The New Era of Shale BHP Billiton Petroleum Supplement to
Contents 2 The Company 4 Operating Principles 6 The Growth of U.S. Onshore Oil and Gas 10 Building the Wells 12 The Move into Shale 14 The Eagle Ford Shale 22 The Permian Basin 26 The Haynesville Shale 30 The Fayetteville Shale 34 Zero Harm 36 Good Neighbors 38 Avoiding Potential Roadblocks 40 Company Profiles
Every time we look at the opportunities in our shale oil and gas plays, they get larger. Mike Yeager Chief Executive BHP Billiton Petroleum We know the resources are there. Our job is to deliver them safely and in an environmentally responsible way. We are in this business for the long haul, and we are going to do it right.
2 BHP Billiton The Company Houston-based BHP Billiton Petroleum delivers nearly one fourth of the annual earnings of the BHP Billiton Group. BHP Billion Petroleum s exploration, development, production, and marketing activities span more than a dozen countries. The company holds significant positions in the deepwater Gulf of Mexico and onshore United States as well as in Australia, the United Kingdom, Algeria, Trinidad and Tobago, and Pakistan. It also has promising prospects in the Philippines, India, and Malaysia. Between 2007 and 2011, BHP Billiton Petroleum brought five world-class developments on stream. The company entered the onshore shale business with the $4.75 billion Fayetteville Shale acquisition in April, 2011, but that was just the first step. It strengthened its U.S. onshore position later in the year through the $15 billion acquisition of Petrohawk Energy BHP Billiton Petroleum s Seismic Processing and Imaging Team has numerous technology projects with research institutions around the world.
BHP Billiton 3 BHP Billiton Petroleum s Shenzi deepwater platform in the Gulf of Mexico began production in 2009. Corporation, which gave it major stakes in the Haynesville, Eagle Ford, and Permian basins to complement its Fayetteville position. Since then, the U.S. onshore workforce has doubled. BHP Billiton Petroleum operates some 45 land drilling rigs in the United States in addition to its deepwater drilling around the world. BHP Billiton Petroleum is now among the largest independent oil and gas companies in terms of both its total production and resource base. Its shale assets in North America are some of the most valuable, high-quality resources in the world. The company s business is built on a powerful platform of rigorous safety standards, high quality oil and gas resources, functional excellence, operating discipline, and financial strength. It has the people and skills to take on complicated and diverse opportunities, and the flexibility to move quickly to deliver value in any environment. BHP Billiton Petroleum has close to 4,000 employees globally, and is deeply committed to their safety. The company has the systems in place to ensure its employees return home unharmed at the end of the day, and it continually strives to improve its sterling safety performance. As a global producer, exporter, and consumer of energy, BHP Billiton understands the need to conserve energy and the risks of climate change. Since 2006, it has achieved an 16 percent reduction in greenhouse gas emissions per volume of production, exceeding its public target of a six percent reduction by 2012.
4 BHP Billiton Operating Principles These five basic operating principles shape everything BHP Billiton Petroleum does as a company and serve as its pledge to local communities. 1. To be the safest company in the industry We carefully develop and rigorously implement safety and operating systems, properly train our people, and will not compromise our behavioral standards. We only work with contractors who share our commitment to safety. We partner with local communities to prepare them to respond to unplanned events. 2. We will protect the land where we operate We install and operate our wells and facilities in the most environmentally sensitive manner. We look for opportunities to drill multiple wells from a single pad to reduce the size of our surface footprint. We conduct environmental assessments prior to the execution of work to properly plan for and minimize the impacts of our operations. We are committed to restoring the environment when we complete our operations to ensure it is as healthy and robust as before we arrived. 3. We will safeguard and manage water resources We minimize our impact on fresh water by utilizing alternate sources wherever possible. We do not dispose wastewater into any surface source (streams, lakes, rivers). We do not drill or conduct hydraulic fracturing operations unless we are confident that groundwater will be protected. 4. We will minimize air emissions from our operations We conduct our operations in a manner that minimizes flaring and venting. We use alternative or cleaner-fuel source technologies. We have one of the most modern and operationally efficient drilling fleets in the onshore industry. 5. We will be a good neighbor to our communities We look for ways to make our operations less intrusive to the community. We publicly disclose the chemicals that are used in our hydraulic fracturing operations. We work with state and local officials to find workable solutions to common industry problems. We give back to the community in a meaningful way through social investment and partnerships.
BHP Billiton 5 Safety is BHP Billiton Petroleum s primary concern. The company recognizes that the business of finding, extracting, and delivering hydrocarbons is full of potential hazards, and its commitment to the safety of its employees and contractors is one reason that, statistically, they are less likely to be injured at work than they are in their own homes. Every employee and contractor, no matter what their position, has the right and obligation to speak up if they have doubts about any activity. If they can t be certain of the task at hand, they are required to either stop the job or do whatever it takes to ensure their own safety and that of those around them. Is the approach working? Yes. In its U.S. onshore operations, many of the safety standards established by BHP Billiton Petroleum have improved not only its own safety performance, but that of its contractors and other operators as well. Eagle Ford Drilling and Completions Manager Michael Bloom prepares a group of journalists for a drillling rig site visit.
6 BHP Billiton The Growth of U.S. Onshore Oil and Gas It s no secret that recent advances in hydraulic fracturing and well completion are opening vast new oil and gas resources. The biggest fields by far are in North America. An increasing portion of BHP Billion Petroleum s North American portfolio consists of what are known as unconventional oil and gas plays. While shale oil and shale gas are considered unconventional resources, the term refers only to the source rock, not the high-value liquids and natural gas that come from it. Two basins in particular, the Eagle Ford and the Permian, account for about 40 percent of all the unconventional oil and gas activity in the United States. What are shale and tight gas reservoirs? In conventional reservoirs, hydrocarbon molecules are able to squeeze between the grains of relatively porous rock. Above that porous zone, however, there must be what geologists call a trap or seal to keep the oil and natural gas from migrating all the way to the surface. Shale reservoirs are different. Shale and other tight reservoirs don t need traps and seals, because the source rock itself is the trap. Hydrocarbons are caught within pore spaces that are significantly smaller and more restrictive, and are also absorbed onto the clay mineral particles that make up the shale. The only way hydrocarbon molecules can move around is through natural and artificial cracks.
BHP Billiton 7 A matter of scale One of the biggest differences in shale oil and gas fields is the large number of wells needed to extract the resource.
8 BHP Billiton An abundance of opportunity exists in shale in the lower 48 states. Source: Energy Information Administration based on data from various published studies. Updated: May 9, 2011. Geologists have long been aware of the oil and gas contained in shale, but didn t have a way to recover it economically. That changed on a significat scale in the mid-2000s, thanks to improvements in a 50-year-old technology known as hydraulic fracturing, or fracing for short. Fracing uses water pressure to create networks of tiny cracks in the rock. To hold them open, sand and minute amounts of a gel-like thickener are added to the water. But what about market changes? After BHP Billiton Petroleum acquired a stake in the U.S. shale oil and gas industry, the price of natural gas in the United States dropped to the lowest level in years. Such low prices are squeezing out the small operators and forcing changes within the industry. That s nothing new in the oil and gas business. What s important to remember is that discovering, producing, and delivering hydrocarbons is a long-term venture. Fields take years, even decades, to develop. The wells being drilled now will be productive for at least the next 30 years. At the end of 2012, the company s onshore holdings stood at 1.6 million acres. Since it will take 20 years just to develop the shale resources it knows are in the ground, the fields themselves will be active for at least the next 50 years. Few industries have lead times as long as this, or capital expenditures as large.
BHP Billiton 9 The drillers control room, known in the industry as the dog house, on one of BPH Billiton Petroleum s brand new Eagle Ford rigs built to company specifications. Supply and demand drives the market. While the United States now has an oversupply of natural gas, Europe and Asia do not. That will likely change in the next few years as more liquefied natural gas (LNG) receiving terminals in the United States are converted to export terminals. When it becomes relatively easy to export natural gas, world prices should be more uniform. Other factors are changing the market as well. Low prices are encouraging some electric power producers to shift from coal to gas, and chemical plants are increasing capacity to take advantage of the relatively low cost of natural gas liquids. The demand for natural gas and natural gas liquids is certain to grow in the United States, the largest and most mature market in the world. What about liquids production? By the end of 2012, BHP Billiton Petroleum s onshore fields were delivering 270,000 barrels of oil equivalent per day to U.S. customers. The hydrocarbons are a mix of oil, natural gas, and natural gas liquids in the current market, the liquids sell for more than dry gas. Since many of the company s onshore fields have the capacity to produce more than 50 percent liquids, it has the flexibility to leave the dry gas in the ground for now and keep its crews and equipment busy producing more liquids, including crude oil, which continues to sell at strong prices.
10 BHP Billiton Building the Wells At the surface After geologists and reservoir engineers determine where the wells should be, crews level the site, construct a lease road, erect the drilling rig, and place support facilities on the pad. For efficiency, and to minimize disturbance at the surface, BHP Billiton Petroleum typically drills and completes several wells from a single pad, directing each wellbore to a different part of the target zone. When the wells are to be hydraulically fractured, an array of large trucks, pumps, storage units, and control systems will be brought in for several days. Once all the wells are completed, the perimeter of the site is restored as close as possible to its original condition, leaving only a minimal surface footprint. Surface drilling and casing Drillers start a new well by drilling a hole to a depth of approximately 80-100 feet, and installing a large-diameter pipe called a conductor casing, which is then cemented in place. Protecting the water table Once the conductor casing is set, drilling continues to a depth that state regulatory agencies determine is well below the level of any fresh ground water. The heavy pipe called surface casing is then installed and cemented in place by pumping cement down the pipe. The cement circulates to the bottom of the surface casing and rises back to the surface on the outside of the casing, forming another layer of protection and strength. Horizontal drilling Shale wells are usually completed with a horizontal section. As the wellbore continues downward and it approaches the target shale, drilling engineers guide the drill bit, curving the borehole until its path is horizontal or nearly so. The finished hole may run horizontally for a mile or more through the hydrocarbon-rich layers of rock. Production Casing The drilling phase is finished after drillers install and cement an additional set of piping from the bottom of the well all the way back to the surface, forming yet another barrier between the rock and the inside of the well.
BHP Billiton 11 Manufacturing wells In most shale fields, operations continue around the clock. Depending on the reservoir, wells typically take 10-20 days to drill. BHP Billiton Petroleum drills several wells from each pad in a manufacturing-like process. Perforating In a critical part of the completion phase, portions of the production casing are perforated by a series of small explosive charges, creating holes that are about an inch in diameter and extend as far as 18 inches into the surrounding rock. These perforations provide a conduit for fluid and sand to be pumped into the reservoir during the fracing stage, and afterward allow hydrocarbons into the wellbore so they can flow or be pumped to the surface. Hydraulic Fracturing Because shale is too dense for hydrocarbons to flow through it on their own, the wells are stimulated by pumping in fluid usually water and thickeners and sand under very high pressure. Downhole, the fluids push out through the perforations into the rock formation. The pressure is great enough to break the rock and release hydrocarbon molecules from microscopic voids in the shale. The sand, called proppant, holds the fractures open so the fluids can flow into the wellbore and to the surface.
12 BHP Billiton The Move into Shale Through purchases in 2011, BHP Billiton Petroleum acquired major positions in four of the largest onshore oil and gas fields in the United States. Two of the assets are what the industry calls liquidrich, which means the hydrocarbons they produce are largely oil and natural gas liquids, as opposed to dry gas. In some areas, the proportion of total liquids production is as high as 80 percent. The company s holdings in shale basins across Texas, Louisiana, and Arkansas contain some 8.0 billion barrels of oil equivalent, a U.S. domestic resource that we will be producing over the next 50 years. People know us BHP Billiton Petroleum s onshore acreage in the United States lies in regions where people have a long history in the oil and gas business and the industry is an important part of the economy. At the end of 2012, the company was producing 270,000 barrels of oil equivalent per day from these onshore fields. That number will grow throughout 2013, driven by more than $4 billion in drilling and completion and facility development. Using local contractors, BHP Billiton Petroleum is building the infrastructure to bring valuable gas and liquids to market. In 2012, it installed some 140 miles of new pipeline in the Eagle Ford and Permian shales, and is building another 200 miles of pipeline in 2013. Over the next few years, the company will add six new processing plants and lay about 800 miles of pipeline in the Eagle Ford alone. Development in the Permian includes some 600 miles of pipeline, as well as gas dehydration, compression, and cryogenic facilities. These large, long-life, and low-cost assets hold tremendous volumes, with potential for significant future development. Together, they make BHP Billiton Petroleum one of the industry leaders in some of the most productive shale basins in the United States. BHP Billiton Petroleum s size and scale give it the flexibility to respond to market conditions. In financial year 2012, the company adjusted its shale development plans to focus on oil rather than gas, while maintaining its capability to ramp up in the future when natural gas prices rebound. A diversified portfolio of onshore oil and gas opportunities provides extraordinary flexibility to respond to changes in the market.
BHP Billiton 13 Home-grown energy BHP Billiton Petroleum works closely with landowners to minimize its footprint. Shale proving to be an economic boon to the U.S. 1.75 million jobs created in past few years. New jobs expected to grow to 3 million in 2020. $2.5 trillion in government revenue by 2035. Nearly 2% of U.S. GDP over next three years. Source: U.S. Chamber of Commerce
14 BHP Billiton The Eagle Ford Shale Hydrocarbons in economic quantities were discovered in the Eagle Ford shale in 2008. Since then, the region has become the epicenter of shale operations in Texas, and one of the premiere plays in North America. The Eagle Ford spans more than 400 miles of south-central Texas. The heart of the play is about 50 miles wide and has an average thickness of 250 feet. It is a giant resource that will be productive for many years to come.
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16 BHP Billiton BHP Billiton Petroleum s average hydrocarbon production from the Eagle Ford, which includes the Black Hawk and Hawkville fields, is over 50 percent liquid hydrocarbons. With an attractive product mix of condensate and natural gas liquids, the Eagle Ford Shale is rated among the lowest cost plays in North America. As a result, the economics of dry gas have much less effect on company activities. The rigs are working flat-out, says Eagle Ford Production Unit Manager Steve Pastor. Our success is due in part to the fact that we re in the sweet spot of the basin. Geologically, it is among the best of the best. According to a study by the independent research and consulting group, Wood Mackenzie, BHP Billiton Petroleum has the second most valuable position in the Eagle Ford. The Eagle Ford includes a vast rural area of south-central Texas. Hydraulic fracturing at night in the Eagle Ford Shale. Drilling and completions operations run non-stop, lessening America s dependence on foreign oil and gas.
BHP Billiton 17 The field produces three products. First is the crude oil and condensate, which is a high-value lighter form of crude oil. Next is dry gas, which can often go straight into interstate pipelines and be sold directly into the market. Between the two are natural gas liquids ethane, propane, butane, and pentane which are typically separated out in gas processing plants. In 2012, BHP Billiton Petroleum produced nearly 100,000 barrels of oil equivalent per day from the Eagle Ford Shale, with half of that being hydrocarbon liquids and the rest, dry gas. In the next few years, the company aims to produce 300,000 barrels equivalent per day from the Eagle Ford. Six new processing plants will be needed to handle the volumes. BHP Billiton Petroleum will be adding 800 miles of pipeline, and has already spent more than a billion dollars on the infrastructure. Reservoir modeling Commercial amounts of hydrocarbons were discovered in the Eagle Ford Shale in 2008. The region has since seen an extraordinary amount of development as one of the premiere shale plays in North America. What BHP Billiton Petroleum brings to the table is financial strength and technical depth to make the most of this outstanding resource. BHP Billiton Petroleum s Technology Goals Model and understand production complexities associated with nano-permeability reservoirs Lead the industry in the development of static and dynamic shale reservoir models Improve hydraulic fracturing efficiency, development planning, and ultimate energy recovery Identify, assess, and implement breakthrough technology If we can unlock the secrets of the Eagle Ford, we can apply that technology elsewhere around the world. Vice President of Development Planning Rob Kase.
18 BHP Billiton We are now working on dynamic reservoir models of the field, says Rob Kase, Vice President of Development Planning. That s what we do for conventional reservoirs, but it has never been done in a shale like the Eagle Ford. Reservoir models are computer-based simulations of a field s geology. Specialists construct them using seismic data and information from wells. Dynamic 3D models help engineers and geoscientists predict how fluids will move through a reservoir. Accurate models help them plan the location of new wells and develop strategies for enhancing recovery. The reason no one has created a dynamic model for a shale reservoir is that the permeability of the rock is so much less than it is in a conventional oil and gas reservoir. The rock is so tight that some of the parameters geoscientists would use to model a conventional reservoir just don t apply. The conventional approach is difficult to use in the Eagle Ford, Kase says. In a well-connected reservoir with higher permeability, you can calculate the flow or drainage rate based on the reservoir parameters. Here, because the rock is so dense and varied, it creates a significant challenge. The flow rate from a single well, for example, can be deceiving. The fluids might be entering the well at a uniform rate throughout the length of the completion zone, or the majority of the fluids might be coming from a narrow zone that just happens to have more natural fractures in the rock. Without a good model of the reservoir, there is Eagle Ford Production Unit Manager Steve Pastor (left) with Eagle Ford HSEC Supervisor Harry Barnes. not a strong correlation between the characteristics of the reservoir and how much production you can expect from the wells. Shale gas recovery factors generally run in the mid to high teens, and oil recovery factors between five and seven percent, Kase says. If we can build a dynamic reservoir model for the Eagle Ford, I believe we can improve recoveries significantly. This will have a significant impact on not only production rates, but the value of the asset. The really big prize, however if we can unlock the secrets
BHP Billiton 19 in revenue, created 38,000 full-time jobs, and added $211 million to local government revenues in south-central Texas. Today, communities in the 14 counties that make up the Eagle Ford are building new schools and hospitals and launching training programs to help people realize the benefits of shale oil and gas development in the regions surrounding their communities. The study projects that up to 116,000 full-time jobs will be created by 2021. Water in an arid land The Eagle Ford has no surface water to speak of. Much of the area is quite arid, but there is a world-class aquifer that has an immense volume of fresh water in a porous sandstone that is 400 to 500 feet thick. The problem is, the water is extraordinarily deep. While most freshwater aquifers are no more than 400 feet below the surface, one has to drill much deeper down to reach this one. Cities can afford to get their water from this source, but many ranchers and farmers can t. BHP Billiton Petroleum Chief Executive J. Michael Yeager (left) on a visit to the Eagle Ford. of the Eagle Ford will be the ability to apply that technology elsewhere around the world. Adjusting to the market Low natural gas prices in the United States have caused dramatic shifts in the way producing companies manage their fields. Such cycles, driven by supply and demand, have been the nature of the petroleum industry since 1859. In BHP Billiton Petroleum s case, it has shifted assets to produce more hydrocarbon liquids and less dry gas. Since the Eagle Ford and Permian are its most liquids-rich fields, they are getting the most attention. Near the end of 2012, the company was running 8 rigs in the Permian Basin and 30 in the Eagle Ford. A new fleet of drilling rigs, most of them purpose-built for working in shale, are now being delivered from fabrication yards on the Texas Gulf Coast. Several units are already in service and the rest will be in the field by mid-2013. By then, all 45 BHP Billiton Petroleum drilling rigs will be the safest, cleanest, and most energy-efficient in the field. A boost for local communities Exploration, development, and production in the Eagle Ford Shale has contributed to the economic revitalization of the region. According to a 2012 study by the University of Texas at San Antonio, the shale gas projects in 2011 alone generated just under $20 billion To get enough water for drilling and hydraulic fracturing, we have drilled a number of fresh water wells and turned them over to private landowners.
20 BHP Billiton To get the water needed for drilling and fracing wells in the Hawkville area of the Eagle Ford, BHP Billiton Petroleum is drilling these extra-deep water wells and turning them over to private landowners in exchange for a share of the water. That gives it the water it needs, and the property owners are happy to have a reliable source of fresh water. How much is needed? The amount of water needed per well for hydraulic fracturing varies from one field to the next, but three to five million gallons is a ballpark figure. While that sounds like a lot, it is small compared to the daily water consumption of a power plant or the irrigation needs of a large farm. To ensure that it is not taking too much water or harming the aquifer in any way, the company has retained the services of a Ph.D. geologist who lives in the area. As a landowner himself, he represents the community and advises local water boards. The drilling program When BHP Billiton Petroleum took over drilling in the Eagle Ford, it put a lot more hardware in the field, including 30 new rigs built to its specifications. Our rig fleet is entirely composed of modern AC rigs split between fast movers and skidders, says Derek Cardno, the company s vice president for global drilling and completions. The fast movers are typically used for drilling only one or two wells on a pad. That equipment is easier to move from one site to another. The skidder rigs are designed to drill multiple wells on a pad. They are more complex because they include a skidding system that allows the derrick to move quickly from one well to the next. If the idea is to drill appraisal wells, as is done in the Permian, then the rigs need to be easy to move. If the rigs will be drilling large numbers of development wells, as they are in the Eagle Ford, then rigs on skids are the answer. All 45 of our new rigs have much better control systems than the units they are replacing, Cardno adds. That makes them more suited to drilling the type of short-radius horizontal wells we want. These rigs can drill the curve and lateral sections of the wellbore much more efficiently and with a high degree of precision. The new equipment is also more automated than ever before. Drillers, for example, can enter set points, then take their hands off the controls and let the rig s computers guide the drill string. These advanced rigs are inherently safer than the older ones, Cardno says. A lot of the hazards have been designed out. A finished well site in the Eagle Ford field.
BHP Billiton 21 We re trying to change the way folks think about safety in their day-to-day business. That s going to take constant vigilance. Vice President of Drilling Derek Cardno. Safely managing change With 45 drilling rigs in BHP Billiton Petroleum s U.S. onshore fleet, part of the challenge is managing them consistently. We are a bigger organization now, Cardno explains. Smaller companies are used to working with fewer rigs. We work that way ourselves in the conventional business, where we had only eight or ten work fronts at any one time around the world. They were run by a small team. Everyone knew how each other worked. Now, in the unconventional plays, we are geared up to run 45 rigs and nine frac spreads, so we have 60-70 work fronts. That is a lot to get your arms around. Consistency is one of the most difficult things to achieve in daily operations. When you consider that the drilling program spans not only the Eagle Ford, but three other large fields as well, the challenge is huge. What Cardno and his team did is divide the drilling organization into smaller, more manageable chunks: Drilling managers look over a certain number of rigs. Drilling superintendents oversee smaller numbers of rigs. An engineer and superintendent work together, and each has a certain number of rigs supported by a small team. The hard part is getting a consistent message across all work fronts, Cardno says. We re managing that through a lot of interaction. I receive direct reports daily. We have a morning meeting every day to go through the operations and discuss issues. Managers do the same down the line. The drilling organization also brings all of the field personnel together every three to six months. The goal is to get the same message out to everyone about the company s expectations and its requirements for safety, performance, and quality. It is also an opportunity to gain valuable feedback from the field. We are doing it with our service providers as well, Cardno says. We ve met with vice presidents and CEOs of all our service companies. We brought them all together to make sure everyone understands what we expect in terms of safety, quality, and performance. We re making great strides, but we cannot get complacent. We re trying to change the way folks think about safety in their day-to-day business. That s not going to happen overnight.
22 BHP Billiton The Permian Basin The Eagle Ford is liquids-rich, but the Permian Basin, which covers some 75,000 square miles of west Texas and southeastern New Mexico, has a very high percentage of crude oil. Although BHP Billiton Petroleum is still drilling appraisal wells, it is seeing liquid hydrocarbon production from shale in the range of 75 percent. The best wells are in the 30,000 square-mile Midland Basin and in the smaller Delaware Basin, which lies to the west. Many operators are working in various parts of the Permian, which accounts for about 20 percent of all the drilling in the United States today. sine waves slowly through the earth, pushing up mountains in some places and leaving basins in between. The Permian is huge, and anything but consistent. There are multiple layers of hydrocarbon-bearing rock with names like Wolfcamp, Sprayberry, and a blend of the two known as the Wolfberry. The Permian includes the north and south Midland basins, a Central Basin Platform and the Delaware Basin. BHP Billiton Petroleum s BHP Billiton Petroleum has more than 440,000 acres of undeveloped land under lease. What is it finding? One of its appraisal wells peaked out at 500 barrels of oil and six million cubic feet of gas per day. It s too early to tell how many such wells it will have, but its Permian drilling program calls for 60 new wells in 2013, and the company is just getting started. An area known as the South Midland is largely unexplored, but many companies are starting to drill there now. It is a very new play for the industry in general, and there is a lot of optimism because liquids production in some areas could be as high as 90 percent. Portions of the Permian Basin have been producing conventional oil and gas since the 1920s. In 2012, the conventional part of the Permian produced the energy equivalent of a million barrels of oil per day. Now, with the ability to recover hydrocarbons from unconventional plays, production from the Permian could reach two million barrels per day by 2020. Challenging geology of the Permian The basin itself was formed as part of the Ouachita orogeny, a 50-million-year era of mountain building caused when the continents we now call North and South America bumped together some 300 million years ago. The continental collision sent huge Lee Higgins is BHP Billiton Petroleum s top geoscientist evaluating the Permian Basin.
Safer and more efficient rigs Forty-one of the rigs in BHP Billiton Petroleum s 45-rig fleet are new and purpose-built for drilling in shale. The remaining four rigs are only three years old, which means that the company operates the most energy efficient, technicallyadvanced, and safest rigs in the field.
24 BHP Billiton largest holdings are in the Midland, where the producing zone averages around 700 feet thick, and the Delaware, where the Wolfcamp interval is nearly 1,000 feet thick. By comparison, that is three to ten times thicker than most shale plays. I ve been working and studying this area since 1988, says Lee Higgins, the company s top geoscientist working on the Permian. When I saw how much acreage the company had, I was eager to work on the project. The Permian is a huge challenge, both from an operations standpoint and from a technical, scientific standpoint. For one thing, the shale is not really shale. What we have in the Wolfcamp is really a different type of rock, Higgins says. You won t find this in the Haynesville, Fayetteville, or Eagle Ford. It is different from the Bakken, the Marcellus, and the Utica. Those are all more classic shale plays. What we have in the Wolfcamp is actually mud rock, which implies that it was deposited differently than shale. Despite the region s long history of conventional production, there was little data on the layers known as the Lower Permian. The Permian is an old basin, Higgins explains. The rock changes vertically and laterally. It is not the same here as it is over there, so even nearby wells could have different characteristics. Every time we get new data, we go back and rethink what we thought before. One question is whether it is better to drill vertical wells through the 1,000-foot thick producing zone, or to drill them with long Operations Engineer Phillip Schneider. horizontal sections. Operators are trying both, and there are good arguments for each approach. Vertical wells are cheaper to drill, but horizontals reach more of the reservoir. We re exploring the concept of drilling stacked laterals, Higgins adds. That means a series of two or more horizontal wellbores, one above the other. The trick is where to put those laterals. It s important to remember that we have only drilled a handful of wells and we are still studying the results. We are just in the early stages here. Striking a balance The abundance of high-value liquids, particularly in the South Midland and Delaware basins, gives operators more flexibility in developing the field. Even so, it is important to control costs. We re drilling fairly long laterals, says Permian Production Unit Manager Doug Handyside. The idea is to touch as much rock as possible. Horizontal wells in the Delaware are 4,000 to 5,000 feet long. In the South Midland, we re drilling 7,500-foot laterals, and some in the industry have drilled laterals up to 10,000 feet. Permian Drilling and Completions Manager Paul Kelly (left) with Drilling Supervisor Daren Mahoney. It s likely that fields in the Permian will be developed using a mix of horizontal and vertical wells as companies decide which are the most economical for their portions of the play.
BHP Billiton 25 Our initial assessment of development potential here suggests that we will recover only about five percent of potential hydrocarbon in place. The upside is enormous if we can double that to only 10 percent. I believe that in five to ten years, we ll be there. Growing pains There is limited infrastructure capacity in the Delaware and South Midland fields to accommodate the rapid pace of drilling, but operators are catching up. Typically, collections of nearby wells will flow to pads or tank batteries to begin separating the oil from the natural gas liquids and dry gas. The oil and condensate is typically stored at the lease site and trucked out. For the gas, we propose to build infield gathering systems and route it to a central distribution point, Handyside says. There, the gas would be dehydrated and compressed and either processed or simply sold into a third-party line. We are also building a small cryogenic plant to process our own gas in the Delaware Basin. Another challenge, besides separating the production into marketable products, is how to get them out of the field. The pipelines coming out of west Texas are full of oil, Handyside explains. The pipelines that handle the NGL mix are almost full. There is enough pipeline capacity to handle the dry gas, but getting liquids out has been an issue. Pipeline companies are beginning to move in, expanding their capacity and building new lines. The lag in infrastructure is mainly due to the rapid increase in liquids production as the unconventional reservoirs in the Permian are developed. Operations Supervisor Brian Downing (left) and Production Supervisor Dennis Winowiecki at the site of a new gas plant under construction.
26 BHP Billiton The Haynesville Shale In 2007, the Haynesville Field in northwestern Louisiana did not exist. Today it is among the largest gas fields in the United States. Technically known as the Haynesville/Bossier Shale, this play is remarkable for several reasons. Like other shale developments in the BHP Billiton Petroleum portfolio, this one is big. The entire play straddles east Texas and western Louisiana. Most of the company s portion of the field is in Louisiana, where the producing zone is up to 300 feet thick and the reservoir pressure is relatively high. The rock is also hydrocarbon-rich, and the water saturation is low. The Haynesville shale currently produces enough natural gas to satisfy 10 percent of U.S. demand. BHP Billiton Petroleum is one of the largest leaseholders in this field, as it is in the Fayetteville play to the north in Arkansas. Even if U.S. gas prices trend low through 2013, the Haynesville shale still contains enough easy-to-recover hydrocarbons to make it profitable. The wells are fairly deep, but the shale is easy to frac. The company s strategy for the Haynesville given the prolific Permian Basin and Eagle Ford plays in its portfolio is to continue drilling at a moderate pace. It has enough rigs to keep its drilling teams busy and support its contractors. When dry gas prices in the United States firm up, the company can pick up the pace. There are places in the Haynesville where neighbors can see our operations from their back porch. BHP Billiton Petroleum s new office building in Shreveport, Louisiana, will double as a training center for new employees.
BHP Billiton 27 Here to stay Drilling continues in the Haynesville even in the face of lower natural gas prices. Part of the company s strategy is to maintain a solid base of contractors and experienced crews so they will be available when the market rebounds.
28 BHP Billiton The neighbors Unlike the Permian and Eagle Ford fields, there are places in the Haynesville where neighbors can see BHP Billiton Petroleum operations from their back porch. A two-well site near Shreveport is about 1,000 feet from the home of a retired federal judge and a church, and the Red River is just across the highway, says Haynesville Production Unit Manager Greg McCain. Another site is about the same distance from a school. Even though BHP Billiton Petroleum is new in town, its employees are not. External Affairs Manager Tommy Clark has lived in Shreveport more than 25 years. He has a business background and has worked extensively with local and state governmental agencies. External Affairs Manager Tommy Clark (left) and Haynesville Production Unit Manager Greg McCain. When working so close to the community, Clark says, we go out of our way not to be a nuisance. We are sensitive about noise, for example, so fracing operations are typically restricted to daylight hours. In the case of the nearby school, we waited until Christmas break to complete the well. In the Haynesville area there is plenty of surface water available. Much of it comes from the Red River.
BHP Billiton 29 To conserve water and avoid the high cost of disposal, much of the produced water from BHP Billiton Petroleum wells is stored on site in tanks and reused for hydraulic fracturing. Responsible water use In most areas where operators use hydraulic fracturing, finding enough water is a problem. Not so in the Haynesville, where there s plenty of surface water available. Much of it comes directly from the Red River or ponds that have been built to hold frac water. The bigger challenge is what to do with water that comes back to the surface after a frac job, and what comes up from the producing wells. We recycle and reuse as much water as we possibly can, McCain says. We don t pull water from freshwater aquifers that supply rural communities. Where we are close to the river, we pull water from there. We also drill water wells into the Red River alluvial, which is where the State of Louisiana wants us to drill. What about the water that is not recycled? In the Haynesville, there aren t many disposal wells, so that also drives the effort to recycle. Although we ve been in the Haynesville a relatively short time, the equipment and practices we have in place so far allow us to reuse more than 40 percent of all the water from hydraulic fracturing, and the company is constantly improving on that.
30 BHP Billiton The Fayetteville Shale The Fayetteville is a giant field that covers a large amount of central Arkansas. Its wells are shallow, predictable, and remarkably productive. BHP Billiton Petroleum purchased the asset in April, 2011. Since then, the company has hired more than 250 workers. While the level of activity has been scaled back due to lower than expected natural gas prices, Fayetteville continues to be a major part of its onshore oil and gas portfolio. The previous operator was very good at identifying the plays, getting the land, and appraising it, says former Fayetteville Production Unit Manager Rob Skaufel, and now BHP Billiton Petroleum s President of global Conventional Production. Now we are at the point of developing the acreage. It was exactly the time to step in. As a large international oil company, BHP Billiton Petroleum brings resources, financial strength, and a depth of experience that smaller companies seldom have. Take safety, for example. Our way of doing things is based on our experience offshore, Skaufel says. Safety is the highest priority in the company. We bring established systems and processes developed offshore and adapt them for onshore operations. The same culture of safety and operational integrity shows in the way the fields are being developed, Skaufel notes. We do assessments and baseline studies that cover a 1,500- foot radius around each well. If there are existing water wells or sources of surface water, we sample them to be sure we know what condition they are in before we drill, then we sample them again later to see if there is any change. Responsible water use There are more than 3,000 wells in the Fayetteville area. BHP Billiton Petroleum operates about 800 of them. Together, those 800 wells produce around 10,000 barrels of water per day, and something has to be done with it. The previous company primarily trucked the produced water to disposal wells, Skaufel says. All of the injection wells were in the heart of the field. Right about the time we took ownership, however, a series of small earthquakes swept this part of Arkansas. A similar thing happened 50 years ago. We thought the recent quakes were a repeat of the older ones, but we wanted to make sure they were not related to our water injection wells. We did a study, and even though we did not find evidence that our wells caused the problem, we could not prove they didn t, so we voluntarily shut them down. The water disposal costs shot up, from $2 a barrel to as much as $15. Waste water had to be trucked to disposal wells as far away as eastern Oklahoma. Our way of doing things is based on our experience offshore. Safety is everything.
BHP Billiton 31 Efficient design Skid-mounted drilling rigs such as this one are much more efficient for drilling multiple wells on a single pad.
32 BHP Billiton The final stage of building a well is to run all of the fluids through a test separator like this one to determine the exact amount of water, oil, and natural gas the well is producing. (Photo courtesy Cameron) We were still doing that when I joined the company in August, 2011, says Operations Specialist Corey Riddle. Disposal is still the most direct way to handle produced water, but we think it s better to recycle as much of it as we can. That s easier said than done in a field where the wells are widely spaced and set among rolling hills. Riddle s answer was to group wells to one of four water-collection hubs. That did two things: It made the collection system more efficient, and it took a lot of big trucks off the road. If one truck holds 100 barrels (4,200 gallons) of water, and we needed to dispose of 10,000 barrels of produced water a day, that means 100 trucks were picking up the water and driving four to eight hours to the disposal site, Riddle says. That was not only wasteful, it was a safety risk. Now the system is more localized, and much of our produced water is being treated and recycled for fracing nearby wells. Our highway truck traffic is down substantially. While truck traffic is down, the amount of water being recycled is way up. When we first started to focus on water use, we were recycling about 10 percent, Skaufel says. By April, 2012, it climbed as high as 85 percent, and there have been weeks since then that we were recycling 95 percent of our water. Drilling efficiency In 2011, it was taking a month to drill the average Fayetteville well. Through a process of continuous improvement, crews are now doing the same in less than half the time. On the south end of the field, it is not unusual to take 20 days to drill a well, but in other places we have come down to 10 days, says Fayetteville Drilling Superintendent Bill Robinson. There are many things we have been doing to improve the efficiency and safety of our rigs. Most of the drilling has shifted to the liquids-rich Eagle Ford area, and an increasing number of rigs will go to the Permian. Even so, Fayetteville has the potential to be a major producer of natural gas for the next 50 years. The current development plan is to continue drilling through the middle of 2020. Even with low gas prices, we are still drilling economic wells, Robinson says, but for now, we have dropped our rig count in Fayetteville from a high of 13 down to two. We don t want to lose the momentum and capability we have gained over the last year, both internally and with our contractor base. If the U.S. demand for natural gas comes back as quickly as it fell, we want to be able to meet the need.
BHP Billiton 33 Much of our produced water is being treated and recycled for fracing nearby wells. Operations Specialist Corey Riddle. BHP Billiton Petroleum s newest wells in the Fayetteville use composite trees that are more compact than conventional frac trees. They are also safer, since operators can reach all of the controls from a comfortable height, rather than having to use a lift. (Photo courtesy Cameron)
34 BHP Billiton Zero Harm BHP Billiton Petroleum operates under the principle of Zero Harm to people and the environment. In many locations, the company s policies set the standard for smaller operators. As a globally significant producer, exporter, and consumer of energy, BHP Billiton Petroleum is committed to managing its greenhouse-gas emissions. The company actively seeks to reduce water usage and carbon emissions across its business, and publishes the results in its annual Sustainability Report. its history, and it places BHP Billiton Petroleum firmly in the top 10 percent of the industry. My group supports them, says HSEC Vice President Kristen Ray. In our North American Shale operations, our first remit is getting the basics right. Much of our work involves regulatory compliance BHP Billiton Petroleum is one of the safest oil and gas companies in the industry. It works at it. Its programs aim to identify all risks so they can be understood and controlled. That means the company investigates every incident to determine the root cause and prevent it from happening again. Since 2006, BHP Billiton Petroleum has experienced continuous improvement in its Health, Safety, Environmental and Community (HSEC) programs. In fiscal 2012, the total recordable injury rate within its conventional business was 1.34, which is the best-ever in We look at risks and what we can do to prevent injuries. That always comes first. HSEC Vice President Kristen Ray.
BHP Billiton 35 Operations Engineer Tommy Roberts (left) and Drilling Superintendent Orville Crandall. and our license to operate. We look at risks and what we can do to prevent injuries. That always comes first. The company s rapid growth in 2011 and 2012 meant hiring a lot of people, not only on the drilling and operations side, but also the HSEC professionals needed to support them. Up and down the line, all of those new employees needed to learn how BHP Billiton Petroleum works. We have to communicate and train and make people aware of what the company expects, especially in terms of safety, Ray says. We are still in the early stages of that journey. We are establishing baselines for compliance and learning where our opportunities for improvement are. From there, we can build on improvement and driving cultural change. But it is a journey that will take several years. The lessons the company has learned in the conventional oil and gas business are now being applied to each of its four giant fields in the Onshore United States. The company s goal is to become the safest company in the industry. It is proud of its achievements so far, and is confident that it will continue to make progress towards its goal of Zero Harm.
36 BHP Billiton Good Neighbors BHP Billiton Petroleum employees live where they work, and they try their best to contribute to the lives of those around them. It s more than just getting along. Whenever BHP Billiton Petroleum joins a new community, it studies the quality of life as well as the social and economic environment to find areas to target for community development. Each community is different Working in various locations would be easier if all situations were the same, but they re not. In south Texas, for example, there are few large cities but many smaller communities. One in particular is the town of Cuero in DeWitt County, which lies within the very active Eagle Ford basin. BHP Billiton Petroleum has more than a dozen rigs working nearby, and there are other BHP Billiton Petroleum has donated $30,000 per year through the Thea Foundation to support rural school art programs in the Fayetteville area. operators in the area. The company knows that puts a strain on the local infrastructure. To help compensate, it voluntarily pays the county of DeWitt a per-well fee to help offset the cost of maintaining the roads. In a broader context, company employees also meet regularly with local officials to address their concerns. It realizes that it affects these communities, and it wants to do everything it can to help out. Economic growth Kids everywhere love to paint. Community relations aside, the most widespread benefits for every part of the country where U.S. onshore oil and gas development is booming are the good-paying jobs, business income, and tax revenue that development brings. The Fayetteville play in Arkansas is a prime example, according to a 2012 report from the University of Arkansas Center for Business and Economic Research. The study highlights the
BHP Billiton 37 many direct ways the state benefits, and hints at the indirect gains for restaurants, hotels, retail stores, and other local businesses. The average pay of oil and gas workers, for example, is twice the average for all other industries in the state. New businesses in central Arkansas have also increased at a higher rate than the state in general for the past ten years. Manufacturing jobs are coming back. There s a new $100 million plant in Saline County that makes ceramic proppant for use in hydraulic fracturing. Two manufacturing plants in Arkansas and a sister plant in Missouri hired a total of 1,000 people to build railroad cars to haul sand to the oil and gas fields. The University of Arkansas study adds that even with the slowdown in the U.S. economy in general, five out of the nine Fayetteville Shale counties saw higher than expected growth According to the Texas Railroad Commission, the Eagle Ford produced 308,139 barrels of oil in 2009. That jumped to 4.3 million barrels in 2010 and then to an astounding 36.6 million in 2011. In 2009, 19 billion cubic feet (Bcf) of dry gas and 839,490 barrels of natural gas liquids (NGL) were produced. Those figures jumped to 287 Bcf of dry gas and 7.0 million barrels of NGL in 2011. The Commission predicts that the Eagle Ford will continue to shatter even these output figures in the years to come. A BHP Billiton Petroleum employee watches activities at the Main Street Searcy Festival in Searcy, Arkansas.
38 BHP Billiton Avoiding potential roadblocks In rural areas, the economic benefits of oil and gas development come with their own set of challenges. Rural roads were never meant for heavy use, but drilling and fracturing a single well requires hundreds of trips to and from the well site in trucks weighing up to 40 tons each. Just moving drilling rigs over county roads can amount to the wear and tear of years of normal traffic. Companies like BHP Billiton Petroleum recognize that, and have stepped forward to help address the problem by offering to compensate counties to offset the extra traffic their operations bring. For example, until a permanent and equitable solution can be found, BHP Billiton Petroleum has been voluntarily paying DeWitt County a per-well fee as a way to offset the cost of maintaining the roads. Everyone knows, however, that the current arrangement is only an interim solution. DeWitt County Judge Daryl L. Fowler is the highest elected public official in his county. Where will all the new workers live? Are there enough restaurants and stores in small towns to support the rapid increase in population? Are there adequate medical facilities and schools? In most cases, local governments, enterprising individuals, and private companies are rushing to fill the gap. But what about the roads? asks DeWitt County Judge Daryl Fowler. His jurisdiction, a rural area in south-central Texas, sits atop the richest part of the Eagle Ford Shale. DeWitt County maintains 689 miles of road, and 342 of them are simple gravel or asphalt lanes. DeWitt County s growing pains are typical. Good roads are good for business, Fowler says, but at the county level, we just don t have the revenue to maintain them without some help from the state. Part of the problem is the way tax money is allocated. While the State of Texas receives all of the royalties for oil and gas production on land where it owns the mineral rights, the money is not earmarked for roads. For the first six months of 2012, oil and gas companies operating in DeWitt County paid $71 million in severance taxes to the State of Texas, Fowler says. DeWitt County didn t get a nickel of it. But the judge is hard at work with the state legislature to find a permanent solution. It is a classic case of industry and government at the both the local and state level working cooperatively to the benefit of all concerned.
BHP Billiton 39 Big trucks for big jobs The high volume of truck traffic on rural roads is a problem the industry and host communities are dealing with in almost every region where shale oil and gas is being developed.
Company Profiles 42 Cameron 46 Baker Hughes 48 Celerant 50 FTS International 52 GE Oil & Gas 54 Halliburton 56 Jacobs 58 Nabors 60 Jet Maintenance 61 Schlumberger Custom Publishing VP, PennWell Custom Publishing Roy Markum roym@pennwell.com Managing Editor and Principal Writer Richard Cunningham richard@rcunninghamstudio.com Art Director Meg Fuschetti Production Manager Shirley Gamboa PennWell Petroleum Group 1455 West Loop South, Suite 400 Houston, TX 77027 U.S.A. 713.621.9720 fax: 713.963.6285 PennWell Corporate Headquarters 1421 S. Sheridan Rd., Tulsa, OK 74112 P.C. Lauinger, 1900 1988 Chairman, Frank T. Lauinger President/CEO, Robert F. Biolchini
42 BHP Billiton Company Profile Cameron BHP Billiton Petroleum Taps Frac Equipment and Services Leader Cameron for Shale, Deep Permian Basin Development Providing enhanced uptime through high-integrity critical frac equipment monitored by FracServ, Cameron s Valve Integrity Protection Plan (VIPP) BHP Billiton Petroleum is accelerating development of both dry gas and liquidsrich shale gas formations such as those found beneath its extensive lease holdings in the Fayetteville and Eagle Ford shales, among other domestic tight gas regions. The company also is ramping up horizontal drilling and completion of more conventional deep, oily gas formations located in the greater Permian Basin. Working hand-in-hand with BHP Billiton Petroleum in developing shale gas and liquids production and other tight gas sands is Cameron, whose Surface Systems division provides integrated well surface equipment and services for high-pressure, high-fluid volume fracturing, flowback operations and well testing. Cameron is among top manufacturers and suppliers of high-quality, reliable pressure control and flowback equipment to ensure enhanced results from ever larger highpressure frac operations with higher fluid volumes that cost tens of millions of dollars. The two companies have maintained an extensive global relationship with regard to subsea oil and gas operations in the offshore environment, as well as in conventional land-based development. They have carried that association further as a result of BHP Billiton Petroleum s acquisitions of its large lease holdings in shales. In fact, in addition to providing its full range of flow control products and Cameron recently entered into a five-year fixed contract to provide BHP Billiton Petroleum with flowback services in the Fayetteville Shale Play. systems critical to BHP Billiton Petroleum s fracturing and well completion operations in the shale areas, Cameron recently entered into a five-year fixed contract to provide it with flowback services in the Fayetteville Shale play. One main reason for partnering with Cameron is its ability to provide highintegrity equipment and systems, a crucial aspect for an operator in mitigating HSSE issues as well as risks associated with horizontal drilling and hydraulic fracturing. As a responsible operator, BHP Billiton Petroleum is conscientious of protecting its personnel and contractors on location as well as the communities in which it drills. The selected supplier must be able to provide high-quality equipment and services of such integrity that it alleviates failures. Risk mitigation starts with reliable, high-quality equipment, but is sustained by proper monitoring and maintenance, as Cameron supports its flexible solutions with highly trained, competent service technicians.
BHP Billiton 43 provided by FracServ, Cameron s Valve Integrity Protection Plan. A top choice gate valve for Frac Operations As a leading provider of critical and highpressure control equipment, Cameron is committed to providing effective, safe, reliable, and cost-effective products to handle the challenges that are unique to this fast-growing element of our industry. Frac service is about as harsh as it gets. Gate valves are exposed to nearly continuous service, flowing and controlling high-pressure, high-volume, abrasive frac fluid for days, and even weeks, on end. And the cost of failure is high. Delay caused by a gate valve failure is idle time for an expensive frac crew. A key component of Cameron s products, including frac manifolds and frac trees, is its internationally recognized FLS-R gate valve, which provides operators with highquality metal-to-metal sealing to deliver design dependability and durability within harsh and erosive operating environments. The FLS-R gate valve has established a worldwide reputation as a top choice valve for fracturing operations in both conventional and unconventional resources areas. It is designed, developed, and qualified by Cameron s engineers. As all Cameron s large-bore and high-pressure gate valves, the FLS-R is manufactured in-house at the company s state-of-the-art manufacturing facilities. It has a reputation for excellent performance earned in tackling a long list of extreme applications. For fast, positive remote operation, Cameron provides the FLS-DA2 gate valve. It has a simple design with all the metal sealing features of the FLS-R, but with a double-acting hydraulic actuator. Cameron offers composite frac tree systems. By incorporating the master and swab valves, and wing outlets into a solid body, the number of potential leak path connections as well as the tree height and weight are reduced. FracServ Monitoring fatigue life of critical frac equipment Typically, surface frac equipment is subjected to a series of forces that serve as drawbacks to an efficient A key component of Cameron s products, including frac manifolds and frac trees, is its internationally recognized FLS-R gate valve, which provides operators with high-quality metal-to-metal sealing to deliver design dependability and durability within harsh and erosive operating environments. Cameron is among top manufacturers and suppliers of high-quality, reliable pressure control and flowback equipment.
44 BHP Billiton Leveraging Technology Accustomed to high-end technology in its offshore development projects, BHP Billiton Petroleum is naturally interested in any technology that offers efficiency, promotes safety, and minimizes downtime for its onshore shale operations. Partnering with an industry leader such as Cameron offers access to technology and new innovations that have the potential to be game changers. Through the FracServ Valve Integrity Protection Plan, Cameron s competent field inspection specialists follow a set of procedures written by the company s design and quality engineers to assure the integrity and service performance of its frac fleet. and successful operation. These include high-working pressures, high volumes of abrasive frac proppant per stage, highly corrosive fluid additives, equipment vibration, oscillation, bending loads due to pump cavitations, shrapnel from perforated casing, and the debris resulting from drilled-out isolation plugs. These effects result in flow-bore erosion, wetted surface corrosion, high and variable loads in pressure vessels, and similar bending loads in equipment bolting. FracServ is that it mitigates safety and environmental risks while enhancing an operator s fracturing uptime. Cameron already offers composite frac tree systems as an alternative to conventional frac tree systems. By incorporating the master and swab valves, and wing outlets into a solid body, the number of potential leak path connections as well as the tree height and weight are reduced. Taking the compact concept further, Cameron expects to launch its next generation frac tree, the F-T90 in early 2013. This new design is expected to not only offer a smaller footprint and reduced height, but further enhance the integrity of overall frac operations. As with all Cameron s frac trees, the F-T90 can be operated with pneumatic, The philosophy of knowing the severity of such effects is the crux of the Cameron s FracServ Valve Integrity Protection Plan, which the company provides for its manufactured surface frac equipment. Through FracServ, Cameron s competent field inspection specialists follow a set of procedures written by the company s design and quality engineers to assure the integrity and service performance of its frac fleet. Although a vigorous commitment, the company believes this principle offers better protection to shale operators than a flush and test approach. The latter procedure requires little to no disassembly and, at best, limited verification of trapped debris. The bottom line for Cameron s Accustomed to high-end technology in its offshore development projects, BHP Billiton Petroleum is naturally interested in any technology that offers efficiency, promotes safety, and minimizes downtime for its onshore shale operations. Partnering with an industry leader such as Cameron offers access to technology and new innovations that have the potential to be game changers.
The ECO 2 System accurately measures production, reduces emissions, and collects natural gas liquids for transfer. hydraulic, or electric actuation. The electric frac tree actuation control system, manufactured by Cameron, minimizes potential damage to vulnerable hydraulic power units or to the lengthy, leak-prone hydraulic lines that typically meander around wellsite equipment. The equipment and technicians required to hydraulically fracture a well are expensive. When drilling a single well, a significant amount of idle time is imposed on these costly resources. A frac manifold can provide for almost continuous utilization of the frac crew and equipment, from the first treatment at the toe of the first well to the last treatment at the heel of the last well. This represents a substantial improvement to the effective use of the frac resources and, thus, to the overall economics of the well. Cameron s Generation II Frac Fluid Delivery System (FFDS) is an improvement of the current frac manifold design. It is a solid monoline solution that utilizes API standards and controlled bolted connections that promote a higher level of system integrity, and hence, safety. Parallel to this effort, Cameron s engineers are working on a Gen III design that may well become a game changer to the industry. These innovations, when ready for market, will allow operators a more secure and defensive option than current practices with frac iron. From an ecological standpoint, Cameron is also taking initiative in green innovations with its ECOnomical and ECOlogical (ECO²) production system. Using a three-phase separator (oil, gas, and water), a stabilizer and a natural gas powered generator, Cameron is able to environmentally control higher gravity oils and natural gas liquids without the release of Volatile Organic Compounds (VOC). Typically, vapors from a storage tank need to be controlled (that control method includes flaring the vapors or utilizing a vapor recovery unit to recompress them to a higher pressure) and subsequently moved to a pipeline for transport. The ECO² production system does not allow the vapors to be generated. They are kept under pressure until they get to a point where they can economically be collected and sold. The rapid growth in the production of shale oil and gas in recent years has brought phenomenal growth as well as unique challenges to our industry. Cameron is actively resolving these challenges and brings to the table a heritage of industry leadership, a reputation for technically sound products, quality in-house manufacturing, reliable product performance, and service excellence. Cameron is a leading provider of flow equipment products, services, and systems to worldwide oil, gas, and process industries. Leveraging its global manufacturing, engineering, and sales and services network, Cameron works with customers to control, direct, process, measure, and compress pressures and flows. Cameron 4646 W. Sam Houston Pkwy. N. Houston, TX 77041 Tel 1.713.939.2211 Fax 1.713.939.2753 www.c-a-m.com
46 BHP Billiton Company Profile baker hughes Baker Hughes has the technological solutions to meet oilfield challenges Every shale play presents a diverse range of challenges, and those challenges require a service company with equally diverse experience. Baker Hughes is a global oilfield services company that offers a wide array of products and services to operators, including the expertise of scientists and technicians who can bring the right mix of knowledge and tools to characterize reservoirs, drill boreholes, evaluate formations, cement casings, run completions, and stimulate and monitor production. The company s ability to leverage enterprise capabilities results in better wells, improved productivity, and continued safety. With the integration of pressure pumping services, Baker Hughes commitment to delivering safe and effective solutions that maximize asset value while meeting environmental responsibility goals is stronger than ever. For decades, Baker Hughes has helped operators overcome operational hurdles in Texas. In the Eagle Ford Shale, for example, one of the most prolific fields in the U.S., Baker Hughes has drilled more than 1 million feet, and has been actively involved in 97% of all wells in the Eagle Ford to date. The company has played a significant role in the successes that BHP Billiton Petroleum (BHP) has experienced in the liquids-rich Eagle Ford and Permian Basin. Baker Hughes plans to be there for the long haul, providing the expertise and high-tech equipment necessary to produce these fields. Integrated bottomhole assembly optimizes well placement and ultimate recovery Through a combination of Baker Hughes bits, motors, rotary steerable systems (RSS), and real-time logging tools, the company can engineer an integrated bottomhole assembly to optimize well placement and ultimate recovery. Baker Hughes is able to see the reservoir, often in great detail, with the use of our advanced visualization and modeling tools. For the demanding build and lateral sections of the Eagle Ford wells, Baker Hughes drilling systems, when matched with application-specific bits, provide an unrivaled level of drilling service performance. Our latest RSS and highperformance motors let operators drill curve and lateral sections using the same equipment, lowering cost and reducing operating time, said Mathias Schlecht, Baker Hughes Vice President of Technology for Drilling and Evaluation. The AutoTrak Curve RSS allows high buildup rates, extended-reach laterals, precise wellbore placement, and a reduction in time on the well by drilling vertical, curve and lateral sections in one run. The Hughes Christensen Talon highefficiency PDC drill bits are designed in conjunction with Baker Hughes AutoTrak Curve RSS. Working together, these technologies meet the challenges of drilling unconventional plays with exceptional accuracy, reliability, and speed. We ve seen some really great performance with our Talon bits, said Mark Freeman, Baker Hughes Director of U.S. Land Sales. Our StaySharp cutters keep the bit efficiently drilling longer so run life is maximized with higher ROP, helping to reduce the days on the well. Customizable, environmentally responsible drilling fluids Baker Hughes LATIDRILL drilling fluid system is an integrated waterbased platform customized to address multiple drilling objectives with improved performance compared to the conventional water-based mud systems. It provides aggressive attributes that supersede invert-emulsion systems in terms of speed, wellbore protection, and cost reduction. The platform capabilities have further enabled operators to set new performance, HSE, and cost benchmarks in challenging drilling operations. The drilling fluid system can be packaged with the full range of Baker Hughes Baker Hughes is a leading supplier of oilfield services, products, technology, and systems to the worldwide oil and natural gas industry. shale solutions, including Baker Hughes StarTrak imaging tool, which identifies natural and induced fractures while drilling, and characterizes the horizontal for optimal zone placement and maximum production potential. The LATIDRILL system is one of the company s latest additions to the SmartCare family of environmentally responsible solutions. Baker Hughes is the first oilfield services company to apply a comprehensive chemical evaluation process to products beyond those used in hydraulic fracturing. The expansion offers additional responsible, high-performing chemical products to operators. As new requirements take shape, the SmartCare family will be continuously updated and expanded so Baker Hughes customers can confidently comply with regulations and still deliver on production targets. Effective zonal isolation A high-quality cement job is an important aspect of any well. Baker Hughes began working with BHP s predecessor in the Eagle Ford in 2008. The initial cement slurry
BHP Billiton 47 designs were taken from extensive and successful work Baker Hughes had performed in the Haynesville area. Before applying Baker Hughes engineered Set for Life slurry designs to the Eagle Ford, it was matched to the Eagle Ford s unique requirements. Slurry properties were systematically finetuned to provide effective zonal isolation, which is necessary for complex hydraulic fracturing of lateral sections. The addition of unique spacer technologies, such as Baker Hughes exclusive SealBond cement spacer systems, allows for cement and fluid lift without losses to formation while providing a water-wet coating all important factors in achieving a good bond. Baker Hughes state-of-the-art, fully automated Falcon cementing units provide quality operations. Additionally, Baker Hughes reliable composite plug systems provide a barrier Baker Hughes PETROSWEET hydrogen sulfide scavengers sweeten natural gas and produced fluids. that the company s customers can depend on to fracture against. In order to effectively stimulate the Eagle Ford laterals, BHP has looked to Baker Hughes composite plugs since 2010, said Justin Dworaczyk, Baker Hughes Marketing Director for Completions and Wellbore Intervention. Since then, we have run 4,575 composite plugs with a nearly 100% success rate. More technology for optimal performance Baker Hughes electrical submersible pumping (ESP) systems optimize production for thousands of wells around the world in a broad range of applications. After installation of a Baker Hughes highvolume ESP system into one of BHP s wells, as an alternative to drilling five water supply wells, the rate at which water was produced from the supply well to fill the tank for the pressure pumping job increased 250%. This decreased the time between well completions by as much as five weeks, allowing BHP to return to its planned drilling pace. Wells in the Haynesville shale can have a high level of hydrogen sulfide, which often leads to internal corrosion of production equipment. Baker Hughes has developed a unique suite of production chemicals to deliver total production solutions that are delivered via capillary services. Baker Hughes also offers robust chemical-feed and tank-monitoring services. We successfully treat Haynesville wells by continuously injecting a combination high temperature scale-corrosion inhibitor, said Don Brookshire, Baker Hughes Sales Director for U.S. Land Production. In addition, our comprehensive deliquification chemical services help production flow again. We not only address the immediate demands of increasing production and reducing downtime, but we also review the application, cost, and effectiveness of our scale control program on a continuous basis, said Douglas Stephens, Baker Hughes President of Pressure Pumping. We have the expertise to understand the reservoir and then bring the right mix of technologies and products to optimize and enhance operators wells and productivity, Stephens continued. One solution with the potential to enhance long-term production is Baker Hughes Sorb family of solid inhibitors. MultiSorb technology allows the combination of two or more Sorb chemical products in treatments designed to address multiple issues simultaneously. In the Eagle Ford Shale, the technology has been used to treat paraffin, asphalt, and biocides, among other issues. Technology and training Baker Hughes technology and education centers help accelerate the delivery of advanced technology to the market. Among the company s multiple worldwide technology and education centers and laboratories is the Baker Hughes Center for Technology Innovation (CTI), located in Houston. CTI develops new solutions for the industry s toughest completions and production challenges. Baker Hughes global shale teams also are supported by a drill bit manufacturing plant in The Woodlands, Texas, and a Pressure Pumping Technology Center in Tomball, Texas. The Tomball campus has well-equipped laboratories that do everything from mineralogical identification to determining the compatibility of the formation with completion, fracturing, and stimulation fluids. For more information about Baker Hughes technologies and solutions, please contact Anthony Hooper at 1 281-357-2647 or review our website at www.bakerhughes.com. Baker Hughes 2929 Allen Parkway Houston, Texas 77019 Phone: +1 713-439-8600 Fax: +1 713-439-8699 www.bakerhughes.com Email: pamela.easton@bakerhughes.com
48 BHP Billiton Company Profile celerant consulting, inc. The meter is running on your supply chain Let us say that the land drilling rig rentals and contractors are costing you $75,000 a day. How much time are you willing to spend waiting for someone to deliver a $500 flange? What about the frac spread that through some mix-up showed up a day early and is now charging $25,000 an hour to sit around? Remember when a load of pipe was delivered to the wrong location, or maybe it was the wrong pipe in the first place? Even worse, wells are drilled and completed, but then they sit there, awaiting the facilities and pipeline needed to produce them. While the cost of such waste is high, what hurts field operations most is the delayed production revenue caused by the many mishaps and mistakes incurred along the way. When you consider how those seemingly minor incidents compound one another, you can start to see how an entire field s development becomes suboptimized, driving up capital costs and lowering returns on investment. How does this happen? More importantly, how can it be prevented? mobilize equipment and service contractors for each job. How will a delay or shortage today affect not only that well location, but then the next well location, and possibly the sequence of well locations where those same resources will be used down the road? When you then consider multiple (sometimes several) rigs, trucks, equipment and contractors working at many locations across an entire field, it is easy to envision how critical the overall supply chain is to a development project s success. Rig & Equipment Movement Delays, lost days, and wrong priorities can all result in lower net production volumes and higher spends. The challenge is that most of the technical change has been layered on top of management systems that are no longer able to keep up. Celerant s goal is to increase management s full control of the interactions between field operations and the supply chain. with logistics, and doing anything it can to stay up with changes in the field. It can seem like a never ending battle. The fundamental challenge is one of integrating the two sides: field operations and supply chain. You may have the best engineers in the business on your team, and you may tell them over and over how much you want to manufacture quality wells, both safely and quickly, Rig & but Equipment that doesn t Movement make them well manufacturing experts, says Gary Traylor, Senior Vice President for Celerant Consulting, Inc. We see it all the time. Those on the front lines just do not have the manufacturing know-how or the management tools needed to integrate their field operations with their supply chain. Exploration and production companies are good at finding oil and gas, but manufacturers who make anything from automobiles and aircraft to appliances and apparel are much more adept at managing their supply chains. These companies understand and apply for many years advanced supply chain concepts as operations demand planning and integrated resource scheduling. They know how to optimize multiple manufacturing constraints, balancing lead times and capacity limitations with Production Costs More often than not, the root-cause is poor supply chain management systems When you think of all the costly details that go into safely building a single well, operators expect some degree of overspending and production delays. However, in unconventional plays, where operators are scrambling to manufacture hundreds or even thousands of wells quickly over the next few years, the compounded losses from this inefficiency are staggering. Consider, for example, the lead times required to organize and At first glance, the problem may seem to lie within an E&P s supply chain function. Deeper investigation often shows it is a two-sided problem. The customers (the field) are constantly changing their requirements, going outside and around company policies and procedures, perhaps Demand - Constraint repeatedly changing the X-Y location itself, Optimization Model and submitting their requests at the last minute to the supply chain organization, thereby jeopardizing the schedule for on-time and in-full delivery. Meanwhile, the supply chain organization is backedup with contract Materials requirements, consumed Staffing Production Costs Services Staffing Demand - Constraint Optimization Model Materials Services Optimization occurs through integrated resource demand planning and scheduling, supported by constant feedback on field execution.
BHP Billiton 49 Celerant consultants work directly with your people to achieve break-through performance. Celerant is a global management consulting firm that provides operational strategy and implementation support around the world. Our oil and gas experience extends across the Middle East, the North Sea, the Gulf of Mexico, the United States, Western Canada and Brazil. Celerant delivers real and sustained operational improvements that benefit our clients financially and culturally. Our approach engages people in a way that ensures commitment and lasting performance. Celerant s ability to deliver is nothing new. We ve been at it for more than 25 years, and over 90% of our clients say they would be pleased to work with us again. resource availability and costs, all through modern day manufacturing tools and techniques. That is where Celerant comes in, Traylor says. We have seen in our projects that much of what other industries have learned can be applied to exploration and production. Our consultants have shown clients where supply chain inefficiencies are costing them big money within their operations, and then provided the management methods and tools needed to avoid such costs and delayed production. It doesn t matter whether we are talking about field development projects or ongoing field operations, e.g. when well work overs and routine well repairs can be completed in less time, failed wells are brought back to production much faster. How we work First, a Celerant team of management system experts will study your field operations and its historical performance. The team will work with your management and supervisors, both in the office and in the field, to gather and analyze data identifying opportunities to improve. They will talk to your engineers and geoscientists, as well as your rig superintendents, field operators, contractors and suppliers to capture the full story, so they can then show you the complete opportunity for improvement. Celerant collaborates with you to fix the issues, using the management systems, methods and tools they adapted from over 25 years of business. Celerant is not just another E&P management consulting firm. It has worked across the oil and gas value chain, including exploration and appraisal, drilling and completions, facilities and pipelines, as well as field and well operations. Celerant s solutions drive value throughout an organization. Its core strength is its deep understanding of the complete oil and gas value chain, regardless of departmental function or type of operation. But even more, Celerant brings learnings and best practices from a multiple range of industries in addition to E&P. Drawing from that knowledge base, Celerant consultants can provide the very best management systems needed to meet your cost, scheduling and ROI performance goals. While we often work in the field to help deliver significant measurable results, we share our expertise up and down the client s management ladder, says Celerant Senior Vice President Maarten van Hasselt. Celerant works with its clients from the shop floor to the top floor. We work closely with business unit managers, their management teams and reports so that they can not only talk the talk, but then walk the talk for their organization to hear and see. Using data and studies from the field, as portrayed through our advanced management tools, we show them how they can increase their control over operations and stay at the top of their game. Making it relevant The last twenty years have brought unprecedented and occasionally unexpected advances in horizontal drilling and hydraulic fracturing practices. With them have come more new opportunities than most oil and gas professionals have seen in a lifetime. The challenge is that most of the technical change has been layered on top of management systems that are no longer able to keep up. Celerant s goal is to put management back in full control of their operations. In the new world of unconventional plays, Celerant helps companies integrate their field operations and supply chains, to safely manufacture new wells and return existing wells to production, each within the shortest amount of time and at the lowest possible cost. Celerant Consulting, Inc. 1980 Post Oak Blvd, Suite 1500 Houston, Texas 77056 +1.713.360.4831 Website: www.celerantconsulting.com
50 BHP Billiton Company Profile fts international FTS International Delivers Well Completion Services Focused on Maximizing Results Custom Proppant Helps BHP Billiton Petroleum Increase Production in the Haynesville Shale When BHP Billiton Petroleum first began work in the Haynesville Shale, the operator faced issues common with the play, known to be the deepest, hottest, and highest pressured shale among the major unconventional plays in the United States. One particular challenge was placing proppant in the Haynesville s deep formations during the hydraulic fracturing process. FTS International (FTSI - formerly Frac Tech), a leading provider of well completion and stimulation services, partnered with BHP Billiton Petroleum to develop a custom solution Spearprop proppant, designed and produced by FTSI to meet the needs of BHP Billiton Petroleum in the Haynesville. Because FTSI engineers, manufactures and produces many of the key components used in its well completion operations, the company is uniquely equipped to customize its services, products and equipment focusing on customer needs, including distinctive requirements for individual plays and reservoirs. FTSI creates and delivers innovative solutions focused on maximizing production. Since 2008, FTSI has worked with BHP Billiton Petroleum and Petrohawk Energy Corporation (acquired in 2011), to enhance well productivity. During the initial work in the Haynesville, formation depth presented a significant challenge. These deeper areas required costly linear and crosslinked gel systems to place even a nominal amount of 40/70 proppant. These completions were also prone to screenouts requiring coiled tubing intervention. Completion costs escalated while production rates fell short of expectations. Meeting challenges, exceeding expectations FTSI responded to the challenge by developing a more effective, innovative well completion solution. Working closely with BHP Billiton Petroleum s completions teams, FTSI engaged experts from its engineering group, in-house research and development labs, company-owned proppant sources and resin coating operations. These experts worked together to invent a custom solution to address BHP Billiton Petroleum s challenges in the Haynesville Spearprop proppant. Featuring increased conductivity and higher permeability, Spearprop proppant serves as a bridge between 100 mesh and 40/70 proppants. This allows fracturing of Haynesville wells with a simpler, less costly slickwater process, while enabling better penetration into the deep formations and fostering increased natural gas production. Since this innovative solution was developed, BHP Billiton Petroleum has used Spearprop proppant in a majority of its wells in the Haynesville, pumping approximately eight million pounds per month for a total of 2,629 stages as of September 2012. Screenouts were reduced and production improved over a leading competitor s system used in the play. It all adds up to better profitability for BHP Billiton Petroleum in the Spearprop proppant was custom-created by FTSI to help BHP increase its production in the Haynesville Shale. Spearprop proppant s green color helps field engineers easily identify it from other proppants to ensure optimum amounts of each proppant are added to the system. Haynesville. Plus, FTSI s proprietary proppant sources and resin coating facilities help keep costs in check for the custom Spearprop proppant. A true leader in safety training Engineering advances aren t the only attributes that help FTSI clearly identify its position in the market. The company is also focused on Health, Safety, and Environmental (HSE) leadership. For example, FTSI had zero recordable incidents (OSHA TRIR = 0.00) for the last
BHP Billiton 51 FTSI s people are also a driving factor in its success. Committed in every way to help ensure each well reaches optimum production while maintaining safe operations, FTSI s people are a tremendous resource. customized technology, focusing on improving recovery. The facility includes equipment that FTSI experts will use in their research related to reservoir and rock mechanics, proppant technology, and fluid behaviors. year and a half on BHP Billiton Petroleum sites. The foundation of FTSI s safety ratings is the company s commitment to training. Its professional HSE staff administers year-round safety training, and reinforcement programs are designed to deliver a best-in-industry record. In fact, FTSI s New Team Member Training program is PEC Premier SafeLandUSA accredited, a distinction only one other company in the oil and gas industry can claim. FTSI Service Supervisor Dennis Dunn and Field Safety Trainer Patrick Hicks demonstrated exceptional dedication to excellence, helping to deliver a perfect safety record for BHP Billiton Petroleum in the Haynesville. Respecting the environment while developing new technology FTSI continues to explore more environmentally friendly ways to do business. The company produces a line of ECO-Green hydraulic fracturing additives designed to increase production while minimizing environmental impact. One product in this line is Slickwater Green customizable powdered blend. Engineered according to the American Chemical Institute s Principles of Green Chemistry, the blend is pre-mixed based on job specifications and delivered in dry form. This eliminates the need for product totes, decreasing the operational footprint and transportation costs. An additional benefit of Slickwater Green blend is that it eliminates concerns about the product freezing during transport or storage in harsh climates. FTSI s new state-of-the-art Corporate Technology Center in Houston will foster the development of even more cutting edge solutions, including next generation fluids, market-leading research and Personalized service is a core value of FTSI. Dedicated teams, from engineers who work in-house at customer sites to customer-exclusive field staff, demonstrate FTSI s focus on delivering excellent customer service. FTS International 777 Main Street, Suite 3000 Fort Worth, TX 76102 Phone: 866.877.1008 www.ftsi.com sales@ftsi.com
52 BHP Billiton Company Profile ge oil & Gas Innovative wellhead and frac solutions strive to improve safety, keep production costs in check The development of unconventional gas and oil has spurred attempts to apply basic offshore platform techniques such as the assembly line to drilling and fracing operations on land. Pad drilling is a prime example. Drilling several wells from one small well site reduces costs of multiple site preparation and down time due to breaking down, transporting, and reassembling the rig at each location. But in order to make the most of such cost savings, many operators are considering unconventional wellhead designs which not only require less installation time, but are designed to improve safety for personnel and the environment. GE Oil & Gas has spent a substantial amount of time collaborating with operators as they redefine their drilling procedures and look at ways to operate more safely and efficiently. Our History and Culture GE Oil & Gas is making significant investments in new technology, facilities, people, and services to support our oil and gas customers in key unconventional plays across North America and beyond. One such investment was our acquisition of Pressure Control, a surface wellhead manufacturer and frac service provider, from Wood Group in April 2011. GE s earlier acquisition of VetcoGray in 2007 had introduced surface and subsea wellhead equipment to our oil and gas portfolio. Rather than folding Pressure Control into the existing VetcoGray surface wellhead business, GE did the opposite, so as to exploit Pressure Control s successful business model. The challenges of the past year have been tremendous: Doubling our head count by merging two similarly sized businesses and learning to manage and leverage their combined strengths; Cross-training field service personnel and others on the new, expanded product offerings and their application; Restructuring our supply chain to accommodate a 50% increase in production while maintaining our reputation for quick responsiveness and dedicated customer service; Remapping our network of service centers, consolidating those where VetcoGray and Pressure Control both had a presence, replacing older facilities with new fit-for-purpose spaces, and following our customers migration into new oil and gas regions to maintain the ability to respond quickly to their needs; And continuing to provide the customer service that our culture values, while converting infrastructure on every level over to GE systems. It has been a huge undertaking that is not yet complete. At GE Oil & Gas, we continue to learn from our remarkable successes and challenges encountered along the way. Businesses are ever-changing and must continue to adapt in order to grow. Our successful growth is a testament to innovative thinking and willingness to learn from those challenges, and will ultimately be of benefit to our customers. Wellhead Solutions Time-saving wellheads, which also provide safety advantages, were first introduced approximately 35 years ago. Since then, unconventional wellheads have continued to evolve to reflect the industry s continually changing drilling methods, and offer efficiencies that cannot be achieved using more traditional wellhead systems. Whether it is a Speedhead system, one of the many MB multibowls, an S95 Time- Saver or any other system which suits Pad well sites allow adjacent wells to be fractured in quick succession, thus saving transportation and site preparation costs. During the quiet time after the drilling crew leaves and before the hydraulic fracturing trucks arrive, a BHP Billiton Petroleum wellhead is fitted with a rental frac tree.
BHP Billiton 53 Completed BHP Billiton Petroleum well. a specific application, these GE Oil & Gas products are backed by a history of over 90 years of surface wellhead engineering and service expertise. We understand the fastpaced rhythm of the business and the demands put on our customers not only to produce, but to produce economically and safely. Hydraulic Fracturing Solutions GE Oil & Gas has a long heritage of designing and manufacturing gate valves and actuators, so it made sense to enter the frac market as a full service frac valve/frac tree provider. We offer a broad range of frac tree systems from 2-1 16 10M through 7-1 16 20M, equipped with manual and/or actuated valves available on either a purchase or a rental basis. Frac stands are also available to facilitate safe access to all the valves and critical outlets or connections on these very large trees. To simplify customer operations, we serve as a single source for all ancillary equipment for frac trees, including wellhead isolation sleeves, back pressure valves or two-way check valves, lubricators, hydraulic closing units, and multi-access frac heads on a per-day rental or project basis. To further enhance our frac equipment offering, a full complement of associated frac equipment services is available to properly install, maintain, remove, and refurbish equipment. Our crane trucks deliver fully assembled frac trees and install them on the wellhead after the drilling rig is moved from the site but before the heavy frac tanks and other equipment are moved in. This often significantly reduces set-up time in the field, while providing superior safety on-site. Test trailers are also available for the prestaging of frac trees and ancillary equipment, which further increases the flexibility of our customers on-site operations. To properly test and maintain our frac equipment while mobilized, dual air-powered greasing units are used. Because simultaneous operation by two service technicians is possible, greasing time is reduced between frac stages. The trailer unit also supplies air for torqueing tools and optional pressure testing services. Solutions-based on-site support Our fully trained field technicians are available 24/7 to safely and efficiently deliver, install, service, or remove frac equipment on-site, delivering the superior performance our customers expect. Strategically located service centers are equipped with the latest technology to safely disassemble, inspect, repair, refurbish, and disposition frac equipment upon its return from the field. A comprehensive inventory of spare components is stored in each location to ensure rapid equipment turnaround. We are working to ensure that as our customers needs evolve in unconventional resources, GE Oil & Gas will deliver the quality and attention to HSE that the industry demands. GE Oil & Gas Pressure Control 4424 W. Sam Houston Parkway N. Suite 100; Houston, TX 77041 P.O. Box 82; Houston, TX 77001-0082 Phone: 832-325-4200 Fax: 832-325-4350 www.geoilandgas.com/pressurecontrol Larger rental frac stacks are often configured with frac tree stands which provide easy access to upper valves and connections.
54 BHP Billiton Company Profile halliburton Halliburton s Well-Construction Team Collaboration Leads to Successful Shale Developments BHP Billiton Petroleum has expanded its fleet of North American shale rigs over the past six months, and relied heavily on their vendors for achieving their improved success. Some of the rigs employed Halliburton s Red Team, which increased operational efficiency as a result of each product service line (PSL) understanding how the related service lines work and interact with one another, as well as collaborating with the BHP Billiton Petroleum team. Information passes seamlessly between the Red Team for each product service line. Collaboration and data integration by a single source service provider increases operating efficiency while a burden is removed from the operator s drilling team to provide data and operational details to different service providers. The BHP Billiton Petroleum drilling team is afforded greater opportunity to focus on overall optimization and improved success while Halliburton provides wellbore evaluation, well construction, completions, and production sustainability. Wellbore Evaluation To evaluate the complexities of the Eagle Ford Shale, Halliburton s Open Hole evaluation services deployed the Hostile Rotary Sidewall Coring Tool (HRSCT ) device to obtain formation core samples that are more than three times the volume of standard sidewall cores and have a highly Attempts Number Recovered Percent Coring Efficiency 31 31 100.0 28 27 96.4 38 36 94.7 27 26 96.3 13 13 100.0 13 11 84.6 16 16 100.0 reliable data-collection effort. The cores are highly useful in defining the mixed mineralogies of the play, as well as helpful in better defining the petrophysical log evaluations. The core data is also used to define what is required in the mud system, the geomechanics of the play, and helps in defining the best design components (fluids and proppants) for the hydraulic fracture. The successful BHP Billiton Petroleum coring campaign conducted in the Eagle Ford Shale resulted in six of seven wells with 95% recovery or higher, for an average core recovery of 96%. Well Construction Since August, 2011, the Halliburton drilling team (Sperry Drilling services, Baroid, Halliburton Drill Bits and Services, and Cementing) and BHP Billiton Petroleum worked together to plan and execute the wells as efficiently as possible. BHP Billiton Petroleum and Halliburton together drilled 110 wells as of mid-september 2012. The team reduced the number of drilling days per well from 30 days to just under 10 days. This was accomplished by, among other things, improving data transmission for faster data collection, tailoring mud programs to meet each wellbore challenge, and matching the correct bit to the formation through custom design using geomechanics data. Sperry Drilling deployed its electromagnetic (EM) measurementwhile-drilling (MWD) system to reduce survey time. The EM system establishes a two-way communication link between the surface and the MWD equipment downhole using low-frequency electromagnetic-wave propagation to facilitate high-speed data transmission to and from the surface. The use of this technology over the drilling campaign saved BHP Billiton Petroleum an estimated $2.4-3.5 million over the 110 wells drilled in the Fayetteville Production Unit. Halliburton Drill Bit and Services (HDBS) 8 3/4-in. FXD55M Halliburton Drill Bits and Services (HDBS) continuously develops bits to control the tool face while providing improved speed and performance. Directional features have been strategically incorporated into our bits to create a perfect partnership with the higher differential-capacity motors that Sperry Drilling introduced to meet BHP Billiton Petroleum s goal for reduced nonproductive time. This success produced multiple one-bit-run wells and improved drilling-curve performance that culminated in drilling a complete 1,000-ft (305 m) 3D curve in less than nine hours. By implementing the optimized operating parameters, as well as by using the new
BHP Billiton 55 operation time by 30 percent on zipper fracs. Besides perforating and setting plugs, Wireline also provided services to confirm zonal isolation for well integrity. Sperry Drilling electromagnetic (EM). motor and bit designs, the curveinterval average ROP for the 8 3/4-in. FXD55M bit increased dramatically from 54 to 84 ft/hr. In the Fayetteville and Eagle Ford Shales, Halliburton Baroid worked very closely with other team members to enhance BHP Billiton Petroleum s drilling performance by using Drilling Fluids Graphics (DFG ) software that enabled the prediction of hole-cleaning efficiency, ECD modeling, and simulations of drilling conditions to determine the best operating parameters. By analyzing mud properties throughout the resource play areas, Baroid pinpointed mud properties that reduced costs and enhanced drilling performance. Invert emulsion drilling fluids (IEF) were designed specifically for formations that were drilled through to reach the geological target while reducing the number of drilling days and cost per foot. Baroid worked closely with BHP Billiton Petroleum on lost circulation strategies while drilling the Wilcox sand formation. With continued drilling and fracturing in the Eagle Ford formation, mud densities are becoming more difficult to manage due to the ever-narrowing window between the pore pressure and fracture gradient increasingly challenged by the fracturing of offset wells. Baroid Technical Professionals worked closely with the Halliburton Cementing Technical Professionals in optimizing rheological and physical properties of the fluid train for maximum mud displacement while minimizing potential losses in order to optimize cement placement and coverage for longterm wellbore architecture integrity. Completions Halliburton s Well Construction team completed 452 tubing-conveyed perforations (TCP) gun runs with a +99.5% efficiency rate. Hydraulic fracturing operations were impressive, as well. Ninety-five percent of the planned proppant was placed with a 99.4% success rate during a total of 2,181 hours of actual pumping time. The treatments consisted of friction-reduced water and sand. The team conducted the first zipper frac for BHP Billiton Petroleum, which enabled an average of 7 stage fractures to be created per day versus the typical 4.5 stage fractures to be created per day on a single well. Also, greater fracture complexity was created from the zipper frac enabling greater reservoir stimulated volume to be provided to BHP Billiton Petroleum. Production Enhancement worked with Sperry Drilling to minimize the potential of screenouts based upon well placement and wellbore configuration. This is a unique benefit gained from using Halliburton products and services. Halliburton s Wireline team had an excellent track record of 99.6% effectiveness for perforating and plug setting. They adopted an innovative technology (lubricator stand) used in the Rocky Mountains which reduced wireline Production Sustainability Multi-Chem, a Halliburton service, used purpose-built application trucks and a specially designed process to provide accurate and reliable delivery of biocides, scale, and surfactant chemicals. Multi-Chem also provided post-frac monitoring, which is critical for continuous process improvement by allowing the determination of whether the biocide treatment is effective or if a reevaluation of the treatment protocol is needed. Multi- Chem continues to process and evaluate data for wells for which it provides postfrac monitoring and provides BHP Billiton Petroleum with monthly reports. Multi-Chem developed the industryleading MVP 2.0 Web-based Chemical Management Software for productionchemical treatments. This software allows BHP Billiton Petroleum to easily and precisely track all of their data related to production chemicals. The key to effective production-chemical management is trend-related data. One-off data can be misleading and result in irrational decisions. MVP 2.0 allows easy setup and monitoring of key performance indicators specific to BHP Billiton Petroleum fields in South Texas and Arkansas. Summary Halliburton s Red Team working with BHP Billiton Petroleum has enabled significant efficiencies for BHP Billiton Petroleum resource plays. This has resulted in cost savings and production increases, which provided significantly improved profitability for BHP Billiton Petroleum shale-resource plays. Halliburton 10200 Bellaire Blvd. Houston, TX 77072 281/575-3000 www.halliburton.com
56 BHP Billiton Company Profile jacobs Jacobs Focuses on Safe, Optimal Operations and Efficient Delivery to Market Jacobs (NYSE: JEC) is one of the world s largest and most diverse providers of technical, professional, and construction services. The company provides all aspects of architecture, engineering and construction, operations and maintenance, and scientific and specialty consulting to a broad range of companies and organizations including industrial, commercial, and government clients across multiple markets and geographies. In the upstream oil and gas market, Jacobs offers a full range of services, ranging from conceptual and detailed design, engineering, procurement, construction management (EPCM) and commissioning, to operations and maintenance (O&M). Jacobs experience and capabilities run the gamut from oil to natural gas to natural gas liquids (NGLs) and heavy oil (using steam assisted gravity drainage), produced from conventional and unconventional resources including shale, and using secondary/tertiary production techniques such as CO2 enhanced oil recovery for both onshore and offshore field development and production. Clients worldwide rely on Jacobs to deliver and maintain their upstream facilities, including oil and gas production sites, topsides for offshore oil platforms, and separation and gathering systems. Jacobs also has vast experience and expertise in processing facilities such as gas treatment (sulfur, CO2, acid gas removal, and others) and fractionation for NGL in addition to liquids recovery, compression, and transportation, including pipeline systems. Jacobs integrated services include regulatory aspects such as environmental assessments, permitting, as well as water management. Having worked with all the major producers and operators in the oil and gas sector, Jacobs also has a growing portfolio of projects and services in the area of shale and other unconventional basins, such as those described here for BHP Billiton Petroleum. Many of Jacobs past and current projects in North America are contributing significant production growth in the region. Jacobs and BHP Billiton Jacobs has a long standing relationship with BHP Billiton, across multiple project sites and facility types, including onshore gas plants, mining, and minerals facilities. Our relationship with BHP Billiton spans over 28 years: from the 1980s, delivering offshore petroleum projects in the Timor Sea and major mining facilities in Australia and South America; to the 1990s working with the steel, petroleum, and mining businesses; and now the 21st century, where we continue to support BHP Billiton s customer service groups around the world. With global experience in petroleum, uranium, copper, and nickel, Jacobs is proud to have provided study, engineering, and construction management services to many of BHP Billiton Petroleum s major projects. Jacobs is currently providing engineering, procurement, and commissioning services for the surface production facilities at BHP Billiton Petroleum s shale development projects at the Eagle Ford and Permian Basins in Texas, and at the Fayetteville shale in Arkansas. Bringing an optimized development philosophy to these projects, Jacobs develops standardized designs and specifications and leverages volume and critical equipment procurement, enabling BHP Billiton Petroleum to move its products to market quicker. Eagle Ford Shale Development At the Eagle Ford Shale asset in south Texas, Jacobs provides engineering, procurement, and commissioning services for gas and liquid handling facilities and central delivery points (CDPs). Work began on these facilities in 2012 and is ongoing. The facilities gather and process natural gas, condensate, and light crude in the Karnes, Hawkville, and Blackhawk areas of the basin. The processed gas is sent through a sales pipeline, and condensate is transported to markets via trucks. Jacobs scope of work at Eagle Ford includes gas compression, glycol gas dehydration, amine treating to remove CO2, condensate stabilization, modular compression systems and treating
BHP Billiton 57 facilities, vapor recovery, and export facilities via pipeline or truck. Permian Basin Shale Development For the Permian Shale asset in west Texas, Jacobs is providing engineering and procurement services for a gas and liquids handling facility to gather and process natural gas, condensate, and light crude in the Pecos area of the Permian Basin. This early production facility will support BHP Billiton Petroleum s field development planning and execution in the basin. The project includes gas compression, glycol gas dehydration, condensate stabilization, and storage and truck loading for water and condensate. Like the Eagle Ford facility, processed natural gas will be sent through a sales pipeline, while the condensate is transported to markets by truck. Jacobs work began on these facilities in 2012 and is ongoing. A compression skid at the Karnes site. Fayetteville Shale Development At the Fayetteville Shale asset, Jacobs worked with BHP Billiton Petroleum to provide engineering services for infrastructure development at existing operating facilities, as well as process safety management (PSM) services. The work scope included HAZOPs, facility siting, regulatory compliance, and conceptual designs for water management systems integrating fresh and produced water handling, transportation, storage, and treating. Building Long-term Client Relationships Jacobs fundamental business strategy is building long-term client relationships. Over 80% of Jacobs projects come from The Karnes site in the Eagle Ford basin. repeat customers. This strategy yields strong, long-term relationships with clients leading to value maximization, cost advantages, profits, and predictable project delivery for clients. The combination of a loyal client base and steady growth enables Jacobs to attract and retain the industry s top professionals. BeyondZero Jacobs World Class Approach to Safety Jacobs is dedicated to keeping its employees, clients, contractors, and their families safe and healthy through its BeyondZero safety program, which promotes a culture of caring that extends beyond the office and work sites. Jacobs safety culture combines comprehensive safety policies and procedures with leadership commitment and a genuine care and desire for every individual to be incident and injury free. Jacobs plans safety into the design, implementation, and operation of each project. In 2010, the Occupational Safety and Health Administration (OSHA) recognized Jacobs for excellence in worker safety and health by approving the company as a Voluntary Protection Programs (VPP) Corporate participant. Only seven other corporations currently hold this recognition in the U.S. Jacobs also brings disciplined and valueadded execution through its: Integrated EPCM approach; JSTEPS structured work process; Value Enhancing Practices that strategically implements Value Improving Practices (VIPs) to ensure best practices and innovation that can provide significant cost savings in design and planning; Ability to leverage high value engineering centers and global procurement capabilities. A Sustainable Approach With the drive and expertise to progressively and cost-effectively reduce the environmental impact and resource intensity of projects worldwide, Jacobs commitment to running an ethical, relationship-based, and cost-conscious business enables the company to help its clients find the best sustainable solutions for their projects around the world. Jacobs delivers tangible, technical solutions that support customers improved profitability. With comprehensive knowledge and experience across a diverse range of resources and processes, conventional and unconventional including shale oil and gas production, heavy oil, enhanced oil recovery, and onshore or offshore production Jacobs offers a complete service to support customers continued growth and competitive edge. Jacobs Engineering Group Inc. 1111 South Arroyo Parkway Pasadena, CA 91109 Phone: 626.578.3500 Website: www.jacobs.com
58 BHP Billiton Company Profile nabors Innovative Technology Designed Specifically for Shale Projects Nabors Drilling Designs PACE -X Series Rig from Crown to Ground to Optimize Well Manufacturing from Multi-Well Pads; Six are scheduled for the Haynesville and Eagle Ford Nabors Drilling USA, LP started working for Petrohawk in the Haynesville Shale in 2007. At that time, initial wells averaged 80 days per well. Today, the company continues to meet the demands of that partnership with BHP Billiton Petroleum, using programmable A/C electric (PACE ) rigs with automated technology. Nabors PACE -M Series rigs helped reduce drill times in the Haynesville to an average of 32 days. In fact, Rig M46 drilled a fieldrecord well in 20.8 days. Customers like BHP Billiton Petroleum are looking for the latest technology with compact but powerful equipment. They want faster moving features, enhanced safety elements, better power distribution, greater torque control and higher penetration rates. When these objectives are accomplished, they allow operators to drill more efficiently and move more rapidly. Nabors has used these advancements while drilling for BHP Billiton Petroleum to pave the way for the next generation of PACE technology. Nabors has designed a new rig that meets the demands of shale plays, such as the Eagle Ford and Haynesville, said Randy Clark, vice president, marketing Southern Division. We interviewed customers to create a rig configuration that would meet their current and future needs. The PACE -X Series rig was designed from the crown to the ground to optimize well manufacturing on multiwell pads. Experience and technology from Nabors rigs operating all over the world were incorporated into the design. The PACE -X rig can skid on both the X and Y axis, with a 16-ft-wide by 27-ft tall clearance below the substructure to optimize batch drilling, or dodge an existing well head. A 20% improvement in skidding efficiency equates to saving about 1.5 days on an eight-well, batch drilling pad. Another primary target of the design was to reduce flat time with the rig s ability to stump-test offline in order to handle the BOPs more quickly. The PACE -X rig can provide more capable horsepower at the bit than any other rig of its size, said Clark. It will accommodate up to four 3,516 diesel or natural gas engines, up to three 2,200-hp, 7,500-psi mud pumps, a 2,200-hp AC Canrig COMMANDER Drawworks and a 500-ton Canrig AC top drive. Unparalleled horsepower, pressure and torque is delivered to the bit. More than 20,000 feet of five-inch drill pipe can be set back, optimizing the long laterals that have become the new standard. One of the many benefits of the PACE -X rig is its visually simple concept, said Clark. The straightforward design decreases hesitation by trucking companies and rig crews during rig-up and -down. Plugs and cables have been reduced due to the split VFD design and distributed power systems. This makes the rig easier to handle and maintain. Currently, six PACE -X rigs are scheduled for deployment in the Haynesville and Eagle Ford Shales. Nabors is on target to deliver the first PACE -X rig in late 2012. Advanced Automation Canrig Drilling Technology Ltd., a Nabors company, continues to provide directional drilling solutions with ROCKIT, a surface rotary steerable system. It has quickly demonstrated its ability to save rig time through faster toolface setting and improved toolface control, which increases the penetration rate while sliding. The ROCKIT platform also includes our ROCKIT HEADS UP DISPLAY and ROCKIT PILOT automation products, said Rob Guillory, vice president of Sales
BHP Billiton 59 and BHP Billiton Petroleum account manager. The ROCKIT HEADS UP DISPLAY integrates the surface-based instrumentation and MWD downhole data so that the driller has immediate access to all the information required to steer the directional well. The ROCKIT PILOT control system allows the top drive PLC to automate toolface steering, providing predictable bearing offset corrections which are repeatable and based on directional drilling logic. Both are valuable enhancements to the ROCKIT technology. Guillory also notes that one of the biggest problems facing the drilling industry today is non-productive time due to downhole vibration. Vibration can destroy drill bits, damage expensive downhole tools and lead to tool failures and poor drilling performance. Canrig s REVIT system employs Soft Torque technology to mitigate torsional vibration in real time and allow drillers to achieve a level of performance that was unthinkable just a few years ago, Guillory noted. The system integrates seamlessly with the Canrig AC top drive controls to alert the driller to excessive downhole vibration and provides sophisticated tools to eliminate stick slip, he added. REVIT users experience increased ROP, extended bit life, and fewer downhole tool failures, all of which equates to significant cost savings associated with reduced down time. Our customers also have access to Canrig s world-class RigLine 24/7 support service staffed by certified REVIT technicians who are specially trained to monitor and analyze the product s performance as well as the performance of associated rig systems and to take immediate action if that performance is less than optimal, said Guillory. REVIT is a high-technology product that reacts automatically and instantaneously to mitigate stick-slip. It reflects Canrig s dedication to developing new technology that automates the drilling process and meets both customer and market demands. There are currently more than 70 REVIT systems operational. It is expected that Canrig will have about 100 systems in operation by the end of 2012. Coiled Tubing Services Nabors continues to build a fleet of mobile coiled tubing units that are used primarily in well intervention to support hydraulic fracturing on operating wells as well as in well-servicing operations. We have 12 coiled tubing units that are tailored specifically for the shale markets, said Perry Courville, director of coiled tubing services. We customized the string design through a variance of the wall thickness to optimize the horizontal reach capabilities in the shale play completions. We have the ability to provide 23,000 ft of 2-in OD coil. This is the optimal size needed to intervene in these wells. The coil units are matched with pumping equipment tailored specifically or these diameter and reel lengths. The trailermounted, twin pumping units provide 600 hydraulic hp each and work independently for maximum efficiency. Courville says the design was a direct result of Nabors willingness to meet the growing demands of the shale market. The increased activity in shale plays has shaped the coil market uniquely, he said. As few as four years ago, the coiled tubing units were a different size and configuration. Since we didn t want our customers to have to incur extra costs to get down to TD, Nabors optimized the coil unit s configuration and the string design for a greater reach. We took into consideration rig-up times and the ergonomics of working with large-diameter pipe. As a result, our customers end up with better equipment that runs more efficiently and less expensively in any shale market. Nabors 515 W. Greens Road Houston, TX 77067 Tel: 281-874-0035 Email: Randall.Clark@nabors.com Website: www.nabors.com
60 BHP Billiton Company Profile Jet maintenance Jet Maintenance provides complete service solutions for all oilfield construction needs Jet Maintenance, an oilfield construction company based in Victoria, Texas, has been providing premium turnkey services to the oil and gas industry since 1992, and has established itself as a leader in oilfield construction in south Texas. Jet provides all construction services necessary for pre-drilling and post-drilling operations. With over 40 pieces of heavy machinery ranging from backhoes, rollers to dozers, trackhoes, and scrapers, Jet is able to offer a broad range of commercial construction services. We specialize in the construction of pad locations, lease roads, frac ponds, fencing, and other pre-drilling construction services. When drilling and completion operations are complete, Jet has roustabout crews that clean and hook up the well site. Jet also has the ability to perform pipeline work, such as digging trenches, welding pipe, and installing pipelines. Jet Maintenance constructs all aspects of the drilling site roads, drilling pads, cellars, frac ponds everything necessary for a safe and successful well. The company has an extensive welding crew composed of its own employees that performs various fabrication work for all oilfield needs. Jet s welders can perform field work, such as well hookups, pipelines, and on site fabrication. The company also has a fabrication shop, located in Victoria, Texas, in which it can build chemical loops, knockouts, fuel bottles, cellar covers, crossovers, and much more. With over 40 pieces of heavy machinery, Jet is able to offer a broad range of commercial construction services. Jet also has the ability to haul and deliver its own aggregate material through AW Trucking, also located in Victoria, Texas. Providing premium services in Eagle Ford since 2004 Beginning with Petrohawk, one of the original operators in the Eagle Ford Shale, Jet Maintenance has been providing its premium services to operators in south Texas since 2004. When BHP Billiton Petroleum acquired Petrohawk in 2011, the company continued to provide its premium services for BHP s exploration programs, building more than 70 drilling locations in south Texas since the acquisition. Jet delivers superior value with outstanding quality Jet Maintenance s success is the result of its superior service and extra attention to detail throughout its operations. The company has a loyal, dedicated, and diverse staff that increases its ability to successfully differentiate its products and services from the competition. Jet is very customer-focused, committed to providing solutions to all of its customers needs, and doing everything possible to keep material procurement on time, their project deadlines on schedule, and their project budgets under control. Driven by excellence in execution, Jet is committed to ensuring the safety of its employees. Jet maintains an excellent safety record, demanding the highest safety standards from and for its employees. Jet Maintenance has been a member of ISNetworld since 2003. JET MAINTENANCE P.O. Box 5026 Victoria, TX 77903 Phone: (361) 576-3226 Fax: (361) 578-0054 Website: www.jetmaintenanceinc.com
Company Profile schlumberger Technology and Collaboration for North American Shale Development A game-changing technology has been deployed in the Eagle Ford over the last 24 months, which has allowed BHP Billiton Petroleum to produce its Blackhawk and Hawkville wells at improved production rates while reducing the water and proppant usage in these fields. To date, 3,200 fracturing treatments have been performed in more than 200 Blackhawk and Hawkville wells. The technology has allowed savings in excess of four million barrels of water and 200,000 tons of proppant with respect to conventional fracturing techniques. This has prevented more than 30,000 proppant and water hauling trips and eliminated more than five million pounds of CO2 emissions. HiWAY flow-channel hydraulic fracturing service The technology that has made this possible is called HiWAY* flow-channel hydraulic fracturing service, a patented process that creates highly conductive paths or channels within the hydraulic fractures. Like most successful technologies, the basic concept behind the technology is simple: instead of filling or packing the fracture with proppant as is done with conventional treatments, proppant is placed in engineered clusters to promote the formation of voids, gaps, or channels through which oil and gas can flow expeditiously. The HiWAY channel fracturing service combines geomechanical modeling, intermittent proppant pumping and degradable fibers and fluids to attain the heterogeneous placement of proppant within the hydraulic fracture. BHP Billiton Petroleum pioneered the use of this technology in horizontal wellbores worldwide and has become an industry-recognized leader in the implementation of this breakthrough service. Collaboration Workflows and Mangrove As an early adopter of technology and committed to the value of producing more with less, BHP Billiton Petroleum continues to expand the use of the HiWAY service in the Eagle Ford, and has recently *Mark of Schlumberger The HiWay service uses specialized blending equipment and control systems to pump proppant in pulses creating stable, infinite-conductivity flow channels in fractures. taken the technology to the Delaware Basin. The company s asset team is working jointly with a Schlumberger petrotechnical team of experts to complete basin-scale resource assessments of the Delaware and Midland basins. An integrated 3D geological, geomechanical, and petrophysical model of the Delaware Basin was created in the Petrel* E&P software platform to characterize production-driver heterogeneity, rank the acreage, and assist in developing the drilling program. Reservoir simulation is being applied to calibrate production forecasts, which will be made across the basin. Tried and tested workflows are being used to deliver an integrated heterogeneous earth model that integrates reservoir and completion quality within a single platform. A new Petrel plug-in called Mangrove*reservoir-centric stimulation design software will be used to link the G&G model to the operational decisions concerning the drilling and completions program. Through collaboration and utilization of innovative technologies, tools, and workflows, the team is working to improve the performance of these assets in a safe and effective manner. By integrating the rock properties into the completions design, BHP Billiton Petroleum will be able to optimize the staging and HiWAY frac design, allowing the reduced consumption of resources and lowering the overall costs per barrel to deliver these hydrocarbons to market. Spear shale-optimized steel-body bit Smith Bits, a Schlumberger company, and BHP Billiton Petroleum drilling engineers continue to work closely on optimizing and utilizing Spear* shale-optimized steel-body PDC bits. Spear PDC bits are the industry-leading steelbody PDC bits developed with Schlumberger proprietary Shale Smart technologies and engineered to increase drilling performance in the curve and horizontal shale sections while not sacrificing directional control. Using the award-winning, in-house, IDEAS* integrated drillbit design platform, the PDC cutting structure and steel-bit-body geometry are designed to meet and exceed the goals of BHP Billiton Petroleum for each drilling application. In the first half of 2012, BHP Billiton Petroleum s use of Spear bits and all of the technologies therein has increased the average footage drilled per bit by 33% in the Eagle Ford curve and lateral sections compared to non-spear PDC bits in the same intervals. Through collaboration and application of new and innovative technologies, Schlumberger and BHP Billiton Petroleum are working together to unlock these resources. This approach has resulted in improved economic performance through greater efficiency, production optimization, and informed decisions. Schlumberger 1325 South Dairy Ashford, Houston, TX 77077 www.slb.com
BHP Billiton Petroleum 1360 Post Oak Boulevard Houston, Texas 77056 (713) 961-8500