is Important

Drill string

Collars

Mud motor – determines build rate

Bit

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Azimuth (Hole Direction)– The azimuth - the direction of the

borehole on the horizontal plane, measured as a clockwise angle (0°- 360°) from the North reference.

– All magnetic tools give readings referenced to Magnetic North; however, the final calculated coordinates are referenced to either True North or Grid North.

Azimuth - Degrees from North to High Side (Horizontal Plane)

N

S Azimuth

W E

Reference Systems and Coordinates

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Directional Control Methods Oriented Mode – Sliding

Inclination – magnetic tools in BHA

Wellpath

– Controlled curvature

– Controlled direction

– No drill string rotation

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Directional Control Methods Rotary Mode - Rotating

Wellpath

– Behavior same as a rotary drilling assembly

– Hole slightly over size

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Intercepts natural fractures Pilot hole Opposing laterals

Applications of Directional Drilling

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Shoreline drilling

Applications of Directional Drilling

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Re-entry/Multi-lateral wells – our future??

Applications of Directional Drilling

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yAAPL June 2007

Horizontal Urban Drilling Multiple wells off of one pad

• Reduces foot print

• Reduces influence on neighbors

• Centralizes facilities

• Centralizes pipeline access and reduces number of ROW

Complications

• Creates shallow drilling hazards

• Many landowners do not own minerals

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Inaccessible locations

Applications Of Directional Drilling

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yCity Limits and the Core

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yCurrent Pad – 4 wells

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yCurrent wells – 3 wells & 1 infill

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y40 acre infill – 6 wells

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y20 acre development – 10 wells

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Let’s Look inside a Horizontal Wellbore

AAPL June 2007

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HEALED FRACTUREOPEN FRACTURE

BARNETT SHALENEWARK EAST FIELD

PARKER CO., TX

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HEALED FRACTUREOPEN FRACTURE

BARNETT SHALENEWARK EAST FIELD

PARKER CO., TX

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yPlay Overview

The tools used to make the play economic

Horizontal Drilling

Frac technology gets the gas out

Seismic identifies geohazards

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Barnett Shale – New Technology Horizontal Drill & Frac

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Wellbore azimuth 0Longitudinal fractures

Surface

Reservoir

Vertical Stress

Transverse fracturesWellbore azimuth

Longitudinal fractures

Surface

Reservoir

Minimum horizontal stress

Vertical Stress

Maximum horizontal stress

Wellbore azimuth 90Transverse fractures

Wellbore azimuth 0Longitudinal fractures

Surface

Reservoir

Vertical Stress

Transverse fracturesWellbore azimuth

Longitudinal fractures

Surface

Reservoir

Minimum horizontal stress

Vertical Stress

Maximum horizontal stress

Wellbore azimuth 90Transverse fractures

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yBarnett Wellbore Schematic

Stage 4

Stage 5

3 – 5 Stages of fracs starting at “toe”Typical frac: 18,000 BW & 400,000 lbs. sand per stage

Stage 3

Stage 2

Stage 1

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yPlay Overview

The tools used to make the play economic

Horizontal Drilling

Frac technology gets the gas out

Seismic identifies geohazards• Faults

• Karsts

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THE EXPLOSIVES PRODUCE THE SOUND WAVES,WHICH THEN BOUNCE BACK FROM THE LAYERS

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y It’s not my fault that the rock is broken.

It’s a Fault!High & thick!

Gone!

Low?

Low and Thin?!?

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yVR Crossline 106

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yVR Crossline 106

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0.6

0.7

0.8

0.9

1.0

1.1

1.2

1.3

1.4

1.5

PetraSeis <Arb-Line 0> Survey: Cleburne_3d Volume: TMIG 05/22/07 21:04:27

Normal Polarity Gain 60 7.50 IPS 24.00 TPI

10911571

11111572

11311573

11511574

11711574

11911575

12111576

12311577

12511578

12711579

12911580

13111580

13311581

13511582

13711583

13911584

14111585

14311585

14511586

400’ fault

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y Karst, fancy “geo-term” for Sink Hole

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0.6

0.7

0.8

0.9

1.0

1.1

1.2

1.3

1.4

1.5

SWJ_BBRNT

SWJ_MRBL

PetraSeis <Arb-Line 0> Survey: Cleburne_3d Volume: TMIG 05/24/07 17:08:08

Normal Polarity Gain 60 7.50 IPS 24.00 TPI

10881785

11081784

11281784

11481783

11681783

11881782

12081781

12281781

12481780

12681780

12881779

13081778

13281778

13481777

13681777

13881776

14081775

14281775

14481774

14681774

1800’

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yPlay Summary

Industry is still on the learning curve

The play is evolving technically and economically

Horizontal drilling and improved frac techniques are expanding the play to the south and west

XTO leasing strategy based on geology and maturation

XTO drilling is based on geology and seismic

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yConclusions I

“The only true wisdom is in knowing you know nothing.” –

Socrates

. . . Feeling fairly wise!

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yConclusion II

. . . “Without the whole group, we know even less.” AFG

• Businesses/Ranchers/Landowners

• Commercial/Residential Developers

• Cities and Municipalities

• Landmen and Brokers

• Geologists

• Engineers

• Geophysics

• So many others!

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•The Barnett is complex

•Frac technology moves the gas

•Seismic helps steer away from Karsts and Faults

•Horizontal drilling

•Allows for better well placement in the section

•More exposure to rock

•Avoid culture

•The play is logistically intensive – a Real Group effort!!

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yAAPL June 2007

Many Thanks to:

XTO Energy

• Mark Pospisil – VP Geology & Geophysics

• Operational Group

− Jacky Brown, Jimmy Hasley & Terry Henderson

LEAM Drilling Systems

• Matt Anding & Dan Fox

AAPL – for allowing me to give my two cents worth – or less!