This report presents a summary of the geologic site selection studies, planning, drilling, completing, stimulating, and testing of two horizontal wells drilled in the Devonian Shales of the Appalachian Basin in West Virginia. Each horizontal well was designed and managed by BDM as the prime contractor to the Department of Energy. The first well was drilled with industry partner Cabot Oil and Gas Corporation in Putnam County, West Virginia. The second well was drilled with Consolidated Natural Gas Company in Calhoun County, West Virginia. This report summarizes four reports prepared by BDM which detail the site selection rationale and the drilling and completion operations of each weil. Each horizontal well is currently producing commercial quantities of hydrocarbons. The successful application of horizontal well technology represent continued development of the technology for application to tight and unconventional natural gas resources of the United States. Continued technology development is expected to ultimately result in commercial horizontal well drilling activity by industry in the Appalachian Basin. ix 1.0 EXECUTIVESUMMARY This report summarizes the geologic studies, site selection, drilling, logging, completion, and well _testing of two horizontal wells t drilled in the gas-bearing Devonian Shale interval in the Appalachian Basin. Detailed technical information concerning each of the two wells reviewed in this volume will be found in the technical report for each weil. Cash flow analyses were undertaken for each horizontal well using the well-specific cost and production information available through the end of January 1992. These results, detailed in this volume, show that a horizontal well is economic over a wide range of economic conditions if: (1) The well cost can be controlled to between $500,000 and $700,000 and (2) If the well is likely to produce at least 140 Mcf/day over the first year of operations, depending on the price of natural gas.

Troutman Oil Co., Inc. of LaCygne, Kansas has developed a low-cost process for recovery of oil from shallow oil formations. The process (named "TWINCO2") relies on immiscible displacement of oil through the injection of flue gas in a cyclic injection program. It was first installed in the LaCygne-Cadmus field located in Linn County, Kansas. The project has been in continuous use since 1979. Oil production rates have stabilized and the project has proven to be cost-effective given its small investment requirements and low operating costs. Flue gas is generated by burning natural gas in an internal combustion engine. The exhaust gas is treated and is compressed to around 250 psi for injection into the reservoir. Following injection, the same well is converted to production and the well flows oil, water, and gas into surface separating units. The economics associated with this oil recovery process as reported in the paper have been process as reported in the paper have been updated to reflect 1989 prices and conditions. This analysis assumes that the oil producing wells and related oil production infrastructure are in place. The analyzed project area contained 51 wells in 225 acres. Incremental cost to install a system in 1989 similar in scale to that employed by Troutman Oil is estimated to be approximately $100,000. for the Troutman Oil scale of operations, the operating costs are estimated at $37,400 per year. Cash flow and profitability depend on the level of oil production, posted prices, and net revenue interest in a lease. For example, at a posted price of $20 per barrel and average oil price of $20 per barrel and average oil production of 15 barrels per day, the annual cash flow production of 15 barrels per day, the annual cash flow from the entire project is estimated at $43,000 assuming an 80 percent net revenue interest. This level of cash flow will payback the initial investment in 2.3 years (undiscounted) and yields an internal rate of return of 42 percent over a 10 year project life. Economic parameters are presented in this report which will enable the reader to estimate the economics associated with application of the process at a particular property, including the minimum oil production property, including the minimum oil production required to cover operating costs and repay the initial capital investment. PROJECT LOCATION PROJECT LOCATION The Troutman Oil Company flue gas, oil recovery project is located about 50 miles south of Kansas project is located about 50 miles south of Kansas City, Kansas (see Figure 1). P. 933

This research program has been designedto develop and verify a unique geostatisticalapproach for finding natural gas resources. The project has been conducted by Beckley College, Inc., and BDM Engineering Services Company (BDMESC) under contract to the U.S. Department of Energy (DOE), MorgantownEnergy TechnologyCenter (METC). This section, Volume II, contains a detailed discussion of the methodology used and the geological and production information collected and analyzed for this study. A companion document, Volume I, provides an overview of the program, technique and results of the study. In combination, Volumes I and II cover the completionof the research undertaken under Phase I of this DOE project,which includedthe identificationof five high-potentialsites for natural gas production on the Eccles Quadrangle, Raleigh County, West Virginia. Each of these sites was selected for its excellentpotential for gas productionfrom both relatively shallowcoalbeds and the deeper, conventional reservoirformations. Phase II is scheduled to be initiated in April, 1991, with the drillingof the first of up to three wells plannedto confirmthe Phase I analyses. Each of the planned wells is scheduledto be dually-completed in the coal seams (for methane production)and the underlyingconventional reservoirs (for natural gas production). Each w_ll will be producedthroughdual strings. The stringswill b¢ independently metered and tested for quality before the gas is commingled for ultimate sale into a commercial pipeline. The economics of addipg methane from the coal to multiple-strata conventional natural gas resources are expected to be significantlygreater than the economicsof producinga single interval alone. Successful application of the methodology developed for this project should lead to reduced exploration times and finding costs for natural gas and methane, and, thus, directly to expanded commercial development in the Raleigh County area and in other areas with combined coalbed methane and conventional natural gas resources. Additionally, the methodology represents a low-cost approach that should be generally applicable to finding oil, natural gas or methane reserves in other producing areas of the United States.

Gas lift has long been used as a petroleum industry vehicle for secondary artificial lift. Typically run in a conventional jointed tubing completion string or, more recently, in manufacturer installed spoolable systems utilizing continuous pipe; new applications utilizing modifications of existing equipment and processes have enabled "on-location" make up of coiled tubing conveyed gas lift strings and subsequent installation and/or extraction of same. This application was designed as an alternative to conventional gas lift systems as well as other means of artificial lift in order to effectively address mechanical problems due to wellbore conditions and expensive and frequent workover operations all dictated by marginal well economics from tail-end field reserves. Results from this completion method have been mechanically and economically successful for this application and field installed coiled tubing gas lift has been expanded to exploit other formation types.

boy turning the wheel which ran loose on the screw outdide the thread, fitting the key-way running along the screw. As the screw advanced, the boss of the wheel pressed against the nut through which the screw moved, and thus it was kept back and did not advance with the screw. To drill a hole along the rib of the stall, or in a corner, a ratchet was provided, so that it could be turned without the necessity of a support on the wall side of the apparatus. This upright was so made that it could be fitted to any seam from X feet 9 inches to 8 feet thick, by placing various distance pieces either at the top or the bottom. One of these measured 3 feet 6 inches long, another 2 feet 4 inches, and a third 1 foot 6 inches, and these three could be combined. The drill was keyed to the screw, so that the screw pushed forward the drill, and turned it at the same time. He had also arranged the screw so that it would work out of the centre of a hollow drill. The end of the screw was fixed in the upright, instead of working through it, which lessened the distance between the working face and the upright, and this in pits with little room in front of the face was of great importance. Mr. CRAIG, Manager of the Harecastle Colliery, said, that when the Moss pits at Harecastle were opened about five years ago, and the levels commenced from the bottom of the shaft, great difficulty was experienced from the explosive gas, preventing generally the use of powder, and it was frequently necessary to stop up the places for days on opening out seams which generated large volumes of gas.