Testing Carbon Storage in the Mississippian/Devonian Black Shale of Eastern Kentucky. Pikeville, KY

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Stewart Parker
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1 Testing Carbon Storage in the Mississippian/Devonian Black Shale of Eastern Kentucky Pikeville, KY 30-Apr Apr-2008

The Energy Crystal Ball Quadrillion BTU 60 50 40 30 20 Oil Natural Gas Coal Nuclear

2 The Energy Crystal Ball Quadrillion BTU Oil Natural Gas Coal Nuclear Hydropower Other Renewable EIA Annual Energy Outlook

3 U.S. CO 2 Emissions, 2004 Commercial 4% Industrial 18% Residential 6% Electric Power 39% 5.96 billion metric tonnes Transportation 33%

4 Kentucky CO 2 Emissions 160 Million Metric Tonnes Electric Power Transportation Industrial Commercial 2004: 156 Million Metric Tonnes Residential % 22% 16%

5 CO 2 Supply & Availability % Million Metric Tonnes Emissions Available for EOR Capture rate 1.5% per year 3.5% per year 80% 70% 60% 50% 40% 30% 20% 10% Capture Rate %

6 Phase I: CO 2 Storage Billion tonnes Speculative 6.1 Not Demonstrated Oil & Gas Fields Coals Devonian Shale Deep Saline 32.5 billion tonnes total (>300 years)

7 The Black Shale New Albany Fissile Alternating Gray (Q+C) Black (organic) Ohio (Not to scale)

8 Sequestration Capacity 247 Gt 21 Gt The fine print 15 Gt 211 Gt Volumetric based on typical gas adsorption Speculative not demonstrated

9 Geology of Devonian Shale

10 W Cross Section 72 miles E 1,600 feet Shading based on density (RhoB) <2.4 >2.8 More organic More clastic

11 Devonian Shale Reservoir Low permeability (microdarcies) Micro-porosity Organic-rich rich (up to 25% TOC) Thickness > 1,600 feet (eastern Kentucky) > 400 feet (western Kentucky) Kentucky s s most active and prolific gas producer

12 Deplete free gas in fractures Hyperbolic Decline Natural fracturing is key to production Desorbs from fracture faces Desorption and diffusion through shale matrix

13 Cumulative Production Industry rule of thumb is 300 MMcf per well 100% 75% 50% 10 MMcf 692 MMcf 25% 1 year 5 year 10 year 25 year 50 year 0% Billion Cubic Feet Proprietary GTI data

14 Cumulative Production Notes 50% of shale wells produce at least 692 million cubic feet (MMcf) in 50 years Long production history indicates large adsorbed gas content

15 Why Test the Shale? Why Test the Devonian Shale?

16 Paradigm If natural gas can diffuse through the shale matrix to be produced, carbon dioxide should be able to diffuse into that same matrix.

17 CO 2 Enhanced Gas Recovery Demonstrated in coal Low-permeability Organic-rich rich Fractured Continuous Potentially huge storage volume > 25 billion tonnes

18 Production Data Production for some wells inclines Long-term, nearly flat decline GTI Proprietary Data

19 Isotherms Indicate Preferential Expected reservoir pressure Adsorption Standard cubic feet per ton PSIA CO 2 CH 4 CO 2 = 5.3 x CH 4 Average CO 2 : 42.9 scf/ton Average CH 4 : 8.1 scf/ton 60% 50% 40% 30% 20% 10% 0% Standard cubic feet per psia

20 CO 2 /Sand Frac Study Yost, Mazza, & Gehr, 1993, SPE Fast flowback (2 to 3 days) Preliminary production 56% > N 2 frac wells 4.8 x shot wells Consistent with CO 2 adsorption

21 Testing CO 2 Injection for Enhanced Gas Recovery in the Shale

22 HB-1 1 (2007), Section 57 Specifies: At least one of the wells will test the Devonian shale for enhanced gas recovery and sequestration potential. Encourages: the Survey to use these funds to match available federal and private funds to the extent possible.

23 Site Selection Criteria Sufficient size pad for equipment Access for CO 2 delivery Operated by company willing to risk future production (assume liability) Surface, royalty, and working interest owners agree Control of all wells within area of review for EPA Class V permit

24 Project Outline Consortium Site selection Data collection, analysis, modeling Background MMV Injection Data analysis and reporting Model refinement and confirmation MMV

25 CO 2 Injection EPA Class V Small quantities of CO 2 Implement procedures for safe handling during injection and testing Not expected to pose long term public hazard (can safely be vented to atmosphere)

26 Well Selection Criteria Standard open-hole nuclear logs Logging and sampling Rotary sidewall cores, ECS, and others Detailed production data Preferred: Nitrogen/foam or slickwater frac,, sand-propped (or not yet stimulated)

27 The Injection Well Access to open hole Logging and sampling Set 4.5 casing Perforate and stimulate Background data acquisition Injection Site monitoring.

28 Pre-injection: Data Acquisition Well sampling Digital Logs, Φ,, k, mineralogy, TOC, cores Gas composition Microseismic (VSP) or logging for fracture identification Stimulation Injection rate, volume, pressure, breakdown pressure, flowback period Background MMV

29 Pre-injection: Modeling Simulation Multi- Φ, multi-k model Production history match Cyclic Huff- n -puff (single well) CO 2 flood (multi-well) Determine optimum shut-in (soak) times and injection rates EPA permitting (must submit required data) Background MMV

30 Injection Injection volume, rate, pressure, and shut-in times Production data Continuous, for injection and monitor wells Rate & composition (variations in CO 2 content) Pressure Mass balance calculations

31 Post-injection History match & model verification Assessment & analysis MMV continues Reporting

32 Indicators of Success Increase in gas production rate Mass balance indicates CO 2 adsorption After flowback and cleanup, pipeline quality gas

33 Status Site nominations received or in process Recent advanced logs or samples KGS Well Sample and Core Library is being searched for additional cores.

34 Contact Info x 174

35 EOR Scenarios Incremental production from CO 2 EOR: 60 to 200 million barrels Million Barrels Annually CO 2 used: 1 to 7 million metric tonnes per year D i =5.4% D i =7.6% B= Total (bbl) Exponential Hyperbolic 3% 8% 10% Average

Geologic Criteria for Eastern Kentucky Permanent CO 2 Storage (Saline reservoir test)

Geologic Criteria for Eastern Kentucky Permanent CO 2 Storage (Saline reservoir test) Stephen Greb Warren Anderson Kentucky Geological Survey House Bill 1 $5 million appropriated to research use and storage