Introduction to…Caledus

SlimWELL® an evolutionary well construction system

DEA(e) 3Q06 Meeting Milan

Paul Howlett, MD/CEO, Caledus Limited

CHALLENGING CONVENTIONIN WELL CONSTRUCTION

TECHNOLOGY

Introduction to…

CHALLENGING CONVENTIONIN WELL CONSTRUCTION

TECHNOLOGY

Established January 2004 with 4 staff, more than 40 today (30 months on)

Traditional oil and gas service sector business, already award winning

In-house design engineering, ISO9000 accredited

In-house manufacturing, ISO9000 accredited

In-house sales, service and operations

Office’s in Calgary Canada, Perth Australia

Several agents establishedBecoming

widely known as a company

that can be relied upon….

• RotoTEC Friction Reducer® Drill Pipe Deployed Friction Reducer / Casing Wear Protector

Caledus “TD Solutions”Technology

• FloMASTER™ DP and CS cementing u-tube control tools

• Drifting DartCATCHER™ and Safe SingleDRIFTER™ Efficient, safe drill pipe drifting in and out of the well

• SlimWELL® Evolutionary Well Construction System

• BridgeBUSTER® Enhanced CasinglLiner Reaming Shoes

• SwivelMASTER™ Downhole drill pipe swivel for ERD sand screen deployment

• SingleRUN™ Motor Sacrificial Down Hole Mud Motor

• DriveSHOE™ Closed –end conductor drive shoes

• Comprehensive range of casing/liner centralisers (Brunel Ezee-Glider® 2000)

Visit www.caledus.com or email info@caledus.com or call +44(0)1224 659000 for more information on any of these product lines

Trading in other product lines helps us invest in SlimWELL® and grow capability

• Innovar Wireline Fishing Magnets, high strength, highly effective fishing magnets

• LinerHANGER™ Systems High specification standard liner hanger technology

SlimWELL® is an evolutionary well construction systembased on a “bottom-up” design of close-clearance, flush-jointed casing liners.

Slims down the well profile, gives optimum or maximised pipe size across the zone of interest.

Significant reduction in full well construction costs

SlimWELL® is based on API casing sizes and special sizes as applicable.

Economic, safety and environmental benefits.

Reduces the telescoping effect in wells compared to conventional construction.

Delivers cased and cemented well integrity

SlimWELL® is NOT slim-hole drilling and does NOT rely on expandable technology.

What is SlimWELL®?

A JIP in the late nineties, early ideas, IP developed, prototype work done, but NOT commercialised

SlimWELL® lay dormant for lack of commercialisation funds, and more industry focus on expandable technology

SlimWELL® patents applied for now granted for method and apparatus protection

Caledus obtained exploitation rights to SlimWELL® in 2003, provided funding for development and commercialisation starting in Q1 2004

SlimWELL® History…

What can SlimWELL® be used for?

Now In-fill drilling/Brownfield development from existing donor wells (utilising 1-2 cemented SlimWELL® liners, one could be slotted/pre-perforated liner or sand control screen installation) This could be TTD depending on tubing size

LaterFull development well construction of all types i.e. deepwater, ERD, HPHTLower cost finder/exploration wellsLower cost appraisal wellsRemote location wellsDouble-skin casing wells?

Existing SlimWELL® sizes could be used in full well construction now at the lower reaches

Economic benefit of full well construction…

Total CasingMass (Tons) Cement

(Tons) Total Cuttings( Tons)

SlimWELL™0.00

500.00

1000.00

1500.00

2000.00

2500.00

3000.00

3500.00

Tons

Mass removed/used

SlimWELL®

Conventional

SlimWELL® (3 liners plus) can reduce the cost of full well construction by more than 50%, largely due to the savings on materials not consumed or produced during the construction

Potential for multiple wells from a single slot (Splitter Wellheads)

Completely new wells could be constructed within an old upper well structure

Source: JIP members and confirmation during investment diligence by third party well engineering consultancy

Economic benefit of partial well construction…

SlimWELL® can increase the size of the pipe at TD from a sidetrack or in-fill drilling opportunity, standard sidetrack or TTD…

Increasing the available flow area, increases BOPD or allows higher injectivity

Increasing early production has significant impact on Net Present Value(NPV)

Larger diameter pipe across zone of interest allows larger perforating guns to be utilised – Increased production potential

262%3.958”12.64.1/2”2.441”6.42.7/8”

111%3.548”9.54”2.441”6.42.7/8”

65%5.08”19.75.3/4”3.958”12.64.1/2”

52%4.892”175.1/2”3.958”12.64.1/2”

% increase in ID flow area

IDPPFNominal Pipe OD

Replaced by

IDPPFNominal Pipe OD

SlimWELL® Size at TDCommon Conventional Size at TD

Read left to right to see what SlimWELL® delivers in a sidetrack from an existing donor well thru a 7” liner

This chart shows one example of a SlimWELL® casing configuration that allows for 0.225” clearance at the upper part of

the well and 0.125” clearance at the lower part.

What might a SlimWELL® well look like?

Two Main Innovative Technologies

How SlimWELL® Works…

SlimSLIP™ AnchorHANGER™Slips are contained within the Hanger Wall

Incorporates a High-Pressure Packer DiVERTA™ SHOEControllable ‘Dual-Flow’ Paths

eliminate Swab/Surge/ECD concerns

How SlimWELL® Works…

Dedicated joints are deployed with the previous casing for locating, cementing, anchoring and sealing in

The next hole section is drilled and under-reamed sufficiently for access and cementing, 10-20%

Flush jointed casing is used, and in-line casing centralisers

Standard cementing operation are used

No rig modifications are required

Standard well engineering applies

SlimWELL® is evolutionary rather than revolutionary

The DiVERTA™SHOE, stinger/seal-bore, inner string, and AnchorMASTER™ RUNNING TOOL create an artificial inner annulus to allow flow inside the liner and up and out of the top of the liner to eliminate swab/surge whilst running in and moving the pipe in the well

Stinger/seal-bore and inner string

How SlimWELL® Works, running in…

By-pass working

The LoCATOR™TOOL run in the drill-pipe above the liner ensures the system is cemented, anchored and sealed at the correct depth in the DEDICATED JOINT which was deployed with the previous casing

How SlimWELL® Works, locating at TD…

How SlimWELL® Works, converting the shoe…

A ball is circulated down to the DiVERTA™ SHOE to change the direction of flow from the artificial inner annulus to the normal outer annulus, to allow hole cleaning prior to cementing

Pressure is applied to convert the DiVERTA™ SHOE

How SlimWELL® Works, cementing...

A unique upper and lower cementing dart arrangement ensures accurate placement of the cement slurry and provides the barrier to pressure up against at the end of the operation

No cement contacts the liner ID

The whole liner can be rotated during circulating and cementing

How SlimWELL® Works, setting and sealing…

When the lower cementing dart seats in the end of the stinger pressure is applied to set the HANGER and the SEAL in the DEDICATED JOINT

Dart landed in stinger

How SlimWELL® Works, releasing…

Once the HANGER and SEAL is set continued pressuring up releases the running tool and allows the RUNNING TOOL, inner string and stinger to be removed

There is no cement to drill out inside the liner after cementing

Excess cement can be circulated off the liner top once the running tool is released and pulled up

How SlimWELL® Works, animation

Time permitting run SlimWELL®

animation now

The animation runs through the installation of a 5.1/2” x 7” system once the 7” casing/liner has been installed with the dedicated joints and after the hole below has been drilled/enlarged and the system has been made up and is running in on drill pipe

Completed……The 5-1/2 (5-3/4) x 7” SlimWELL® has been developed and testedCaledus ran a full System Test trial at the Aberdeen test well in late December ‘04

Where Are We Now & Where Next?

Completed….

A successful field trial of the 5.1/2” (5.3/4” x 7” system, sponsored by Talisman Energy, took place in Canada during Jan ‘06

The next SlimWELL® size started in Q2 ’05, 4” x 5-1/2”, and is sponsored by BP (North Sea) and will be ready for system testing and field trialling during 2nd half of 2006

Ultimately there will be 6 – 10 sizes (or more?)

Where Are We Now & Where Next?

1 2 3 4 5 6 8 107 9 11 12

1. DISPLACE TOP DART @ 0.5 m3 ( 3 BPM ) 7. BLEED OFF PRESSURE TO ZERO / PICKUP 5 FT INTO RESTRICTED ID TO HANGER SET POSITION. 2. TOP DART CATCHES UP w/ CEMENT AFTER 7m3 / PRESS RISE TO 7500 kPa 8. PRESSURE UP TO 4000 PSI MAX TO SET HANGER. 3. REDUCE PUMP RATE TO 0.16 m3 ( 1 BPM) 9. BLEED OFF TO ZERO AND CONDUCT PUSH – PULL TESTS / NO SET 4. TOP DART LANDS / BALL TRANSFER TO LWR DART & RELEASE / AUTO SHUTDOWN 10. PRESS. UP TO 4400 PSI MAX TO SET HGR / INDICATION @ 4000 PSI 5. RECOMMENCE DISPLACEMENT @ 0.16m3 / GRADUAL PRESSURE INCREASE. 11. BLEED OFF TO ZERO AND CONDUCT PUSH – PULL TESTS / HGR SET 6. LOWER DART BUMPS / ALLOW PRESS. TO INC. TO 500 PSI OVER FINAL CIRC. PRESS. 12. PRESS. UP TO RELEASE RUN TOOL.

22 Jan 06

Canadian Land Rig

By-pass working

Pressure Chart of operations on trial

9.5/8” Donor Casing

7” x 9.5/8” Standard Liner

5.1/2” x 7” SlimWELL® Liner

4” x 5.1/2” SlimWELL® Liner

SlimWELL® InFILL™ 2006/1

This InFILL™ system can be deployed now…

3 casing seats from an 8.1/2” ID obtains 4” pipe at TD….

Caledus now has capability in standard liners…

9.5/8” Donor Casing

7” x 9.5/8” Standard Liner

5.3/4” x 7” SlimWELL® Liner

4.1/2” x 5.3/4” SlimWELL® Liner

SlimWELL® InFILL™ 2006/2

This InFILL™ system can be deployed soon…

3 casing seats from an 8.1/2” ID obtains 4.1/2” pipe at TD….

Caledus now has capability in standard liners…

Full well construction will become available in time, but several more sizes are required, bigger than the existing two sizes…..

For more information go to www.caledus.com

or email info@caledus.com

or call +44 (0)1224 659000

What can we do later………….