This document summarizes a conference on tight shales held in Warsaw, Poland in March 2011. It discusses how tight shales are not all the same and differ in their reservoir quality. Methods for characterizing and analyzing shale such as micro-structure observations, core analysis, well logs, and hydraulic fracturing are presented. The heterogeneity and natural fractures within shales are shown to create complex hydraulic fractures. Different conceptual fracture models are evaluated using reservoir simulation to demonstrate how fracture geometry impacts production outcomes. While knowledge is advancing, the document concludes that understanding the rock properties remains important for improving shale reservoir performance and lowering technical risk.

1. South Baltic Gas Forum Gdansk, Poland 5-8 Sept. 2011 Tight Shales-Not all Shales are Created Equal Sidney Green University of Utah / Schlumberger Innovation Center

2. Improving reservoir performance, lowering technical risk Tight Shale Conference March 2011 Warsaw Poland Organizers: Sidney Green Roberto Suarez-Rivera / Innovation Center Raymond Levey / EGI Univ. of Utah Wieslaw Prugar / Orlen Upstream Focus: On the “rock” following the belief that “Rocks Matter” Goal: To develop a better mental picture of tight shales Overall Conference: Poland was a great host and provided a great setting for the Conference Improving reservoir performance, lowering technical risk Improving reservoir performance, lowering technical risk Improving reservoir performance, lowering technical risk Improving reservoir performance, lowering technical risk Improving reservoir performance, lowering technical risk

3. Improving reservoir performance, lowering technical risk Prime Minister Donald Tusk at Poland Tight Shale Conference

5. National security implications

7. Improving reservoir performance, lowering technical risk Changes in the Energy ‘Picture’ In the past year, major changes have occurred: The GOM oil spill changed offshore drilling greatly in the US The Japan earthquake changed the perception of nuclear energy worldwide US Shale gas has changed from an unqualified hero to an environmental concern The “Arab Spring” has led to disruptions and uncertainties regarding world oil production These are big, big changes -----

9. How do we tell high Reservoir Quality from poor Reservoir Quality ?

10. Tight Oil and Gas Shale Core Improving reservoir performance, lowering technical risk

11. Improving reservoir performance, lowering technical risk Micro-Structure Observations Nano-Focus CT X-Ray E-SEM Ion Milling SEM

12. Improving reservoir performance, lowering technical risk Dominate Compositions from Dr. Patrick Gathogo

13. Improving reservoir performance, lowering technical risk Core Analysis Pressure Decay Permeability Measurement

14. Improving reservoir performance, lowering technical risk Core Analysis Diamond Scratcher Continuous Profile Scratch Test Rock Core

15. Improving reservoir performance, lowering technical risk Well Logs Typically the Vertical Pilot Well is Logged with only Limited Logs taken in the Horizontal Borehole

17. From Core to Log Scale - yes

18. From Core-Log to Seismic - nearly Shale “Typing” works, using logs and calibrated with core (each color represents a similar Log Pattern)

19. Improving reservoir performance, lowering technical risk Vertical and Horizontal Heterogeneity B C A

20. Improving reservoir performance, lowering technical risk Hydraulic Fracturing “From Hero to Villain”

21. Improving reservoir performance, lowering technical risk The Heterogeneous Nature of Shales cannot be Ignored Heterogeneous Formation Complex Hydraulic Fractures

22. Improving reservoir performance, lowering technical risk Rock Hydraulic Fracture Hollow whole-core cylinder specimens subjected to uniform external confinement and internal borehole pressure. The rock fabric determines the fracture initiation and the orientation of fracture propagation.

23. Improving reservoir performance, lowering technical risk Fracture Complexity

24. Improving reservoir performance, lowering technical risk Shale Natural Fractures Many natural fractures, but highly filled and tight.

25. Improving reservoir performance, lowering technical risk Large Block Tests

26. Improving reservoir performance, lowering technical risk Highly Laminated Rock(Mancos Shale) Maximum Stress Vertical Fracture Vertical Fracture 2 1 Horizontal Wellbore Vertical Fracture Maximum Stress

27. Improving reservoir performance, lowering technical risk Acoustic Emissions During Fracturing

28. Improving reservoir performance, lowering technical risk Complex Fracture Characterization

29. Improving reservoir performance, lowering technical risk Wellbore Mechanics(Breakdown Stress) Argillaceous Argillaceous Siliceous Siliceous The breakdown pressure is related to far field stresses through the anisotropic elastic properties

30. Improving reservoir performance, lowering technical risk Conceptual and Eclipse Fracture Models Conceptual Models for Different Fracture Geometries Yellow is Primary Fracture and Black is Secondary Fracture System Eclipse Models Used to Model each Conceptual Model Vertical Wellbore “Base Case” (not shown) is Primary Fracture only, with no conductivity for Secondary Fracture System Horizontal Wellbore Case 2 Case 4 Case 1 Case 3

31. Improving reservoir performance, lowering technical risk Daily Productions from 10 Days to Six Months Initial Production and Early Time (Time Zero Estimated) Case 2 1 & 2 Case 4 4 (green) Base Case Case 3 3 Case 1 Base Case

32. Improving reservoir performance, lowering technical risk Cumulative Productions Case 3 56 % increase over Base Case All ~35 % increase over Base Case Case 2 Case 4 Different geometries lead to different cumulative productions Case 1 Base Case

34. heterogeneity—vertically and horizontally

35. anisotropy and natural fractures

36. complex hydraulic fractures and surface area created

37. conductivity of the hydraulic fractures

38. we have the tools to provide measurements and analysis needed Overall “Rocks Matter”

39. Improving reservoir performance, lowering technical risk