Overview of Shale Gas Technology how to make a shale gas prospect productive

Amit Sharma Technical Advisor Global Business and Technical Solutions Team

The statements in this presentation that are not historical statements, including statements regarding future financial performance, are forward-looking statements within the meaning of the federal securities laws. These statements are subject to numerous risks and uncertainties, many of which are beyond the company's control, which could cause actual results to differ materially from the results expressed or implied by the statements. These risks and uncertainties include, but are not limited to: changes in capital spending by customers; execution of long-term, fixed-price contracts; changes in the demand for or price of oil and/or natural gas; structural changes in the oil and natural gas industry; consequences of audits and investigations by domestic and foreign government agencies and legislative bodies and related publicity; potential adverse proceedings by such agencies; protection of intellectual property rights; compliance with environmental laws; changes in government regulations and regulatory requirements, particularly those related to radioactive sources, explosives, and chemicals; compliance with laws related to income taxes and assumptions regarding the generation of future taxable income; unsettled political conditions, war, and the effects of terrorism, foreign operations, and foreign exchange rates and controls; weather-related issues including the effects of hurricanes and tropical storms; impairment of oil and gas properties; increased competition for employees; availability of raw materials; and integration of acquired businesses and operations of joint ventures. Halliburton's Form 10-K for the year ended December 31, 2009, Form 10-Q for the quarter ended September 30, 2010, and recent Current Reports on Form 8-K, and other Securities and Exchange Commission filings discuss some of the important risk factors identified that may affect the business, results of operations, and financial condition. Halliburton undertakes no obligation to revise or update publicly any forward-looking statements for any reason.

Global Knowledge Transfer

627 TCF 548 TCF 3,810 TCF 2,547 TCF 3,526 TCF

274 TCF 2,625 TCF 2,116 TCF

Sources: Russell, P.L., Oil shales of the world, their origin, occurrence and exploitation, Pergamon Press, Inc., Elmsford, NY, 1990 (ISBN 0-08-037240-6; 753PP; over 40 refs); Saleh M. Billo, Ridayh University, Ridayh, Saudi Arabia, Oil shale and its relation to petroleum and other fuels, Oil & Gas Journal 22-Dec-08. Important note: Halliburton is not the original source of the information and it has not been independently verified. This information is being provided without warranty of any kind.

High-growth Indian Market

Rising demand levels, driven by economic growth Focus on clean energy and environmental concerns

USA Land Gas Production New Technology

Increase Due to Unconventional Gas Plays Horizontal Wells Fracturing Technologies Halliburtons Proven Expertise in all Shale Plays

US Gas Productive Capacity

60 58
production, bcfd Dry Natural gas production, bcfd

Source: DOE-EIA

56 54 52 50 48 46 44 42 40
Ja n98 Ja n99 Ja n00 Ja n01 Ja n02 Ja n03 Ja n04 Ja n05 Ja n06 Ja n07 Ja n08 Ja n09 Ja n10

0% Trend

12% Trend

U.S. Dry Natural Gas Production (Bcfd)

No Substitute for Experience

Shale Basins

Halliburton Locations

Halliburton Expertise in Unconventional

Halliburton Pumps 4,200 Stages per month Unconventional Gas Halliburton HPHT Experience since 2003
Stages Pumped below 15,000 14,275 Stages Pumped above 350F 1,719 Stages Pumped below 18,000 2,514 Stages Pumped above 400F 677

In the last 20 years, approximately 450

SPE papers written regarding Unconventional Gas that have Halliburton employees as authors / co- authors

Gas Reservoir types

Conventional Unconventional

Conventional Gas MilliDarcy Range (>1mD) Fluid type varies Rock type varies Complex Gas Retrograde Gas with High Dew Point MilliDarcy Range (Relatively low permeability ~1mD or less) Sandstone Tight Gas Micro Darcy Range Dry Gas Wet Gas Primarily Sandstone Shale Gas NanoDarcy Range Dry Gas Wet Gas Mostly free gas some adsorbed gas CBM Flow mostly trough fractures (cleats) Adsorbed Dry Gas Coal
8

Matrix Permeability Increases

History of Shale Development:

Reducing the learning curve

Historically - a trial-and-error process Data Acquisition USA Analogue Fields to speed up Evaluation and Development

Quantify

Construct

Complete

1,000

Analyze

10

Gas Rate (Mscf/D)

100

1,0

10

Gas Rate Sim Gas Rate Oil Rate Oil rate Sim

10

1 0 500 1,000 1,500 Time (Days) 2,000 2,500

10 3,000

Market has shifted to horizontal work

July 2008 Job Type Distribution
(199 Total Stages)

September 2009 Job Type Distribution

(227 Total Stages)

8
Vertical Horizontal Vertical

215
Horizontal

July-08 40 4,500 0.76 250,000 2,000 13,000 12,000

Average Per Stage Rate (bpm) Pressure (psi) Frac Gradient (psi / ft) Fluid Volume Pumped (gallons) Proppant Pumped (sacks) HHP on Location HHP Hours

September-09 75 65% 10,000 110% 0.97 450,000 3,200 36,000 180% 47,000 335%

18

Summary of Directional Drilling Experience

US Shale Formations
Barnett
# of Jobs
# of BHAs
# of Jobs # of BHA's 1,369 7,131

Bakken
725 4,555

Fayetteville
363 1,186 1,475,930 280 31,869 3,533 1,063 1

Woodford Haynesville Marcellus

26 246 155,877 30 9,916 737 234 0 29 219 129,611 25 9,142 1,008 215 0 14 68 62,370 12 2,372 225 67 0

Total Shale
2,526 13,405 18,821,820 3,566 506,773 44,392 12,562 32

Total Horizontal
4,571 25,332 30,790,774 5,832 845,534 80,867 22,955 164
Data since Q1 2009

Total Footage Total Footage 9,345,676 7,652,356 Miles Miles Directionally Drilled Directionally Drilled Drilling Hours Drilling Hours Job-Days
Job-Days Motor Runs AGS Runs 1,770 240,170 21,353 6,598 30 1,449 213,304 17,536 4,385 1

Motor Runs
AGS Runs

Shale Reservoirs
Ultra low perm (NanoDarcies, pore throat in the 3-12 angstroms range)

Wide range of mineralogy

Natural fracture networks are important Require stimulation Individual to the shale reservoir Most successful shale projects

Brittle shale, high TOC

High decline rates

They are all different and need to be treated that way

Critical Parameters to be Commercial in US (gas wells)

Gas-in-place (Bcf/mi2) Gas Content (scf/Ton) Thermal Maturity (Ro) Permeability Porosity TOC Water Saturation Thick zone Moderate Clay content Well bounded Brittle Shale (Fracability) : 1 is BAD, 50 is good, 150 is better : 10 is BAD, 50 is typical, 200 is great : 0.7 to 2.5+ range; 1.2 typical : greater than 100 nanodarcies : > 4% : >2% (1-3% is typical, 5-15% is exceptional : <45% : >100 ft : < 40% : i.e. good Frac barriers : i.e. low Poissons & high YM

Quartz

Carbonate

Clay

Unconventional Gas Key Areas of Understanding

Understand the Reservoir, the formation potential, and flow mechanisms Petrophysics, Geochemical and Geomechanics Diagnostic Fracture Injection Test (DFIT) Zone Selection and Perforating Minimizing Gel & Fracture face damage Enhance & Maintain the Frac Conductivity Frac Staging Techniques

Design for Effective Fracture Length & Conductivity

Maximizing reservoir exposure by effective Hydraulic Fracture Placement

Key Factors of Shale Road Map

Fracability: Ability of the reservoir to be fracture stimulated effectively
High fracability or brittle Shale-frac geometry, high Youngs Modulus low Poisson ratio Low fracability or ductile Shale-frac geometry, low Youngs Modulus high Poisson ratio

Producibility: ability of the completion plan to sustain commercial production

Sustainability: ability of the field development to meet both economic and environmental concerns

Shale Gas Development Workflow

Evaluate Potential Evaluate Potential (Shale Screening) (Shale Screening) Shale Formation Characterization Data Validation and Evaluation Potential Potential Exploitation Exploitation Program Program
Lessons Learned / Best Practices
Well Placement - Reservoir drainage Well architecture to maximize production - Vertical / high angle - Horizontal - Multilateral Water Management Logistics

Organic Shale Interval - Potential hydrocarbon presence.

Review of data - Seismic - Geological geochemical - Geomechanical data Petrophysical - Mineralogy, , TOC, - RO, Brittle, k - Fluid typing. Define data requirements - Core, well log etc. First pass field analogs Workover candidate to identify production potential

Reservoir Extension
Estimated Principal Stresses Directions Identification of Natural Fractures Estimation of Mechanical Properties Geochemical Properties Petrophysical Properties Estimated Mineralogy - Spectral Gamma Ray - Chemostratigraphy - Cores DFIT Analysis Determine Shale Analog

Drilling - Casing Program - Bit Selection - Mud Program - Trajectory - Sidetracking - Data Acquisition
Hydraulic Fracturing - Completion Perforation Strategy (If cased) - Material Selection Fluids, Additives & Proppant - Stimulation Design Job Size, HHP, Logistics & Environmental Impact Evaluation - Production Potential - Frac Monitoring

Elements of a Shale Field Development Plan

Constraints
- Production capacities - Fracturing Equipment - Capital Expenses - Water handling - Well Location - Logistics

Decision variables Scenarios

- Wellbore casing, tubing and wellhead configurations - Proppant Concentration (Schedule) - Perforations (Density, Location and size) - Type of Fluid. - Pumping Rate. Can Control, - Down-hole Equipment Decision - Horizontal vs. Vertical Wells - Transverse vs. Longitudinal Fractures

State parameters Probabilities

- Res. Complexity - Permeability and Porosity - Fracture Gradient. - Fluid Properties - Net Sand Thickness, and extend - Stress Levels. Understand - Temperature But Cant - Pressure Control

Comparison of Shale Properties of Known Analogues

Maximum Production Starts with Maximum Insight

ShaleEval Core Analysis
Formation screening process Fluid screening process Fracture treatment screening process Fracture evaluation and candidate selection process Total Organic Carbon Shale Maturity Gas content Matrix Permeability Rock Mechanics X-Ray analysis SEM Immersion Tests Fluid Sensitivity Rock Strength

Evaluating The reservoir

ShaleLog Service - Model Measure - Optimize

Lithology Reservoir Properties Mineralology Brittle or Ductile?

Unconfined Compressive Strength

Natural Fractures?

What is the TOC and gas content?

Shale Type

Frac Ease Kerogen Content

Hydrocarbon Content

Will it frac and what is the relative fracture width? What is the shale volumetric gas in place? What is the shale porosity and permeability? Where is the organic rich shale? Where are the zones of highest kerogen content?

TOC

SPE 115258

Shale Completion Strategy: Optimizing Fracture Treatments

Based on Formation Brittleness (or Ductility)

Pinpoint Stimulation
Unconventional thinking for Unconventional Reservoirs
Benefits Reduced Cycle Time to production Speed and efficiency of Coiled Tubing Reduced Cost Increased Production Improved Reservoir Recovery Effectively treat EVERY zone of interest Reduced costs associated with wireline perforating Eliminate costs associated with screen outs

Halliburton has Done Pinpoint Stimulation Jobs in over 6,000 wells in 18 countries, over 20,000 stages and over 600 jobs in shale throughout North America over 220 Utilizing Coiled Tubing

We Know Everything About Our Fracs Except . . .

Poor fluid diversion

Out-of-zone growth

Upward fracture growth

T-shaped fractures Perfectly confined frac Horizontal fractures

Twisting fractures

Multiple fractures dipping from vertical

Microseismic is Changing the Game

Why Fracturing Mapping? Measure frac geometry and azimuth Evaluate frac complexity Estimate SRV (Stimulated Reservoir Volume)
Marcellus NE BC Shales WHERE DO WE WORK? NAM MS FRACMAPPING PROJECTS Two year data (~1800 fracs) Bakken

Horizontal well direction and length Out-of-zone growth/risk of growth into water Well placement and spacing Whats the best completion and frac design? New development (spend some $ up front to save $$$$ by trial & error)

New Albany Granite Wash Woodford Devonian, Barnett, Woodford Barnett Fayetteville

Pinnacle Microseismic job count by year

Founded in 1992 Leading fracture mapping organization Multiple diagnostic technologies Over 200 technical papers published Two R & D 100 awards Two Meritorious Engineering awards

Contact in Unconventional Reservoirs Matters

Barnett Shale Longitudinal
Gel Frac Versus High Rate Waterfrac (Refrac) Increased SRV
3000
3000

3 x SRV = 3 x Gas Rate

2500 2000

Perforations

Observation Well 1

South-North (ft)

2500

1500

2000

1000

Northing (ft) (ft) South-North

1500

Observation Well Observation Well 1 1

500

1000

500

Perforations

-500

Observation Well 2

-1000

-500

Observation Well 2 Observation Well 2

-1000

-500

500

1000

1500

2000

2500

West-East (ft)

-1000 -1000 -500 0 500 1000 1500 2000 2500

SPE 95568 (Devon)

West-East Easting (ft)(ft)

CleanSuite Technologies

ADP Advanced Dry Polymer Blender

CleanStim Formulation

CleanStream Service

3-D Fracture Mapping

CleanWave Water Treatment System

CleanStim Hydraulic Fracturing Fluid System

New fracturing fluid formulation made with ingredients

sourced from the food industry Applicable to Gelled fracs and Water fracs Excellent fracturing fluid performance Reduced Environmental Risk

Reducing Water Cost

On-site Treatment and Recycling Custom service tailored to your needs Individual Analysis and Consulting 90+ years of water treatment experience

CleanWave Water Treatment Process

It reduces your environmental footprint and conserves water by enabling on-site recycling of: Frac flow back water Produced water Surface waters Other non-potable water sources.

HALLIBURTON Case History

CHALLENGE

Remote location in Utah Significant delays in production Schedule Single truck road 40 miles each way Massive snow buildup in the winter High total dissolved solids (TDS) water > 50,000 ppm

SOLUTION

CleanWaveSM water treatment service Halliburton slick water frac

RESULTS

Successful seven month operation 55,000 barrels treated in under four days 1,000 truck loads, 5,000 hours of drive time eliminated Significant reduction in water mgmnt. cost savings On location treatment eliminated frac schedule delays Successful frac

Halliburtons Holistic Approach Creates Added Value for Producers

DISCOVERY

DEVELOPMENT
1,000

DECLINE
10,000

Gas Rate (Mscf/D)

100

1,000
Oil Rate (bbl/D)

10

Gas Rate Sim Gas Rate Oil Rate Oil rate Sim

100

1 0 500 1,000 1,500 2,000 Time (Days) 2,500

10 3,000

Quantified reservoir understanding

Fit-for-purpose well

Targeted

Evaluate to maximize economic value

construction technology stimulation/ completion

The value of operational optimization & collaboration Shale Gas

Drilling Solutions Total Completion Time

FRAC

CYCLE TIME

DELAY

Productivity Enhancing Technologies

Summary

A keen understanding of the reservoir, geology, geomechanics, etc. is required The well must be placed to take advantage of the most productive reservoir characteristics When planning your well stimulation, the well must be drilled & constructed to accommodate the most rigorous anticipated treating conditions Construct and Perforate for Frac The stimulation technique needs to be tailored to the individual shale reservoir and shale type

Preplanning, interdisciplinary teamwork & close, open collaboration is essential

Creating tomorrows standards, today

Microseismic & Engineered Fractures

Elemental Analysis

Pinpoint Stimulation

Thank You!