Unconventional Gas in Italy: the Ribolla Basin*

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Unconventional Gas in Italy: the Ribolla Basin* Roberto Bencini 1, Elio Bianchi 2, Roberto De Mattia 2, Alberto Martinuzzi 2, Simone Rodorigo 2, and Giuseppe Vico 2 Search and Discovery Article #80203 (2012) Posted January 9, 2012 *Adapted from oral presentation at AAPG International Convention and Exhibition, Milan, Italy, October 23-26, 2011 1 Independent Resources plc, Rome, Italy (rbencini@ir-plc.com) 2 Independent Resources plc, Rome, Italy Abstract CBM and Shale Gas production is growing fast and is becoming an important energy source in many countries. CBM is methane produced directly from coal seams. Methane is found adsorbed into the coal matrix and it is produced at low pressure by pumping away any water from the coal seam and stimulating the methane flow through the coal cleats to the well bore. Similarly, Shale Gas is natural gas that is produced by desorption from organic rich clay at low pressure, after multistage stimulation of long horizontal boreholes, often from formations that are less permeable than coal. Independent Resources plc is developing the first unconventional gas project in Italy, at the 100% owned Fiume Bruna and Casoni exploration licences (Central Italy), where some 300 BCF of natural gas are calculated to be in place, of which 160 BCF are interpreted to be primarily recoverable from the two blocks. The gas is interpreted to be producible from both the coal and the organic rich shale that is associated with the coal seam, at an average depth of approximately 1000 m. Results to date include knowledge that the Miocene age organic rich sequence: - consists of one laterally continuous 9-11 meter thick seam of coal and black shale, - is saturated with thermogenic gas, - is dry, - is able to produce excellent quality natural gas by desorption after stimulation, - has a permeability of 1-2 md, - responds more like a gas shale than a classic high permeability coal.

Additionally, there are indications that the 70 meter thick laminated marl and clay sequence immediately above the main seam may be prospective for shale gas as well. The initial challenges of the project are: - characterization of the coal and of the organic rich shale, including its mineralogy and gas content, gas composition and gas productivity, and any associated water; - identification of the best formation stimulation technique; - technology transfer from areas where CBM and Shale Gas production is mastered with economic success; - procurement of suitable equipment and services in a safe and value-for-money manner. ECBM (Enhanced Coal Bed Methane) is one way to implement CO 2 geological storage, by injecting CO 2 in unmineable coal seams to enhance methane recovery. This technique may find application toward the end of the primary production cycle in the Ribolla Basin. Selected Reference Mukhopadhyay, P.K., J.A. Wade, and M.A. Williamson, 1994, Measured versus predicted virtinite reflectance from Scotian Basin wells in P.K. Mukhopadhyay, and W.G. Dow, (eds.), Vitrinite reflectance as a maturity parameter; applications and limitations: ACS Symposium Series, v. 570, p. 230-248.

RIBOLLA, 1930 RIBOLLA, 2010 Unconventional Gas in Italy: the Ribolla Basin R. Bencini E. Bianchi, R. De Mattia, M. Martinuzzi, S. Rodorigo, G. Vico rbencini@ir-plc.com www.ir-plc.com AAPG International Conference & Exhibition Milano Convention Centre, Milan, Italy, 23-26 October 2011

RIBOLLA BASIN LOCATION The Ribolla Basin is covered by two Exploration Licences: Fiume Bruna Casoni 100% IR plc

RIBOLLA COAL MINING COAL DISCOVERED IN 1830 1848, R. I. Murchison

NET COAL THICKNESS net coal thickness (m)

DEPOSITIONAL MODEL NORTH RIBOLLA BASIN SOUTH Feccia Casteani Ribolla FB 2 Casoni (projected) Cana Argille Lignitifere formation Gas Shale Shaley Coal 1.5 m 1 m 4 m (gas potential under study) (Bagaglia) 6 m 6 m Coal 3 m 60-70 m 11 m 27 km 22 km 30 km 5

GAS INTERVALS 0 cps 150 0.001 Ohm.m 100 700 µsec/m 200 TOC (%) Casing 1 mm shallow resistivity affected by hole caving example of varvae in gas shale cutting 2.27 photo of varvae 1.63 low GR lacustrine organic rich gas shale photo of varvae no hole caving in best gas shale 2.36 1.12 Ribolla play bed dip = 25-32 cores organic laminations coal high GR marine organic rich bagaglia GR photo of varvae SEISMIC REFLECTOR resistivity sonic 1.67 1.59 1.38 21.09 34.82 56.14 43.45 15.63 43.05 6.92 metres coal bagaglia (coaly shale) gas shale Fiume Bruna 2 well

TOC AND MINERALOGY

COAL WIRELINE CORING

SATURATED COAL BUBBLING GAS gas bubbles

MEASURING COAL GAS CONTENT well site lab

COAL GAS CONTENT Coal and Gas Shale at Ribolla are gas saturated 350 m

SEISMIC ACQUISITION Phase 2 Phase 1

2008-2010 SEISMIC SURVEYS

RIBOLLA SEISMIC SECTION BH-1 BH-2 FB-2 WELL BH-3 BH-4 Miocene conglomerate Miocene coal / gas shale seam

2010 COAL STIMULATION FIUME BRUNA 2, a small footprint site

2010 COAL STIMULATION proppant used upgraded water well rig, UNMIG approved pre-job safety meeting frac job

GOOD NEWS: GAS COMPOSITION Methane 93-94% Ethane 1-2% Nitrogen 4% CO 2 1% SPECIAL GOOD NEWS: the gas is of thermogenic origin (Delta 13 C methane -28 permil) Considering that the section has not been uplifted, this means that the coal /gas shale seam produced many times the gas it is able to trap by absorption in the matrix, and that the seam is always saturated with gas.

STRUCTURE AND GRAVITY MAP limit of uplifted area (Larderello cooling granite stock influence) outcrop limit poor coal area 2D seismic profiles 5 miles m gal geo-electric profiles A B 5 km

SCHEMATIC CROSS-SECTION Legend Quaternary, clay, sand, conglomerate Pliocene, clay, sand Miocene, claystone, siltstone, coal, evaporites Cretaceous-Eocene, claystone, marl, limestone (allochthonous units) Oligocene, sandstone, marls (Macigno Fm) Jurassic, limestone (Calcare Massiccio Fm) Vertical exaggeration: 2 Triassic, dolomitic limestone (Calcare Cavernoso Fm) A Ribolla Basin Triassic, quartzites, shales (Verrucano Fm) B thermogenic methane seep gas migration thermal maturity Coal, Bagaglia, Gas Shale interval

VITRINITE REFLECTANCE MAP thermogenic methane in FB-2 well Modelled V o corr (%) Notes: Liptinite generates abundant gas at lower temperature then other types of macerals, and has high gas capacity thermogenic methane seep 5 miles 5 km FB-2 well sapropelic, lacustrine coaly sequence: - suppressed maturity indicator (V o =0.46%); - exceptionally high content of Liptinite (12-22%); - high geothermal gradient (twice the normal); - young age of rocks (Late Miocene, 6 MY). thermogenic methane seep Modelled vitrinite reflectance is based on FB-2 values, extrapolated on the basis of Horseshoe Canyon / Drumheller coal maturity vs depth in the Alberta Basin, and corrected for suppression (V o corr = V o + 0.6%, after P. Mukhopadhyay, 1994).

STRUCTURAL FORM-LINE MAP thermogenic methane prospective area Mapped horizon: lower part of gas zone ( top coal ) Contouring interval: 100 m (328 ft) Datum: m.s.l. poor coal area outcrop limit 2D seismic profiles geo-electric profiles 5 miles 5 km offshore 2D seismic profiles

RESULTS TO DATE Single play: coal and gas shale (tens of metres thick) Coal and Gas Shale have similar gas content of 4.7 m 3 /t (152 scf/ton) at approx. 80 bar Dry organic rock with 1-2 md permeability, gas saturated Water-based frac tried. Next: nitrogen frac Seam responds overall more like Gas Shale than classic high permeability CBM coal More than 190 km 2 (47,000 acres) of potentially productive area with seam at an average depth of 1000 m (3280 ft) Estimated 27.4 BCM (968 BCF) of gas in place Estimated 5.7 BCM (203 BCF) of recoverable gas 69% Shale Gas and 31% CBM/CSM

Wellhead SHALE GAS Ground Level Gas To Compressor WELL SCHEME stimulation monitoring 1000 m 3000 ft Source: National Energy Board, Canada

WORK PROGRAMME Test future wells - dry Shale Gas style Obtain Exploitation Concession Produce material amount of methane Test CO 2 injection and methane recovery Inject CO 2 at full rate and recover methane Abandon site safely and responsibly

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