NEWS

Engineering and Business News from Fekete Associates Inc.

Fall 2006

Announcing the Release of F.A.S.T. CBM Version 2.6

Kamal Morad is a Senior Technical Advisor at Fekete
production/pressure data from different sources into Feketes database template. Using the connectivity between F.A.S.T. CBM and the database, the data can be imported efficiently. Improvement to History Match: A number of improvements have been implemented in the history matching section to make this function more effective and streamlined: ! Variable skin to account for refracturing. ! Ability to save and restore match parameters.

AUTHOR

Fekete announces the release of F.A.S.T. CBMTM version 2.6. This upgrade contains a range of new features and functionalities designed to enhance coalbed methane reservoir modeling and analysis. These features were largely a result of CBM deliverability studies we have performed for clients, and in response to our software users' requests. Binary Langmuir Isotherm: Produced coalbed methane gas is essentially composed of CH4 and sometimes, CO2. The CO2 fraction in the produced gas increases with time and its monitoring becomes important from both economic and environmental aspects. Using the Extended Langmuir Isotherm model, F.A.S.T. CBM can now generate CO2 fraction profiles for both forecast and history-matched data. It also produces this profile as a function of cumulative produced gas, and allows the determination of recoverable reserves based on abandonment CO2 fraction. Pools: This feature allows for grouping of wells into one common pool and simulating the interference effect among them. Gas and water deliverability is calculated based on the individual well characteristics, but average reservoir pressure and water saturation is calculated on the pool basis. Database Connectivity: Users can consolidate reservoir /

Ability to honour actual cumulative gas/water production (as opposed to using simulated values) in material balance calculation. Applying lower and upper limits to history matching parameters for automatic parameter estimation.

Liquid Lift Calculation: F.A.S.T. CBM calculates the minimum gas rate required to lift liquids based on the Turner Correlation. It also colour codes the historical data plot to visually indicate when the well is becoming loaded. Wellbore Enhancements: The flow path, pressure source, tubing ID, OD and depth can be varied with time. This allows a large amount of flexibility to reflect changing production operations during the life of a well. Risk Analysis Enhancements: Given the type/parameters of the probability distribution function and the Langmuir isotherm, the randomly generated gas contents may lead to over-saturated or under-saturated scenarios. Users can now choose to prevent oversaturation, or impose a limit for under-saturation. General Improvements: General improvements in F.A.S.T. CBM include: ! Well Notes: allows users to record their observations and notes for every well. ! File Lock: provides a read-only access to a .cbm file that is currently in use by another instance of F.A.S.T. CBM or F.A.S.T. Piper. This prevents unintentional overwriting of the data. ! Enhanced reporting of reservoir parameters and forecast.

CO2 Isotherm

Overall Isotherm

100 90

%CO2 in Produced Gas

80 70 60 50 40 30 20 10 0 0 20 40 60 80 100

CH4 Isotherm

% Recovery

New Features at a Glance: F.A.S.T. CBM Version 2.6

! Binary Langmuir isotherm ! Improved well selection and pool interface ! Database connectivity for efficient reservoir/ ! Enhanced risk analysis ! Liquid lift calculations production/pressure data import ! Pools ! Enhancements to history-matching ! Time-variable wellbore configuration - Time-based variable skin ! File-lock - Calculation execution control ! Well notes - Parameters save/restore

- Lower/upper limit

INSIDE THIS ISSUE

F.A.S.T. CBM 2.6 Release - p1 | Tech Talk: Understanding Reservoir Geometry Helps Optimize Your Waterflood - p2-3 | See Us @ SPE ATCE 2006 - p4

TECH TALK: Understanding Reservoir Geometry Helps Optimize Your Waterflood

AUTHORS

Lisa Dean, P. Geol., is Manager of the Geology Group

pods within the Lloydminster pool can be observed in the net porosity map. Core analysis data shows that porosity ranges from 24 to 32% with a permeability range of 80 to 400 mD. The Lloydminster pool is situated on a local structural high. While the gross sand thickness is consistent across the high, two post-depositional sags create three thick oil pods that are the productive areas of the pool (see Figure 2). The pods are interconnected by continuous oil pay through the sags that are less than 2 m thick. The entire oil accumulation is underlain by water.

Understanding Reservoir Geometry Helps Optimize Your Waterflood

Geologists and engineers have always been faced with the challenge of trying to define, develop and optimize gas/oil fields. This is difficult enough when dealing with primary production in conventional pools but it can be even more difficult when applying EOR strategies. It is our experience that most of the waterfloods in the WCSB are underperforming and a closer look at the geology of the reservoir is essential to understanding why. The objective of the project was to characterize and visualize the Lloydminster reservoir, give our client the reasons why, under waterflood, their production rates were declining and how to effectively increase the outcome. The critical first step is reservoir characterization and understanding the reservoir geometry based on detailed core analyses, regional geology and log petrophysics. When done properly, subsequent integration with engineering data can greatly enhance reservoir performance predictions and facilitate greater hydrocarbon recovery through optimal flood design. This procedure helped to identify the sedimentology, depositional environment and variations of reservoir quality in the Lloydminster pool. The reservoir consists of clean homogeneous sand with a blocky log signature and is commonly capped by a coal seam (see Figure 1). It is a coarsening upward sequence with a marine mudstone base that progresses upward through more silt and wave or current-rippled fine-grained sandstone. It is interpreted to be a marine to marginal marine (shoreface) environment (wave dominated, tidally-influenced coastal plain). The model suggests sand that is both vertically and laterally consistent. Isopach maps for gross formation thickness, gross sand thickness and net porosity thickness all reflect the relative consistency of the linear shoreface depositional model. The sand is shown trending in a northwest to southeast direction, with the seaward direction likely to the northeast. The development of three thick areas that ultimately become the three oil bearing
Structural Cross Section

Figure 2: Lloydminster Formation Net Oil Pay Isopach on Rex Time Structure Seismic Map
The Lloydminster pool consists of five producing wells that are located in the three oil pods, five observation wells that were unsuccessful in producing from areas with less than 2 m of pay, and four water injection wells. The flood is operating as a vertical displacement flood, with water being injected directly into the water leg that underlies the oil accumulation. The original oil-in-place was volumetrically estimated for the total pool and for each of the three pods within the pool. The pool estimate includes all pay contours to the oil-water contact, while the estimates for each pod extend only to the 2 m pay contour. The pods were treated in this fashion based on the lack of success to date in producing wells that were placed in locations with low pay. The geological model presented above was realized only after careful review of all the data. Only when this reservoir model was described and understood could the pressure and production data be analyzed properly. Well production performance trends, along with an understanding of the reservoir geometry, are the primary indicators of waterflood performance, because the producing GOR is directly related to reservoir pressure, and because

Figure 1: Structual Cross Section

TECH TALK: Understanding Reservoir Geometry Helps Optimize Your Waterflood

production data is the most continuous and most reliable data available. A relatively thin pay, coupled with an adverse mobility ratio, severely hampers the effectiveness of conventional horizontal waterflooding. However, the presence of a continuous water leg underlying the Lloydminster oil, and the absence of vertical permeability barriers has been used to advantage, by injecting directly into the underlying water, thus creating a vertical sweep. From the production profiles, a major issue for the Lloydminster pool is the efficiency of the well completions and the high water cuts. The structure map and the net oil pay map illustrate that the shut in wells are structurally lower and have less oil pay than the wells that remain on production. The production plots for the five shut-in wells show that initial water cuts were in the order of 75 to 90%, the wells had elevated producing GOR's and lower oil production rates despite initial fluid production rates that are similar to the wells with the greater pay thickness. Initial fluid and oil production rates were divided by the net oil pay to yield a productivity per unit of pay comparison. The data shows that structurally low wells actually had higher total (oil + water) fluid production rates per unit of oil pay than did the structurally high wells. A lower oil production rate per unit of oil pay is partly due to the higher water saturation in the perforated interval of the structurally low wells. It may also indicate that relatively more water is channeling past the cement in the structurally low wells which contacted the water leg. The initial reservoir pressure is estimated to be between 4860 and 5206 kPa. Reservoir pressure has been maintained at or above the original value in Pods #1 and #2 but has decreased to between 4137 and 4391 kPa in Pod #3. Wells with low producing GOR have recovered or will recover significantly more oil than wells with high GOR. The oil pay map illustrates that the two high GOR wells, 100/16-25 and 102/01-36 are both in Pod #3. The pressure history corroborates well GOR performance and offers the first clue that only one injection well is in effective communication with Pod #3. Pool bubble maps showing the highest GOR and lowest oil production visually illustrate that the wells in the southern and western portions of the pool are receiving adequate water from the waterflood while the eastern portion of the pool is underinjected. Voidage Replacement Ratio (VRR) calculations for the pool indicate that, on average, the total water volume is adequate. However, recognizing the reservoir geometry and assigning the injection accordingly, it is evident that Pod #3 is seriously underinjected, as can be seen in Figure 3, which shows a cumulative VRR of 0.53 and the continuously increasing shortfall in injectivity. Changes in monthly VRR generate a rapid response in the producing GOR for wells in Pod #3, and the monthly VRR correlates with the declining pressure trend. Calculations for Pods #1 and #2 show adequate water injection volumes, with a cumulative VRR in excess of 1.0 An estimate for the remaining recoverable oil from each pod under existing operations was obtained by extrapolating the

Voidage Replacement Ratios for Lloydminster D Pool Pod #3 vs Time

Figure 3: Voidage Replacement Ratios for Pod #3

exponential decline trend for each producing well to an assumed economic limit to obtain the remaining producible oil. Pod #1 exceeds the expectation of 40% recovery as an upper limit and sets the performance standard that should be realized from the other two pods. Incremental reserves can be realized from pods #2 and #3 by increasing the cumulative VRR in Pod #3 to at least 1.0 and by drilling an additional well in the northern portion of Pod #2 to improve sweep efficiency. These actions are expected to increase oil recovery by about 24,000 m3 in pod #3 and 34,000 m3 in pod #2. Further incremental recovery might be achieved with additional drilling, but this requires knowledge of the current fluid saturation profile through the oil pay column. Should logging the wells show that the saturation profile around the perimeter of the pods has not changed, this would indicate that the drainage area of the current producing wells is limited, thereby justifying the additional drilling. Conversely, if the saturation profile has changed, it would imply that the existing producers are draining more than their volumetrically assigned drainage. This direct evidence of effective drainage area is valuable in developing the optimum depletion strategy.

Conclusion
The first critical step in optimizing your waterflood is to understand the pool geometry. As the reservoir characterization of the example pool evolved, the engineering analysis of pressure and production data became clear. It was not until the three pod version of the geological model was adequately described that the waterflood performance could be understood and recommendations made. Fekete's advantage is the integration of geology with engineering and their interaction to come up with the best, most reasonable model that will facilitate greater hydrocarbon recovery in your waterflood. (Article based on a report authored by Ray Mireault, P . Eng. and Norbert Alwast, P . Geol. of Fekete)

Fekete Introduces a New Network Licensing System (NLS)

Fekete has developed a new versatile Network Licensing System that supports user mobility and provides tools to network administrators that enable them to configure and monitor network licenses and users. Some of the NLS benefits include: ! Laptop users will have the ability to temporarily checkout (borrow) a network seat, allowing them to go mobile in the field with their F.A.S.T. Software. ! ! Laptop users with checked-out network seats (when connected to the network) will auto-detect if there is a newer version of F.A.S.T. software on their corporate network. They can click to upgrade to the corporate version. This feature is also available for remote Wide Area Network (WAN) workstations. Some NLS features for the Network Administrators: ! Licensing information at a glance. ! ! The ability to update software licenses while F.A.S.T. Software is in use. ! An audit trail of software usage and statistics. ! ! The ability to specify which users have privileges to checkout a network seat. ! ! A record of all network seats that are currently checkedout and by whom. ! ! The ability to set the check-out duration of a network seat. ! ! The ability to share different network license schemes for the same F.A.S.T. application. This allows users of a more restrictive network license (LAN) to use seats from a less restrictive license (Citrix), if available. ! ! Remote WAN workstations and checked-out laptop users will have their local license information automatically updated to match the corporate version. If you have any questions about the new licensing system, please contact Kevin Dunn, manager of technical sales.

Fekete Launches Redesigned Web Site - fekete.com

Fekete has conducted a major redesign of its web site enabling our clients to better find, assess, and interact with our software, services, and courses. The new site debuted on July 6, 2006. It is another step forward in Fekete's continuing efforts to provide the oil and gas industry with greater access to our technical expertise in reservoir and petroleum engineering. We built our new site on a platform that takes advantage of the latest advances in web technology. With video clips of our technical advisors and online software demonstrations, we can better showcase our expertise and exchange software support information with our clients. Be sure to check out our new website. We look forward to your feedback.

SEE US @ THE SHOW

SPE ATCE San Antonio - September 24 - 27, 2006
Attending the SPE ATCE in San Antonio? If so, we want to see you! Be sure to stop at Fekete's Booth #1417, located left of the main entrance near the SPE Pavillion. Drop by and meet our experts in well testing, CBM, pipeline optimization and rate-transient analysis, along with many of the authors of our Technical Video Series. There will also be discussion and software presentations of our latest releases. As always, you're welcome to bring along any data, and our engineers will gladly answer questions on using the software and/or completing an analysis.

Fekete Associates Inc. | Phone: 403.213.4200 | Toll Free: 1.800.625.2488 | Fax: 403.213.4298 | Email: fast@fekete.com | Website: fekete.com