cuadrilla design values

8/10/2019 Cuadrilla Design Values

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Shale Gas Exploration

and Hydraulic Fracturing

Eric Vaughan, Well Services Director

IMechE May 13, 2014


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Who is Cuadrilla

What is Unconventional or Shale Gas

UK Shale Gas Areas

Hydraulic Fracturing

Economics


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Cuadrilla who we are

Formed in 2007, UK company Early entrant to shale gas in Europe

Prospective and diversified acreage portfolio

Partnered with government and backed by

industry-specialist funds

Exploration assets Netherlands 680,000 acres

Bowland basin 293,000 acres

Weald basin 192,500 acres

Poland 440,000 acres
http://www.cuadrillaresources.com/person/a-j-lucas/http://www.cuadrillaresources.com/person/a-j-lucas/http://www.cuadrillaresources.com/person/riverstone-llc/http://www.cuadrillaresources.com/person/riverstone-llc/


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What is Unconventional or Shale Gas?


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Why is Hydraulic Fracturing Needed?


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Gas emanating from visible fractures


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UK Shale Gas Areas


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Earliest UK Shale Gas Well - 1875

Source: Professor Dick Selly, Department of Earth

Science and Engineering


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DECC/BGS Shale Gas Study


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Bowland Basin

National Grid High Pressure Gas Pipe Locations

Key:A. Thistleton-1

B. Hesketh-1

C. Banks-1

1. Preese Hall-1

2. Grange Hill-1Z

3. Becconsall-1Z

4. Annas Road-1 HZ

5. Elswick-2 HZ

Correct geology

Legacy 2D seismic Age and depth of shales

History of wells drilled

Thistleton-1

Banks-1

Hesketh-1 Elswick-1

History of oil and gas production in

area

Formby Oilfield

Off-shore production

Elswick-1

National Grid has over 190,000 km

of pipelines


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Trying to increase surface area of

reservoir rock exposed to wellbore.

150 foot section of reservoir exposed in8 inch hole is only 333 ft2.

Early Fracturing not really hydraulic!


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Precursor Fracturing Technology

November 1866 Patent for Roberts

Torpedo

Initially used gunpowder and later

nitroglycerin Filled borehole with water to provide

fluid tamping

Pennsylvanias Otto Cupler Torpedo

Company shot its last oil well usingliquid nitroglycerin in 1990


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Bigger Toys Fracturing Technology

Gasbuggy-1967

29 kilotons

Rulison-1969

43 kilotons

Rio Blanco-1973

3 by 33

kilotons each


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What is Hydraulic Fracturing?

According to the United States Environmental Protection

Agency (EPA) hydraulic fracturing is a process to stimulate a

natural gas, oil, or geothermal energy well to maximize the

extraction.

Main purpose is to increase the effective surface area of the

wellbore to allow oil and gas to flow from the rock matrix into

the wellbore.


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Injects fluid into rock at a high enough pressure to cause therock to fracture.

Fluids can be water based, hydrocarbon based, acids,

liquid CO2, gaseous N2, foams and various combinations.

The fractures are held open with proppant after the hydraulicpressure is released.

Typically silica sand.

At greater depths or pressures, ceramic proppants can be

used.

Common sizes are 20/40 mesh (0.853mm-0.422mm) and

40/70 mesh (0.422mm-0.211mm)


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First Hydraulic Fracture Treatment

Stanolind OilCompany

Hugoton Gas

Field, Kansas

1,000 gallonsof naphthenic-

acid-and-palm-

oil (napalm)

and river sand


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Increase Stimulated Rock Volume

Stimulated Reservoir Volume 430 million ft3 withhigh viscosity cross-linked gel

Stimulated Reservoir Volume 1.4 billion ft3 with

low viscosity slickwater


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Frac Mine Back Experiments

(Warpinski, 2011)


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Monitoring Frac Height Growth


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Generate the Hydraulic Pressure

8,000 foot vertical depth well with 14,000 feet of

measured depth.

Fracturing fluid is fresh water.

5 inch monobore well casing.

Injection rate is 80 barrels (12.7m3) per minute.


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Generate the Hydraulic Pressure Typical shales require 0.8-1.1 psi per foot of vertical depth to

fracture.

With a fracture gradient of 0.9 psi/foot then 7,200 psi at

the formation is required.

The hydrostatic pressure of the water based fluid helps.

Just the water exerts 3,464 psi.

This leaves 3,736 psi required at the surface to pump thefractures open.

However, friction from the drag of the water along the walls of

the steel well casing increase this pressure.

Water only would generate 725 psi per thousand feet of

pipe or 10,150 psi.

With friction reducer this would be about 215 psi per

thousand feet of pipe or 3,010 psi.

Pumping surface pressure is 7,200-3,464+3,010=6,746 psi.


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Friction Pressure


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This is not a frac rig!


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Early Frac Pumps

1955 frac pump

manufacturing.

Remote

controlled

pumps powered

by war surplus

1,475

horsepowerAllison aircraft

engines

JPT December 2010


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Frac Pumps in the UK 1990s

First started in UK in 70s

Over 200 fracs performed on-

shore in the UK

Multi-stage, gelled

water frac,

Cheshire, UK 1992

Detroit 12v 149TI,

Allison Transmission,Triplex pump, 1,200

horsepower


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Frac Suite on Preese Hall-1


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Hydraulic Fracturing in Poland


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Hydraulic Fracturing in USA


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Frac Boats in the North Sea


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Example Horizontal Well Design


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Frac Sleeve


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Frac Sleeve

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P i P


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Pumping ProgramDate: 28-Mar-11

Job Num: 1

Meyers File:

Lower Worston Shale Stage Stage 1 Frac

Elap Cum. Stage Slurry Blender

Time Pressure Fluid Fluid Rate Conc. Prop Prop Comments/Fluidmin psi bbl bbl bpm psa lbs type


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Economics


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Growing gas import gap

Indigenous gas production supplies a

decreasing share of UK demand

(Source: Department of Energy and Climate Change)


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UK Energy Electricity vital but only 20% of energy demand

The challenge is much more than Keeping the Lights On

45%

31%

20%

4%

UK Final Energy Consumption - 2011

Petroleum

Natural Gas

Electricity

Other

Data Source Dept. of Energy & Climate Change

From 2011 to 2012 Electricity Generation

increased coal use from 29.5% to 39.3%

And decreased gas use from 39.9% to

27.5%

Renewables9.4%

Gas 39.9%

Nuclear 18.8%

Oil 1.0%

Coal 29.5%

Other 1.5%

2011 Shares of Electricity Generation

Renewables,

14.8%

Gas, 26.8%

Nuclear, 19.8%

Oil, 0.7%

Coal, 36.3%

Other, 1.5%



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44 Data Source Dept. of Energy & Climate Change

Renewables

11.3%

Gas 27.5%

Nuclear 19.4%

Oil 1.0%

Coal 39.3%

Other 1.5%


Dont worry about the Russian gas

Other, 2.0%

Russia, 40.0%

EU, 1.0%

Australia, 6.0%South Africa, 1.0%

USA, 24.0%

Columbia, 26.0%

2012 UK Coal Imports


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55% of gas goes to heat and industry

36% gas goes toheat

36% of gas goes to

electricity andassociated uses

19% to industry and

other final customers 9% other

Use of Gas

Heat

Electricity

Industry

Losses



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Current Fuel Mix for National Electric Grid

(Source: http://www.gridwatch.templar.co.uk/)

05 May 2014

I di d ti li


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Growing gas import gap

Indigenous gas production supplies a

decreasing share of UK demand



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Send Billions of to the exporters or:

(Source: IoD calculations)

Potential contribution

from Shale


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On-Shore Gas Industry

Meaningful unsubsidized private investment (Bowland alone 50B through 2039)

Meaningful job creation (74K at peak)

Meaningful energy security contribution

Green completion standards

Small industrial footprint

(Source: IoD calculations)


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Community benefits

Local authority to receive 100% of business rates

Communities receive 100,000 for every exploration well

site that is hydraulically fractured

Communities receive one per cent of revenues from futureshale gas production Potentially, more than 1 billion over a 20 to 30 year shale gas production

timescale could be returned to Lancashire communities within the Bowland

Basin license area alone

The above is (broad brush) paid 2/3 locally, 1/3 to the

county (many specifics to be worked out)


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