Bakken Basics Drilling, Fracing, Producing (How it works)

Bakken Basics Drilling, Fracing, Producing (How it works) Lynn Helms- ND Dept. of Mineral Resources Larry Dokken-Frear Consulting Tyler Dokken-Hess Corporation

OIL & GAS LEASES Leases are acquired by a landman whose primary duty is to secure leasehold interest from the landowners. County records are searched to determine ownership in a particular area. Not only must the landman determine who owns the land, but who owns the mineral rights as well. After this has been determined, the landman will negotiate the necessary leases with the landowners. Compensation in the form of a bonus, a delay rental payment, and royalty are typically offered the landowner in return for leasing the area of interest. Leases for gas and oil are legal contracts, which for specified compensation give the company the right to explore for and to extract oil and gas. Each lease is negotiated and agreed upon individually. www.dmr.nd.gov/oilgas/leasingconsiderations.pdf 2

DRILLING UNIT 43-02-03-18. DRILLING UNITS - WELL LOCATIONS. In the absence of an order by the commission setting spacing units for a pool: Vertical or directional oil wells projected to a depth not deeper than the Mission Canyon formation shall be drilled upon a governmental quarter section or equivalent lot, located not less than five hundred feet [152.4 meters] to the boundary. Vertical or directional oil wells projected to a depth deeper than the Mission Canyon formation shall be drilled on a governmental quarter section or equivalent lots, located not less than six hundred sixty feet [201.17 meters] to the boundary of such governmental quarter section or equivalent lots. Horizontal wells with a horizontal displacement of the well bore drilled at an angle of at least eighty degrees within the productive formation of at least five hundred feet [152.4 meters], projected to a depth not deeper than the Mission Canyon formation, must be drilled upon a drilling unit described as a governmental section or described as two adjacent governmental quarter sections within the same section or equivalent lots, located not less than five hundred feet [152.4 meters] to the outside boundary of such tract. The horizontal well proposed to be drilled must, in the director s opinion, justify the creation of such drilling unit. No more than one well may be drilled to the same pool on any such tract, except by order of the commission. 3

DRILLING UNIT 43-02-03-18. DRILLING UNITS - WELL LOCATIONS. In the absence of an order by the commission setting spacing units for a pool: Horizontal wells with a horizontal displacement of the well bore drilled at an angle of at least eighty degrees within the productive formation of at least five hundred feet [152.4 meters], projected to a depth deeper than the Mission Canyon formation, must be drilled upon a drilling unit described as a governmental section, located not less than five hundred feet [152.4 meters] to the outside boundary of such tract. The horizontal well proposed to be drilled must, in the director s opinion, justify the creation of such drilling unit. No more than one well may be drilled to the same pool on any such tract, except by order of the commission. Gas wells projected to a depth not deeper than the Mission Canyon formation shall be drilled upon a governmental quarter section or equivalent lots, located not less than five hundred feet [152.4 meters] to the boundary. Gas wells projected to a depth deeper than the Mission Canyon formation shall be drilled upon a governmental quarter section or equivalent lots, located not less than six hundred sixty feet [201.17 meters] to the boundary. Except by order of the commission after notice and hearing. 4

100 years ago wells were drilled wherever they would fit (rule of capture), and were not spaced on the basis of geology and engineering as is currently done by the North Dakota Industrial Commission. This wasted a great deal of the oil and gas. 6

DRILLING 43-02-03-16. APPLICATION FOR PERMIT TO DRILL Before any person shall begin any well-site preparation for the drilling of any well other than surveying and staking, such person shall file an application for permit to drill (form 1) with the director, together with a permit fee of one hundred dollars. The application must be accompanied by the bond pursuant to section 43-02-03-15 or the applicant must have previously filed such bond with the commission, otherwise the application is incomplete. An incomplete application received by the commission has no standing and will not be deemed filed until it is completed. The application for permit to drill shall be accompanied by an accurate plat certified by a registered surveyor showing the location of the proposed well with reference to the nearest lines of a governmental section. The plat shall also include latitude and longitude of the proposed well location to the nearest tenth of a second. Information to be included in such application shall be the proposed depth to which the well will be drilled, estimated depth to the top of important markers, estimated depth to the top of objective horizons, the proposed mud program, the proposed casing program, including size and weight thereof, the depth at which each casing string is to be set, the proposed pad layout, including cut and fill diagrams, and the proposed amount of cement to be used, including the estimated top of cement. The director may impose such terms and conditions on the permits issued under this section as the director deems necessary. The director shall deny an application for a permit under this section if the proposal would cause, or tend to cause, waste or violate correlative rights. 8

STAKING A LOCATION Well Stake 9

BUILDING A LOCATION 10

RIPPING FROZEN GROUND 11

LOCATION READY FOR DRILLING RIG 12

RIGGING UP DRILLING RIG 13

DRILLING RIG READY 17

RIG PERSONNEL 4 5 Man Crews Tool Pusher Drilling Consultant Two Directional Drillers Two MWD hands Two Geologist/Muddloggers 18

DRILLING Drilling Surface TOH Surface Casing TOH Drilling to KOP TOH Logging KOP 19

HOW DO WE BEND THE PIPE? 20

HOW DO WE BEND THE PIPE? 21

HOW DO WE BEND THE PIPE? 9300 - KOP 680 90 750 22

HOW DO WE BEND THE PIPE? 9300 -KOP 1250 23

DIRECTIONAL DRILLING Bend Point Baker Hughes Motor 24

DIRECTIONAL DRILLING Baker Hughes Motor 25

DRILLING CURVE Pictures from NCS 26

DRILLING LATERAL Pictures from NCS 27

DRILLING COMPLETED 28

FRAC HOOK UP 30

The producing formation is fractured by pumping water at thousands of pounds per square inch. Millions of pounds of sand or ceramic beads are pumped to hold fractures open. 31

Compound Purpose Common application Fresh Water 80.5% Proppant 19.0% Acids - 0.12% Allows the fractures to remain open so the oil and gas can escape Drinking water filtration, play ground sand Help dissolve minerals and initiate fractures in rock (pre-fracture) Swimming pool cleaner Petroleum distillates 0.088% Dissolve polymers and minimize friction Make-up remover, laxatives, and candy Isopropanol 0.081% Increases the viscosity of the fracture fluid Glass cleaner, antiperspirant, and hair color Potassium chloride 0.06% Creates a brine carrier fluid Low-sodium table salt substitute Guar gum 0.056% Thickens the water to suspend the sand Thickener used in cosmetics, baked goods, ice cream, toothpaste, sauces, and salad dressing Ethylene glycol 0.043% Prevents scale deposits in the pipe Automotive antifreeze, household cleansers, deicing, and caulk 33

Compound Purpose Common application Sodium or potassium carbonate 0.011% Improves the effectiveness of other components, such as cross-linkers Washing soda, detergents, soap, water softeners, glass and ceramics Sodium Chloride 0.01% Delays break down of the gel polymer chains Table Salt Polyacrylamide 0.009% Minimizes friction between fluid and pipe Water treatment, soil conditioner Ammonium bisulfite 0.008% Removes oxygen from the water to protect the pipe from corrosion Cosmetics, food and beverage processing, water treatment Borate salts 0.007% Maintain fluid viscosity as temperature increases Used in laundry detergents, hand soaps and cosmetics Citric Acid 0.004% Prevents precipitation of metal oxides Food additive; food and beverages; lemon juice N, n-dimethyl formamide 0.002% Prevents the corrosion of the pipe Used in pharmaceuticals, acrylic fibers and plastics Glutaraldehyde 0.001% Eliminates bacteria in the water Disinfectant; Sterilizer for medical and dental equipment 34

TRENCHES FOR FLOWLINES 35

PIPELINES 36

TREATER CONSTRUCTION 37

OIL & WATER DUMP VALVES 38

FLUID LINES TO TANKS 39

GAS FLOW METER 40

COMPLETED TANK BATTERY 41

TOP OF TANKS 42

LACT UNIT 43

LACT OIL METER 44

FINISHED TANK BATTERY 45

ELECTRIC CONTROLS 46

FRAC TANKS 47

FLOW BACK TEST UNIT 48

FRAC JOB 49

TRUCKING 50

COILED TUBING UNIT 51

MILL 52

FLARE 53

TRUCKING PITS FLUIDS 54

WORKOVER RIG 55

CLEAN OUT MILLS 56

CLEAN OUT MILLS 57

SAND FROM CLEANOUT 58

TUBING 59

MUD ANCHOR 60

FLUID ENTRY PORTS 61

TUBING ANCHOR 62

ROD STRING 63

PUMPING UNIT 64

PUMPING UNIT 65

PUMPING UNIT CONTROLLER 66

PUMPING UNIT CONTROLER 67

QUESTIONS TO FOLLOW VIDEO From Time Location Is Built Until The Well Is Completed, There Will Have Been Approximately 1250 Trucks On Location With 10 Wheels Or More Doing Different types Of Jobs. There Well Be Approximately 415 Different Types of Jobs Per Well! 68

North Dakota Department of Mineral Resources http://www.oilgas.nd.gov http://www.state.nd.us/ndgs 600 East Boulevard Ave. - Dept 405 Bismarck, ND 58505-0840 (701) 328-8020 (701) 328-8000