Use of Cutting-Edge Horizontal and Underbalanced Drilling Technologies and Subsurface Seismic Techniques to Explore, Drill and Produce Reservoired Oil and Gas from the Fractured Monterey Below 10,000 ft in the Santa Maria Basin of California

This project was undertaken to demonstrate that oil and gas can be drilled and produced safely and economically from a fractured Monterey reservoir in the Santa Maria Basin of California by employing horizontal wellbores and underbalanced drilling technologies. Two vertical wells were previously drilled in this area with heavy mud and conventional completions; neither was commercially productive. A new well was drilled by the project team in 2004 with the objective of accessing an extended length of oil-bearing, high-resistivity Monterey shale via a horizontal wellbore, while implementing managed-pressure drilling (MPD) techniques to avoid formation damage. Initial project meetings were conducted in October 2003. The team confirmed that the demonstration well would be completed open-hole to minimize productivity impairment. Following an overview of the geologic setting and local field experience, critical aspects of the application were identified. At the pre-spud meeting in January 2004, the final well design was confirmed and the well programming/service company requirements assigned. Various design elements were reduced in scope due to significant budgetary constraints. Major alterations to the original plan included: (1) a VSP seismic survey was delayed to a later phase; (2) a new (larger) surface hole would be drilled rather than re-enter an existing well; (3) a 7-in. liner would be placed into the top of the Monterey target as quickly as possible to avoid problems with hole stability; (4) evaluation activities were reduced in scope; (5) geosteering observations for fracture access would be deduced from penetration rate, cuttings description and hydrocarbon in-flow; and (6) rather than use nitrogen, a novel air-injection MPD system was to be implemented. Drilling operations, delayed from the original schedule by capital constraints and lack of rig availability, were conducted from September 12 to November 11, 2004. The vertical and upper curved sections were drilled and lined through the problematic shale member without major stability problems. The top of the targeted Monterey was thought to be seen at the expected TVD of 10,000 ft where the 7-in. liner was set at a 60{sup o} hole angle. Significant oil and gas shows suggested the fractured interval anticipated at the heel location had been penetrated. A total of 2572 ft of 6{Delta}-in. near-horizontal interval was placed in the shale section, extending planned well length by approximately 470 ft. Very little hydrocarbon in-flow was observed from fractures along the productive interval. This may be a result of the well trajectory falling underneath the Monterey fractured zone. Hydrocarbon observations, cuttings analysis and gamma-ray response indicated additional fractured intervals were accessed along the last { -}900 ft of well length. The well was completed with a 2 and 7/8-in. tubing string set in a production packer in preparation for flow and swab tests to be conducted later by a service rig. The planned well time was estimated as 39 days and overall cost as $2.4 million. The actual results are 66 days at a total cost of $3.4 million. Well productivity responses during subsequent flow and swabbing tests were negative. The well failed to inflow and only minor amounts (a few barrels) of light oil were recovered. The lack of production may suggest that actual sustainable reservoir pressure is far less than anticipated. Temblor attempted in July, 2006, to re-enter and clean out the well and run an Array Induction log (primarily for resistivity and correlation purposes), and an FMI log (for fracture detection). Application of surfactant in the length of the horizontal hole, and acid over the fracture zone at 10,236 was also planned. This attempt was not successful in that the clean out tools became stuck and had to be abandoned.

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