What is the Frac Load Fluid

Recovery?

Robert Sage March 3, 2014

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100%

90%

80%

70%

60%

50%

40%

30%

20%

10%

0%

0.1 1 10 100 1000

What is the Frac Load Fluid Recovery?

% O

F LO

AD F

LUID

PRODUCING DAYS Source: Don Leblanc, Eastex Petroleum Consultants Inc.

WATER

LPG Ideal

Fluid BlockEffective Fracture Length

Created Fracture Length

GAS FLOW NO GAS FLOW

Fluid BlockEffective Fracture Length

Created Fracture Length

GAS FLOW NO GAS FLOW

Current Fracturing

Hydrocarbon Flow NO Hydrocarbon Flow

Poor Frac Load Recovery

What Causes Poor Frac Load Recovery and the Resulting Short Effective Fracture Length - Water block due to Imbibition – A Function of Surface Tension - Water interaction with clays and formation minerals - Water is immiscible with Hydrocarbons ( 2 phases) - Flooding of the reservoir with water - Hydrocarbon break thru prior to total clean up

Fluid BlockEffective Fracture Length

Created Fracture Length

GAS FLOW NO GAS FLOW

Fluid BlockEffective Fracture Length

Created Fracture Length

GAS FLOW NO GAS FLOW

Effective Fracture Length

Created Fracture Length

GAS FLOW

Effective Fracture Length

Created Fracture Length

GAS FLOW

Current Fracturing Method

Ideal Fracturing Method

Hydrocarbon Flow NO Hydrocarbon Flow

Hydrocarbon Flow

Industry Issues

Case Study San Miguel Formation

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• Depth 3,750 ft

• Bottom-hole pressure of 1650 psig (.44 psi/ft)

• Bottom-hole temperature 140 degree F

• Tight oil sand gross pay of 90 ft, high porosity pay section of 27 ft.

• Perm of .05 - .10 md

• Water saturation of 45%

• Oil gravity 45 degree API, Gas is over 8 gpm

• Field has over 200 vertical wells. Average IP of 15 bpd and EUR of 15 Mbbl.

San Miguel: Comparison of Water & NGL Fracs

Water NGL

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• 4,797 bbls per stage

• 85,569 lbs. per stage

• Frac gradient .94 psi/ft

• Treating Rate 66 BPM • 9 stages per well

• 1,675 bbls per stage

• 90,924 lbs. per stage

• Frac gradient .96 psi/ft

• Treating Rate 40 BPM • 10 stages per well

San Miguel: Cumulative BOE vs Time

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0 20 40 60 80 100 120 140 160 180

BOE

Days

Gas Frac Average Water Frac Average

San Miguel: Rate vs Time

9

0

100

200

300

400

500

600

700

1 31 61 91 121 151 181 211 241 271 301 331

Avg. Rate water frac BPDe Avg. Rate NGL frac BPDe

San Miguel: Flowing Tubing Pressure

10

0

50

100

150

200

250

300

350

400

450

500

550

600

650

700

750

800

1 31 61 91 121 151 181 211 241 271 301 331

Avg. FTP Water frac psig Avg. FTP NGL frac psig

On gas lift

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Ideal Fracture Fluid: Hydrocarbons • Impact of LPG’s and Hybrid Fluids Low Viscosity, Lower Surface Tension,

Solubility/Miscibility, Lower Density (Higher Drawdowns) Leading to Higher % and Quicker Load Recovery

Advantage of LPG’s and Hybrid Hydrocarbon Fluids Properties: Leading to Higher % Recovery of in Place Hydrocarbons, Immediate Load Recovery time, production and Enhanced Oil Recovery (EOR) Low Viscosity

• Lower Surface Tension • Solubility/Miscibility in formation hydrocarbons • Lower density (Higher Drawdowns) • No interaction with formation clays or minerals

Hydrocarbons fluids can be recovered and sold for cost recovery These hydrocarbon properties can be engineered to enhance production, and facilitate recycling / cost recovery of the fracturing fluid

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How do I make a business case for using hydrocarbon fluids as

a fracturing fluid ?

when: Water cost pennies per gallon

Hydrocarbon fluids cost dollars per gallon

A Compelling Question

San Miguel: 90,000 lb/stage Frac Economics

Water Frac NGL Frac

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Pump: $110 K Frac Fluid: $18 K H2O Transfer: $7 K Disposal: $5 K Total: $140 K/stage

Pump: $120 K Frac Fluid: $196 K Total: $316 K Recovery: ($148 K) Net Cost: $168 K/stage

San Miguel: Cost per 180 Cumulative BOE

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$42/Cum BOE

$30/Cum BOE

$23/Cum BOE

$0

$5

$10

$15

$20

$25

$30

$35

$40

$45

$50

Water Frac NGL Frac Future NGL

San Miquel: Average IP Rate

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0

200

400

600

800

1000

1200

1400

Water Frac Propane Frac C4 + Frac Small Hybrid frac Large Hybrid Frac

Aver

age

IP (B

OE/

d) 90,000 lbs

1 well

90,000 lbs 2 wells

90,000 lbs 4 wells

90,000 lbs 4 Wells

183,000 lbs 4 wells

Is it Scalable ?

GASFRAC Experience

As of Dec 2013 : 2314 Fracs on 722 Locations Largest job to date: 2.6 MM lb, 10 + stage Highest pressure treatment to 13,050 psi (Lowest: 362 psi) Treating rates to 50 bbl/min & proppant concentrations to 8 lb/gal Oil, Gas, and Condensate wells Deepest Treatment to over 13,000 ft TVD Formation Temperatures from 54 °F to 300 °F

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Gasfrac: Focused on Safety, Engineered Hydrocarbon Fracture Fluids &

Fit for Purpose Equipment

LPG Bulkers – 500 bbl capacity Nitrogen Support

2250 HHP LPG Frac Pumpers

1 - 206,000# Proppant Blender

Typical LPG Equipment Spread

Fluid LPG 4,000 bbl (170,000 gal)

Proppant 20/40 mesh sand 200,000 lb

Pumping 11,500 HHP, 30 bpm 26

Gelled 100% LPG Fracturing Process

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Hybrid LPG Fracturing Process LPG

Hybrid Fluid Sand

This Is Done with the Knowledge Gained from 100 % LPG Fracturing

Two Streams Commingled at the Wellhead

- LPG - Hybrid Fluid and Sand

A Scalable LPG Fracturing Process – Increase Proppant Delivery

Typical Hybrid LPG Equipment Spread

Fluid Plus 11,000 BBLs

Proppant Plus 720,000 lb

Pumping 60 bpm

Pros and Cons

More Productive Wells Provide energy to help lift frac fluid and

reservoir fluids. It does this while also remaining in liquid phase while treating the well.

Higher initial IP’s. Increased long term production. Enhanced recovery rates. Minimized flaring - immediate to gas sales. Does not cause clay swelling. Maintains higher relative permeability to oil.

Flowback Turn a liability into an asset. Engineered hydrocarbon frac per facilities. Quicker for wells to clean up. Low surface tension help during flowback.

Lower Life Cycle of Well Costs Chemical Costs – no water and no resulting

introduction of SRB’s. Pigging. Facility upsets. No investment in water handling

infrastructure, as with water fracs.

Potentially Fewer Wells Larger effective drainage area.

Low Environmental and Ecological Impact

Pros

Costs Higher AFE number for completions. Flowback – integration of flowback equipment for recovery.

Safety Concerns Built for purpose equipment. Compartmentalize and flare any problems. More redundancy and backups than with water fracs. Maintenance process to maintain equipment specifications. LEL monitors. Thermal cameras in the hot zone.

Logistics Availability of NGL frac fluids. Wellbore Configuration - open hole vs plug and perf packers. Job size.

Pros and Cons

Cons