Mitchell Drilling Contractors Presentation 16 June 2005

Coal Seam Gas Drilling

Presentation byNathan Mitchell, Managing Director

Presentation Outline

Introduction to CSG Introduction to CSG DrillingDrillingIntroduction to Introduction to Dymaxion DrillingDymaxion DrillingSlimholeSlimhole Surface to Surface to InseamInseam–– The Drilling ProcessThe Drilling Process–– New InnovationsNew Innovations–– Previous Experience

Directional Production Directional Production DrillingDrilling–– The Drilling ProcessThe Drilling Process–– Previous ExperiencePrevious Experience

Rig AdvancementsRig Advancements–– Top Drive Top Drive –– Iron RoughneckIron Roughneck

Previous Experience

About MITCHELL DRILLING Began Operations in 1969Began Operations in 1969Currently operates 25 rigs throughout Australia Currently operates 25 rigs throughout Australia and Indiaand IndiaCan offer all facets of CSG drilling includingCan offer all facets of CSG drilling including–– Conventional Vertical drillingConventional Vertical drilling–– Surface to Inseam (Dymaxion)Surface to Inseam (Dymaxion)–– Cavity Completion Cavity Completion

Can offer a complete Integrated ServiceCan offer a complete Integrated Service–– Planning & ProcurementPlanning & Procurement–– Drilling & CompletionsDrilling & Completions–– Engineering & Ongoing Remedial Works Engineering & Ongoing Remedial Works

Mitchell Vision StatementTo be a world leader in CBM drilling technology, offering a complete integrated service able to supply the entire project from conception to completion.

Fundamental values include : •Continuing a tradition of excellence•Increasing client’s asset value•Pioneering technology•Optimising drilling efficiencies•Raising the industry bar •Tenacious pursuit of excellence

Introduction to CSG DrillingThree Main drilling types for Three Main drilling types for CSGCSG

• Low Pressure

• Lower Flows

• Reduced Costs

• Low Pressure

• Medium to High Flows

• Medium Costs

• High Pressure

• High Flows

• Higher Costs • High Pressure

• High Flows

• Higher Costs

Shallow Wells Surface to Inseam Gas Capped Wells TraditionalOil & Gas

Introduction to CSG Drilling

Shallow CSG Vertical wells Shallow CSG Vertical wells –– Low pressure water Low pressure water

saturated coal seams saturated coal seams »» Moura, Sydney Basin, Moura, Sydney Basin,

Walloon CoalsWalloon Coals

»» Modified Deep Modified Deep Mineral RigsMineral Rigs

Introduction to CSG Drilling

Surface to InseamSurface to Inseam–– Shallow Low pressure Shallow Low pressure

alternative to cavitation alternative to cavitation and fracand frac

»» Moranbah, German Moranbah, German Creek, Bowen Basin Creek, Bowen Basin coal minescoal mines

Introduction to CSG Drilling

Traditional Oil & Gas Traditional Oil & Gas Technology Technology –– High Pressures e.g. Gas High Pressures e.g. Gas

Capped AreasCapped Areas»» Fairview, Durham, ScotiaFairview, Durham, Scotia

»» Soilmec GSoilmec G--102 102

SLIMHOLE

The use of modified exploration rigs for shallow inseam wells.

What is a Surface to Inseam well

Surface to Inseam drilling or Dymaxion drilling Surface to Inseam drilling or Dymaxion drilling allows the extraction of Coal Seam Gas (CSG) allows the extraction of Coal Seam Gas (CSG) from the coal seam. from the coal seam. The hole is started from the vertical, steered The hole is started from the vertical, steered through a medium radius bend to enter the coal through a medium radius bend to enter the coal seam horizontally. The horizontal section is seam horizontally. The horizontal section is directionally drilled up to 1200m through the coal directionally drilled up to 1200m through the coal seam. This safe and cost effective method seam. This safe and cost effective method substantially increases the area degassed substantially increases the area degassed compared to a conventional vertical well.compared to a conventional vertical well.

Dymaxion Drilling AdvantagesViableViable production production from marginal fieldsfrom marginal fields

Use Use of mineral drilling equipmentof mineral drilling equipment and highly trained and highly trained personnelpersonnel

Does not hinder mining operationsDoes not hinder mining operations

Less holes required than U/G drilling Less holes required than U/G drilling –– cost reductioncost reduction

Not tied to mining schedules Not tied to mining schedules –– longer lead timelonger lead time

Borehole trajectory can be controlled to take advantage of Borehole trajectory can be controlled to take advantage of coal seam directional permeabilitycoal seam directional permeability

Multiple horizontal holes can intersect single vertical Multiple horizontal holes can intersect single vertical production well production well –– infrastructure cost savingsinfrastructure cost savings

Possible Uses For Surface to Inseam Wells

Methane gas production for saleMethane gas production for sale

Methane Gas extraction ahead of mining Methane Gas extraction ahead of mining

Water removal ahead of mining Water removal ahead of mining

As an exploration tool ahead of mining. Gives As an exploration tool ahead of mining. Gives real information such as the position of rolls, real information such as the position of rolls, folds, faults, etcfolds, faults, etc,, in the targeted coalin the targeted coal

Dymaxion – A proven technique

14288

35840

67148

109801

56108

2001 2002 2003 2004 2005

By the end of 2005

Total Number Directional Metres Drilled

Multi Intersection Well

New Innovations

Coil Tubing DrillingCoil Tubing DrillingElectromagnetic MWDElectromagnetic MWDDAWD, Data Acquisition DAWD, Data Acquisition While Drilling While Drilling Solids Control Solids Control –– Mud Mud SystemSystemUDR 1200 Drilling RigsUDR 1200 Drilling Rigs

Electromagnetic MWDOIL & GAS OIL & GAS APPLICATIONApplications:•• UnderbalancedUnderbalanced drillingdrilling•• Under pressured formationsUnder pressured formations•• Vertical control drillingVertical control drilling•• Directional drillingDirectional drilling•• Horizontal drillingHorizontal drilling•• Air drillingAir drilling•• ReRe--entry wellsentry wells•• Relief wellsRelief wells

Mud System

Trailerised complete mud treatment unit for precise Trailerised complete mud treatment unit for precise drilling fluid and environmental control drilling fluid and environmental control

The Drilling Process & Equipment used to date

Conventional mineral exploration rigs and equipment Conventional mineral exploration rigs and equipment have been modified and utilized to keep costs to a have been modified and utilized to keep costs to a minimumminimum

Proven steering equipment and methods from the civil Proven steering equipment and methods from the civil engineering have been adapted engineering have been adapted

Focused Gamma ray equipment helps us know where we Focused Gamma ray equipment helps us know where we are inseam in relation to the roof and floorare inseam in relation to the roof and floor

Conventional medium low RPM Conventional medium low RPM -- high torque mud motors high torque mud motors are usedare used

P.D.C. bits are used for increased ROPP.D.C. bits are used for increased ROP

The Drilling Process & Equipment used to date

Threaded seamless linepipe is used as casing where Threaded seamless linepipe is used as casing where possible to reduce costspossible to reduce costs

Well Control to date has been achieved by ensuring the Well Control to date has been achieved by ensuring the well is full at all times and nonwell is full at all times and non--rotating diverter is used to rotating diverter is used to control gas flows away from the rig, however B.O.P.s are control gas flows away from the rig, however B.O.P.s are availableavailable

Equipment and methods used are tried and proven. Very Equipment and methods used are tried and proven. Very careful selection of careful selection of ““Fit for PurposeFit for Purpose”” equipment is the key equipment is the key to the success of this drilling method.to the success of this drilling method.

Where possible oilfield equipment and services are Where possible oilfield equipment and services are avoided to keep costs to a minimumavoided to keep costs to a minimum

CONVENTIONAL WELLS

Traditional Oil & Gas specifications for deep inseam wells > 6” dia.

Deeper and Larger DiametersSuccess in the 99mm holes has Success in the 99mm holes has given MDC the experience and given MDC the experience and confidence to now offer confidence to now offer Dymaxion Drilling technology to Dymaxion Drilling technology to clientclient’’s who have deeper seams s who have deeper seams and want larger diameter wells and want larger diameter wells drilleddrilled

Mitchell have completed 3 deep Mitchell have completed 3 deep CBM wells in collaboration with CBM wells in collaboration with Weatherford and Tipperary Oil & Weatherford and Tipperary Oil & Gas. Gas.

Surface to Inseam Example

Lateral Angle: +/- 91.5 deg.Whipstock with Quick-cut Window System

• 7” Cased Main Wellbore• 6’ & 5-7/8” Open Hole, Short Radius Curve• Drilled Underbalance to Minimize Formation Damage

Sump for Production Equipment

Coal Seam

7” Casing Shoe @ 1003m.

TD @ 1722m. MD

73 degree hole angle

Vertical CSG Production Drilling Two types of CSG well designs used in AustraliaTwo types of CSG well designs used in Australia1.1. Conventional Oil & Gas Conventional Oil & Gas –– 77”” production casingproduction casing2.2. Shallow Mineral adaptation Shallow Mineral adaptation –– 5 1/25 1/2”” production casingproduction casing

Well Design Vs Rig Design

HH-102 Drilling Rig

HH-55 Drilling RigHH-55 – 5 ½” Csg

Designed for water saturated CBM reservoirs:

Used in inexpensive CBM wells with low risk of blow out

Unable to run 7” casing to 1200m

Less personnel

Faster rig up & shift site

Reduction in location size

Single annular BOP only

Angle Mast

HH-55 – 5 ½” Csg

Designed for water saturated CBM reservoirs:

Used in inexpensive CBM wells with low risk of blow out

Unable to run 7” casing to 1200m

Less personnel

Faster rig up & shift site

Reduction in location size

Single annular BOP only

Angle Mast

HH-102 – 7” Csg

Traditional Oil & Gas specifications and must be used for 7” casing design wells:

Used with UBD techniques where high possibilities for blow out occur

Capable of larger well designs

Increased depth capacity

Triple stack BOP, annular & double ram

HH-102 – 7” Csg

Traditional Oil & Gas specifications and must be used for 7” casing design wells:

Used with UBD techniques where high possibilities for blow out occur

Capable of larger well designs

Increased depth capacity

Triple stack BOP, annular & double ram

Safety and Low EnvironmentalImpact

Safety and Low EnvironmentalImpact

The new technology has been shown that the increased control of all thedrilling operations and the increasing of the safety parameters have reducedthe risk of accidents.

Less people involved in tubular handling

Reduction in noise levels with silenced engines

Best visability of the operations

More compact equipment and less components to facilitate

assembly/disassembly of the rig and reducing of the risk of accidents

Reduction of the environmental impact due to the reduction of the

dimensions of the location

The new technology has been shown that the increased control of all thedrilling operations and the increasing of the safety parameters have reducedthe risk of accidents.

Less people involved in tubular handling

Reduction in noise levels with silenced engines

Best visability of the operations

More compact equipment and less components to facilitate

assembly/disassembly of the rig and reducing of the risk of accidents

Reduction of the environmental impact due to the reduction of the

dimensions of the location

Drillmec G-55Soilmec G-55 Rated at 55 ton pullback

HH-55 Technical SpecificationsMax. weight on moving:Max. weight on moving: 38 tons38 tonsSelfSelf--erecting substructure:erecting substructure: 1.0 m1.0 mIndependent Independent ““jibjib”” crane max. capacity:crane max. capacity: 2 tons2 tonsHydraulic power pack (No. 1 diesel engine) Hydraulic power pack (No. 1 diesel engine) 450 HP450 HPMax. static hook capacity:Max. static hook capacity: 55 tons 55 tons (110,000lbs)(110,000lbs)Max. pull down:Max. pull down: 7 tons7 tonsMax. operating tripping velocity:Max. operating tripping velocity: 1 1 m/sm/sPower swivel speed ranging from:Power swivel speed ranging from: 0 0 -- 200 rpm200 rpmMax. torque:Max. torque: 3.600 3.600 KgmKgm (at 60 (at 60 rpm)rpm)Max. drilling capacity:Max. drilling capacity: 1200 m (3,900 1200 m (3,900 ft) with 3 1/2ft) with 3 1/2”” DPDPBOP StackBOP Stack 99”” x 3000 x 3000 psipsi

No. 1 Taurus Reagan annularNo. 1 Taurus Reagan annular

Hydraulic Hoist Basic conceptTechnology & Safety

Top drive with torque wrench

Hydraulic hoisting

equipment

G-102

G-102 Technical SpecificationsMax. weight on moving:Max. weight on moving: 42 tons42 tonsSelfSelf--erecting substructure:erecting substructure: 4.3 m4.3 mIndependent Independent ““jibjib”” crane max. capacity:crane max. capacity: 6 tons6 tonsHydraulic power pack (No. 1 diesel engine) Hydraulic power pack (No. 1 diesel engine) 660 HP660 HPMax. static hook capacity:Max. static hook capacity: 100 tons 100 tons Max. pull down:Max. pull down: 14 tons14 tonsMax. operating tripping velocity:Max. operating tripping velocity: 1 m/s1 m/sPower swivel speed ranging from:Power swivel speed ranging from: 0 0 -- 200 rpm200 rpmMax. torque:Max. torque: 3.600 Kgm (at 60 3.600 Kgm (at 60 rpm)rpm)Max. drilling capacity:Max. drilling capacity: 2.000 m (6,500 2.000 m (6,500 ft) with 3 1/2ft) with 3 1/2”” DPDPBOP StackBOP Stack 1111”” x 3000 psix 3000 psi

No. 1 Hydrill No. 1 Hydrill ““GKGK””No. 1 Shaffer No. 1 Shaffer ““LWSLWS”” (3(3””1/2, 51/2, 5””, 7, 7”” pipe, blind rams)pipe, blind rams)

Drilling Rig FeaturesDrilling Rig FeaturesDrilling Rig Features

New Technology

Integrated Drilling System based on the followings:

High Automation with minimizing the risk of accidents and the environmental impact.

Reduction of the location requirements

Easy and fast tripping

Reduction of cost of operation and increasing of quality and efficiency of the work.

New Technology

Integrated Drilling System based on the followings:

High Automation with minimizing the risk of accidents and the environmental impact.

Reduction of the location requirements

Easy and fast tripping

Reduction of cost of operation and increasing of quality and efficiency of the work.

Advantages:Advantages:Reduced HeightReduced HeightTelescopic mastTelescopic mastIntegrated Top driveIntegrated Top driveIntegrated Power TongIntegrated Power TongAutomatic Power slipsAutomatic Power slipsAutomatic handling Automatic handling systemsystem

Integrated automatic Integrated automatic jib cranejib craneHydraulic device for Hydraulic device for casing screwingcasing screwingCementation SystemCementation SystemIntegrated system for Integrated system for drilling parameter drilling parameter continuous continuous monitoringmonitoring

ConventionalConventional HydraulicHydraulic

165 ft165 ft 65 ft65 ft

Equipment Advantages

Small rig footprint and minimal lease preparation Small rig footprint and minimal lease preparation requirementsrequirements

High mobility and able to move all rig equipment High mobility and able to move all rig equipment

Lower cost operationLower cost operation

–– Personnel, camp, crew rotation, fuel, rig maintenance Personnel, camp, crew rotation, fuel, rig maintenance costscosts

Major HSE risks reducedMajor HSE risks reduced

Equipment specifically designed for this type of operation Equipment specifically designed for this type of operation

Under Balanced Drilling Equipment

Air CompressorAir Compressor–– 3 x Atlas Copco XRVS455, rated at 365 psi / 950 3 x Atlas Copco XRVS455, rated at 365 psi / 950 cfmcfm

BoosterBooster–– 1 x Ariel JGP1 x Ariel JGP--2, Rated at 1450 psi / 2700 2, Rated at 1450 psi / 2700 cfmcfm–– 1800 psi injection pump, hammer oiler, and walkways 1800 psi injection pump, hammer oiler, and walkways

Trailer mounted for fast rig up & downTrailer mounted for fast rig up & downSilenced engines for residential operations Silenced engines for residential operations

Who to Contact for Further Information

Managing DirectorManaging Director

Mr. Nathan MitchellMr. Nathan MitchellPh: Ph: 07 3376 757707 3376 7577Fax:Fax: 07 3376 280607 3376 2806