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JIP TO IMPROVE EAGLE FORD HYDRAULIC

FRACTURING TECHNOLOGY

SUBMITTED TO:

Oil Operators Service Companies Drilling Contractors

National Oil Companies

DR. WILLIAM MAURER MAURER ENGINEERING INC

AUSTIN, TX 78733 MAY 9, 2011

TP11-1

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TABLE OF CONTENTS

PAGE EXECUTIVE SUMMARY……………………………………………………………………….3 PROJECT DESCRIPTON ........................................................................................... 10 PROJECT GOALS....................................................................................................... 12 BENEFITS OF IMPROVED FRACTURE DESIGNS……………………………………….13 FRACTURING ISSUES ............................................................................................... 13 BENEFITS TO PARTICIPANTS .................................................................................. 15 CANDIDATE PARTICIPANTS……………………………………………………………… 16 PROJECT PROPOSAL ............................................................................................... 18 WORK STATEMENT ................................................................................................... 21 WORK STATEMENT SLIDES .................................................................................... 31 TIME SCHEDULE………………………………………………………………………..........43 BUDGET……………………………………………………………………………………......44 APPENDIX 1 MAURER ENGINEERING QUALIFICATIONS……………….…………….45 REFERENCES ............................................................................................................ 46

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EXECUTIVE SUMMARY

EAGLE FORD FRACTURING

The Eagle Ford shale has nanodarcy permeability and therefore a large surface area of the shale

must be opened up with massive hydraulic fracturing to produce oil and gas economically.

These massive fracs are very expensive, costing from $3 to $5 million each since typically four

million gallons of water and five million pounds of proppants required in addition to up to 40,000

horsepower of high pressure pumping equipment.

Since the Eagle Ford is a new field operators and fracing companies are on the steep slope of the

learning curve and major improvements will be made in the next five years that will greatly increase

fracturing efficiency and significantly reduce fracing costs.

One problem is that there is very little technical interchange between the operators and

therefore fracturing technology in the EF is not advancing as fast as it should.

This JIP will provide a forum for EF operators to work together and exchange technical

information and conduct experiments in their EF wells so that EF fracing technology can advance at a

much faster rate for the benefit of all JIP Participants.

On April 25, Chesapeake announced that it had a blowout on Pennsylvania shale well due to a

wellhead failure where thousands of gallons of frac fluid polluted farmland and a stream. As a result

Chesapeake suspended fracing on seven wells.

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This type of failure is detrimental to all operators and can lead to regulations against fracturing

since the anti-fracing environmentalists are very strong in that area.

One goal of the JIP is to bring all operators up to a high technical level so that these types of

failures can be eliminated.

Goodrich announced in February, 2011 that EF fracing costs are increasing rapidly due to

shortages of sand and gel. One goal of this project is to develop EF fracs that will use fewer materials

and less pump horsepower to significantly reduce fracing cost.

In November, 2010, Petrohawk Energy announced that it had developed a new fracing

techniques that reduced its fracing costs in the Haynesville shale by $1 million per well. Petrohawk is a

major player in the Eagle Ford and will be apply new fracturing technology there also.

Based on Petrohawk's success and having all JIP Participants work together we are

confident that the JIP can reduce the cost of most Eagle Ford wells by $1 to $1.5 million each.

APPROACH

The approach will be to provide a forum for EF operators to work together and exchange

technical information and generate ideas on how to improve EF fracing through technical meetings,

forums, frac schools and online chat rooms.

The Participants will then conduct experiments in their EF wells in a coordinated way to

provide a much bigger data base than any one company can generate on its own, partly because the

Participants will be drilling in a wide diversity of areas in the Eagle Ford field.

This technique should allow rapid development and implementation of new fracing technology,

just as the successful Maurer Engineering DEA 44 project did in the 1980’2 with horizontal drilling.

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Limitations of EF Hydraulic Fracturing

The major limitations to EF hydraulic fracturing are

1. High frac costs - $3 to $5 million each

2. Large amount of frac materials (4 million gallons water & 5 million pounds of proppants)

3. Large amount of pump horsepower (30,000 to 40,000 horsepower)

4. Near wellbore flow restrictions that reduce flow rates by up to 50 percent

5. Degradation of fracture conductivity on all wells due to plugging

6. High decline rates

7. Damage to fracs due to gel

8. Improper placement of proppants in fracture

9. Screenouts and flowback problems

10. Difficulty in initiating fracs in with cemented casing

11. Downhole equipment failures

BENEFITS OF IMPROVED EF HYDRAULIC FRACTURES

1. Reduce frac costs by $1 to $1.5 million

2. Increase flow rates and EUR by 20 to 40 percent

3. Reduce costly frac failures like blowouts and loss of wells

4. Reduce environmental and regulatory problems

5. Create good public relations with

6. Improved technology applicable to other shale fields

7. Will help non USA operators develop their indigenous shale fields

PROJECT MANAGEMENT

The JIP will be run by Maurer Engineering Inc in Austin, Texas and will be managed by Dr.

William Maurer CEO who has extensive experience in managing JIPs including the successful DEA 44

project which had over 100 Participants and was instrumental in implementing horizontal drilling

worldwide in the 1980’s.

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PHASE I PROJECT PLAN

This Phase I project will consist of the following 29 tasks which tackle all of the major problems

with EF fracing:

MONTHS FROM

TASK

START

1 EF HORIZONTAL DRILLING TECHNIQUES 0-8

2 EF COMPLETION TECHNIQUES 0-8

3 EF HYDRAULIC FRACING TECHNIQUES 0-12

4 ANALYZE EF FIELD FRAC DATA 2-10

5 ANALYZE EF PRODUCTION DATA 2-12

6 OPEN-HOLE AND CEMENTED CASING FRACS 2- 10

7 EF WELL PRODUCTITVITY VS NUMBER FRAC STAGES 2-10

8 EF SCREENOUTS AND FLOWBACK 2-10

9 HOLD HYDRAULIC FRACTURING SCHOOL 2-3

10 PARTICIPANT EF FIELD TESTS 2-11

11 IMPROVE EF FRAC DESIGNS 1-12

12 IMPROVE EF FRAC PROCEDURES 1-12

13 WELLBORE CONNECTIVITY PROBLEMS 2-11

14 FRACTURE CONDUCTIVITY PROBLEMS 2-11

15 EF SURFACE FRAC EQUIPMENT 2-8

16 EF DOWNHOLE FRAC EQUIPMENT 2-8

17 EF FRAC INTRUMENTATION 2-6

18 EF FRAC PROPPANTS

2-6

19 EF FRAC FLUIDS

1-11

20 EF RESERVOIR CHARACTERIZATION 1-12

21 EF FRAC INITIATION AND PROPAGATION 1-6

22 EF ACIDIZING TECHNIQUES 1-9

23 EF WATER RECLAIMATION AND DISPOSAL 1-8

24 EVALUATE EF REFRACTURING POTENTIAL 3-11

25 MICROSEISMIC FRACTURE ANALYSIS 2-8

26 EF TECHNICAL CHAT ROOM 1-12

27 HOLD MEETINGS

1-12

28 WRITE REPORTS

1-12

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COST AND DURATION

The cost for this 12 month Phase I project is $1 million. The Participation fee is

$200,000 per company. The projected initiation date is August 1, 2011. Once this system is

commercialized, Participants will receive a 20 percent discount on this system until they receive

back double their $200,000 Phase I fee.

PHASE I BUDGET

JIP BUDGET

NUMBER OF PARTICIPANTS 6 8 12 20

PROJECT DURATION MONTHS 12 12 18 24

MAURER ENGINEERING MANAGEMENT 200,000 230,000 300,000 400000

ENGINEERING 80000 100000 180000 270000

SECRETARIAL 35,000 40,000 60,000 90000

OVERHEAD

25,000 30,000 60,000 90000

SUBTOTAL 340,000 400,000 600,000 900000

THIRD PARTY COSTS

0

CONSULTANTS 700,000 930,000 1,400,000 2100000

FIELD OPERATIONS 40000 60000 100000 150000

FRAC SIMULATIONS 20,000 30,000 40,000 60000

FRAC SCHOOL 20,000 25,000 30,000 45000

TRAVEL

15000 25000 40000 60000

MEETINGS

30000 40000 60000 90000

REPORTS

25000 40000 60000 90000

MISCELLANEOUS 25000 50000 70000 105000

SUBTOTAL 875,000 1,200,000 1,800,000 2700000

TOTAL 1,215,000 1,600,000 2,400,000 3600000

TRAVEL COSTS - COST PLUS 15 PERCENT

THE SCOPE AND DURATION OF THE JIP WILL BE INCREASED AS ADDITIONAL PARTICIPANTS JOIN

The project will be initiated when the funding level reaches $1.2 million (6 Participants) at a

reduced level and at a full scale level with eight Participants ($1.6 million).

As more than Participants join the JIP, the amount of work done on the initial 29 tasks will be

increased and new tasks added with the majority approval of the Participants.

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With twelve Participants ($2.4 million), the project duration will be increased to twelve months

and with twenty Participants it will be extended to 24 months.

Detailed project reports will be written at the end of twelve months and at the end of the JIP if

longer than twelve months.

CONSULTANTS

Most of the technical work on this JIP will be conducted by world class fracturing consultants

including:

DR HARRY MCLEOD – SPE LEGEND OF PRODUCTION AND OPERATIONS

DR RANDY CRAWFORD – SPE LEGEND OF PRODUCTON AND OPERATIONS

DR MICHAEL PRATS – LEGEND OF HYDRAULIC FRACTURING

JACQUES L. (JACK) ELBEL – LEGEND OF HYDRAULIC FRACTURING

DR WILLIAM MAURER – SPE LEGEND OF DRILLING

CECIL PARKER – HYDRAULIC FRACTURING CONSULANT

DR CHING YEW – UN OF TEXAS HALLIBURTON PROF OF ENGINEERING MECHANICS

DR WILLIAM MCDONALD – PHD PHYSICIST AND PETROLEUM CONSULTANT

Benefits to Participants

The JIP will allow Participants to work with other EF operators to exchange technical

information, obtain data from their wells, work together to improve well performance and reduce

fracing costs and to improve their well economics.

CANDIDATE PARTICIPANTS

EAGLE FORD OPERATORS:

ANADARKO PETROLEUM CRIMSON EXPLORATION HESS RELIANCE

PETROLEUM DEVELOPMENT

APACHE CORP DEVON (BARNETT) HILCORP ROSETTA RESOURCES RAM RESOURCES BHP BILLITON (FAYETTE) E V ENERGY PARTNERS

LEWIS PETRO PROPERTIES SHARON ENERGY RANGE RESOURCES

BP EL PASO MARATHON OIL ROYAL DUTCH SHELL WILLIAM COMPANY

CABOT O&G ENCANA (BARNETT) MURPHY OIL SM ENERGY

CARRIZO O&G EOG RESOURCES

NEWFIELD EXPLORATION ST MARY LAND & EXPLORAT

CHESAPEAKE ENERGY EXXON - XTO OCCIDENTAL SWIFT ENERGY

CNOOC (CHINA) FOREST OIL PENN VIRGINIA TALISMAN ENERGY

COMPANY GASTOR EXPLORATION PETROHAWK TXCO RESOURCES

COMSTOCK RESOURCES GEO RESOURCES PIONEER RESOURCES DENBURY RESOURCES

CONOCOPHILLIPS GOODRICH PETROLEUM PLAINS E&P PARALLEL RESOURCES

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OILFIELD SERVICE COMPANIES

1. BAKER HUGHES

2. CNOOC

3. HALLIBURTON

4. PACKERS PLUS

5. PETROFRAC

6. SCHLUMBERGER

7. WEATHERFORD

NON USA OIL COMPANIES

Non USA oil companies buying shale acreage in the USA or developing their own shale

resources are prime candidates for this JIP since most of horizontal well technology in the

EF field applies equally well in other shale fields around the world.

GOVERNMENT AGENCIES

Government agencies worldwide can benefit from belonging to this JIP since it will allow them

to better develop and manage their indigenous shale resources and ensure that this is done

economically and in an environmentally safe manner.

SMALL OPERATORS AND SERVICE COMPANIES

The JIP will benefit small operators and small service companies because it will allow them to

interface with larger JIP Participants and help put them on an equal technical level with the

large companies.

Several large operators interested in joining the JIP have expressed interest in working with

smaller service companies because they would be more amenable to testing new fracturing

technology.

NATIONAL OIL COMPANIES

Most of the NOC countries have shale resources that can be developed. The JIP will provide technical

information and training that will help them develop these resources.

In addition, many of them will be developing shale resources outside of their countries and this JIP will

provide fracing technology to them that will allow them to better interface and communicate with their

foreign partners.

CONTACT INFORMATION

Dr. William Maurer

Maurer Engineering Inc

10309 Indigo Broom Loop

Austin, TX 78733

512-263-4614;wcmaurer@aol.com

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1. PROJECT DESCRIPTION

This Joint Industry Project (JIP) will focus on hydraulic fracturing in the Eagle Ford s field

since operators are still on the steep part of the learning curve in this new field and frac costs

range from $3 to $6 million.

The cost of joining this 12 month JIP is $200,000 per Participant and the initial goal is to have

eight Participants with a $1.6 million budget. If more than eight Participants join the JIP, the

additional funds will be used to expand the scope of the JIP.

The goals of this project are to increase production rates by 25 percent and reduce fracturing

costs by 35 percent without reducing well productivity. These are high goals, but we believe

they are achievable.

Operators are doing an excellent job of reducing EF horizontal drilling costs because they

have extensive in-house expertise on drilling.

They are making much less progress on EF fracing costs because most of the fracturing

technology resides with the service companies providing the fracing services.

The goal of this JIP is to help Operators take a greater role in developing improved fracing

techniques that will improve frac performance and significantly reduce fracing costs.

These goals can be obtained by eliminating wellbore connectivity and other wellbore

problems that hinder production rates and by using “Intelligent” instead of “Brute Force” frac

designs to reduce the $3 to $6 million fracturing costs.

Although the focus is on the Eagle Ford, most of the technology developed during this JIP is

applicable to the other 20 or 30 shale fields in the USA and in shale fields around the world.

This project contains 28 tasks focused on improving fracing technology with open hole and

cemented casing and eliminating wellbore-to fracture connectivity problems that reduce

production rates by up to 30 to 50 percent and contribute to the fast decline of EF shale wells.

Participants will be encouraged to exchange technology and to jointly conduct field tests that

will allow Participants to evaluate new fracing systems and implement the best systems into

their operations.

Participants will also be encouraged to test new fracturing technology in their EF wells and to

make the results available to all JIP Participants so that the JIP can advance fracturing

technology much faster than individual companies can do on their own.

Technical meetings, frac schools, technical reports, and an internet chat room will allow good

technical interchange between Participants so they can quickly implement new fracturing

technology into their operations.

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The payout from this JIP could be very large because the $200,000 Participation fee

constitutes only seven percent of the cost of one $3 million Eagle Ford frac job.

By combining the knowhow and test well data from 10 to 20 Participants, this JIP should have

a major impact on shale well technology, just as Maurer Engineering’s DEA 44 Horizontal

Well Technology JIP did with horizontal drilling in the 1980s.

A JIP legal agreement can be obtained from wcmaurer@aol.com

2.

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2. PROJECT GOALS

The goals of this project are as follows:

1. Provide a forum where EF operators can work together to improve EF fracturing technology

2. Have Participants share well data to create large data base

3. Implement latest and best fracturing technology into the Eagle Ford field

4. Reduce EF fracturing costs by $1 to $1.5 million

5. Reduce drilling and completion costs

6. Improve EF well productivity by 20 to 30 percent

7. Reduce the amount of materials used on fracs

8. Eliminate near wellbore flow restrictions which reduce production rates by 30 to 50 percent

9. Reduce fracture degradation which occurs on all EF wells

10. Determine if cemented casing or open-hole fracs better

11. Determine the optimum number of EF frac stages

12. Learn how to better utilize and enhance natural fractures and microcracks

13. Better utilize microseismic analysis for real time control of hydraulic fracturing process

14. Improve frac designs

15. Improve fracing field operations

16. Utilize “intelligent” fracs instead of “brute force” fracs

17. Develop competitive frac bidding

18. Assist Participants in jointly testing new fracing concepts

19. Change EF emphasis from IP to EUR and well economics due to rapid decline curves

20. Conduct fracture economic trade-off studies

21. Analyze Participant field frac data and production data to better understand EF fractures

22. Stimulate development of improved downhole fracing tools and procedures

23. Share shale characterization data from different parts of the Eagle Ford field

24. Share drilling and well completion information

25. Combine the know-how of all Participants into improved fracturing procedures and designs

26. Provide chat room for Participants to exchange information

27. Hold meetings where Participants give presentations on their EF fracturing technology

28. Hold school for Participant engineers to learn latest EF fracturing technology

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3. BENEFITS OF IMPROVED EF FRACTURE DESIGNS

1. Reduce frac costs by $1 to $1.5 million

2. Increase IR and EUR by 20 to 40 percent

3. Reduce costly frac failures like blowouts and loss of wells

4. Reduce environmental and regulatory problems

5. Create good public relations with

6. Improved technology applicable to other shale fields

7. Will help non USA operators develop their indigenous shale fields

Hydraulic frac jobs in the Eagle Ford wells typically cost from $3 to $6 million compared to $2

million drilling costs, so there is major incentive to reduce fracturing costs

With cemented casing, connectivity problems between the wellbore and the hydraulic

fractures can reduce flow rates in EF wells by 30 to 50 percent.

Open hole fracs overcome many of these problems so one goal of this JIP is to have

Participants test different open hole fracing techniques so that this technology can be

advanced in the Eagle Ford wells.

Frac designs will be optimized for the three different types of wells in the Eagle Ford, oil, dry

gas, and gas with high liquid content.

Shale wells typically decline 60 to 80 percent in the first 2 to 3 years so more emphasis

needs to be placed on Expected Ultimate Recovery (EUR) than on Initial Production Rates

(IP).

I n some wells it may be advantageous to use smaller and lower cost fracs and spread the

recovery over a longer time and still recover the same amount of oil or gas.

Refracing of EF wells will be studied in detail because refracing will likely become a common

practice in the Eagle Ford due to the rapid decline of these wells.

The proppants used in shale wells can have a major affect on well productivity so sand and

ceramic proppants will be studied to determine where the extra cost of ceramic proppants

may pay out.

Focus will be placed on the effect of increased number of fracture stages since there are

indications that in some EF well the extra stages increase Initial Production IP but not

Estimated Ultimate Recovery EUR.

There is a major opportunity to significantly increase EF well production rates and reduce EF

fracturing costs due to the large number of wells Participants will be drilling in the Eagle Ford.

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4. FRACTURING ISSUES

Following are fracing issues that have not yet been resolved in the Eagle Ford since this field

is very new and is still on the steep part of the learning curve. These issues will be

addressed on the JIP:

1. Open hole vs. cemented liners

2. Production vs. number frac stages

3. Slick water vs. viscous fluids

4. Sliding sleeves vs. perforating

5. $3 million vs. $6 million fracs

6. 20,000 vs. 40,000 horsepower fracs

7. Abrasive jet vs. shaped charge perforating

8. Sand vs. ceramic proppants

9. Acid soluble cements

10. Coiled tubing fracing

11. Wellbore connectivity problems

12. Acidizing applications

13. Microseismic real time uses

14. Frac equipment and instrumentation

15. Ball drop techniques

16. Screen outs and flow back problems

17. Fracture initiation and propagation

18. Fracing problems and solutions

19. Guiding wellbores through “sweet spots”

20. Fracing into water zones and overlying Austin Chalk

21. Effect of wellbore orientation and vertical placement on well performance

22. Enhancement and propping of natural fractures

23. Permeable horizontal layers in eagle ford

24. Improved horizontal drilling procedures

25. Improved completions

26. Improved and lower cost frac designs

27. “Intelligent” vs. “Brute Force” fracs

28. Overall well economics

29. Shortage of fracing equipment

30. Excessive frac costs

This information will be used to improve drilling, completion and fracing operations and improve well performance and well economics. The jip can more effectively study these issues than an individual company because of the much larger fracing data base from 10 to 20 jip Participants.

Eagle Ford fracing is still on the steep part of the learning curve so frac experts believe that EF fracing techniques will change considerably during the next five years.

We are confident that this jip will be a major factor in implementing these changes

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5. BENEFITS TO PARTICIPANTS

1. Interface with world leading frac experts

2. Interface with frac experts with other Participants

3. Technical interchange between Participants

4. Obtain data from

a. large pool of Participant wells

b. different types of fracs

c. Participant fracturing experiments

d. In-house fracturing experts.

5. Provide data to Participant engineers

6. Detailed post-well analyses on participant wells

7. Compare techniques, capabilities and costs of many service companies

8. Rapid implementation of new fracturing technology

9. Utilize capabilities of jip fracturing “chat room”

10. Get participant assistance on real time fracing problems

11. Identify fracing problems and solutions

12. Attend jip eagle ford fracing school

13. Increase R&D funds 10 to 20 fold

14. Royalty free use of technology developed on jip

15. Improved frac designs

16. Reduced fracing costs

17. Increased well performance

18. Service companies that join the jip will have the benefit of working with jip

Participants to optimize frac designs for their EF applications

6.

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6. CANDIDATE JIP PARTICIPANTS

EAGLE FORD OPERATORS

ANADARKO CRIMSON EXPL HESS RELIANCE PETROLEUM DEVEL

APACHE CORP DEVON (BARNETT) HILCORP ROSETTA RESOURCES RAM RESOURCES

BHP BILLITON EV ENERGY PARTNERS LEWIS PETRO PROP SHARON ENERGY RANGE RESOURCES

BP EL PASO MARATHON OIL ROYAL DUTCH SHELL WILLIAM CO

CABOT O&G ENCANA MURPHY OIL SM ENERGY CARRIZO O&G EOG RESOURCES NEWFIELD EXP ST MARY L&E

CHESAPEAKE EXXON - XTO OCCIDENTAL SWIFT ENERGY CNOOC (CHINA) FOREST OIL PENN VIRGINIA TALISMAN ENERGY COMPANY GASTOR EXPL PETROHAWK TXCO RESOURCES COMSTOCK RES GEO RESOURCES PIONEER RES DENBURY RESOURCES CONOCOPHILLIPS GOODRICH PETROLEUM PLAINS E&P PARALLEL RESOURCES

OILFIELD SERVICE COMPANIES

8. BAKER HUGHES

9. CNOOC

10. HALLIBURTON

11. PACKERS PLUS

12. PETROFRAC

13. SCHLUMBERGER

14. WEATHERFORD

NON USA OIL COMPANIES

Non USA oil companies buying shale acreage in the USA or developing their own shale

resources are prime candidates for this JIP since most of horizontal well technology in the

EF field applies equally well in other shale fields around the world.

Belonging to the JIP will allow them to communicate better with USA partners and to

develop their own shale resources better and at lower cost.

Interfacing with other JIP Participants is another plus for all Participants since each

company has in-house knowhow that will be useful to other Participants.

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GOVERNMENT AGENCIES

Government agencies worldwide can benefit from belonging to this JIP since it will allow them

to better develop and manage their indigenous shale resources and ensure that this is done

economically and in an environmentally safe manner.

SMALL OPERATORS AND SERVICE COMPANIES

The JIP will benefit small operators and small service companies because it will allow them to

interface with larger JIP Participants and help put them on an equal technical level with the

large companies.

Several large operators planning to join the JIP have expressed interest in working with smaller

service companies because they consider them more amenable to testing new technology.

NATIONAL OIL COMPANIES

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7. PROJECT PROPOSAL

PARTICIPATION COST

The Phase 1 participation cost is $200,000.This is equal to only 7 percent of the cost of one

$3 million EF frac job.

PROJECT DURATION

The Phase 1 project will last for 12 months

NUMBER OF PARTICIPANTS

The JIP will be initiated at a reduced level with 5 Participants, and run at full scale with 8

Participants. If more than 8 companies join the JIP, the extra funds will be used to expand the

scope of the JIP.

MANAGEMENT

Dr. William Maurer will manage the JIP. He has extensive experience in managing

JIPs including THE DEA- 44 HORIZONTAL WELL TECHNOLOGY project which

helped spread horizontal drilling worldwide.

DELIVERABLES

Deliverables will include:

1. Detailed technical reports and power point presentations 2. Technical meetings 3. Technical interchange between Participants 4. Analysis of Participant frac jobs 5. Fracing school

PARTICIPANT RIGHTS

Participants will have the non-exclusive royalty-free right to use all information

developed on this Phase I project in their shale well

EF SHALE FOCUS

The focus of the project will be the EAGLE FORD (EF) shale since this is a

significant liquids-rich discovery, with many active operators and few established

best practices. Companies operating in the EF are still on the steep part of the

learning curve, and can leverage some of the recent learnings from other liquids-rich

plays developed with multistage horizontal wells.

GROUP PARTICIPATION

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Participant input is needed on planning the program, providing field frac data,

conducting frac experiments, providing production data. .

TECHNICAL ADVISORY COMMITTEE

A Technical Advisory Committee will be set up that consists of two members from

each Participant company.

MEETINGS

Meetings will be help periodically to plan JIP tasks and to review progress being

made on the JIP.

BENEFITS TO PARTICIPANTS

This project will allow Participants to obtain up-to-date information on EF shale

fracturing, pool their fracing knowhow, develop improved fracturing techniques, and

reduce fracturing costs.

CANDIDATE PARTICIPANTS

Operators to improve their Eagle Ford shale wells.

Service companies to help operators optimize their EF frac designs.

Foreign and National Oil Companies to help them develop their shale resources...

Government agencies involved with the energy development.

JIP STRATEGY

This JIP will be a “hands on” project aimed at utilizing the latest fracing technology

being developed around the world in Eagle Ford shale wells.

TECHNICAL PERSONNEL

The technical work on this project will be conducted primarily by world class frac

consultants including:

DR WILLIAM MAURER – SPE LEGEND OF DRILLING

DR HARRY MCLEOD – SPE LEGEND OF PRODUCTION AND OPERATIONS

DR RANDY CRAWFORD – SPE LEGEND OF PRODUCTON AND OPERATIONS

DR MICHAEL PRATS – LEGEND OF HYDRAULIC FRACTURING

JACQUES L. (JACK) ELBEL – LEGEND OF HYDRAULIC FRACTURING

CECIL PARKER – HYDRAULIC FRACTURING CONSULANT

DR CHING YEW – UN OF TEXAS HALLIBURTON PROF OF ENGINEERING MECHANICS

DR WILLIAM MCDONALD – PHD PHYSICIST AND PETROLEUM

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They will provide technical input on drilling, completing and fracing shale wells.

TECHNIQUES FOR OBTAINING EF TECHNICAL INFORMATION

Frac data will be obtained on this JIP from

1. Technical publications 2. Fracturing experts 3. Technical meetings 4. Participant engineers 5. Data from Participant wells

GEORGE KING PAPER ON SHALE FRACS

George King recently wrote an outstanding 50 page technical paper entitled THIRTY

YEARS OF GAS SHALE FRACTURING: WHAT HAVE WE LEARNED? (SPE

133456) that we plan to apply to the Eagle Ford shale.

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8. WORK STATEMENT

TASK 1 ANALYZE EF HORIZONTAL DRILLING TECHNIQUES

Drilling technology related to EF horizontal wells will be studied in detail because

drilling affects fracturing in many ways including:

1. Formation damage around wellbores 2. Fracture initiation pressures 3. Fracture quality 4. Ability to stay in “sweet spots” in the reservoir 5. Connectivity problems around wellbore 6. Drilling time 7. Well costs 8. Cementing

TASK 2 ANALYZE EF COMPLETION TECHNIQUES

Although the completion program is in a large part dictated by the frac design, there are ways

to reduce fracturing problems by improving completion designs by use of better equipment

and better fracturing procedures.

EF completion s will be studies in detail since the type of completion equipment needed

including casing; packers, sliding sleeves, cementing, perforating, straddle packers etc.

strongly affect the success of frac jobs.

Failures being encountered EF wells with completion equipment and techniques will be

studied in detail and attempts made to overcome these problems.

New shale completion designs developed in other areas than the Eagle Ford will be studied

and improvement made in those areas applied to the Eagle Ford field.

TASK 3 STUDY EF HYDRAULIC FRACTURING TECHNIQUES

Fracturing techniques currently used in EF wells and other shale fields will be studied in detail

and attempts made to improve frac performance and reduce fracing costs which typically

range from $3 to $6 million.

The effect of the number of frac stages on well production will be studied in an attempt to

determine if 15 to 20 stages are needed since the number of stages is a major factor on the

high cost of these EF fracs.

Facing data will be analyzed to determine if 40,000 pump horsepower is actually needed on

these fracs since this also contributes to the excessive cost of these EF fracs.

Surface and downhole equipment failures which contribute to high costs and reduced frac

performance will also be studied and attempts made to reduce these failure equipment

failures.

Problems that arise with these large EF frac jobs include equipment failures, excessive

breakdown

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TASK 4 ANALYZE EF FIELD FRAC DATA

During this project, frac experts will study real time frac data from Participant EF wells and

analyze

1. Frac design

2. Surface and downhole equipment failures

3. Completion tools

4. Frac fluids and proppants

5. Number of frac stages

6. Breakdown and propagation pressures

7. Problems encountered during frac jobs

8. Improvements needed

9. Frac costs

These frac data will be used on other project tasks relating to frac design and frac

implementation.

TASK 5 ANALYZE EF PRODUCTION DATA

Frac experts will analyze EF production data from Participant wells to determine the effects of

frac design and other factors on well productivity and frac costs. .

If ten Participants each contribute production data from 5 to 10 wells, this will provide a 50 to

100 well data base to analyze.

This will be a very important task on this project and should lead to improved frac designs

and reduced fracing costs.

TASK 6 COMPARE OPENHOLE AND CEMENTED CASING FRACS

Most Eagle Ford fracs are currently done with cemented casing. This technique works well

but it has two major limitations:

1. The cement seals off the natural factures along the wellbore 2. The cement and perforations create fracture initiation problems 3. Near wellbore connectivity problems can reduce flow rates by 20 to 40 percent 4. Cemented casing fracs are more expensive

Service companies prefer cemented casing because it makes their fracing jobs simpler and faster so they make more money with them.

Openhole fracs overcome many of these problems and have been used successfully in other

shale fields.

Because of the potential of openhole OH fracturing, Participants will be encouraged to test

openhole fracs in their EF wells.

If each Participant conducts one openhole OH frac using information gained from previous

Participants OH fracs, the JIP should significantly advance OH fracing technology in the

Eagle Ford.

TASK 7 STUDY EFFECT OF NUMBER OF FRAC STAGES ON WELL PRODUCTIVITY

23

EF frac jobs typically utilize 10 to 20 frac stages and cost from $3 to $6 million.

Frac costs can be significantly reduced by reducing the number of frac stages, but the effect of doing this

on ultimate recovery in the EF is not well documented.

One reason for this is operators focus more on initial production rates than on ultimate recovery.

TASK 8 STUDY EF FRACTURE SCREENOUTS AND FLOWBACK

Screenouts are major problems with EF fracturing because they can leave the casing full of

sand -laden slurries and are expensive and time consuming to clean out.

If a screenout occurs, it is necessary to remove the slurry before the next stage can be fraced

because of of ball dropping and other problems if the slurry remains in the casing or tubing.

One operator spent $500,000 solving screenout problems on a shale well.

Screenout and flowback problems will be studied in detail on Participant wells and attempts

made to reduce these problems in Participant wells.

Screenouts are a major problem in horizontal wells because they that leave the vertical and

horizontal wellbores full of slurry fluids containing large concentrations of 20/40 sand.

It is not possible to pump the next plug or to drop the next ball or dart during the next stage

until the slurry is removed from the well which is an expensive and time consuming.

Coiled tubing cleanout costs run as high as $500,000 on EF multistage wells since the laden

slurry must be removed from both the horizontal and vertical sections of the well before the

next stage can be fraced. .

Flowback of sand into the wellbore also creates expensive and time consuming cleanout

problems that increase fracing costs and delay fracing operations.

Because of these problems this task will focus on ways to reduce EF screenout and flowback

problems.

TASK 9 HOLD HYDRAULIC FRACTURING SCHOOL FOR PARTICIPANTS

We plan to hold a three day frac school for Participant engineers to update them on the latest

fracturing technology with a special focus on Eagle Ford fracing procedures.

This school will be likely be taught by Mike Vincent, one of the foremost authority on hydraulic

fracturing in the world.

It will be good for Participant engineers to meet Mike since he may be able to give them

overcome problems they encounter in the field and assist them with their EF frac designs on

a consulting basis.

Participants may have to pay a nominal fee to help offset part of the school costs.

Hydraulic fracturing involves so many different disciplines that few or no frac engineers

understand all of them in detail.

TASK 10 PROMOTE PARTICIPANT EF FIELD TESTS

24

A major focus of this JIP will be to encourage Participants to test different completion and

facing concepts that have potential to significantly improve performance of Eagle Ford wells.

Many factors affecting EF fracturing are not well understood, such as the effect of fracture

spacing distance and wellbore connectivity conditions, and tests need to be made to quantify

these factors.

This will be possible because JIP Participants will be using many different types of fracing

procedures in different parts of the EF field and can conduct experiments in these wells.

By pooling the information from these tests, it will be possible to jointly advance EF fracturing

much faster than one Participant can do alone.

TASK 11 IMPROVE EF FRAC DESIGNS

Information generated by the JIP will be used to improve EF frac designs and reduce frac

costs.

Predictions from industry frac simulations will be compared to Participant field production

data to determine the accuracy of the simulators and ways to improve them.

Because of the high decline rates in EF wells, a focus will be made on Estimated Recovery

Rate EUR since adding extra stages may increase Initial Recovery rate IR, and increase

fracing costs without improving EUR and thereby reduce the payouts from wells.

We believe that too much emphasis is being placed on IR and not enough on EUR since

adding frac stages immediately increases flow rates, but it takes much longer to determine

the effect on EUR.

The JIP will review frac designs for oil, dry gas, and high condensate gas since fracs have to

be optimized for each of these regions of the Eagle Ford shale.

This frac design task will also focus on improving wellbore-to- frac connection problems

which reduce flow rates in many shale wells by 30 to 50 percent, especially with cemented

casing. This problem, which is time dependent, is a major factor in the rapid decline of EF

wells.

The JIP will also focus on the continual reduction in frac conductivity as the well is produced

due to plugging of the frac with fines, frac fluid viscosifiers, asphalt precipitation, barite scale,

etc. This is also a major contributor to the fast decline of these wells.

An attempt will be to significantly reduce fracing costs without affecting fracture performance

by reducing the horsepower of the fracs, the 3 to 4 million gallon water requirement and the 4

to 5 million pounds of proppants used.

We expect to make major improvements on the EF frac designs and major reductions in

fracing costs as a result of this JIP.

Petrohawk published that they had reduced fracturing costs by$1 million per well in the Haynesville shale

by developing improved frac designs.

25

Based on Petrohawk’s success, it should be possible to reduce fracing costs in the Eagle Ford field by $1

to $1.5 million per frac while improving fracture performance.

The JIP will accelerate development of these improvements by combining the technical expertise of the

Participants and conducting coordinated field experiments to test new fracing concepts.

TASK 12 IMPROVE EF FIELD FRACTURING PROCEDURES

Participant frac jobs will be studied to determine what surface fracing equipment problems

occur and what can be done to improve this equipment and eliminate field failures.

Real time fracture data will be analyzed to determine if frac designs can be changed to better

utilize the fracing equipment and to improve fracing procedures and reduce fracing costs.

This task will be integrated with Task 13 to implement these improvements into the frac

designs.

The high pressure frac pumps will be studied closely because they often fail during EF frac

jobs due to excessive wear in the fluid ends due to the abrasive nature of the frac fluids being

pumped.

Problems with other surface equipment such as blenders, mixers, etc will also be studied and

recommendations made on improvements needed to improve fracing operations and reduce

fracing costs.

This will include better frac design and better use of the frac equipment and frac personnel on

location.

TASK 13 REDUCE WELLBORE CONNECTIVITY PROBLEMS

A major near-wellbore problem is present with shale fracs that can reduce production rates

by 20 t0 40 percent in many EF wells.

This “connectivity” problem is present because of problems connecting the wellbore to the

hydraulic fracture. This problem arises because the fracture is perpendicular to the wellbore

so there is very little contact where the wellbore and fracture come together, and where fluid

velocities are very high.

Small fractures initiate at the 3 to 6 perforations and then initially propagate parallel to the

wellbore because of high stresses around the wellbore.

As they propagate, the small cracks go together to form a larger frac which turns and

propagates perpendicular to the wellbore (lowest fracture pressure direction).

In the area where the small fractures go together, they form small flow paths that create high

pressure drops which reduce the drawdown pressures and flow rates from the well.

The problem is compounded later as fines migration, asphalt deposition, and barite scale

formation plug off more of the flow paths.

The good thing about this connectivity problem is that the damage is within about 10 feet of

the wellbore, so the connectivity degradation can be removed by small, low-cost fracs that

propagate 10 to 15 feet.

26

This is a major advantage over frac conductivity degradation with time since much larger and

higher costs fracs are required in that case.

Due to the small flow area near the wellbore compared to the large flow area in the frac, it is

likely that more of the rapid decline with shale wells is due to the connectivity problem and

not fracture conductivity degradation.

TASK 14 REDUCE FRACTURE CONDUCTIVITY PROBLEMS

The second problem is deterioration of the fracture conductivity with time due to fines

migrations, asphalt precipitation, barite scale and other factors.

Refraced Barnett and other shale wells show that refracing can often increase flow rates to 2

to 4 fold indicating that the rapid decline in shale wells is primarily due to connectivity and frac

degradation problems, not due draining the reservoir. This indicates that refracing will

become an important tool in the life of EF wells.

Tests need to be conducted on Participant wells to determine if the rapid decline is due to

restrictions near the wellbore, or degradation of the long hydraulic fracs.

If the damage is near the wellbore, it should be possible to restimulate EF wells using small,

low cost fracs that propagate only 10 to 20 feet from the wellbores.

If the damage is primarily due to conductivity reduction in the hydraulic frac, much larger and

more expensive fracs will be required to stimulate the wells and overcome the rapid decline

problems.

Early time flow tests and evaluation are needed to identify the best frac-to-wellbore

connection and suggest improvements in proppant selection and placement near the well

bore.

Considerable time will be spent on the JIP studying connectivity and fracture degradation

problems since they can significantly reduce flow rates and the economic payout of EF wells.

TASK 15 STUDY EF SURFACE FRAC EQUIPMENT

Surface equipment used during EF frac jobs will be studied to determine if this equipment can

be improved or if better fracing procedures can be developed. .

The high pressure frac pumps will be studied closely because they often fail during EF frac

jobs due to excessive wear in the fluid ends due to the abrasive nature of the frac fluids being

pumped.

As are result, service companies have extra frac pumps on location to allow replacing failed

pumps during frac operations. This contributes to the need for up to 40,000 pump

horsepower on EF frac jobs.

Problems with other surface equipment such as blenders, mixers, etc will also be studied and

recommendations made on improvements needed to improve fracing operations and reduce

fracing costs.

27

TASK 16 STUDY EF DOWNHOLE FRAC EQUIPMENT

Downhole fracing tool failures are a problem packers, sliding sleeves, perforators, millable

plugs, etc. because of the abrasive nature of frac fluids, plugging of openings with proppants,

high pressures, high temperatures, contaminants, corrosion and other factors.

Downhole tool failures on Participant wells will be documented and attempts made to

eliminate these failures.

The large data base from Participant wells should allow improvements to be made in

downhole tools designs and in fracing procedures to reduce these downhole tool failures.

TASK 17 STUDY EF FRAC INSTRUMENTATION

Surface and downhole fracing instrumentation will be studied to determine equipment

reliability and effectiveness.

New instruments will be identified that will allow better analysis of fracing operations and lead

to improved frac designs.

TASK 18 ANALYZE EF FRAC PROPPANTS

Proppants are a major cost item in EF frac jobs since up to five million pounds of proppants

are used on EF wells.

Sand proppants are currently used in most EF fracs due to their lower cost, but they tend to

crush more and result in lower frac permeability than more expensive ceramic proppants.

Therefore fracing results with both types of proppants to better identify the pros and cons of

sand and ceramic proppants and to identify areas where each are superior.

The ceramic proppants may have application near the wellbore since they may reduce

connectivity problem which can greatly reduce production rates as described in Task 13.

TASK 19 STUDY EF FRAC FLUIDS

Numerous types of frac fluids are used in fracturing shale wells including foam s, gels, and

slick water.

In most EF wells, slick water is used to initiate and propagate the fractures and then viscous

water is used to carry the proppants into the fracture.

Frac experts will study the different frac fluids being used in EF shale wells and determine the

pros and cons of each. They will attempt to determine how frac fluids affect well productivity

and fracturing costs.

TASK 20 STUDY EF RESERVOIR CHARACTERIZATION

Reservoir characterization information is the key to optimizing frac designs and field

operations.

28

On a microscopic scale, shale reservoirs permeabilities on the order of 100 nanodarcies.

Very little oil or gas could be produced if these fluids had to flow through 100 nanodarcy

formations.

Therefore the permeability of these shale formations must be higher due to natural fractures

or thin permeable layers in the shale that can transport the oil and gas to the hydraulic

fractures. This must be true of oil production since oil will not flow through nanodarcy

formations at commercial rates.

Drill cuttings can provide characterization data which can used to calibrate the electric logs

run for depth correlation and porosity evaluation.

The high calcium content (50% to 70%) makes the EF shale more brittle and easier to frac

than other shale reservoirs which may allow the development of lower cost and more

effective fracturing techniques.

If funding permits, properties of other shales will be compiled, especially from shale fields

where Participants are drilling wells.

TASK 21 STUDY EF FRAC INITIATION AND PROPAGATION

Dr. Ching Yew, the author of the book “MECHANICS OF HYDRAULIC FRACTURING”, is a

world leader on hydraulic fracture initiation and propagation.

Dr. Yew will apply these mathematical principles and concepts to EF shale wells to provide a

better understanding of shale fracturing and to identify ways to improve frac designs.

His insights into fracturing have the potential to change the way EF shale wells are fraced in

the future.

Dr. Ali Daneshy recently published a paper that shows that longitudinal fractures initially form

parallel to the wellbore and then grow together and rotate to become perpendicular to the

wellbore to the minimum horizontal stress.

This mechanism contributes to the near-wellbore connectivity problem that will be studied in

TASK 15.

TASK 22 ANALYZE EF ACIDIZING PROCEDURES

Perforations are often acidized to reduce breakdown pressures and to provide better

connection of the hydraulic fracture to the wellbore.

Different shale formations respond differently to acid. Carbonate shales are easily stimulated

by acid, but plugging particles can be released when the insoluble content is high. The effect

of acid on different shale mineralogies needs to be studied.

Various diverting agents are used to effectively acidize all perforations. These diverters need

to be reviewed to determine those which are most effective.

TASK 23 STUDY EF FRAC FLUID RECLAMATION AND DISPOSAL

Water reclamation and disposal may become an increasing problem since up to four million

gallons of water are use on EF frac jobs.

29

Two types of frac fluid reclamation systems are being tested in shale fields; heating &

distillation and membrane technology.

Water costs may increase in the future in the Eagle Ford because of water shortage

problems in the Barnett and other Texas shale fields. They are considering pipelining water

long distances to these shale fields.

For these reasons, water reclamation and disposal will be addressed during the JIP.

TASK 24 EVALUATE EF REFRACTURING POTENTIAL

Refracs have been attempted in hundreds of fields around the world and it is likely that

refracing will become important in the Eagle Ford wells since they decline so rapidly.

Typically shale wells require refracing after 4 or 5 years since they decline so rapidly.

If flow meters show that certain stages of the multistage frac wells are not producing , it may

be possible to refrac those stages at a later time using smaller fracs.

This task should allow Participants to improve the effectiveness and durability of fracs plus

design completions to allow more cost-effective refracing.

TASK 25 REVIEW MICROSEISMIC FRACTURE APPLICATIONS

Real time microseismic logging is proving to be a valuable tool for monitoring and controlling

fracture initiation and propagation in EF wells.

Microseismic measurements are made by putting 5 to 7 seismic receivers at the same depth

in an offset well and then locating seismic events as the fractures propagate.

This technology shows the direction factures are propagating and what stages are being

more effectively fractured.

This allows the fracturing process to be modified in real time to enhance the production from

EF wells.

Because of its importance, microseismic logging will be studied in detail so that Participants

can better utilize this technology in their EF wells.

TASK 26 SET UP EF TECHNICAL CHAT ROOM

A technical chat room or blog will be set up where Participant engineers can communicate

with each other about their fracing operations.

This will allow them to exchange fracing information and ideas on how to improve their frac

designs and field implementation operations.

This chat room will be important when Participants need help on frac designs or when they

encounter field problems that they cannot solve.

TASK 27 HOLD MEETINGS

30

Meetings will be held throughout the JIP to keep Participants informed of progress being

made on the JIP and to allow them to implement new technology into their frac designs and

field operations. .

If we have more than 10 Participants from outside of North America, consideration will be

given to also holding meetings in London or Paris.

TASK 28 WRITE REPORTS

Detailed progress and final reports will be written periodically during the JIP and a detailed

final report will be written at the end of the JIP.

31

9. WORK STATEMENT SLIDES

These slides are presented to show the types of things that will be studied in each

task. They have been put into this separate section so that they can be quickly

updated.

The references for these figures are included in the Reference section at the back

of the report. Readers are encouraged to buy the papers from the SPE.

TASK 1 DRILLING

32

TASK 2 COMPLETIONS

TASK 3 HYDRAULIC FRACING TECHNIQUES

33

TASK 4 ANALYZE FIELD FRACTURING

TASK 5 PRODUCTION DATA

34

TASK 6 OPEN HOLE AND CEMENTED CASING

TASK 7 NUMBER OF FRAC STAGES

35

TASKS 8 TO 10 NO SLIDES

TASK 11 IMPROVED FRAC DESIGN

TASK 12 FIELD FRAC PROCEDURES

36

TASK 13 WELLBORE CONNECTIVITY PROBLEMS

TASK 14 FRACTURE CONDUCTIVITY PROBLEMS

37

TASK 15 SURFACE FRAC EQUIPMENT

TASK 16 DOWN HOLE FRAC EQUIPMENT

38

TASK 17 FRAC INSTRUMENTATION

TASK 18 FRAC PROPPANTS

39

TASK 19 EF FRAC FLUIDS

TASK 20 RESERVOIR CHARACTERIZATION

40

TASK 21 FRAC INTITIATION AND PROPAGATION

41

TASK 22 ACIDIZING

23 NO SLIDE

TASK 24 REFRACING

42

TASK 25 MICROSEISMIC FRACTURE ANALYSIS

43

10. TIME SCHEDULE

MONTHS FROM

TASK

START

1 EF HORIZONTAL DRILLING TECHNIQUES 0-8

2 EF COMPLETION TECHNIQUES 0-8

3 EF HYDRAULIC FRACING TECHNIQUES 0-12

4 ANALYZE EF FIELD FRAC DATA 2-10

5 ANALYZE EF PRODUCTION DATA 2-12

6 OPEN-HOLE AND CEMENTED CASING FRACS 2- 10

7 EF WELL PRODUCTITVITY VS NUMBER FRAC STAGES 2-10

8 EF SCREENOUTS AND FLOWBACK 2-10

9 HOLD HYDRAULIC FRACTURING SCHOOL 2-3

10 PARTICIPANT EF FIELD TESTS 2-11

11 IMPROVE EF FRAC DESIGNS 1-12

12 IMPROVE EF FRAC PROCEDURES 1-12

13 WELLBORE CONNECTIVITY PROBLEMS 2-11

14 FRACTURE CONDUCTIVITY PROBLEMS 2-11

15 EF SURFACE FRAC EQUIPMENT 2-8

16 EF DOWNHOLE FRAC EQUIPMENT 2-8

17 EF FRAC INTRUMENTATION 2-6

18 EF FRAC PROPPANTS

2-6

19 EF FRAC FLUIDS

1-11

20 EF RESERVOIR CHARACTERIZATION 1-12

21 EF FRAC INITIATION AND PROPAGATION 1-6

22 EF ACIDIZING TECHNIQUES 1-9

23 EF WATER RECLAIMATION AND DISPOSAL 1-8

24 EVALUATE EF REFRACTURING POTENTIAL 3-11

25 MICROSEISMIC FRACTURE ANALYSIS 2-8

26 EF TECHNICAL CHAT ROOM 1-12

27 HOLD MEETINGS

1-12

28 WRITE REPORTS

1-12

44

11.BUDGET

JIP BUDGET

NUMBER OF PARTICIPANTS 6 8 12 20

PROJECT DURATION MONTHS 12 12 18 24

MAURER ENGINEERING MANAGEMENT 200,000 230,000 300,000 400000

ENGINEERING 80000 100000 180000 270000

SECRETARIAL 35,000 40,000 60,000 90000

OVERHEAD

25,000 30,000 60,000 90000

SUBTOTAL 340,000 400,000 600,000 900000

THIRD PARTY COSTS

0

CONSULTANTS 700,000 930,000 1,400,000 2100000

FIELD OPERATIONS 40000 60000 100000 150000

FRAC SIMULATIONS 20,000 30,000 40,000 60000

FRAC SCHOOL 20,000 25,000 30,000 45000

TRAVEL

15000 25000 40000 60000

MEETINGS

30000 40000 60000 90000

REPORTS

25000 40000 60000 90000

MISCELLANEOUS 25000 50000 70000 105000

SUBTOTAL 875,000 1,200,000 1,800,000 2700000

TOTAL 1,215,000 1,600,000 2,400,000 3600000

TRAVEL COSTS - COST PLUS 15 PERCENT

THE SCOPE AND DURATION OF THE JIP WILL BE INCREASED AS ADDITIONAL PARTICIPANTS JOIN

45

APPENDIX 1 MAURER ENGINEERING QUALIFICATIONS

MAURER ENGINEERING INC (MEI) was founded in 1974 by Dr. William Maurer in Houston, TX to

provide advanced drilling engineering services to the petroleum industry.

In the 1970’s and 1980’s Dr. Maurer worked on many different novel drills including laser drills,

plasma drills, electron beam drills, spark drills, explosive drills, impact drills, electric arc drills, high

pressure jet drills, and abrasive jet drills

He wrote two books NOVEL DRILLING TECHNIQUES and ADVANCED DRILLING TECHNIQUES

describing these drills in detail.

In 1978 MEI developed an advanced 625 geothermal turbodrill that allowed the DOE to drill the world’s

first directional geothermal well.

In 1980 Dr. Maurer and Dr. Mahlon Dennis jointly started the world’s first PDC bit company.

In 1980, MEI started SLIMDRIL which drilled the first horizontal well in the Austin Chalk field. This

opened up a horizontal drilling boom in the Austin Chalk in the 1980’s.

In 1985, Dr. Maurer started the DEA Horizontal Drilling JIP which had over 100 Participants over a 10

year period and spread horizontal drilling around the world.

In 1992, Dr. Maurer was inducted into the National Academy of Engineering in as a result of his

pioneering work on horizontal drilling.

From 1985 to 2001, MEI conducted numerous JIP projects including ones on:

Extended reach drilling

Horizontal drilling

Slimhole drilling

High pressure jet drilling

Coiled tubing drilling

Casing wear

Dual gradient drilling

Most of these projects had major impacts on the petroleum industry because these JIPs were

conducted when these technologies were in their infancy just as shale oil and gas production is now.

From 1970 to 2001, Dr. Maurer started 15 oilfield service companies to market advanced downhole

drilling tools developed by MEI.

Because of this pioneering work, Dr. Maurer was awarded the SPE DRILLING ENGINEER OF THE

YEAR AWARD in 2001 and the SPE LEGEND OF DRILLING AWARD in 2008.

In 2001, MAURER ENGINEERING INC assets were purchased by NOBLE DRILLING and moved into

a new company MAURER TECHNOLOGY and put MAURER ENGINEERING was put out of business.

Dr. Maurer stayed at NOBLE DRILLING until 2004 as President of MAURER TECHNOLOGY and then

went into the petroleum consulting business.

In 2011 Dr. Maurer reformed MAURER ENGINEERING INC (MEI) to provide consulting services to

the petroleum industry.

46

REFERENCES

King, George E, 2011A: FRACTURING MECHANICS at www.gekengineering.com

Potapenko, D.I., et al. 2009: Barnett Shale Refracture Stimulations Using a Novel Diversion

Technique. SPE Paper 119636. Presented at the 2011 SPE Hydraulic Fracturing Conference

Woodlands, Texas, January 19-21 2011.

Vincent, M.C. 2009: Examining Our Assumptions – Have Oversimplifications Jeopardized

Our Ability To Design Optimal Fracture Treatments? SPE Paper 119143. Presented at the

2009 SPE Hydraulic Fracturing Technology Conference, Woodlands, Texas, January 19-21,

2009.

Daneshy, A., 2011: Hydraulic Fracturing of Horizontal Wells: Issues and Insights. SPE Paper

140134. Presented at the 2011 SPE Hydraulic Fracturing Technology Conference and

Exhibition, Woodlands, Texas, January 24-26, 2011.

Vincent, M.C. 2010: Refracs-Why Do They Work, And Why Do They Fail in 100 Published

Field Studies? SPE Paper 134330. Presented at SPE Annual Technical Conference and

Exhibition, Florence, Italy, September .19-22, 2010.

King, G. E. 2010: Thirty Years of Gas Shale Fracturing: What Have We Learned: SPE Paper

133456. Presented at SPE Annual Technical Conference and Exhibition, Florence, Italy,

September .19-22, 2010

MAURER, W.C., 2011: Unpublished information.

PETROHAWK, 2011: Operations: Eagle Ford & Others.

LEWIS ENERGY, 2011 www.lewisenergy.com

WEATHERFORD, 2011 www.weatherford.com

PINNACLE, 2011: FracSeis Microseismic Fracture Mapping, www.pinnacle.com

Vincent, M.C., 2010A: Cracking The Code – Optimizing Fractures For Horizontal Wells. This

paper can be downloaded free from Packers Plus, www.packersplus.com.

Vincent, M.C., 2010A: Challenges and Opportunities Stimulating Horizontal Wells. This

paper can be downloaded free from Packers Plus, www.packersplus.com.