Tarrant County Urban Drilling
Mid-Cities Tech Club
December 3, 2008
Shale Plays
Marcellus
Shale
New Albany
Shale
Woodford
Shale
Fayetteville
Shale
Floyd
Shale
Barnett
Shale
Barnett /
Woodford
Shale
Eagleford
Shale
Haynesville
Shale
2
Barnett Shale
Industry Overview
Average over 3.5 Bcfe/d – 30% annual
increase(1)
Jack
Wise
Denton
Average household uses Mcf each month
Over 1,200 new completions reported in
2008
Major activity focused on Tarrant, Johnson,
Parker, Denton, Wise, Hood, Hill and Erath
counties
Tarrant
Palo Pinto
Parker
Hood
Erath
Ft. Worth
Johnson
Somervell
Peak at 5 BCFD in 2010-2012?
Hill
Bosque
Hamilton
(1) Based on 2008 data provided by the Texas Railroad Commission.
3
Barnett Shale
Continuing to Grow
4,000
Total Newark east
field production
(gas & oil) from
public records
3,500
3,000
MMCFED
2,500
Denton/Wise
volumes flat
2,000
Tarrant surpassed
Denton & Wise in
March 2006
1,500
1,000
500
0
00
01
Wise
Denton
02
03
Tarrant
04
Johnson
05
06
07
Parker
Hood
Other
08
Johnson surpassed
Tarrant in
November 2006
Source: Texas Railroad Commission
4
Regional Geology
WEST
Barnett Shale overlies
Ellenberger formation
Ellenberger is waterbearing in this area
Geologic features such a
faults allow potential
communication between
Barnett and Ellenberger
Viola formation acts as
barrier between Barnett
and Ellenberger
Productive
Area
Barnett Shale
Carrizo Leases / 2008 Industry Completions
Wise
Jack
Denton
Tarrant
Parker
Ft. Worth
Carrizo lease
Industry completion
Hood
Johnson
Somervell
Erath
Hill
6
Barnett Shale
Tarrant County Urban Development Overview
Thickest most gas-rich
part of the Barnett sits
under the urban areas
in SE Tarrant County
20 sq mile area with
surface partially or
completely developed
Most surface owners
also still own the
mineral rights beneath
their property
DFW
Fort Worth
Pantego
UT-Arlington
Carrizo acreage
Existing drillsite
Completions
Permits
Pipeline
Future pipeline
7
Urban Drilling
Development of this resource not possible without horizontal
drilling technology
Urban Drilling - UTA
Barnett Urban Project Lifecycle
Identify & acquire rights to drillsite
Lease mineral rights surrounding drillsite
Acquire subsurface seismic data
Formulate development drilling plan
Permit wells and facilities
Drill wells
Complete wells
Install facilities
Produce natural gas!
UTA Drillsite
Urban Drilling - Project Leasing
Once geologic model confirms area as prospective
Carrizo uses company and third party land professionals to coordinate
mineral leasing
In urban areas, drillsite acquisition most difficult - NIMBY
Typically business or PLM degreed individuals
Mineral leasing
– Negotiate the “lease” of minerals which gives operator the right to drill
and produce the minerals under property
– Lease bonus – paid to lessor (mineral owner) up front when lease is
signed; in Barnett as high as $6,000 for 0.2 acre lot
– Royalty – typically 25% of all gas produced by lessee (Carrizo); 2 – 4
times the lease bonus over life of well
– UTA lease paid lower bonus and higher royalty
– Lease in effect as long as well produces
12
Barnett Urban Project Lifecycle
Identify & acquire rights to drillsite
Lease mineral rights surrounding drillsite
Acquire subsurface seismic data
Formulate development drilling plan
Permit wells and facilities
Drill wells
Complete wells
Install facilities
Produce natural gas!
3D Seismic
Uses sound waves to
create an image of
subsurface
Mathematical model of how
quickly various subsurface
formations reflect waves
created by seismic source
Receivers are placed all
around source allowing
modelling in 3 dimensions
Barnett Shale
3D Seismic
Faults
3D Seismic
Remember – faults in Barnett are a possible
pathway into Ellenberger and water
Faults
Barnett Urban Project Lifecycle
Identify & acquire rights to drillsite
Lease mineral rights surrounding drillsite
Acquire subsurface seismic data
Formulate development drilling plan
Permit wells and facilities
Drill wells
Complete wells
Install facilities
Produce natural gas!
Development Planning
Engineers model projected reserves from each well
– Analysis of geology from other nearby wells
– How much gas is in-place and how much of it can each well
produce
Engineers estimate the cost to drill and complete the wells
Engineers run economics to assess project viability
– Use computer programs
– Requires understanding of commodity market (natural gas)
Engineers get management approval to spend capital
Urban Drilling - Project Permitting
Carrizo project engineers coordinate
Work closely with local municipality to secure approval to drill
Usually requires approval of city planning staff and city council
uses company and third party land professionals to coordinate mineral
leasing
Very detailed ordinances address traffic, noise, safety, screening for
drilling and production operations
Carrizo engineers must understand all facets of operations to prepare
and get permits approved
19
Project Permitting - Noise
NOISE SOURCE
Jet takeoff (25 M)
DECIBEL
LEVEL
NOISE EFFECT
150
Eardrum rupture
140
Earphones at high
levels
Aircraft carrier deck
Jet takeoff (100 M)
Thunderclap, live rock music,
Chain Saw, Steel Mill, Riveting, auto horn at 1 M
130
120
Human pain threshold
110
100
Serious hearing
damage (8 hrs)
90
Hearing damage (8 hrs)
Garbage disposal, dishwasher, average factory, freight
train (15 M)
80
Possible hearing
damage
Freeway traffic at 15 M, vacuum cleaner
70
Annoying
Jet takeoff (305 M), outboard motor, power lawn
mower, motorcycle, farm tractor, jackhammer, garbage
truck
Busy urban street, diesel truck, food blender
Conversation in restaurant, office, background music
60
Quiet suburb, conversation at home
50
Library
40
Quiet rural area
30
Whisper, rustling leaves
20
Breathing
10
Quiet
Very Quiet
Project Permitting - Transportation
60
Location Construction
Completion Ops
50
Rig Move
Rig Demob
30
1st Well
2nd Well
3rd Well
4th Well
5th Well
20
10
DAYS
160
140
120
100
80
60
40
20
0
0
Trucks/Day
40
Barnett Urban Project Lifecycle
Identify & acquire rights to drillsite
Lease mineral rights surrounding drillsite
Acquire subsurface seismic data
Formulate development drilling plan
Permit wells and facilities
Drill wells
Complete wells
Install facilities
Produce natural gas!
Barnett Urban Project Lifecycle
Drilling
Engineers design wells
For horizontal drilling, industry engineers have designed motors and
mud systems to allow drilling up to 6,000 feet from surface site
Complex system of mechanical equipment integrated with computer
technology allows drilling with minimal “footprint”
Engineers monitor ongoing daily drilling in real time to make sure
wellbore is in correct location
Steering well complex – only possible with modern computing
capabilities
24
Fracture Stimulation
Drilling Rig
Drilling rig is composed
of Several Sections
– Power generation
– Derrick and draw
works and sub
structure
– Rotational system
– Drill string
– Mud system
– Well control
equipment
– Pipe handling
– Living quarters
Fracture Stimulation
Rig is on a track which
allows the rig to complete
one well and commence
drilling another in 4 to 6
hours vs. 3 days for a
conventional skid move
using bull dozers
Barnett Urban Project Lifecycle
Identify & acquire rights to drillsite
Lease mineral rights surrounding drillsite
Acquire subsurface seismic data
Formulate development drilling plan
Permit wells and facilities
Drill wells
Complete wells
Install facilities
Produce natural gas!
Fracturing Process
Fresh water
Sand
Combined
in a
Blender
Transferred
to pumps
with
increase the
pressure of
the mixture
Mixture is
pumped down
hole and into
the formation
causing cracks
in the rock
The sand
props the
crack open
and provides a
conduit for
gas to escape
from the rock
Friction
Reducers and
Stabilizing
Chemicals
Engineers determine how much sand and water to pump and at what
rates and pressures to produce the most natural gas from each well
Fracture Stimulation
Fracture Stimulation
31
Fracture Stimulation
Wellbore
Pumped Frac
Fracture Event
Barnett Urban Project Lifecycle
Identify & acquire rights to drillsite
Lease mineral rights surrounding drillsite
Acquire subsurface seismic data
Formulate development drilling plan
Permit wells and facilities
Drill wells
Complete wells
Install facilities
Produce natural gas!
Production
Engineers design equipment for separation of gas from
water and other impurities
Engineers design equipment for compression of gas for
sale into gas pipeline
Engineers supervise construction and installation of these
facilities at the wellsite after drilling and completion
operations are finished
Production