Gardes Energy Services Inc
Gardes Energy Services, Inc.

The company that pioneered
multilateral drilling technology

Under-balanced Multi-lateral Drilling

It is clearly understood that the future in unconventional gas fevelopment will be the introduction of game changing technology and processes. Gardes Energy Services, Inc. believes that it possesses such technologies and processes with it's field proven patented systems. The company believes that it is strategically positioned to be a leader in the development of unconventional gas both in the U.S. and internationally. The processes range from high temperature, high pressure well control to under-balanced multi-lateral for coalbed methane, shale gas, tight gas and deep gas. The company possesses the only under-balanced multi-lateral drilling system on the market today that can operate in both cased hole and open hole environments as well as in under-pressured and over-pressured reservoirs. A review of subsequent sections will clearly acquaint the reader to the opportunities for production and recovery that exist today as well as the potential and superior technical advantages to which the company has positioned itself for these emerging markets.

Coalbed Methane and Shale Gas has emerged as a reliable low cost natural gas supply in the U.S. Currently 3.5 TCF is produced annually from nine (9) U.S. Coal and six (6) Shale Gas basins and accounts for 9% of total U.S. gas production. Over 9 TCF of gas has been produced to date. Future technological developments will substantially increase recovery fractions and open tighter permeability areas to exploit. As development continues, ultimate recovery is likely to exceed 150 TCF. World wide, coalbed methane pilots are underway in Australia, Canada, China, India and other coal-rich countries.

Advances in drilling technology are enabling operations to transform coal and shale gas into a profitable and environmentally friendly energy source. One of the most advantageous recovery methods to evolve through technological progress is the process of drilling coal and shale seams multi-laterally. Use of under-balanced drilling technology allows for coal and shale seams to be drilled under formation pressure, eliminating formation damage. The United States Department of Energy's National Energy Technology Laboratory (NETL) top priority for the exploration of coalbed methane is the development of multi-seam completion technology (MSC). MSC technology has fully demonstrated its proven reliability and offers the potential for numerous benefits including reducing the number of development wells, recovering additional resources and lowering capital and operating and management (O&M) costs per MCF. Proven patented technological processes developed by the company, U.S. Patent 5,720,356 and 6,065,550 "Method And System For Drilling Under-Balanced Radial Wells Utilizing A Dual String Technique In A Live Well". 6,065,550 continuation in part U.S. Patent 6,457,B2 serial # 60,384,871 provisional May 31, 2002, June 14, 2002 t And Production System" Methane Dewatering And Production System", foreign PCT filings pending on all patents and pending patents.

The Gardes process has a clear advantage over other multi-lateral systems:

The speed and ease of reorienting the Gardes upstock has a clear advantage over other multi-lateral systems used for multi-seam completions that employ the use of retrievable whipstocks. The upstock can be repositioned to additional seams without removal from the wellbore and without the need to kill the well, within one (1) hour and be ready to drill additional seams. Other systems have to kill the well and retrieve the whipstock, then replace the used whipstock with a new whipstock, a process that is both time consuming and costly. Depending on the number of seams drilled, the cost of retrievable whipstock systems and rig time could be $200k - $300k higher than the Gardes system. Significant other risks are also possible such as the inability to be able to latch on to a retrievable whipstock and then costly milling procedures would have to be employed. There are cases where whipstocks have not been retrieved or milled and the entire well had to be abandoned.

The Gardes system has been used in both cased and open hole applications. Competitive retrievable whipstock systems can only be used in cased hole environments. Still other companies employ a dual wellbore system whereby a cavitated vertical well is intersected horizontally. Severe bore hole stability associated with the cavity has occurred, multi-lateral wellbores have to be abandoned if unfinished due to mud motor or EM MWD failures. The system can only be completed open hole due to the inability to re-enter the lateral through the cavity. The system is only usable in shallow formations due to limits in cavitation technology.

Coal is a dual porosity reservoir rock containing a microporous matrix and a network of natural fractures known as cleats. While cleats have a very low porosity (of the order of 1% or 2%) they are solely responsible for the permeability of a coal seam. Therefore, it is logical that coal permeability can be easily damaged by the plugging of cleats during over-balanced drilling operations. Unlike sandstones, coal has a high capacity to sorb (absord and/or adsorb) a wide variety of liquids and gases. One consequence of fluid sorption by coal is the swelling of its matrix, the extent of which depends upon chemical nature of the organic solvent. As part of basic coal chemistry research, numerous studies have been published on the swelling characteristics of coals by liquids and gases. Most coals additionally are under-pressured and severe loss circulation can occur requiring massive amounts of water to be transported to remote locations. Additonal water adds costs and the water will eventually have to be removed from the formation before gas production can begin.

The Gardes system employs a dual string method whereby water is circulated down the drillstring through the mud motor and guidance system. Air is then circulated down the concentric casing annullus allowing for the hydrostatic pressure in the wellbore to be reduced below formation pressure eliminating the possiblity of fluid invasion into the coal matrix and creating formation damage. Selecting a MWD system is based on fluid medium to be used in drilling the well. Since the Gardes system's multi-phase circulation allows for fluid to be circulated down the drillstring all MWD, LWD and EM MWD systems can be utilized. The Gardes system can operate both pulse and electromagnetic MWD systems incorporating directional, focused gamma ray and resistivity logging packages. This is a key advantage of Gardes (GES) in helping to Geo-Steer in thin seams.

Systems that employ single phase circulation of air/mist fluids and foam to achieve under-balanced drilling have only the electromagnetic MWD or antiquated steering tool systems in which to utilize for guidance and gamma ray logging. The process of air/mist or foam drilling can lead to poor or inadequate tool performance resulting in premature tool failures, improper hole cleaning due to cutting transportation problems and formation damage to the coal matrix. Based on lab data even water containing low concetrations of friction reducing polymers can cause significant damage to coal permeability. In 1991, the Gas Research Institute recommended that "all possible efforts be made to avoid contacting the coal seam with fluids containing polymers, surfactants, biocides, friction reducers or any other liquid chemical. It is therefore the recommended practice of under-balanced drilling in coals be done utilizing multi-phase circulating systems.

Gardes Energy Services' patented system has the clear competitive advantage over other systems. Innovation is the foundation of Gardes. The application of under-balanced multi-lateral drilling technology for coalbed methane, shale gas recovery and friction controlled drilling for high pressure wells is in itself an innovation. We will continue to implement new applications to solve existing problems whenever and wherever possible.