Reduction of Remedial Cementation of Production Liners…

1. Reduction of Remedial Cementation of Production Liners… …through the use of Equipment, Procedures & People Nicole Baird: EPW-GOM TLP, Jackup & Platform Wells Team Lead Loran Galey: SIEP-EPT Well Performance Team – Cementing Expert (company logo)

2. Objectives • Case for Action – NPT Related Trouble Time / Cost • GOM Production Cementing Staircase – Equipment, Process, People • 2007 – 2008 Results • GOM Learnings • Go-Forward Plans& Next Steps for 2008 – 2009+ • Conclusions (company logo)

3. Case for Action • 2004-2005 GOM operations experienced 26 NPT events • Total Days associated with Prod Csg Cmt NPT = 25.2 days • Total Cost (2008$$) associated with Prod Csg Cmt NPT = $4.4 MM • Objective sands becoming depleted, 5000+ psi (34,475 kPa) • Reduced Margins for cementing ECDs • Max PP – Min FG margins of 0.6 ppg or less common (72 kg/m3) • Compaction-induced wellbore failures • TLP weight / space constraints prohibit use of specialty equipment • Slimhole sidetracks, tighter clearances between csg strings more common (company logo)

4. Historical Production Csg Cement NPT • Year 2006 numbers impacted by Ursa A4ST • 2008 YTD Numbers (as of June 20, 2008) • NPT Cost associated with Prod Csg Cmt = $624,000: NPT Time = 1.9 days Average reduction in NPT $ of 20% per year (company logo)

5. GOM Approach: What, Where, How & When • Joint development with BTC Experts (Cowan, Galey) and Service Providers (HES, SLB) • Focus on all aspects – Equipment, Slurry Design, Procedures, People • Rotatable Liner Hangers • Remote Plug Dropping Heads • Lightweight Slurries for 14 – 15 ppg environment (1680 – 1800 kg/m3) • Move from “pump to bump” mentality to “theoretical displacement” • Manage the level of change – use small steps versus fundamental movements It’s about the “small” things that you do while drilling, post-drilling, and cementing that add up to big results! (company logo)

6. Staircase Approach: What, Where, How & When Integrated Team Effort • Well Engr Staff • Offshore Rig Team • Technology • Service Providers 2008 H2 Clear Fluid Displacement Technology for “Small Csg & Big Hole” Slimhole Use of D155 for Light Cmt 2008 H1 Swellables (Zonal Isolation, TOL) = Brutus, Mars, Auger Use of D155 for Low Cost Lightweight Cmt = Auger A10 2007 Remote Plug Dropping Head = Auger A2 Ream-down systems (hnr, shoe, etc) = Auger A8 & A13 Use of Focused T&D Plots = Auger A10 Swellable Placement = Auger A13 2006 Rotatable Hnrs (TIW) = Brutus A5ST3 LiteCrete Slurry Design = Auger A18 (company logo)

7. GOM Results to Date • No remedial production cementation jobs since Ursa A4 (2006) • Have experienced problems with equipment (liner hangers) which have caused NPT as a result of altering method of primary cementation (Brutus A7ST2 Versaflex activation, Mars A8 plugging of shoe track) • LiteCrete dry bulk segregation at Auger is predominate cause of NPT in 2007 • Drove trial use of D155 with conventional class H on Auger A10 & 2008 Summer Program • Successfully rotated / reamed liners to TD as proactive measure • Allowed rotation at TD • Use of Remote Plug Dropping head enabled full rotation during cementation • Joint Taskforce established to link pre-cementation activities (Hole Cleaning, Liner / Casing Running) and shift operational paradigms • NET RESULTS, Year to date NPT cost = 1.9 days / $624,000 • Of this, 1.3 days and $250,000 was due to failure of a TIW Xpak system post cementation on Brutus A1ST3 (company logo)

8. Auger A10 ST3: Swellable, D155, Depleted Sands Cmt. Technology Implemented • Swellables for zonal isolation / cmt channeling • Rotatable 7” liner and equipment, for reaming & rotation at TD of 25,000’ MD • Use of D155 as alternative to LiteCrete Location of Swellable, CBL ran prior to swell time expended Objective Sand (Perforations): Depleted from 12.6 ppg to 6.7 ppg (6000 psi depletion) (company logo)

9. Brutus A7ST2: SH cementation (5.5”) after reaming to TD • Initial 7 5/8” production liner stuck • Redrilled section below 7 5/8” and ran 5.5” liner • Rotated 5.5” liner from 21,384 to 22,150’ MD • Full rotation while prep for cmt job • No rotation established after stopping to drop Drill pipe dart • Unable to set Versaflex Hanger due to high angles – circulated out primary cmt job during setting process • CBL log of 2nd primary cementation attempt with EZSV – 6 days after liner on bottom. • Successful job attributed to rotation (“smear effect”) of liner to TD & use of RSS system J2 sand (Objective Interval) Cemented 6 days after Lnr to TD (company logo)

10. Learnings & Continuous Improvement (1) • Utilization of LiteCrete requires careful consideration • Issues of Dry Bulk segregation • Sensitive to mix water volumes & proper slurry recirculation for target density • D155 as alternate to LiteCrete • Advantages: • One dry-blend cement (Class H) for entire job • All liquid additives. Unused additives can be returned • Flexibility to make last-minute slurry density changes • Easier to sample and test • 50% cost reduction compared to LiteCRETE • Disadvantages: • Rig space could limit job size. Deck space is needed for liquid tanks. • Liquid additive hoses present additional tripping hazards • More liquid additive volume onboard, therefore more risk of chemical spill (although D155 is non-hazardous) (company logo)

11. Learnings & Continuous Improvement (2) • Use of swellables in oversized hole applications • Low side channeling prevention • Added “flow barrier” for multiple intervals (spaceout becomes critical) • Multiple companies distributing product – engineer the design upfront • Don’t overestimate the power of paradigms • “Pump until you bump” • “We’ll establish rotation once we get to TD” • “What’s 0.1 ppg difference in ECD?” • Shift the design one element at a time • Know what you are changing and why  ensure buy-in • Test more than just cement – mud interfaces (company logo)

12. Next Steps: Where do we go from here? • Synthetic Based Mud Contamination • New DP Dart & Casing Liner wiper plug designs • Use of Higher Density Slurries (increased contamination resistance) • Depleted Sands in GOM • Use of Managed Pressure Drilling equipment for cementation operations • Use of graphitic carbons (G-seal, vin-seal, etc) to serve as LCM plugging in cementation slurry designs • Hole Cleaning Prior to Cementing / As Part of Cementing • Use of “foamed flushes” ahead of cement slurries • Use of “foamed spaces” as part of clean up cycle • 3-Dimensional Modeling for Cement Displacement Efficiency • Standard Use of KCl Additive for Prevention of Shale / Clay Swelling (company logo)

13. Conclusions • One of the most common practices, yet it can cause significant problems later in the life of the wells • Sustained Casing Pressure • Micro-annulus • New practices, procedures & combinations can reap great benefits and not necessarily new technology • Remote Plug Dropping Heads • Class H slurries + different additive combinations • Rotation & centralization for displacement efficiency Performance Improvement is all about doing everything you can right the first time, whereby small changes add up to big results (company logo)

14. Acknowledgements SIEP-EPT Well Performance Team, Fluids & Cementation • Mike Cowan • Loran Galey • Ron Rock EPW Wells-GOM TLP, Jackup, Platform Drilling Engrs EPW Wells-GOM TLP, Jackup, Platform Completion Engrs Service Providers: Halliburton (Cementing, EasyWell), Schlumberger (Cementing), TIW (Liner Hangers), Baker (Liner Hangers), MI (Fluids) (company logo)