# WaterLess Fracturing Technology “Innovative Technology

- Driving the Commerciality of Shale Gas

-



# Impacts on the Bottom Line” Robert Lestz

- GasFrac Chief Technology Officer

World Shale Gas Conference 9 Nov 2011

# Do Shale Gas Completions and Water Mix?
Environmental Impacts

 Full Cycle Water Management

– Sourcing, Disposal, Recycling, Treatment, & Producing

 Establishing the Water Supply Infrastructure

– Wells, Ponds, Transfer Lines, Frac Tanks

 Long Term Disposal and Resulting Microseismic Events

 Reinjection and Souring of Reservoirs

 Handling Produced Minerals and Naturally Occurring Radioactivity Material
 Extended Flaring to Clean Up Wells
 Truck Traffic
 Perception of the Oil and Gas Industry as Good Neighbors and Environmental Stewards

– Food vs. Fuel 

### Reservoir and Production Concerns

 Compatibility with the Shales
 What is Happening to the 60+% of the Water that is Not Recovered
 Relative Permeability Effects

– Imbibition and Phase Trapping
 Why are Only Short Effective Frac Lengths Observed when Producing the Wells
 Impact of Long Term Water Production on Ultimate Recoveries 

# “Is Water Really the Best Answer or Just the Only

Answer we Know?”

# What is The Perfect Fracturing Fluid? Stimulation of Mature Assets

 

## Ultimate Reservoir Performance & Certainty

 Create the Required Fracture Geometry

 Effective Proppant Transport

 Non - Damaging (Water Blocks, Polymer Residue, Clay Swelling)

 All Created Fracture Volume Contributes to Production

 100% Fluid Recovery

 Only Proppant Remains in the Frac

 

## Economic & Environmental Performance

 Readily Available

 All Frac Fluids Recovered are Marketable or Recyclable

 Reduces Swabbing, Coiled Tubing Jetting, or Extended Flowbacks

 Eliminates Water Usage, Disposal Needs, & Venting/Flaring

 

## Operationally Safe

 Jobs can be Conducted Incident Free

2

# The Answer is Cross

- Linked LPG

 LPG can be Handled as a Liquid on the Surface

 Easily X
- Linked to Create Desired Frac Geometry and Achieve Ideal Proppant Transport

 Achievable and “Adjustable” Break Times

 Industry LPG Standards Ensures Fluid Consistency

 Post Job, it Disappears → ~90+% Fluid Recovery

 LPG is soluble w/natural gas

 1st contact miscible w/crude oil

 Very low viscosity, surface tension, & density

 Recovered Frac Fluid is Marketable

 No Waste Streams Created

 Sustainable, Recyclable, and Environmental

 No Water Use in the Fracturing Operation

 Inert to Salts and O ther Reservoir M inerals

 Reduced Truck Traffic to and from Location

 Readily Available and Widely Used by the Public

 Numerous Industry Best Practices & Procedures Exist to Provide for Safe LPG Operations

3 Photo courtesy of Stacey Walker

– Chevron Energy

Technology Company

# Gelling LPG

– Creating a Perfect Transport Fluid

4 

# 8 Seconds



# 15 Seconds

# Comparison of LPG Properties w/Common Frac Fluids Today

 

# Liquid Petroleum Gas (LPG)

 

## Liquid Propane

 

## Viscosity = 0.08 cps 

## (@105F)

 

## Specific Gravity = 0.51

 

## Surface Tension = 7.6 dynes/cm

 

## Non Damaging

– Inert with the Formation Clays and Salts

5  

# Frac Fluids Used Today

 

## Water

 

## Viscosity = .66 cps (@105F)

 

## Specific Gravity = 1.02

 

## Surface Tension = 72 dynes/cm

 

## Potentially Damaging

– Reactive with Formation Clays and SaltsEffective Fracture Length Propped Fracture Length 

# Water Based Fracturing Fluids

GAS FLOW NO GAS FLOW Fluid Block

6 

#  Damage Occurs in the Near Fracture Area due to 

# Imbibition from the Water LeakoffGAS FLOW 

# LPG as a Fracturing Fluid

Effective Fracture Length Propped Fracture Length

7  

# Two Areas of Stimulation are Achieved

– the Fracture and the Near Fracture Area due to the LPG Miscibility

# Comparison of Frac Fluid Recoveries

8 

#  Impact of LPG’s Lower Viscosity, Lower Surface Tension, Solubility/Miscibility, Lower Density (Higher Drawdowns) Leading to Higher % and Quicker Load Recovery

Source: Don LeBlanc, Eastex Petroleum Consultants Inc.9 

# Microseismic Evidence of Greater SRV’s

 

# The propane fracs 

# had a microseismic response over an area of 12

- 15 acres

 

# The water frac had microseismic response over an area of 3

- 5 acres

 

# Note: Sparse data set LPG LPG

LPG Water
Source: Don LeBlanc, Eastex Petroleum Consultants Inc. 

## Wapiti Field

- Cardium Formation in Alberta, Canada 

# LPG Fracturing

- A Superior Alternative.

Well Loc. Fluid Type Proppant Stages IP BOE/D

1 1

- 9 CO2

–

Frac Oil 495,000 15 133

2 4

- 17 Frac Oil 484,000 11 260

3 4

- 22 CO2

–

Frac Oil 495,000 15 215

4 12

- 14 CO2

–

Frac Oil 704,000 16 280

5 14

- 28 

# LPG 333,000 10 1,138

Source: http :// cnrp.marketwire.com/client/seaview_energy/release.jsp?year=2011&actionFor=1395711&releaseSeq=1 These results highlight the effectiveness and benefits of LPG fracturing. A well with half the amount of sand and a third less stages produces FOUR times the production! With LPG Fracturing, Less can Yield more!

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# Total Cost Advantage of LPG Fracturing

 Unit Cost or Total Cost?

 A Key Drilling Metric is Cost per Foot ($/ ft )

 Flex - Rigs, PDC Bit, and Oil Based Mud Systems all Cost More on a Per Unit Basis
- But all Result in a Lower Total Drilling Costs on a Per Foot Basis

 Key Completion Metric that Creates Value is $/Effective Frac Length (Not the Created Length)

 Conventional Frac ~ 2500 $/ ft
 LPG Frac ~ 1500 $/ ft

 LPG Fracturing is More Expensive than Water Fracturing BUT just as Horizontal Wells are More Expensive than Vertical Wells; Economic Results Have Justified Horizontal Wells as a Better Investment than Vertical Wells

 Achieving 3
- 5 Times Longer Effective Fracs will Offset the Incremental Cost by Delivering

 Lower $ / BOE Development Cost
 Higher Production and EUR’s / Well

11

# Total Cost Advantage of LPG Fracturing

 

# Additional Costs Savings for LPG Fracs

 

## No Water Wells/Ponds, Handling Facilities, Logistics, or Frac Tanks

 

## No Disposal Cost

– One Way Hauling

 

## Less Truck Traffic to Location

 

## Reduced Flowback Costs Due to Quick Cleanup

 

## No Well Intervention to Kick Off Well

 

# Additional Cost Benefit of LPG Fracs

 

## Minimal Gas Lost Due to Flaring During Cleanup

 

## Frac Fluid can be Recovered and with the Proper Equipment/Infrastructure it can be Sold with the Gas Stream or as Natural Gas Liquids or Used on a Future Job

12

# Can LPG/Propane be Handled Safely?

Source: PERC 2010 Propane Market Outlook 

#  U.S. Home Propane Market is 9.5 Billion Gallons/Year

Propane Heated Households

# LPG Safety

- How the Public Handles LPG !

14 Propane dates back to 1911 and the industry has develop substantial “best practices” for propane to be used by the general public. Even in the worst case when propane vehicles are involved in accidents, the standards are such that the propane is still safe. It is these practices and standards that GasFrac uses and incorporates into all our equipment and procedures.

# LPG Safety

- How Professionals Handle LPG

15  

### Incorporate Existing Industry Recommended Practices (IRP)

 IRP 4

– Well Testing and Fluid Handling

 IPR 8

– Pumping of Flammable Fluids

 IPR 9 - Basic Safety Awareness

 IPR 16

– Recommend Safety Practices

 IPR 18

– Flammable Fluid Handling

 

### Utilize the Broader LPG/Propane Industry

 Propane Education & Research Council

 Petroleum Service Association of Canada

 Canadian Association of Petroleum Producers

 Propane Gas Association of Canada Inc

 

### Conducted a 3 rd 

### Party HAZOP Evaluation of the Equipment Design, Operating Procedures, and Inspection Schedules with Suggested Modifications Incorporated IRP 8 Table of Contents

# GasFrac Expertise and Experience
Over 1000 Treatments Completed

 Largest job to date: 1 Million Pounds on a 10 stage (3900‟ horizontal)

 Highest pressure treatment to 13,050 psi

 Treating rates to 50 BPM & Proppant Concentrations to 8 lb./gal 

## Treatments placed into over 45 different reservoirs

 Oil, Gas, and Condensate reservoirs and Gas Storage Fields

 Deepest Treatment to 13150‟ TVD

 Formation Temperatures from 59 ° F to 300 ° F 

## Have worked with over 50 clients in Canada and the United States

 Includes Chevron, Husky , EOG, Devon, Canadian Natural Resources, Nexen , ....
 Alberta, British Columbia, Saskatchewan, New Brunswick, Texas, Pennsylvania, New Mexico, Colorado, and Oklahoma

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# Comments from the New York Department of Environmental Conservation Draft Generic Environmental Impact Statement

- 2009

• Liquefied Petroleum Gas (LPG)

– The use of LPG, consisting primarily of propane, has the advantages of carbon dioxide and nitrogen cited above; additionally, LPG is known to be a good carrier of proppant due to the higher viscosity of propane gel [55]. Further , mixing LPG with natural gas does not ‘contaminate’ natural gas; and the mixture may be separated at the gas plant and recycled [55]. LPG’s high volatility, low weight, and high recovery potential make it a good fracturing agent. 

### 9.3 Green Or Non - Chemical Fracturing Technologies And Additives Hydraulic fracturing operations involve the use of significant quantities of additives/products , albeit in low concentrations, which potentially could have an adverse impact on the environment if not properly controlled. The recognition of potential hazards has motivated investigation into environmentally

friendly alternatives for hydraulic fracturing technologies and chemical additives. It is important to note that use of „environmentally friendly‟ or „green‟ alternatives may reduce, but not entirely eliminate, adverse environmental impacts. Therefore, further research into each alternative is warranted to fully understand the potential environmental impacts and benefits of using any of the alternatives. In addition, the „greenness‟ needs to be evaluated in a holistic manner , considering the full lifecycle impact of the technology or chemical. URS reports that the following environmentally

- friendly technology alternatives have been identified as being in use in the Marcellus Shale, with other fracturing/stimulation applications or under investigation for possible use in Marcellus Shale operations:

# Alternatives to Hydraulic Fracturing

“Alternatives to Hydraulic Fracturing. One of the most effective methods of reducing exposure to contaminated wastewater is to implement 

### processes that do not generate wastewater. GASFRAC Energy Services is testing the use of liquefied petroleum gas (LPG), a fracturing agent that also transports the proppants into the fractures . First introduced in Marcellus Shale drilling in September 2009,LPGis derived from natural gas processing and consists mainly of propane in gel form (24). The process generates no wastewater since all of the LPG is recaptured back up the well.”LPG Bulkers

– 500 bbl capacity

1

- 206,000 # Proppant Addition 1

- 70,000 # Proppant Addition 

# LPG Fracturing Process

19 

### Note: Because lines are flushed after the job with Nitrogen, the location is as dry as it was when GasFrac arrived.

# Wapiti Cardium

- Hz Wells

- GasFrac Vs. Offsets

20 

# Technology 1 Year Cumulative Production 

### 25 MBOEG vs. 70 MBOEG 2.5 to 3 Times Greater Recovery!

# Shale Gas Comparison LPG Vertical Wells vs. Water Horizontal Wells

 

## Frederick Brook Shale Same Age as Barnett and Fayetteville

 

## Corridor’s Success Results in an Operator “A” Buying into the Play & Bringing their “Best Practices”

21 

### Operator Well Frac Job Type Job Size Post Frac Production Comments



### Corridor G

- 41 Vertical Well

(w/2 stages) 0.25 Million lbs.

GasFrac (Waterless) 4.1 MMCFPD @ 2083 psi 57 hours after frac Average 5.5 MMCFPD the 1 st week 

### Operator “A” B

- 41 Horizontal Well

(w/5 stages) 2.50 Million lbs.

4.7 Million gals of Water Recovered 10% Load & No Gas Well is 2000‟ offset to the G

- 41 

### Operator “A” G

- 59 Horizontal Well

(w/5 stages) 2.50 Million lbs.

4.7 Million gals of Water Recovered 4% Load & Negligible Gas Water rates have fallen

Source: Corridor Public Release dated Dec 6, 2010 “Corridor Updates Elgin Shale Appraisal Program www.corridor.ca  

## 947 Truck Loads of Water vs. 30 Truck Loads of LPG

 

## Is the Reservoir Failing Us or Are We Failing the Reservoir?

# GasFrac Marcellus Results

22

##  Environmental Impact of LPG Based F rac Fluids can be Minimal

 No Potable Water is Used in the Fracturing Process

 No Biocides Used

 No Waste Stream Created

 No Reservoir Minerals , Nuclides , or Salts are Recovered with the LPG

 Minimal Flaring, Everything Pumped Can be Sold!

 Smaller Quantities can be Used to Achieve Equivalent Effective Frac Length

 Less Road Traffic

– Less Fluids and No Return Trip for Disposal!

 LPG can be R ecovered with the Natural Gas to the Pipeline or Recovered by Gas Processing where it can be Recycled for Fracturing or Sale. 

##  LPG Comes from our Reservoirs and Can be Used to Produce More 

## Oil and Gas from our Reservoirs

– Sustainability! 

# LPG Fracturing

- Environmental Benefits

23 

# LPG Fracturing Achieves a Closed Looped Process

# LPG Fracturing Technology

– Game Changing and Creating a “Competitive Advantage”

 

# Enhanced Well Performance and Project ROR’s, ROI’s, NPV’s, and Development Cost/ Bbl

 

# Effectively Addressing 

# Environmental Impact

 

# Providing a Sustainable Stimulation Fluid for Oil and Gas Development ! Example of how Horizontal Drilling was the Game Changer in the 90’s in the Pearsall Field taking production from 4000 BOPD to 90,000 BOPD!

24

# “LPG Fracturing Technology” No Water, No Waste, All Sustainable Production

25 

# Thank You!