QUARTERLY REPORT 2

MICHIGAN TECHNOLOGICAL UNIVERSITY

OCTOBER, 1994

Recovery of Bypassed Oil in the Dundee Formation Using Horizontal Drains

Contract Number: DE-FC22-94BC14983

University: Michigan Technological University

Budget Period: 04-28-94 to 10-27-95

Project Period: 04-28-94 to 04-27-97

Cumulative DOE Obligation: $800,000

Program Manager: James R. Wood (906) 487-2531

Principal Investigator: James R. Wood

Contracting Officer's Representative (COR): Chandra Nautiyal (918) 337-4409

Reporting Period: 4th Quarter, FY 1994_

EXECUTIVE SUMMARY

Project activity this quarter focused on data acquisition and organization:

Well data, including drillers' logs, wireline logs, and seismic data, from the Crystal and other Dundee hydrocarbon fields in the Michigan basin, have been acquired. Digitized logs of 342 wells that currently produce or have produced from the Dundee Formation in the seven-county study area have been purchased from Maness Petroleum Company. Multiple logs exist for each well, and include gamma ray, caliper, lithodensity, neutron porosity, various types of resistivity, and some sonic logs. The logs total about 3 million linear feet of digitized data. All deep wells in the area are included in the log suite. By combining data compiled by graduate students M. Foley and S. Limesz at Western Michigan University (WMU) with the Maness data set, we now have a complete set of well information for the Dundee in our study area.

Twenty to thirty cores of the Dundee Formation from throughout the state of Michigan are currently available. Cuttings samples are also available from 60 to 100 Michigan wells. The storage locations of many of these core and cuttings samples have been identified, but sampling has not yet begun. Project staff will acquire and examine core and cuttings from as many of these wells as possible. The next major effort in this area is to identify and acquire all available core material in and around each of the Dundee Fields to be studied.

Data from 12 Dundee fields were entered into a TerraSciences TerraSystem database last quarter by project staff at WMU. Data from an additional 18 fields were entered this quarter. This brings the total number of fields in the database to 30. Digital well data are available for 21 of these 30 fields. Structure contour maps and isopach maps are currently being generated for horizons in these 21 fields using Terrasciences TerraStation software.

A well has been designed and permitted and will soon be drilled. This well will have both a horizontal and a vertical leg. The vertical leg well will be cored through the producing interval of the Dundee Formation and the cores will be analyzed for porosity, permeability, and fluid saturations. A full set of well logs will be run, including gamma ray, porosity, resistivity, and geochemistry logs. This data will be incorporated into the existing database for the project area and used to calibrate the MWD (Measurement While Drilling) logs which will be run during the drilling of the horizontal leg. The horizontal leg will be drilled as a sidetrack from the vertical test well. If commercial amounts of hydrocarbons are encountered, the horizontal well will be placed on production. Drilling is expected to commence in late 1994 or early 1995, after completion of an environmental survey.

A 3-day workshop/conference at the University of South Florida in Tampa, Florida is scheduled for January 19 to 21, 1995. This conference will focus on preliminary results of this project as well as results of another DOE contract in which many of the staff are also participating. The second project involves reservoir characterization of a field in California. The plan is to have two days of technical discussions covering progress and results on these two projects, followed by a half day of critiques and suggestions for improvement.

SUMMARY OF TECHNICAL PROGRESS BY TASK

BUDGET PERIOD 1

TASK 1.1 PROJECT MANAGEMENT

Personnel

The management changes outlined in the last quarterly report have been implemented. Specifically,

Dr. Wood has taken a 9 month leave of absence from MTU to teach at the University of South Florida in Tampa Florida but has continued his duties on the project,

Dr. Wayne Pennington has taken a position as Professor of Geology at Michigan Technological University and has agreed to take an active role in the project,

Mr. Mark Gruener has accepted a part-time position as a Research Project Coordinator in the Geology Department and is assisting Dr. Wood in coordinating this project.

Task Overview

The management tasks have gone smoothly this quarter and the personnel changes described above have helped considerably. Budget analysis and tracking of expenditures is now handled within the project and checked with the university records. We feel we have a good system of controls and oversight implemented that should serve the remainder of the project with little or no further modification.

Task management is being implemented through visits by Wood to all project sites, including visits to Houghton every six weeks for 4-5 days. These visits have served to keep project personnel aware of progress at each site and serves as a focal point for people to organize and present their progress in a semi-formal format. They also offer opportunity to discuss problems and to propose changes. We intend to keep with this format through the rest of project. An annual project review in Tampa, Florida this January will bring all team members together for 4-5 days, hopefully with the DOE managers, and we will have an opportunity to further consider any proposed changes or problems with the management structure.

In general, all parties seem to be satisfied with the present management structure and implementation. Contacts are frequent enough, and permit sufficient time for discussions and to iron out problems, without being overly intrusive. All team members so far appear to be functioning well with this management style.

TASK 1.2 RESERVOIR CHARACTERIZATION

The goal of this task is to quantify reservoir heterogeneities and controls on producibility. Geologic, geophysical, hydrologic and engineering techniques will be used. The Crystal Field will be the focus of the characterization effort, but up 30 other Dundee fields will also be studied. Table 1 lists all of the oil and gas fields which produce or have produced from the Dundee Formation in Michigan. Table 2 lists those Dundee fields which are included in this study. Data from 12 Dundee fields were entered into a TerraSciences TerraSystem database this quarter by project staff at WMU. Data from an additional 18 fields were entered this quarter. This brings the total number of fields in the database to 30. Digital well data are available for 21 of these 30 fields. Structure contour maps and isopach maps are currently being generated for horizons in these 21 fields using Terrasciences TerraStation computer program.

1.2.1 WELL LOG ACQUISITION, DIGITIZATION, ANALYSIS

Well data, including drillers' logs, wireline logs, and seismic data, from the Crystal and other Dundee hydrocarbon fields in the Michigan basin, have been acquired. Digitized logs of 342 wells that currently produce or have produced from the Dundee Formation in the seven-county study area have been purchased from Maness Petroleum Company. Multiple logs exist for each well, and include gamma ray, caliper, lithodensity, neutron porosity, various types of resistivity, and some sonic logs. The logs total about 3 million linear feet of digitized data. All deep wells in the area are included in the log suite. By combining data compiled by graduate students M. Foley and S. Limesz at WMU with the Maness data set, we now have a complete set of well information for the Dundee in our study area.

All of the digitized well information will be put into files on Terrasciences' TerraStation computer program. After this is completed, wells that are in or near the fields of primary interest will be located before log analysis and construction of computer maps and cross-sections begin. We are considering the use of a more flexible commercial database, such as Microsoft Access, to integrate and store the log and core data.

A number of operations will be performed to clean up and index the suite of well logs in each field before any calibration is attempted. Among these operations are: a) depth-shifting, b) TVD (True Vertical Depth) and TST (True Stratigraphic Thickness) corrections, c) normalization, d) environmental corrections. These corrections will be performed on a commercially available log analysis computer program, e.g., T-Log from TerraSciences, Petrolog from Crocker Data Processing, or a similar program from another vendor. Core data will be used to aid in this calibration using standard procedures.

Once the logs are corrected, maps and log cross sections will be constructed. These will include: well location maps which show well type and well identifier; structure contour maps; isopach maps of selected intervals; initial production and cumulative production maps' where data are available; and log cross sections. Preliminary versions of: a structure contour map on the top of the Dundee Formation (Fig. 1), an isopach map of the top of the Dundee to the top of Dundee pay (Fig. 2), and a contour map of initial production values (Fig. 3), all for Crystal Field, are attached.

1.2.2 CORE ACQUISITION AND ANALYSIS

Twenty to thirty cores of the Dundee Formation from throughout the state of Michigan are currently available. Cuttings samples are also available from 60 to 100 Michigan wells. The storage locations of many of these core and cuttings samples have been identified, but sampling has not yet begun. Project staff will acquire and examine core and cuttings from as many of these wells as possible. The next major effort in this area is to identify and acquire all available core material in and around each of the Dundee Fields to be studied. Samples will be selected from cores in public repositories such as Western Michigan University Core Research Lab, University of Michigan Subsurface Lab, the Wayne State University Core Facility, and the Michigan Geological Survey core repository. Additional materials will be obtained from private sources, such as oil companies. A list of cores at WMU, University of Michigan, Central Michigan University, and the State of Michigan's core repository at Marquette has been compiled (Table 3). However, there may be other cores listed in drillers' reports or in core analysis files that have not yet been identified. M. Foley is using a database called COREDAT, provided to us by Maness Petroleum, to search the drillers' reports and core analysis files for cores we have missed.

There are no cores in Crystal Field, the site of the field trial in this study. The closest Dundee core is in an outpost well 8 to 10 miles away from Crystal Field. Thus, acquisition of a good vertical core through the Dundee in Crystal Field is an essential element of the reservoir characterization study. W. Harrison currently has all of the porosity, permeability, and oil saturation (p,k,s) data for all of the Dundee cores from wells in a seven-county area surrounding Crystal Field in his possession (Table 3). This includes data from some cores that are no longer available.

Porosity (p), permeability (k), fluid saturation (s) and formation factor (f) data are being gathered from core analysis reports and entered into the database. P,k,f,s analyses will be performed on the core from the well drilled at Crystal Field as discussed in Task 1.4. These measurements will be made by a reputable service company or in the university laboratories.

When all available core material has been identified, samples will be collected from each core. Samples will be selected to provide good coverage of all of the lithofacies and porosity types present in the Dundee Formation. Where possible, samples from both producing and non-producing intervals will be gathered. In areas where no cores are available, drill cuttings will be sampled. Drill cuttings collections are housed at WMU, the University of Michigan, Central Michigan University, and the Michigan Geological Survey in Lansing.

Point counts for mineralogy, grains, matrix, cement, and porosity will be performed on approximately 60 to 100 polished thin sections of core and cuttings samples using optical methods. Each thin section will require about 300 point counts. If needed, image analysis will be used to supplement identification of phases and to determine shape factor and rock texture.

Selection of samples for XRD and SEM analysis has begun and a few preliminary SEM analyses have been made by graduate students at WMU.

1.2.3 FTIR SPECTROSCOPY

Fourier transform infrared (FTIR) spectroscopy analysis has begun. Standards have been prepared and initial samples have been prepared. This FTIR data will be correlated with other data and will be used to help in making log correlations.

1.2.4 FLUID SAMPLES

Hydrocarbon and produced-water samples from the Crystal Field have yet to be collected and analyzed. If possible, arrangements will be made to sample fluids from other Dundee fields as well. Inorganic geochemical analyses of produced brines will be used in conjunction with isotope and fluid inclusion analyses of core and cuttings to determine the origin and history of the porosity-producing dolomitizing fluid. .

TASK 1.3 DATABASE MANAGEMENT

This task includes all activities required to establish and maintain a database of all the data collected under this project. A commercially available computer database management program will be used. Currently, project personnel at WMU are using Terrasciences' TerraStation program to archive and manipulate project data. The MTU group is evaluating the use of a multi-vendor applications package to handle their database, mapping, log evaluation, 2D cross-sectioning, and 3D visualization needs. A. Nigrini is in charge of database management for both contracts and will attempt to standardize software for the two projects. During this quarter A. Nigrini and J. Allan constructed a test database in Microsoft Access and were favorably impressed by its potential.

Data from 18 more Dundee fields were entered into the TerraSciences database this quarter by project staff at WMU. This brings the total number of fields in the database to 30. Data entered to date include well locations, well status (i.e., oil well, gas well, production well, abandoned well, etc.), and formation tops for all key formations. Structure contour maps and isopach maps have been generated by project staff at WMU for many horizons in these fields using the TerraStation software.

TASK 1.4 DRILLING

A vertical well at an appropriate location in the project area has been designed and permitted and will be drilled. The well will be cored through the producing interval of the Dundee Formation and the cores analyzed for porosity, permeability, and fluid saturations. A full set of well logs will be run, including gamma ray, porosity, resistivity, and geochemical logs. This data will be incorporated into the existing database for the project area and used to calibrate the MWD (Measurement While Drilling) logs which will be run during the drilling of a horizontal leg. The horizontal leg will be drilled as a sidetrack from the vertical test well. Cuttings from the horizontal leg will be collected and analyzed and input to the reservoir model. As full a suite of well logs as is permitted by the hole geometry will be run on the horizontal leg. If commercial amounts of hydrocarbon are encountered, the horizontal well will be placed on production. An evaluation will be conducted after the horizontal leg has been on production.

A 4-inch core, approximately 60 ft in length, will be cut vertically through the Dundee reservoir. The coring point will be the base of the Bell Shale. The core itself will include the reservoir interval (approximately 20 ft thick) and the overlying caprock interval, both within the Dundee Formation. A full log suite will be run on the vertical well. The well will then be plugged back to the top of the Dundee, and a horizontal well will be drilled along the top of the reservoir interval. The vertical core and log suite will be used to pick the optimum depth for the horizontal leg. The lateral leg will be 1700 ft long and will drop downsection by 10 ft over the 1700 ft lateral distance. At the very least, a Measurement While Drilling (MWD) Gamma Ray log and cuttings will be recovered from the horizontal well.

Drilling is expected to commence in late 1994 or early 1995, after completion of an environmental survey.

TASK 1.5 TECHNOLOGY TRANSFER

This task focuses on technology transfer of information derived in this study through academic, technical, and commercial channels. J. Allan is responsible for preparation of technical reports to DOE, for coordination of communication between project members, for coordination of technical publications and workshops, and for most other technology transfer activities.

1.5.1 MEETINGS

Semiannual meetings of the Michigan Oilfield Research Consortium (MOFRC), open to all interested parties, will be conducted by the project staff. Various aspects of the project will be discussed through poster or oral presentations. Efforts will be made to make interested parties aware of these meetings. J. Huntoon and A. Hein have put together a newsletter which will be mailed to independent oil producers and other interested parties (Table 4).

1.5.2 REPORTS

Task managers are required to prepare quarterly summaries of efforts, all relevant activity by subordinates, and all trips, and communicate these summaries to J. Allan 30 days in advance of the quarterly deadline to facilitate preparation of DOE Quarterly and Annual reports. To date this has not been accomplished as well as we wish and management will look into improving this aspect of the reporting task. Financial reports will be prepared by MTU staff and will be transmitted directly from MTU to DOE._

1.5.3 PROFESSIONAL MEETINGS AND PUBLICATIONS

Technical papers describing aspects of this project are beginning to be prepared and will be presented at professional meetings and symposia and published in appropriate journals as agreed upon with the DOE. At least two national meetings will be targeted annually, including the Houston AAPG in 1995. Technical papers, including abstracts, for presentation or publication, shall first be submitted to the DOE Document Control Center in draft form and stamped "Draft" or "Preliminary" and will be subject to the review/approval of the DOE COR. Fifteen (15) calendar days shall be allowed for the DOE review and approval.

The American Association of Petroleum Geologists (AAPG) and The Society of Petroleum Engineers (SPE) regional and national meetings are the preferred venues for presentation of project results. Professional papers will be submitted to the AAPG Bulletin, to SPE journals (e.g., Formation Evaluation), and to other publications deemed appropriate for communicating results to the petroleum industry. Ad hoc subgroups will be formed, as required, to put together papers on specific subjects.

1.5.4 WORKSHOPS

Tampa Workshop/Conference

A 3-day workshop/conference at the University of South Florida in Tampa, Florida is scheduled for January 19 to 21, 1995. This conference will focus on preliminary results from this project as well as results from another DOE project which involves reservoir characterization of a field in California. The plan is to have two days of technical discussions covering progress and results on these two projects, followed by a half day of critiques and suggestions for improvement. A preliminary agenda is attached (Table 5).

We also intend to discuss what should be done following the conclusion of the current DOE contracts. We now have a unique research team assembled with skills and experience that can be matched at very few companies or universities. This team is a valuable resource and we should think not only about successfully fulfilling the current contracts, but also about how to keep the team intact and even more deeply involved in addressing the country's long-range energy problems.

The problems related to declining production in the U. S. will remain and intensify. Therefore, we should now begin to develop long-range (5 and 10 year ?) plans to keep the project teams intact and working on these problems. At the Tampa meeting we will discuss possible funding from future federal and state programs, as well as the possibility that the universities can develop programs that will allow them to directly benefit financially from any enhanced recovery research and demonstration programs in which they participate. In other words, devise a plan whereby some of the cash flow from oil and gas recovery is used to continue and build the program.

We would like to have the DOE project managers as well as senior university personnel present for this meeting, particularly the last half-day of discussions on suggestions for project improvement and future strategies.

Annual Workshops

Annual training workshops will be held at the MTU Subsurface Studies Laboratory (SSL) to familiarize interested parties in the computational hardware and software made available by this project and to demonstrate the reservoir characterization methodologies being developed. After training, attendees may later visit MTU to use the SSL computational facilities or may access the facility over an Ethernet network.

Later in the project, short courses and workshops will be run through professional societies, most likely AAPG, since SPE has no mechanism for this type of communication. Other, less-formal workshops may be run either in conjunction with a local geological or engineering society meeting or independently. A list of "customers" will be prepared and publicity will be generated to make these customers aware of workshops that are run independently of professional organizations. Suggested format for most workshops is four hours of prepared discussion followed by an informal examination of the database, maps, logs and other materials.

TASK 1.6 PROJECT CONTINUATION

A Project Evaluation Report describing in detail the project status will be prepared and submitted in accordance with the Reporting Requirements.

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