Six Degrees Et. Al. v. X-Chem

IN THE UNITED STATES DISTRICT COURT
AUG 1 2 2013
EASTERN DISTRICT OF ARKANSAS MES W McCORMACK. CLERK
NORTHERN DIVISION JBA ;;puD AK
y. bktJ c L . ~
SIX DEGREES, LLC
and GREG CONRAD PLAINTIFFS
v.
X-CHEM,LLC DEFENDANT
COMPLAINT
Six Degrees, LLC ("SD") and Greg Conrad ("Conrad") (collectively, "Plaintiffs") for
their complaint against X-Chem, LLC ("X-Chem"), state as follows:
PARTIES
1. Plaintiffs bring this action for patent infringement and request injunctive relief
and damages. Specifically, Plaintiffs seek injunctive relief, preventing X-Chem from continuing
to infringe Plaintiffs' patents, which will also serve to prevent future patent infringement by end
users. This case assigned to District Judge \J',\$q.l,
and to Magistrate Judge ~ u.ocr
2. Greg Conrad is an individual residing in Pocola, Oklahoma.
3. SD is an Arkansas limited liability company with its principal place of business
located at 122 N. 11th Street, Fort Smith, Arkansas 72901.
-4. X-Chem is a foreign limited liability company domiciled in Louisiana but
registered to do business in Arkansas. X-Chem maintains an office at 2549 Pangburn Road,
Heber Springs, Arkansas. 72543. X-Chem may be served via its registered agent, The
Corporation Company at 124 W. Capitol Avenue, Suite 1900, Little Rock, Arkansas 72201.
JURISDICTION AND VENUE
5. This action arises under the patent statutes of the United States, 35 U.S.C. 101,
et seq. This Court has subject matter jurisdiction over these claims under 28 U.S.C. 1331 and
28 U.S.C. 1367. Further, the Court has jurisdiction for the patent infringement claim under 28
U.S.C. 1338(a).
6. Venue is proper in this judicial district pursuant to 28 U.S.C. 1391 and 28
U.S.C. 1400(b). X-Chem has committed acts of infringement and has a regular and established
place of business in the judicial district.
7. This Court has personal jurisdiction over both parties to this action. Specifically,
SD has its principal place ofbusiness in Fort Smith, Arkansas and is wholly-owned by Conrad.
X-Chem operates an office in Heber Springs, Arkansas. Further, X-Chem has availed itself of
the privilege of conducting activities within Arkansas, thus invoking the benefits and protections
of Arkansas's laws.
FACTS
8. On December 25, 2007, the United States Patent and Trademark Office (the
"USPTO") issued United States Patent No. 7,311,144 (the "'144 Patent") to Conrad for an
apparatus and method for increasing well production. A copy of the '144 Patent is attached as
Exhibit A.
9. On March 22, 2011, the USPTO issued United States Patent No. 7,909,101 (the
"'101 Patent") to Conrad for an apparatus and method for increasing well production. A copy of
the '101 Patent is attached as Exhibit B. The '144 Patent and the '101 Patent are referred to
collectively herein as the "Patents." Conrad owned the Patents throughout the period of the X-
Chem's infringing acts and still owns the Patents.
2
10. One device covered by the Patents is a certain type of capillary string assembly
(the "Invention"). In general, capillary strings can be used to deliver chemicals at the downhole
end of a gas well to increase gas production.
11. The Patents also cover a method of using the Invention to deliver chemicals at the
downhole end of a gas well to increase gas production.
12. Through the years, both Plaintiffs and Defendant have engaged in the business of
providing services to owners and operators of gas wells.
13. On December 13, 2011, the Plaintiffs and Defendant entered into an agreement
(the "Agreement") pursuant to which Defendants purchased assets from Plaintiffs. A copy ofthe
Agreement is attached as Exhibit C. The assets included equipment and inventory related to
servicing gas wells, including items used to make the Invention covered by the Patents.
14. Pursuant to Section 4 of the Agreement, Plaintiffs agreed to license the Patents to
X-Chem for one-year (the "License") in exchange for a royalty payment equal to two percent
(2%) ofX-Chem's operating income during the License period.
15. Section 4 of the Agreement also allows X-Chem to use the Patents if it purchases
atomizers fitted to serve as a component of the Invention (the "Atomizers") from SD following
expiration of the License. X-Chem agreed to pay SD a royalty in connection with the purchase
of the Atomizers covering X-Chem's use of the Patents.
16. The License expired on December 13, 2012 and since June 1, 2013, X-Chem has
not purchased any of the Atomizers from SD and therefore has no right to make or use the
Invention or employ the methods covered by the Patents.
17. X-Chem did not pay Plaintiffs the royalty for the License as required under
Section 4 of the Agreement.
3
18. Under the Agreement and the License, Defendant has used the Patents to generate
substantial revenue for itself but has failed to compensate Plaintiffs.
19. Upon information and belief, since June 1, 2013, X-Chem has infringed and is
still infringing the Patents by making, selling, using and installing devices that embody the
Invention, and X-Chem will continue to do so unless enjoined by this Court.
20. Upon information and belief, since June 1, 2013, X-Chem's installation of devices
which infringe on the Patents has induced infringement of the Patents by end users.
21. The infringement of the Patents by X-Chem and end users threatens to cause
Plaintiffs extreme damage and irreparable injury.
22. Further, Plaintiffs' ability to license the Patents is hampered because the
infringing devices are not properly marked with patent numbers, causing confusion among well
operators and owners as to whether a license is necessary to use devices and employ methods
covered by the Patents.
23. Upon information and belief, X-Chem's misconduct has been committed
intentionally and willfully with knowledge of Plaintiffs' rights and in deliberate disregard of
such rights.
24. As a direct and proximate result ofX-Chem's misconduct, Plaintiffs have suffered
and will continue to suffer irreparable harm for which they cannot be adequately compensated by
money damages, entitling Plaintiffs to injunctive relief against X-Chem that would prohibit X-
Chem from illegally infringing the Patents.
25. As a direct and proximate result of X-Chem's misconduct, Plaintiffs are entitled
to recover from X-Chem all gains and profits realized by X-Chem as a result of its misconduct,
4
the amount of any royalties X-Chem owes Plaintiffs under the Agreement and all costs and
expenses incurred by Plaintiffs in this action, including reasonable attorneys' fees.
COUNT I- PATENT INFRINGEMENT
26. Plaintiffs reassert, restate and incorporate by reference paragraphs 1 through 25 as
if fully set forth here.
27. By taking the actions described above, X-Chem has infringed, and will continue
to infringe the Patents by making, selling, using and installing devices and employing methods
that infringe the Patents.
28. As a direct and proximate result ofX-Chem's misconduct, Plaintiffs have suffered
and will continue to suffer irreparable harm for which they cannot be adequately compensated by
money damages, entitling Plaintiffs to injunctive relief against X-Chem that would prohibit X-
Chem from illegally infringing the Patents.
29. As a direct and proximate result of X-Chem's misconduct, Plaintiffs are entitled
to recover from X-Chem all gains and profits realized by X-Chem as a result of its misconduct
and all costs and expenses incurred by Plaintiffs in this action, including reasonable attorneys'
fees.
COUNT II- BREACH OF CONTRACT
30. Plaintiffs reassert, restate and incorporate by reference paragraphs 1 through 29 as
if fully set forth here.
31. The Agreement is a valid and enforceable contract with proper consideration.
32. Plaintiffs performed their obligations under the Agreement and have not waived
their right to insist upon full and complete performance of the Agreement from X-Chem.
5
33. X-Chem breached the Agreement by failing to pay Plaintiffs all royalties they are
entitled to receive under the Agreement.
34. X-Chem's breach of the Agreement caused damage to Plaintiffs.
35. Plaintiffs are entitled to recover from X-Chem the amount of the royalty X-Chem
owes Plaintiffs under the Agreement and all other damages, costs, and expenses incurred by
Plaintiffs in this action, including reasonable attorneys' fees pursuant to Ark. Code Ann. 16-
22-308 and Fed. R. Civ. P. 54.
JURY DEMAND
36. Plaintiffs request a trial by jury.
PRAYER FOR RELIEF
WHEREFORE, Plaintiffs request a jury trial on any issues so triable, and Plaintiffs
respectfully pray for the following relief:
(1) preliminary and permanent injunctions prohibiting X-Chem, its employees,
agents, officers, directors, attorneys, representatives, successors, affiliates, subsidiaries and
assigns, and all those in concert or participation with any of them, from:
(a) making, using, offering for sale, selling, exporting, installing or otherwise
applying any and all devices or methods that violate either the '144 Patent or the '101 Patent;
and
(b) inducing others to infringe upon the '144 Patent or the '1 01 Patent;
(2) judgment against X-Chem awarding Plaintiffs cumulative damages sustained
resulting from X-Chem's unlawful acts of patent infringement in an amount to be proven at trial
and that the amount of such damages be increased by up to three times as provided by law;
6
(3) judgment against X-Chem awarding Plaintiffs cumulative damages sustained
resulting from X-Chem's breach of contract in an amount to be proven at trial;
(4) an award of pre-judgment and post-judgment interest;
( 5) an award of Plaintiffs' costs and expenses, including without limitation Plaintiffs'
reasonable attorneys' fees incurred in this case;
(6) an order directing X-Chem to file with the Court and serve upon counsel for
Plaintiffs, within thirty days after the entry of such order, a report in writing and under oath
setting forth in detail the manner and form in which X-Chem has complied with this Court's
orders; and
(7) all other relief, in law or in equity, to which Plaintiffs may be entitled, or which
the Court deems just and proper.
QUATTLEBAUM, GROOMS,
TULL & BURROW PLLC
111 Center Street, Suite 1900
Little Rock, AR 72201
(501) 379-1700
Carter, Ark. Bar No. 2009073
W. Price, II, Ark. Bar No. 2007168
Attorneys for Six Degrees, LLC and Greg Conrad
7
(12) United States Patent
Conrad
(54) APPARATUS AND METHOD FOR
INCREASING WELL PRODUCTION USING
SURFACTANT INJECTION
(76) Inventor: Greg Allen Conrad, 501 E. Hamon,
Pocola, OK (US) 74902
( *) Notice: Subject to any disclaimer, the tenn of this
patent is extended or adjusted under 35
U.S.C. 154(b) by 13 days.
(21) Appl. No.: 10/905,993
(22) Filed: .Jan. 28, 2005
(65) Prior Publication Data
US 2006/0076139 AI Apr. I 3, 2006
Related U.S. Application Data
(60) Provisional application No. 60/617,837, filed on Oct.
12, 2004.
(51) Int. Cl.
E21B 43122 (2006.01)
(52) U.S. Cl. .................................... 166/270.1; 166/309
(58) Field of Classification Search ............. 166/270.1,
(56)
I 66/300, 309, 3 I 0, 242.3
See application file for complete search history.
References Cited
U.S. PATENT DOCUMENTS
2.620,740 A 1211952 Garrett et al. ............. 417/113
I IIIII 111111111111111111 1111111111 1111111111 111111111111111 11111111
US007311144B2
(IO) Patent No.: US 7,311,144 B2
Dec. 25, 2007 (45) Date of Patent:
3,050,121 A
3,0%,819 A
3,980,136 A
5,033,550 A
5,152,343 A
5,535,767 A
5,871,049 A
6,405,803 B1
6,619,402 B I
2001/0017157 AI*
2004/0060703 A I
2004/0262011 A 1
* cited by examiner
8/1962 Garrett et al. .. . .. . . . ... . . . 166/285
7/1963 White, Jr. et al. .......... 166/309
911976 Plummer eta!.
711991 Johnson et al. ............. 166/372
1011992 Kilgore ................... 166/242.2
7 I 1996 Scbnatzmeyer et al. . . . . . .. 13 7/1
211999 Weaver eta!.
6/2002 Giroux et al.
9/2003 Amory et al. ... ... . . . .. .. . 166/3 70
8/2001 Pringle ....................... 1371155
4/2004 Stegemeier et al. ........ 166/310
1212004 Huckabee et a!. ... . . .. . . . 1661369
Primary Examiner-David Bagnell
Assistant Examiner-Daniel P Stephenson
(74) Attorney, Agent, or Firm.l. Charles Dougherty
(57) ABSTRACT
An apparatus and method for injecting surfactant into a well
for coal bed methane (CBM) recovery, tight sand gas
extraction, and other gas extraction techniques provides for
the mixing of surfactant and water near the downhole end of
the well, maximizing water removal for gas recovery. The
apparatus may include a check valve that feeds a nozzle to
atomize the spray of surfactant into the well production tube.
Surfactant is not sprayed directly into the formation, thereby
protecting the formation from damage and recovering sur-
factant even in the case where water is not present. The
capillary tube feeding surfactant to the check valve may be
placed externally to the production tube to facilitate ease of
cleaning and clearing of the production tube.
17 Claims, 4 Drawing Sheets
EXHIBIT
a
U.S. Patent Dec. 25, 2007 Sheet 1 of 4 US 7,311,144 B2
U.S. Patent
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US 7,311,144 B2
US 7,311,144 B2
1
APPARATUS AND METHOD FOR
INCREASING WELL PRODUCTION USING
SURFACTANT INJECTION
This application claims the benefit of U.S. provisional
patent application No. 60/617,837, filed Oct. 12, 2004.
BACKGROUND
2
the pressure on the face of the fractured mineral is released
to allow for the extraction of the hydrocarbon fuel, the
fracture in the formation would normally close back up.
When proppants are added to the fracturing fluid, however,
the fracture does not close completely because it is held open
by the proppant material. A channel is thus formed through
which the trapped hydrocarbons may escape after pressure is
released.
Although course fracturing of this type is very successful
The present invention relates to gas recovery systems and 10 in some applications, it has not proven particularly useful in
methods, and in particular to an apparatus and method for the recovery of CBM. Coal fines recovered with the water
increasing the yield of a methane well using direct injection and methane during CBM extraction will quickly foul the
of surfactant at the end of a well bore incorporating a well when course fracturing techniques are used. This neces-
downhole valve arrangement. sitates the frequent stoppage of CBM recovery in order that
It has long been recognized that coalbeds often contain 15 the production tubing may be swabbed or cleaned. It has
combustible gaseous hydrocarbons that are trapped within been found that course fracturing will significantly reduce
the coal seam. Methane, the major combustible component both the long-term productivity and ultimate useful life of a
of natural gas, accounts for roughly 95% of these gaseous CBM well.
hydrocarbons. Coal beds may also contain smaller amounts While traditional fracturing has proven unsuccessful in
of higher molecular weight gaseous hydrocarbons, such as 20 CBM extraction, all coal beds contain cleats, that is, natural
ethane and propane. These gases attach to the porous surface fractures through which CBM may escape. As hydrostatic
of the coal at the molecular level, and are held in place by pressure is decreased at the cleat by the removal of ground-
the hydrostatic pressure exerted by groundwater surround- water, methane within the coal will naturally desorb and
ing the coal bed. move into the cleat system, where it may flow out of the coal
The methane trapped in a coalbed seam will desorb when 25 bed. CBM may thus be withdrawn from the coalbed in this
the pressure on the coalbed is sufficiently reduced. This manner through the well, without the necessity in many
occurs, for example, when the groundwater in the area is cases of any artificial fracturing methods. CBM exploration
removed either by mining or drilling. The release of methane and well placement strategies thus are highly dependent
during coal mining is a well-known danger in the coal upon a good knowledge of cleat placement within the
extraction process. Methane is highly flammable and may 30 coalbed of interest.
explode in the presence of a spark or flame. For this reason, If artificial fracturing processes are used to stimulate
much effort has been expended in the past to vent this gas production in CBM wells, they must be very gentle so as not
away as a part of a coal mining operation. to harm the coalbed cleats, and thereby reduce rather than
In more recent times, the technology has been developed increase well production. Acids, xylene-toluene, gasoline-
to recover the methane trapped in coalbeds for use as natural 35 benzene-diesel, condensate-strong solvents, bleaches, and
gas fuel. The world's total, extractable coal-bed methane course-grain sand have been found to be detrimental to good
(CBM) reserve is estimated to be about 400 trillion cubic cleat maintenance. Recent experience in coalbeds in the
feet. Much of this CBM is trapped in coal beds that are too Arkoma Basin indicates that a mixture of fresh water with a
deep to mine for coal, but are easily reachable with wells biocide, combined with a minimal amount of friction
using drilling techniques developed for conventional oil and 40 reducer, may be the least damaging fracturing fluid. The
natural gas extraction. Recent spikes in the spot price of failure to use gentle fracturing methods and other good
natural gas, combined with the positive environmental production practices elsewhere in a coal bed can even
aspects of the use of natural gas as a fuel source, has damage production at nearby wells.
hastened development of coal-bed method recovery meth- Regardless of whether a fracturing liquid is used in CBM
ods. 45 extraction, some means must be provided for the removal of
The first research in CBM extraction was performed in the the significant quantity of groundwater expelled as a result
1970's, exploring the feasibility of recovering methane from of the process. One study found that the average CBM well
coal beds in the Black Warrior Basin of northeast Alabama. removed about 12,000 gallons of water per day. Pump jacks
CBM has been co=ercially extracted in the Arkoma Basin and surfactant (soap) introduction are the most co=on
(comprising western Arkansas and eastern Oklahoma) since 50 means of removing this water. Pump jacks, which have been
1988. As of Mar. 2000, the Arkoma Basin contained 377 used for decades in traditional petroleum extraction, simply
producing CBM wells, with an average yield of 80,000 pump water out of the well by mechanical means. A pump
cubic feet of methane per day. Today, CBM accounts for is placed downhole, and is connected to a rocking-beam
about 7% of the total production of natural gas in the United activator at the wellhead by means of an interconnected
States. 55 series of rods. Pump jacks are expensive to install, operate,
While some aspects of CBM extraction are common to and maintain, particularly in CBM applications where bore
the more traditional means of extracting oil, natural gas, and cleaning is required more often due to the presence of coal
other hydrocarbon fuels, some of the problems faced in fines. The presence of the pump jack at the end of the well
CBM extraction are unique. One co=on method generally also requires lengthier downtimes when maintenance is
used to extract hydrocarbon fuels from within minerals is 60 performed, reducing the cost-efficiency of the well.
hydraulic fracturing. Using this technique, a fracturing fluid In contrast to the pump jack method, the surfactant
is sent down a well under sufficient pressure to fracture the method relies upon the hydrostatic pressure within the well
face of the mineral formation at the end of the well. itself to force groundwater up through the borehole and out
Fracturing releases the hydrocarbon trapped within, and the of the extraction area. The surfactant combines with the
hydrocarbon may then be extracted through the well. A 65 groundwater to form a foam, which is pushed back up
proppant, such as course sand or sintered bauxite, is often through the well by hydrostatic pressure. The water/surfac-
added to the fracturing fluid to increase its effectiveness. As tant mixture is then separated from the devolved methane
US 7,311,144 B2
3
gas and disposed of by appropriate means. Ideally, not all
water is removed at the point of CBM extraction; rather,
only enough water is removed such that the hydrostatic
pressure in the area of the borehole is reduced just enough
that the methane bound to the coal will desorb. In this way,
damage to the coalbed cleats in the area of the borehole is
minimized. Care must be exercised to prevent the surfactant
from entering the coal formation, since this too may damage
4
the well. In actual practice, the lines used to deliver this gel
(typically 3fs inch stainless steel tubing) cannot he made to
reach to the bottom of the well, since the weight of the
capillary tubing is not sufficient to overcome the frictional
force arising from contact with the tubing walls, due to the
arc in the horizontal well "elbow." Again, as in the case of
the soap stick, foam will not be formed at the end of the well
where it is needed most.
the coalbed cleats and reduce the production rate and
lifetime of the well. 10
Another disadvantage of the gel capillary tube approach is
that the tubing is employed inside the main production tube
in the well; thus when the main production tube plugs or
otherwise requires maintenance, the gel delivery tubing will
Two methods are commonly used today for the introduc-
tion of surfactant into a CBM well. One method is the
dropping of"soap sticks" into the well. The soap sticks form
a foam as they are contacted by water rising up through the
well, thereby forming foam that travels up and out of the 15
well due to hydrostatic pressure. The second method is to
attach a small tube inside the main production tube and pour
gelled surfactant into this tube. The surfactant travels down
the tube through the force of gravity, capillary action, or its
own head pressure, eventually depositing the gel into the 20
flow of water in the well and forming a foam. Again, this
foam rises back up through the well for eventual removal.
Use of either of these methods is believed by the inventor to
increase well production on average by 1 0-200/o.
Although a significant amount of CBM is extracted 25
through vertical drilling methods, horizontal drilling meth-
ods have become more common. The general techniques for
horizontal drilling are well known, and were developed for
conventional extraction of oil and natural gas. In the usual
case, the well begins into the ground vertically, then arcs 30
through some degree of curvature to travel in a generally
horizontal direction. Horizontal wells thus contain a bend or
"elbow," the severity of which is determined by the drilling
technique used. It is believed that horizontal drilling may
result in better extraction rates of CBM from many coal beds 35
due to the way in which coalbeds tend to form in long,
horizontal strata. One analysis has shown that "face" cleats
in coalbeds appear to be more than five times as permeable
as "butt" cleats, which form orthogonally to face cleats. A
horizontal well can increase productivity by orienting the 40
lateral section of the well across the higher-permeability
face cleats. As a result of these effects, the area drained by
a horizontal well may be effectively much larger than the
area drained by a corresponding vertical well placed into the
same coalbed stratum. Horizontal well CBM extraction thus 45
promises greater production from fewer wells in a given
coalbed. The first horizontally drilled CBM wells in the
Arkoma Basin were put in place around 1998.
While horizontal drilling promises improved theoretical
productivity over vertical drilling in many instances, it raises 50
several problems of its own that are unique to CBM extrac-
tion. It may be seen that the deposit of a "soap stick" in a
horizontal well will result in the movement of the soap stick
only to the bottom of the "elbow" of the well. The soap stick
is carried by gravity to this point, but will not proceed past 55
the point where the well turns. Thus this method will form
no foam at the end of the well bore at all; foam is only
formed at the point where the soap stick comes to rest. The
inventor has recognized that increased productivity would
result from the production of foam at the end of the well, 60
which is just at the point where the water is being extracted
from the coal bed seam. The soap stick will never reach this
point.
Likewise, the method of introducing a surfactant by
dripping a gel into the well also suffers when horizontal 65
drilling techniques are used. Gravity, capillary action, or
head pressure are the only agents moving the gel down into
impede efforts to clean, clear, or otherwise maintain the
production tube. This is a particular problem in CBM
extraction because of the fouling problems presented by coal
fines, and the resulting need to regularly swab or clean the
well tubing. Finally, since the gel is not introduced under
pressure, it cannot adjust to the hydrostatic pressure at the
end of the well. This pressure is dependent upon the depth
of the well and the height of the water table. If the hydro-
static pressure is significantly less than the gel pressure, then
the gel may flow out the production tube and into the coal
bed, thereby damaging the coal bed cleats and retarding
future production. If the hydrostatic pressure is significantly
greater than the gel pressure, then the gel will flow little or
not at all, producing minimal foam and impeding removal of
groundwater and thus reducing CBM extraction rates.
While this discussion has focused on CBM extraction,
another developing area for the recovery of natural gas from
unconventional sources is the extraction of natural gas from
sandstone deposits. Sandstone formations with less than 0.1
millidarcy permeability, known as ''tight gas sands," are
known to contain significant volumes of natural gas. The
United States holds a huge quantity of these sandstones.
Some estimates place the total gas-in-place in the United
States in tight gas stands to be around 15 quadrillion cubic
feet. Only a small portion of this gas is, however, recover-
able with existing technology. Annual production in the
United States today is about two to three trillion cubic feet.
Many of the same problems presented in CBM extraction
are also faced by those attempting to recover natural gas
from tight gas sands, and thus efforts to overcome problems
in CBM extraction may be directly applicable to recovery
from tight gas sands as well.
What is desired then is an apparatus for and method of
introducing surfactant into a borehole for CBM extraction,
tight sand gas extraction, or other types of gas-recovery
options, where such apparatus and method is well-suited to
horizontally drilled wells and that produces foam at the tip
of the borehole for optimal groundwater removal, while
preventing the flow of surfactant into the formation itself in
conditions of potentially varying hydrostatic pressure.
SUMMARY
The present invention is directed to an apparatus and
method for injecting surfactant into a well utilizing a cap-
illary tube and injection subassembly. The injection subas-
sembly comprises a hydrostatic control valve and nozzle that
injects surfactant through an atomizer arrangement at the
downhole end of the production tube in the well. The
capillary tube travels along the outside of the production
tube rather than the inside, thereby leaving the inner portion
of the production tube unobstructed. The hydrostatic control
valve allows the pressure at which the surfactant is injected
us 7,311,144 82
5
to be controlled, such that the surfactant atomizes and shears
with the gas and water at the downhole end of the production
tube with greater efficiency.
This apparatus and method results in a number of impor-
tant advantages over prior art techniques. The surfactant
may be directed at exactly the point where it is needed most,
that is, at the downhole end of the production tube. By
thoroughly mixing the water with surfactant at this point
through the use of an atomizer on the valve, water may be
more efficiently drawn out of the formation and up through 10
the well tube. Since the surfactant is being directed into the
production tube, rather than into the formation itself, there is
no danger of significant quantities of surfactant being intro-
duced into the formation, thereby reducing well yields. Even
in the case when no water is present, the surfactant will be 15
brought back to the surface by the flow of gas up through the
production tube since it leaves the valve in an atomized
state. The valve is adjustable to allow for the depth of the
well, such that the optimum pressure may be applied to
result in good foam body without excessive pressure, 20
thereby minimizing any damage to the formation and maxi-
mizing the usable life of the well. Compared to typical
surfactant introduction methods that yield increased well
production of 10-20%, testing of the present invention in
CBM extraction, as well as tight sand gas extraction, has 25
yielded production increases of over 100% in most cases.
6
FIG. 3 is a cut-away view of a valve subassembly
according to a preferred embodiment of the present inven-
tion.
FIG. 4 is a cut-away view of a preferred embodiment of
the present invention installed in a borehole.
PREFERRED EMBODIMENTS
With reference to FIG. 1, the downhole injection subas-
sembly 10 of a preferred embodiment of the present inven-
tion for use in connection with CBM extraction may be
described. Although the discussion of the preferred embodi-
ment will focus on CBM extraction, it may be understood
that the preferred embodiment is applicable to other gas
extraction techniques, including without limitation tight
sand gas extraction.
Downhole injection subassembly 10 is designed for
deployment at the end of a production tube for placement in
a well. The external portions of downhole injection subas-
sembly 10 are composed of production tube tip 12 and
injection sheath 14. In the preferred embodiment, production
tube tip 10 is a tube constructed of steel or other appropri-
ately strong material, threaded to fit onto the downhole end
of a production tube. In the preferred embodiments, produc-
tion tube 10 is sized to fit either of the most common 2%
inch or 2
7
/s inch production tube sizes used in CBM extrac-
tion. In alternative embodiments, other sizes may be accom-
modated. The distal end of production tube tip 10 may be
beveled for ease of entry into the well casing. In the
It is therefore an object of the present invention to provide
for an apparatus and method for injecting surfactant into a
well such that surfactant and water are mixed at or near the
end of the well production tube.
It is a further object of the present invention to provide for
an apparatus and method for injecting surfactant into a well
such that surfactant and water arc well mixed in order to
more efficiently move water from the downhole formation.
30 preferred embodiment, the hollow interior of production
tube tip 10 is kept clear in order to minimize blockage and
facilitate periodic swabbing and cleaning.
It is also an object of the present invention to provide for 35
such that surfactant is inhibited from entering the formation.
It is also an object of the present invention to provide for
such that surfactant does not significantly enter the forma- 40
tion even when no water is present.
Attached at the downhole end of production tube tip 12 by
welding or other appropriate means is injection sheath 14.
Injection sheath 14 protects valve/sprayer subassembly 16,
as shown in FIG. 2. Like production tube tip 10, injection
sheath 14 may be constructed of steel or another appropri-
ately strong material. In the preferred embodiment, the tip of
injection sheath 14 is tapered in a complementary way to
that of production tube tip 12, thereby forming a pointed
"nose" on the end of the production tube that eases insertion
of the production tube into a well.
Referring now to FIG. 2, the components of valve/sprayer
subassembly 16 may be described. Nozzle 18 is mounted
such that the pressure at which surfactant is injected is
adjustable.
such that a minimum pressure is utilized for drawing water/
surfactant from a well, thereby reducing formation damage.
45 near the end of production tube tip 12, and oriented such that
surfactant introduced to nozzle 18 is sprayed into production
tube tip 12. In the preferred embodiment, an opening is
provided in the side of production tube tip 12 for this
It is also an object of the present invention to provide for so
that significantly increases gas yields over conventional
surfactant introduction methods.
These and other features, objects and advantages of the
present invention will become better understood from a 55
consideration of the following detailed description of the
preferred embodiments and appended claims in conjunction
with the drawings as described following:
purpose. The size of this opening is roughly one-fourth of an
inch in diameter in the preferred embodiment, although
other sizes may be employed in other embodiments based
upon the exact size and construction of nozzle 18. Nozzle 18
is preferably of the atomizer type, such that surfactant
introduced to nozzle 18 under appropriate pressure will be
atomized as it leaves nozzle 18 and enters production tube
tip 12. Provided that water is present at the end of production
tube tip 12, this water will be thoroughly mixed with the
surfactant thereby forming a foam, which will then be forced
to the surface through the production tube along with the
DRAWINGS
60 evolved gas due to the hydrostatic pressure in the formation.
FIG. 1 is an elevational view of a downhole tube assembly
according to a preferred embodiment of the present inven-
tion.
FIG. 2 is a partial cut-away exploded view of a downhole
tube assembly and injection subassembly according to a
preferred embodiment of the present invention.
Feeding surfactant to nozzle 18 is valve 20. As explained
further below in reference to FIG. 3, valve 20 opens to allow
surfactant into nozzle 18 when the appropriate pressure is
applied to the incoming surfactant. The pressure required to
65 open valve 20 will depend upon the hydrostatic pressure at
the end of the production tube where valve 20 is located. In
the preferred embodiment, valve 20 is threaded on either end
US 7,311,144 B2
7
to receive nozzle 18 and fitting 22. Fitting 22 is used to
connect valve 20 to capillary tube 24. In the preferred
embodiment, fitting 22 connects to valve 20 using pipe
threads, and connects to capillary tube 24 using a compres
sion, flare, or other tube-type fitting. In alternative embodi-
ments, fitting 22 may be omitted if valve 20 is configured so
as to connect directly to capillary tube 24.
8
as drilled to protect the well from collapse. The most
common casing 44 sizes are 4
1
/2 inches and 5
1
/2 inches. Since
the most common production tubing sizes are 2% inches and
2
7
/s inches, this size disparity leaves sufficient room for
production tube 42 to be easily inserted and removed from
casing 44. The size disparity also allows additional room for
capillary tube 24 to be mounted to the exterior of production
tube 42, with periodic banding 26 as described above, in
order to feed valve/sprayer subassembly 16.
The above-ground components of the preferred embodi-
ment include a chemical pump, soap tank, and defoamer
tank (not shown) as are known in the art. Pumps such as the
Texstream Series 5000 chemical injectors, available from
Texstream Operations of Houston, Tex., may be employed.
Banding 26 is used to hold capillary tube 24 against
production tube tip 12 and the production tube along its
length. Banding 26 is preferably thin stainless steel for 10
strength and corrosion-resistance, but other appropriate flex
ible and strong materials may be substituted. In the preferred
embodiment, banding 26 is placed along capillary tube 24
roughly every sixty feet along its length. At the surface,
capillary tube 24 may be routed through a wing port in the
well head (not shown) and packed off with a tube connection
15 The soap tank may be a standard drum to contain surfactant
material that is fed through the pump. The defoamer tank,
the purpose of which is to separate gas from the surfactant
for delivery, may be constructed from a standard reservoir
to pipe thread fitting similar to fitting 22 (not shown).
Capillary tube 24 may then be connected to a pump mecha
nism providing surfactant under pressure. with a top-mounted gas outlet.
Now with reference again to FIGS. 1-4, a method of
recovering gas from a well according to a preferred embodi-
ment of the present invention may be described. A horizontal
well is drilled and cased with casing 44 in a manner as
known in the art. Valve/sprayer subassembly 16 is then fitted
Referring to FIG. 3, the internal components of valve 20 20
may now be described. Seat 28 and body 30 of valve 20
define a passageway through which surfactant may pass
from capillary tube 24 (by way of fitting 22) into nozzle 18,
and then out into production tube tip 12. Seat 28 and valve
body 30 may be fitted together as by threading. Lower
0-ring 40 provides a positive seal between seat 28 and body
25 to downhole injection subassembly 10, such that nozzle 18
is situated to direct the spray of surfactant into production
tube tip 12. Downhole injection subassembly 10 is then
fitted to the downhole end of production tube 42. Capillary
tube 24 is next attached to fitting 22 of downhole injection
30 of valve 20. Lower 0-ring may be of conventional type,
such as formed with silicone, whereby a liquid-proof seal is
formed. In the preferred embodiment, Seat 28 and valve
body 30 are preferably formed of stainless steel, brass, or
other sufficiently durable and corrosion-resistant materials.
Flow of surfactant through valve 20 is controlled by the
position of ball 36. Ball 36 is preferably a 3fs inch diameter
stainless steel ball bearing. Ball 36 may seat against upper
0-ring 38, which, like lower 0-ring 40, is preferably formed
of silicon or some other material capable of producing a
liquid-proof seal. When seated against upper 0-ring 38 at
seat 28, ball 36 stops the flow of surfactant out of valve 20
and into nozzle 18.
Ball 36 is resiliently held in place against upper 0-ring 38
by spring 34. Spring 34 may be formed of stainless steel or
other sufficiently strong, resilient, and corrosion-resistant
material. The inventor is unaware of any commercially
available spring with the proper force constant, and thus
spring 34 in the preferred embodiment is custom built for
this application. Spring follower 32 fits between spring 34
and ball 36 in order to provide proper placement of ball 36
with respect to spring 34. As will be evident from this
arrangement, a sufficient amount of pressure placed on the
surfactant behind ball 36 within valve seat 28 will overcome
the force of spring 34, forcing ball 36 away from upper
o-ring 38 and allowing surfactant to flow around ball36, into
the interior of valve body 30 around spring 34, and out of
valve body 30 and into nozzle 18. Once this pressure is
released, or reduced such that it may again be overcome by
the force of spring 34, valve 20 will again close and prevent
the flow of surfactant through valve 20. Valve 20 thus
operates as a type of one-way check valve, regulating the
flow of surfactant into nozzle 18 and ensuring that surfactant
only reaches nozzle 18 if a sufficient pressure is provided.
This ensures that surfactant will be properly atomized by
nozzle 18 upon disposition into production tube tip 12
regardless of the downhole hydrostatic pressure within the
expected range of operation.
Referring now to FIG. 4, the use of the invention with
respect to the recovery of gas in a CBM well may be
described. CBM wells are generally lined with a casing 44
30 subassembly 10. It may be noted that capillary tube 24 is
preferably provided on a large roll, such that it may be fed
forward as production tube 42 is fed into casing 44. At
regular intervals, preferably approximately every 60 feet or
so, capillary tube 24 is fastened to production tube 42 using
35 banding 26. This operation continues until production tube
tip 12 reaches the bottom of the well, situated at the
formation of interest for gas recovery.
The arrangement described herein with respect to the
preferred embodiment provides for a production tube 42 that
40 is free of all obstacles, allowing unrestricted outflow of gas
through production tube 42 to the surface. This feature is
particularly important for gas production in "dirty" wells
such as those drilled into coal formations for CBM recovery.
In such environments, an unusually high number of con-
45 taminants will enter the well. It will thus be necessary to
periodically swab production tube 42 and to remove coal
plugs from production tube 42. With production tube 42
remaining otherwise open, it is a simple matter to run a swab
the length of production tube 42 in order to clear obstacles.
so Otherwise, it would often be necessary to remove produc-
tion tube 42 from casing 44 in order to perform maintenance.
Removal of production tube 42 increases the equipment
maintenance cost associated with the CBM extraction opera
tion, and further causes significant downtime during CBM
55 extraction.
As gas recovery begins, surfactant is forced into capillary
tube 24 under sufficient force to overcome the combined
force of spring 34 and the downhole hydrostatic pressure
and thereby open valve 20. In the preferred embodiment,
60 valve 20 is constructed such that surfactant is injected
through nozzle 18 at a pressure of no less than 300 pounds
per square inch. This pressure ensures that the surfactant is
atomized upon entry into production tube tip 10, thereby
creating the best foam when mixed with available water. The
65 production of high-quality foam lowers the hydrostatic head
pressure at the bottom of the well, allowing gas to flow up
production tube 42 along with the foam utilizing only the
US 7,311,144 B2
9 10
hydrostatic pressure at the bottom of the well. The elimina-
tion of external pressure to force gas upward minimizes the
damage that might otherwise occur to the formations from
which gas is recovered, which would lower production rates
and expected well lifetime.
3. The apparatus of claim 2, wherein said spray nozzle is
oriented to spray toward the interior of said production tube.
4. The apparatus of claim 3, wherein said production tube
comprises an orifice through which said spray nozzle is
s positioned relative thereto so as to spray into said interior of
said production tube. It may be noted that the feature of directing nozzle 18 into
production tube tip 12, rather than into the formation, is
particularly important in CBM recovery. The long lateral
strata common to coal formations do not allow for a homog-
enous porosity state of coal/gas. Thus the water and gas
influx across the face of the formation are very erratic in
typical horizontal wells. If it should occur that the hydro-
static pressure drops and water is not present at production
tube tip 12, the surfactant still will be carried in an atomized
state up and out of the production tube 42, rather than into 15
the formation. As already noted, surfactant introduced into
fue formation will lower the output and operational lifetime
S. The apparatus of claim 2, further comprising a plurality
ofbands binding said capillary tube and said production tube
together, said bands spaced along the length of said capillary
IO tube.
of the well.
In addition, the ability to vary the pressure at valve 20 is
particularly useful with regard to such wells due to the 20
erratic nature of the hydrostatic pressure across a formation.
The pressure of the surfactant introduced to valve 20 is
varied in response to an observation of foam quality at the
output of production tube 42. In the preferred embodiment
this operation is performed by visual inspection and hand 25
manipulation of the pressure, although automatic sensing
equipment could be developed and employed in alternative
embodiments of the present invention. The pressure of
surfactant can be optimized in a matter of minutes, since the
only delay in determining foam quality is the time that is 30
required for foam to reach the top of production tube 42.
Previous methods would require days of production and
subsequent yield analysis before an optimum surfactant
introduction rate could be determined, due to the delay
caused by slowly trickling surfactant down the casing of 35
production tube 42. The pressure at valve 20 can also be
adjusted according to well depth, which is a factor in the
hydrostatic pressure present. In the preferred embodiment,
the pressure at valve 20 may be adjusted to correspond to
expected hydrostatic pressures at depths of anywhere from 40
500 to 20,000 feet.
The present invention has been described with reference
to certain preferred and alternative embodiments that are
intended to be exemplary only and not limiting to the full
scope of the present invention as set forth in the appended 45
claims.
6. The apparatus of claim 1, wherein said resilient mem-
ber comprises a spring.
7. The apparatus of claim 6, wherein said valve further
comprises a seat, and further comprises a ball in communi-
cation with said spring, wherein said spring biases said ball
against said seat, closing said valve when said ball rests
against said seat.
8. The apparatus of claim 6, wherein said spring com-
presses to open said valve upon the application of a pressure
of about 300 pounds per square inch.
9. A method of recovering a gas from a well, comprising
the steps of:
(a) injecting a surfactant through a capillary tube attached
to a production tube;
(b) limiting surfactant flow from the capillary tube to an
atomizing nozzle wherein surfactant flow is enabled
only when the surfactant is under sufficient pressure to
atomize when it exits the atomizing nozzle;
(c) spraying the atomized surfactant from the capillary
tube into the production tube near a downhole end of
the production tube, such that water and gas present at
the downhole end of the production tube combine with
the atomized surfactant to form a foam at the downhole
end of the production tube;
(d) recovering the foam formed at the downhole end of the
production tube at a surface end of the production tube.
10. The method of claim 9, wherein said injecting step
comprises the step of adjusting the pressure of the surfactant
in the capillary tube to overcome the downhole pressure in
the well.
11. The method of claim 10, wherein said step of adjusting
the pressure of the surfactant in the capillary tube comprises
the step of adjusting the pressure of the surfactant in the
capillary tube to be at least about 300 pounds per square
inch.
What is claimed is:
1. An apparatus for gas recovery in a well, comprising:
(a) a production tube comprising a downhole end, and
further comprising an exterior and interior;
(b) an atomizing surfactant spray nozzle attached near
said downhole end of said production tube and adapted
12. The method of claim 10, wherein said step of adjust-
ing the pressure of the surfactant in the capillary tube further
comprises the steps of observing the quality of the foam
50 emerging from the production tube and adjusting the pres-
sure in accordance therewith.
to spray a surfactant;
(c) a surfactant check valve attached to said spray nozzle
such that said check valve may deliver surfactant to 55
said nozzle when said valve is open, wherein said valve
comprises a resilient member having a force constant
sufficiently high to prevent flow of surfactant to said
spray nozzle unless the surfactant is under sufficient
pressure to atomize the surfactant at the spray nozzle; 60
and
(d) a surfactant capillary tube attached to said check valve
such that said capillary tube may deliver surfactant to
said valve.
2. The apparatus of claim 1, wherein said spray nozzle, 65
said check valve, and said capillary tube are attached at said
exterior of said production tube.
13. An apparatus for gas recovery comprising a surfactant
delivery system, the apparatus comprising:
(a) a production tube comprising an open production tube
downhole end, and further comprising a production
tube exterior and interior;
(b) a surfactant delivery tube extending along said pro-
duction tube exterior and comprising a delivery tube
downhole end;
(c) a surfactant delivery tube check valve in communica-
tion with said delivery tube down hole end; and
(d) an atomizina surfactant delivery tube spray nozzle in
communication with said surfactant delivery tube
check valve, wherein said surfactant delivery tube
spray nozzle extends into said production tube interior
near said production tube downhole end;
US 7,311,144 B2
11
wherein said check valve is operable to prevent flow of
surfactant to said spray nozzle unless the surfactant is
under sufficient pressure to atomize the surfactant at the
spray nozzle.
14. The apparatus of claim 13, further comprising an s
injection sheath positioned adjacent said production tube
exterior at said production tube downhole end, said injection
sheath encapsulating said surfactant delivery tube spray
nozzle.
15. The apparatus of claim 14, wherein said injection 10
sheath comprises an angled tip.
16. The apparatus of claim 15, wherein said production
tube downhole end comprises an angled tip.
17. A method for recovering a gas from a borehole
comprising a downhole water level, comprising the steps of: 15
(a) inserting a gas recovery assembly into the borehole,
wherein the gas recovery assembly comprises a pro-
duction tube with an open downhole end, a delivery
tube positioned at an exterior side of the production
12
tube, and a spray nozzle in communication with the
delivery tube and extending into the interior of the
production tube near the downhole end, wherein the
production tube downhole end is positioned at or below
the downhole water level;
(b) injecting a surfactant under pressure into the delivery
tube and through the spray valve to the spray nozzle;
(c) atomizing the surfactant at the spray nozzle and
thereby forming a gas-containing foam at the downhole
end of the production tube by allowing surfactant flow
only when the surfactant is under sufficient pressure to
atomize when it exits the spray nozzle;
(d) passing the gas-containing foam up through the pro-
duction tube from the downhole end by means of
hydrostatic pressure; and
(e) recovering the gas-containing foam at an uphole end
of the production tube.
* * * * *
. .
c12) United States Patent
Conrad
(54) APPAR<\TUS AND METHOD FOR
INCREASING WELL PRODUCTION
(75) Inventor: Greg Allen Conrad, Pocola, OK (US)
(73) Assignee: Nalco One Source, LLC, Pocola, OK
(US)
( ) Notice: Subject to any disclaimer, the term of this
patent is extended or adjusted under 35
lJ.S.C 154(h) hy 0 days.
This patent is subject to a terminal dis-
claimer.
(21) Appl. No.: 11/983,719
(22) Filed: Nov. 9, 2007
(65) Prior Publication Data
US 2008/0066919 A I Mar. 20, 2008
Related U.S. Application Data
(63) Continuation of application No. I 0/905,993, filed on
Jan. 28, 2005, now Pat. No. 7,311,144.
(60) Provisional application No. ll0/617,837, filed on Oct.
12, 2004.
(51) Int.CI.
E21B 43/16 (2006.01)
E2IB 43125 (2006.01)
(52) U.S. CI. ........................................ 166/300; 166/309
(58) Field of Classification Search ............... 166/270.1,
(56)
166/300,309,310,242.3
See application file for complete search history.
References Cited
2,620,740 A
3,050.121 A
1211952 Garrett et al.
8/196 2 Garrett et a!.
I IIIII
EP
1111111111111111111111111111111111111111111111111111111111111
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(IO) Patent No.: US 7,909,101 B2
*Mar. 22, 2011 (45) Date of Patent:
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(Continued)
FOREIGN PATENT DOCUMENTS
0699821 AI 6/1996
Primary Examiner- Daniel P Stephenson
(74) Attorney, Agent, or Fim1- Edward 0. Yonter; Michael
B. Martin
(57) ABSTRACT
An apparatus and method for hydrocarbon recovery in a well
for coal bed methane (CBM) recovery, tight sand gas extrac-
tion, and other gas extraction techniques provides for the
formation of a hydrocarbon foam comprised of a fluid deliv-
ered into a downhole portion of the well and the hydrocarbon,
maximizing water removal for gas recovery. The apparatus
may include a check valve that feeds a nozzle to deliver or
atomize the spray of fluid into the downhole portion of the
well when the pressure applied to the fluid is sufficient to
overcome a hydrostatic pressure in the downhole portion of
the well and to deliver the fluid into the downhole portion of
the well. The fluid is not sprayed directly into the formation,
thereby protecting the formation from damage and recover-
ing the fluid even in the case where water is not present. The
capillary tube feeding the fluid to the check valve may be
placed externally to the production tube to facilitate ease of
cleaning and clearing of the production tube.
25 Claims, 4 Drawing Sheets
EXHIBIT
If,
' .
6,619,402 Bl
6,880,639 B2
7.341,108 B2
912003 Amory et al.
412005 Rhodes et al.
3/2008 ~ a i z e r et al.
US 7,909,101 B2
Page 2
. ........ 166/321
2001/0017157 AI
2004/0060703 A I
2004/02620 II A I
* cited by examiner
81200 I Pringle
4/2004 Stegerneier et al.
12/2004 Huckabee et al.
U.S. Patent Mar. 22, 2011 Sheet 1 of 4 US 7,909,101 B2
U.S. Patent Mar. 22,2011 Sheet 2 of 4
US 7,909,101 B2
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us 7,909,101 82
1
APPARATUS AND METHOD FOR
INCREASING WELL PRODUCTION
CROSS REFERENCE TO RELATED
APPLICATIONS
2
other hydrocarbon fuels, some of the problems faced in CBM
extraction are unique. One common method generally used to
extract hydrocarbon fi.Jels from within minerals is hydraulic
fracturing. Using this technique, a fracturing fluid is sent
down a well under sufficient pressure to fracture the face of
the mineral formation at the end of the well. Fracturing
releases the hydrocarbon trapped within, and the hydrocarbon
may then be extracted through the well. A proppant, such as
course sand or sintered bauxite, is often added to the fractur-
This application is a continuationofand claims the benefit
ofU.S. utility patent application no. 101905,993, filed on Jan.
28, 2005, and entitled "Apparatus and Method for Increasing
Well Production Using Surfactant Injection," now U.S. Pat.
No. 7,311 ,144, which in tum claimed the benefit of U.S.
provisional patent application no. 601617,837, filed on Oct.
12, 2004, and entitled "Apparatus and Method for Increasing
Well Production Using Surfactant Injection." Each of these
applications is incorporated herein by reference.
10 ing fluid to increase its effectiveness. As the pressure on the
face of the fractured mineral is released to allow for the
extraction of the hydrocarbon fuel, the fracture in the fonna-
tion would normally close back up. When proppants are
added to the fracturing fluid, however, the fracture does not
TECHNICAL FIELD
15 close completely because it is held open by the proppant
material. A channel is thus formed through which the trapped
hydrocarbons may escape after pressure is released.
Although course fracturing of this type is very successful in
some applications, it has not proven particularly useful in the
The present invention relates to gas recovery systems and
methods, and in particular to an apparatus and method for
increasing the yield of a methane well using direct injection of
surfactant at the end of a well bore incorporating a downhole
valve arrangement.
20 recovery of CBM. Coal fines recovered with the water and
methane during CBM extraction will quickly foul the well
when course fracturing techniques are used. This necessitates
the frequent stoppage of CBM recovery in order that the
production tubing may be swabbed or cleaned. It has been
BACKGROUND OF THE INVENTION 25 found that course fracturing will significantly reduce both the
long-term productivity and ultimate useful life of a CBM
well. It has long been recognized that coalbeds often contain
combustible gaseous hydrocarbons that are trapped within
the coal seam. Methane. the major combustible component of
natural gas, accounts for roughly 95% of these gaseous 30
hydrocarbons. Coal beds may also contain smaller amounts
of higher molecular weight gaseous hydrocarbons, such as
ethane and propane. These gases attach to the porous surface
of the coal at the molecular level, and are held in place by the
hydrostatic pressure exerted by groundwater surrounding the 35
coal bed.
The methane trapped in a coalbed seam wiJJ desorb when
the pressure on the coalbed is sufficiently reduced. This
occurs, for example, when the groundwater in the area is
removed either by mining or drilling. The release of methane 40
during coal mining is a well-known danger in the coal extrac-
tion process. Methane is highly flammable and may explode
While traditional fracturing has proven unsuccessful in
CBM extraction, all coal beds contain cleats, that is, natural
fractures through which CBM may escape. As hydrostatic
pressure is decreased at the cleat by the removal of ground-
water, methane within the coal will naturally desorb and
move into the cleat system, where it may flow out of the coal
bed. CBM may thus be withdrawn from the coalbed in this
manner through the well, without the necessity in many cases
of any artificial fracturing methods. CBM exploration and
well placement strategies thus are highly dependent upon a
good knowledge of cleat placement within the coalbed of
interest.
If artificial fracturing processes are used to stimulate pro-
duction in CBM wells, they must be very gentle so as not to
harm the coalbed cleats, and therehy reduce rather than
increase well production. Acids, xylene-toluene, gasoline-
benzene-diesel, condensate-strong solvents, bleaches, and
in the presence of a spark or flame. For this reason, much
effort has been expended in the past to vent this gas away as
a part of a coal mining operation.
In more recent times, the technology has been developed to
recover the methane trapped in coa !beds for use as natura I gas
fuel. The world's total, extractable coal-bed methane (CBM)
reserve is estimated to be about 400 trillion cubic feet. Much
45 course-grain sand have been found to be detrimental to good
cleat maintenance. Recent experience in coalbeds in the
Arkoma Basin indicates that a mixture of fresh water with a
biocide, combined with a minimal amount of friction reducer,
of this CBM is trapped in coal beds that are too deep to mine 50
for coal, but are easily reachable with wells using drilling
techniques developed for conventional oil and natural gas
extraction. Recent spikes in the spot price of natural gas,
combined with the positive environmental aspects of the use
of natural gas as a fuel source, has hastened development of 55
coal-bed method recovery methods.
The first research in CBM extraction was performed in the
1970's, exploring the feasibility of recovering methane from
coal beds in the Black Warrior Basin of northeast Alabama.
CBM has been commercially extracted in the Arkoma Basin 60
(comprising western Arkansas and eastern Oklahoma) since
1988. As of March 2000, the Arkoma Basin contained 3 77
producing CBM wells, with an average yield of80.000 cubic
feet of methane per day. Today, CBM accounts for about 7%
may be the least damaging fracturing fluid. The failure to use
gentle fracturing methods and other good production prac-
tices elsewhere in a coal bed can even damage production at
nearby wells.
Regardless of whether a fracturing liquid is used in CBM
extraction, some means must be provided for the removal of
the significant quantity of groundwater expelled as a result of
the process. One study found that the average CBM well
removed about 12,000 gallons of water per day. Pump jacks
and surfactant (soap) introduction are the most common
means of removing this water. Pump jacks, which have been
used for decades in traditional petroleum extraction, simply
pump water out of the well by mechanical means. A pump is
placed downhole, and is connected to a rocking-beam activa-
tor at the wellhead by means of an interconnected series of
rods. Pump jacks are expensive to install, operate, and main-
of the total production of natural gas in the United States.
While some aspects of CBM extraction are common to the
more traditional means of extracting oil, natural gas, and
65 tain, particularly in CBM applications where bore cleaning is
required more often due to the presence of coal fines. The
presence of the pump jack at the end of the well also requires
US 7,909,101 B2
3
lengthier downtimes when maintenance is perfom1ed, reduc-
ing the cost-efficiency of the well.
In contrast to the pump jack method, the surfactant method
relies upon the hydrostatic pressure within the well itself to
force groundwater up through the borehole and out of the
extraction area. The surfactant combines with the groundwa-
ter to form a foam, which is pushed back up through the well
4
production offoam at the end of the well, which is just at the
point where the water is being extracted from the coal bed
seam. TI1e soap stick will never reach this point.
Likewise, the method of introducing a surfactant by drip-
ping a gel into the well also suffers when horizontal drilling
techniques are used. Gravity, capiiJary action, or head pres-
sure are the only agents moving the gel down into the well. In
actual practice, the Jines used to deliver this gel (typically Vs
inch stainless steel tubing) cannot be made to reach to the
10 bottom of the well, since the weight of the capillary tubing is
not sufficient to overcome the frictional force arising from
contact with the tubing waiJs, due to the arc in the horizontal
well "elbow." Again, as in the case of the soap stick, foam will
by hydrostatic pressure. The water/surfactant mixture is then
separated from the devolved methane gas and disposed of by
appropriate means. Ideally, not all water is removed at the
point of CBM extraction; rather, only enough water is
removed such that the hydrostatic pressure in the area of the
borehole is reduced just enough that the methane bound to the
coal will desorb. In this way, damage to the coalbed cleats in
the area of the borehole is minimized. Care must be exercised 15
to prevent the surfactant from entering the coal formation,
since this too may damage the coal bed cleats and reduce the
production rate and lifetime of the well.
not be formed at the end of the well where it is needed most.
Another disadvantage of the gel capillary tube approach is
that the tubing is employed inside the main production tube in
the well; thus when the main production tube plugs or other-
wise requires maintenance, the gel delivery tubing will
impede efforts to clean, clear, or otherwise maintain the pro- Two methods are commonly used today for the introduc-
tion of surfactant into a CBM well. One method is the drop-
ping of "soap sticks" into the well. The soap sticks form a
foam as they are contacted by water rising up through the
weiJ, thereby forming foam that travels up and out of the weiJ
due to hydrostatic pressure. The second method is to attach a
small tube inside the main production tube and pour gelled
surfactant into this tube. TI1e surfactant travels down the tube
through the force of gravity, capillary action, or its own head
pressure, eventually depositing the gel into the flow of water
in the weiJ and forming a foam. Again, this foam rises back up
through the well for eventual removal. Use of either of these
methods is believed by the inventor to increase well produc-
tion on average by 10-20''/o.
Although a significant amount of CBM is extracted
through vertical drilling methods, horizontal drilling methods
have become more common. The general techniques for hori-
zontal driiJing are well known, and were developed for con-
ventional extraction of oil and natural gas. In the usual case,
the weiJ begins into the ground verticaiJy, then arcs through
some degree of curvature to travel in a generaiJy horizontal
direction. Horizontal weiJs thus contain a bend or "elbow,"
the severity of which is determined by the drilling technique
used. It is believed that horizontal drilling may result in better
extraction rates of CBM from many coal beds due to the way
in which coalbeds tend to form in long. horizontal strata. One
analysis has shown that "face" cleats in coal beds appear to be
more than five times as permeable as "butt" cleats, which
form orthogonally to face cleats. A hori7.0ntal well can
increase productivity by orienting the lateral section of the
well across the higher-permeability face cleats. As a result of
these effects, the area drained by a horizontal well may be
effectively much larger than the area drained by a correspond-
ing vertical well placed into the same coalbed stratum. Hori-
zontal weiJ CBM extraction thus promises greater production
from fewer wells in a given coalbed. The first horizontally
drilled CBM weJis in the Arkoma Basin were put in place
around 1998.
20 duction tube. This is a particular problem in CBM extraction
because of the fouling problems presented by coal fines, and
the resulting need to regularly swab or clean the well tubing.
Finally, since the gel is not introduced under pressure, it
cannot adjust to the hydrostatic pressure at the end of the well.
25 This pressure is dependent upon the depth of the well and the
height of the water table. If the hydrostatic pressure is signifi-
cantly less than the gel pressure, then the gel may flow out the
production tube and into the coal bed, thereby damaging the
coal bed cleats and retarding future production. If the hydro-
30 static pressure is significantly greater than the gel pressure,
then the gel will flow little or not at all, producing minimal
foam and impeding removal of groundwater and thus reduc-
ing CBM extraction rates.
While this discussion has focused on CBM extraction,
35 another developing area for the recovery of natural gas from
unconventional sources is the extraction of natural gas from
sandstone deposits. Sandstone formations with less than 0.1
millidarcy permeability, known as "tight gas sands," are
known to contain significant volumes of natural gas. The
40 United States holds a huge quantity of these sandstones.
Some estimates place the total gas-in-place in the United
States in tight gas stands to be around 15 quadrillion cubic
feet. Only a small portion of this gas is, however, recoverable
with existing technology. Annual production in the United
45 States today is about two to three trillion cubic feet. Many of
the same problems presented in CBM extraction are also
faced by those attempting to recover natural gas from tight gas
sands, and thus efforts to overcome problems in CBM extrac-
tion may be directly applicable to recovery from tight gas
50 sands as well.
What is desired then is an apparatus for and method of
introducing surfactant into a borehole for CBM extraction,
tight sand gas extraction, or other types of gas-recovery
options, where such apparatus and method is well-suited to
55 horizontally drilled wells and that produces foam at the tip of
the borehole for optimal groundwater removal, while pre-
venting the flow of surfactant into the formation itself in
conditions of potentially varying hydrostatic pressure.
While horizontal driiJing promises improved theoretical
productivity over vertical drilling in many instances, it raises
several problems of its own that are unique to CBM extrac-
tion. It may be seen that the deposit of a "soap stick" in a 60
horizontal weiJ wiiJ result in the movement of the soap stick
only to the bottom of the "elbow" of the well. The soap stick
BRIEF SUMMARY OF THE INVENTION
The present invention is directed to an apparatus and
method for injecting surfactant into a well utilizing a capillary
tube and injection subassembly. The injection subassembly
comprises a hydrostatic control valve and nozzle that injects
surfactant through an atomizer arrangement at the downllole
end of the production tube in the well. The capillary tube
is carried by gravity to this point, but wiiJ not proceed past the
point where the well turns. Thus this method will form no
foam at the end of the well bore at aiJ; foam is only formed at 65
the point where the soap stick comes to rest. The inventor has
recognized that increased productivity would result from the
us 7,909,101 82
5
travels along the outside of the production tube rather than the
inside, thereby leaving the inner portion of the production
tube unobstructed. The hydrostatic control valve allows the
pressure at which the surfactant is injected to be controlled,
such that the surfactant atomi7.es and shears with the gas and
water at the downhole end of the production tube with greater
efficiency.
This apparatus and method results in a number of impor-
tant advantages over prior art techniques. The surfactant may
he directed at exactly the point where it is needed most, that is, 10
at the downhole end of the production tube. By thoroughly
mixing the water with surfactant at this point through the use
of an atomizer on the valve, water may be more efficiently
drawn out of the formation and up through the well tube.
Since the surfactant is being directed into the production tu he, 15
rather than into the formation itself, there is no danger of
significant quantities of surfactant being introduced into the
formation, thereby reducing well yields. Even in the case
when no water is present, the surfactant will be brought hack
to the surface by the flow of gas up through the production 20
tube since it leaves the valve in an atomized state. The valve
is adjustable to allow for the depth of the well, such that the
optimum pressure may he applied to result in good foan1 body
without excessive pressure, thereby minimizing any damage
6
FIG. 2 is a partial cut-away exploded view of a downhole
tube assembly and injection subassembly according to a pre-
ferred embodiment of the present invention.
FIG. 3 isacut-awayviewofavalvesubassembly according
to a preferred embodiment of the present invention.
FIG. 4 is a cut-away view of a preferred embodiment of the
present invention installed in a borehole.
DETAILED DESCRIPTION OF THE INVENTION
With reference to FIG. 1, the downhole injection subas-
sembly 10 of a preferred embodiment of the present invention
for use in connection with CBM extraction may be described.
Although the discussion of the preferred embodiment will
focus on CBM extraction, it may be understood that the
preferred embodiment is applicable to other gas extraction
techniques, including without limitation tight sand gas
extraction.
Downhole injection subassembly 10 is designed for
deployment at the end of a production tube for placement in a
well. The external portions of downhole injection subassem-
bly 10 are composed of production tube tip 12 and
sheath 14. In the preferred embodiment, production tube tip
10 is a tube constructed of steel or other appropriately strong
material, threaded to fit onto the downhole end of a produc-
tion tube. In the preferred embodiments, production tube 10 is
sized to fit either of the most common 2
3
/s inch or 2
7
/ inch
production tube sizes used in CBM extraction. In alternative
embodiments, other sizes may be accommodated. The distal
to the formation and maximizing the usable life of the well. 25
Compared to typical surfactant introduction methods that
yield increased well production of 10-20%, testing of the
present invention in CBM extraction, as well as tight sand gas
extraction, has yielded production increases of over 100% in
most cases.
30 end of production tube tip 10 may be beveled for ease of entry
into the well casing. In the preferred embodiment, the hollow
interior of production tube tip 10 is kept clear in order to
minimize blockage and facilitate periodic swabbing and
It is therefore an object of the present invention to provide
for an apparatus and method for injecting surfactant into a
well such that surfactant and water are mixed at or near the
end of the well production tube.
It is a further object of the present invention to provide for 35
such that surfactant and water are well mixed in order to more
efficiently move water from the downhole formation.
It is also an object of the present invention to provide for an
apparatus and method for injecting surfactant into a well such 40
that surfactant is inhibited from entering the formation.
apparatus and method for injecting surfactant into a well such
that surfactant does not significantly enter the formation even
when no water is present.
apparatus and method for injecting surfactant into a well such
that the pressure at which surfactant is injected is adjustable.
45
apparatus and method for injecting surfactant into a well such 50
that a minimum pressure is utilized for drawing water/surfac-
tant from a well, thereby reducing formation damage.
apparatus and method for injecting surfactant into a well that
significantly increases gas yields over conventional surfac- 55
tant introduction methods.
These and other features, objects and advantages of the
present invention will become better understood from a con-
sideration of the following detailed description of the pre-
ferred embodiments and appended claims in conjunction with 60
the drawings as described following:
cleaning.
Attached at the downhole end of production tube tip 12 by
welding or other appropriate means is injection sheath 14.
Injection sheath 14 protects valve/sprayer subassembly 16, as
shown in FIG. 2. Like production tube tip 10, injection sheath
14 may be constructed of steel or another appropriately strong
material. In the preferred embodiment, the tip of injection
sheath 14 is tapered in a complementary way to that of pro-
duction tube tip 12, thereby forming a pointed "nose" on the
end of the production tube that eases insertion of the produc-
tion tube into a well.
Referring now to FIG. 2, the components of valve/sprayer
subassembly 16 may be described. Nozzle 18 is mounted near
the end of production tube tip 12, and oriented such that
surfactant introduced to nozzle 18 is sprayed into production
tube tip 12. In the preferred embodiment, an opening is pro-
vided in the side of production tube tip 12 for this purpose.
The size of this opening is roughly one-fourth of an inch in
diameter in the preferred embodiment, although other sizes
may be employed in other embodiments based upon the exact
size and construction of nozzle 18. Nozzle 18 is preferably of
the atomizer type, such that surfactant introduced to nozzle 18
under appropriate pressure will be atomized as it leaves
nozzle 18 and enters production tube tip 12. Provided that
water is present at the end of production tube tip 12, this water
will be thoroughly mixed with the surfactant thereby forming
a foam, which will then be forced to the surface through the
production tube along with the evolved gas due to the hydro-
static pressure in the formation.
BRIEF DESCRIPTION OF THE SEVERAL
v1EWS OF THE DRAWINGS
FIG. 1 is an elevational view of a downhole tube assembly
according to a preferred embodiment of the present invention.
Feeding surfactant to nozzle 18 is valve 20. As explained
further below in reference to FIG. 3, valve 20 opens to allow
65 surfactant into nozzle 18 when the appropriate pressure is
applied to the incoming surfactant. The pressure required to
open valve 20 will depend upon the hydrostatic pressure at the
us 7,909,101 82
7
end of the production tube where valve 20 is located. In the
preferred embodiment, valve 20 is threaded on either end to
receive nozzle 18 and fitting 22. Fitting 22 is used to connect
valve 20 to capillary tube 24. In the preferred embodiment,
fining 22 connects to valve 20 using pipe threads, and con- 5
nects to capillary tube 24 using a compression, flare, or other
tube-type fitting. In alternative embodiments, fitting 22 may
be omitted if valve 20 is configured so as to connect directly
to capillary tube 24.
Banding 26 is used to hold capillary tube 26 against pro- 10
duction tube tip 12 and the production tube along its length.
Banding 26 is preferably thin stainless steel for strength and
corrosion-resistance, but other appropriate flexible and strong
materials may be substituted. In the preferred embodiment,
banding 26 is placed along capillary tube 24 roughly every IS
sixty feet along its length. At the surface, capillary tube 24
may he routed through a wing port in the well head (not
shown) and packed off with a tube connection to pipe thread
fitting similar to fitting 22 (not shown). Capillary tube 24 may
then be connected to a pump mechanism providing surfactant 20
under pressure.
Referring to FJG. 3, the internal components of valve 20
may now be described. Seat 28 and body 30 of valve 20 define
a passageway through which surfactant may pass from cap-
illary tube 24 (by way of fitting 22) into nozzle 18, and then 25
out into production tube tip 12. Seat 28 and valve body 30
may be fitted together as by threading. Lower 0-ring 40
provides a positive seal between seat 28 and body 30 of valve
20. Lower 0-ring may be of conventional type, such as
formed with silicone, whereby a liquid-proof seal is formed. 30
In the preferred embodiment, Seat 28 and valve body 30 are
preferably formed of stainless steel, brass, or other suffi-
ciently durable and corrosion-resistant materials.
Flow of surfactant through valve 20 is controlled by the
position of ball 36. Ball 36 is preferably a %inch diameter 35
stainless steel ball bearing. Ball 36 may seat against upper
0-ring 38, which, like lower 0-ring 40, is preferably formed
of silicon or some other material capable of producing a
liquid-proof seal. When seated against upper 0-ring 38 at seat
28, ball 36 stops the flowofsurfactantoutofvalve 20 and into 40
nozzle 18.
Ball 36 is resiliently held in place against upper 0-ring 38
by spring 34. Spring 34 may be formed of stainless steel or
other sufficiently strong, resilient, and corrosion-resistant
material. The inventor is unaware of any commercially avail- 45
able spring with the proper force constant, and thus spring 34
in the preferred-embodiment is custom built for this applica-
tion. Spring follower 32 fits between spring 34 and ball 36 in
order to provide proper placement of ball 36 with respect to
spring 34. As will be evident from this arrangement, a suffi- 50
cient amount of pressure placed on the surfactant behind ball
36 within valve seat 28 will overcome the force of spring 34,
forcing ball 36 away from upper a-ring 38 and allowing
surfactant to flow around ball 36, into the interior of valve
body 30 around spring 34, and out of valve body 30 and into 55
nozzle 18. Once this pressure is released, or reduced such that
8
described. CBM wells are generally lined with a casing 44 as
drilled to protect the well from collapse. The most common
casing 44 sizes are 4
1
/2 inches and 5
1
h inches. Since the most
common production tubing sizes are 23fs inches and 2
7
/s
inches, this size disparity leaves sufficient room for produc-
tion tube 42 to be easily inserted and removed from casing 44.
The size disparity also allows additional room for capillary
tube 24 to be mounted to the exterior of production tube 42,
with periodic banding 26 as described above, in order to feed
valve/sprayer subassembly 16.
The above-ground components of the preferred embodi-
ment include a chemical pump, soap tank, and defoamer tank
(not shown) as are known in the art. Pumps such as the
Texstream Series 5000 chemical injectors, available from
Texstream Operations of Houston, Tex., may be employed.
The soap tank may be a standard drum to contain surfactant
material that is fed through the pump. The defoamer tank, the
purpose of which is to separate gas from the surfactant for
delivery, may be constructed from a standard reservoir with a
top-mounted gas outlet.
Now with reference again to FIGS.1-4, a method of recov-
ering gas from a well according to a preferred embodiment of
the present invention may be described. A horizontal well is
drilled and cased with casing 44 in a manner as known in the
art. Valve/sprayer subassembly 16 is then fitted to downhole
injection subassembly 10, such that nozzle 18 is situated to
direct the spray of surfactant into production tube tip 12.
Downhole injection subassembly 10 is then fitted to the
downhole end of production tube 42. Capillary tube 24 is next
attached to fitting 22 of downhole injection subassembly 10.
It may be noted that capillary tube 24 is preferably provided
on a large roll, such that it may be fed forward as production
tube 42 is fed into casing 44. At regular intervals, preferably
approximately every 60 feet or so, capillary tube 24 is fas-
tened to production tube 42 using banding 26. This operation
continues until production tube tip 12 reaches the bottom of
the well, situated at the formation of interest for gas recovery.
The arrangement described herein with respect to the pre-
ferred embodiment provides for a production tube 42 that is
free of all obstacles, allowing unrestricted outflow of gas
through production tube 42 to the surface. This feature is
particularly important for gas production in "dirty" wells
such as those drilled into coal formations for CBM recovery.
In such environments, an unusually high number of contami-
nants will enter the well. It will thus be necessary to periodi-
cally swab production tube 42 and to remove coal plugs from
production tube 42. With production tube 42 remaining oth-
erwise open, it is a simple matter to run a swab the length of
production tube 42 in order to clear obstacles. Otherwise, it
would often be necessary to remove production tube 42 from
casing 44 in order to perform maintenance. Removal of pro-
duction tube 42 increases the equipment maintenance cost
associated with the CBM extraction operation, and further
causes significant downtime during CBM extraction.
As gas recovery begins, surfactant is forced into capillary
tube 24 under sufficient force to overcome the combined force
of spring 34 and the downhole hydrostatic pressure and
thereby open valve 20.ln the preferred embodiment, valve 20
is constructed such that surfactant is injected through nozzle
18 at a pressure of no less than 300 pounds per square inch.
This pressure ensures that the surfactant is atomized upon
entry into production tube tip 10, thereby creating the best
foam when mixed with available water. The production of
high-quality foam lowers the hydrostatic head pressure at the
it may again be overcome by the force of spring 34, valve 20
will again close and prevent the flow of surfactant through
valve 20. Valve 20 thus operates as a type of one-way check
valve, regulating the flow of surfactant into nozzle 18 and 60
ensuring that surfactant only reaches nozzle 18 if a sufficient
pressure is provided. This ensures that surfactant will be
properly atomized by nozzle 18 upon disposition into produc-
tion tube tip 12 regardless of the downhole hydrostatic pres-
sure within the expected range of operation. 65 bottom of the well, allowing gas to flow up production tube 42
along with the foam utilizing only the hydrostatic pressure at
the bottom ofthewell. The elimination ofextemal pressure to
Referring now to FIG. 4, the use of the invention with
respect to the recovery of gas in a CBM well may be
(
us 7,909,101 82
9
force gas upward minimizes the damage that might otherwise
occur to the fonnations from which gas is recovered, which
would lower production rates and expected well lifetime.
It may be noted that the feature of directing nozzle 18 into
production n1be tip 12, rather than into the formation, is
particularly important in CBM recovery. The long lateral
strata common to coal formations do not allow for a homog-
enot)s porosity state of coal/gas. Thus the water and gas influx
across the face of the formation arc very erratic in typical
horizontal wells. If it should occur that the hydrostatic pres- 10
sure drops and water is not present at production tube tip 12,
the surfactant still will be canied in an atomized state up and
out of the production tube 42, rather than into the formation.
As already noted, surfactant introduced into the fom1ation
will lower the output and operational lifetime of the well. 15
In addition, the ability to vary the pressure at valve 20 is
particularly useful with regard to such wells due to the erratic
nature of the hydrostatic pressure across a formation. The
pressure of the surfactant introduced tovalve 20 is varied in
response to an observation of foam quality at the output of 20
production tube 42. In the preferred embodiment this opera-
tion is performed hy visual inspection and hand manipulation
of the pressure, although automatic sensing equipment could
10
3. The apparatus of claim 1, wherein said valve comprises
a spring, a seat, and a ball in conununication with said spring
and said seat, and wherein said spring biases said ball ag:Jinst
said seat, thereby closing s:Jid valve when said ball rests
against said seat.
presses to open said valve if the pressure on the fluid within
said capillary tube is g.reater tlun the downhole hydrostatic
pressure.
presses to open said valve upon the application of a pressure
of about 300 pounds per square inch greater than the down-
hole hydrostatic pressure.
6. The apparatus of claim 1, wherein said valve is operable
to open if the pressure on the fluid within said capillary tube
is greater than the downhole hydrostatic pressure.
7. The apparan1s of claim 6, wherein said valve is operable
to open upon the application of a pressure of about 300
pounds per square inch greater than the downhole hydrostatic
pressure.
R_ The apparatu> of claim 1, further comprising a produc-
tion tube positioned within the well.
9. The apparatus of claim 8, wherein said capillary n1be is
positioned outside of said production tube.
be developed and employed in alternative embodiments of the
present invention. The pressure of surfactant can be opti- 25
rnized in a maner of minutes, since the only delay in deter-
mining foam quality is the time that is required for foam to
reach the top of production tube 42. Previous methods would
require days of production and subsequent yield analysis
before an optimum surfactant introduction rate could be
determined, due to the delay caused by slowly trickling sur-
factant down the casing of production tube 42. The pressure at
valve 20 can also be adjusted according to well depth, which
10. The apparatus of claim 9, further comprising a plurality
of bands binding said capillary tube to said production tube.
11. The apparatus of claim 9, further comprising a nozzle
anached downstream of said valve whereby the fluid is deliv-
30 ered from said valve through said nozzle into s:Jid production
tube.
is a factor in the hydrostatic pressure present. In the preferred
embodiment, the pressure at valve 20 may be adjusted to 35
correspond to expected hydrostatic pres:;ures at depths of
am--where from 500 to 20,000 feet.
The present invention bas been described with reference to
certain preferred and alternative embodiments that are
intended to be exemplary only and not limiting to the full 40
scope of the present invention as set forth in the appended
claims.
What is claimed is:
12. The apparatus of claim 11, wherein said production
tube comprises an orifice and wherein s:Jid nozzle is directed
to deliver the fluid through said orifice and into the interior of
the production tube.
13. The apparatus of claim 9, further comprising a nozzle
attached downstream of said valve whereby the fluid is deliv-
ered from said valve through said nozzle near a downhole end
of said production tube.
14. The apparatus of claim 1, wherein the fluid is a liquid.
15. The app:lratus of cl:Jinl 14, wherein the liquid is a
surf..qctant.
!. An apparatus for hydrocarbon recovery in a well com-
prising a downhole portion. the apparatus comprising:
16.A methodofrecovering a hydrocarbon from a well with
45 an apparatus, the well comprising a production t11be, the
(a) a capillary tube comprising a downhole end, wherein
said downhole end is positioned within the downhole
portion of the well;
(b) a fluid introduced into said capillary n1be, wherein the
fluid is different from species naturally existing in the 50
well and wherein the fluid is mixed with a hydrocarbon
in the well to form a hydrocarbon foam comprised of the
fluid and the hvdrocarbon;
(c) a pump operable to apply to said fluid a pressure suffi-
cient to overcome a hydrostatic pressure in the downhole 55
portion of the well; and
(d) a valve anached at said downhole end of said capillary
tube. wherein said valve is a one-way valve operable to
open and thereby deliver the tluid from said capillary
tube through the valve and into the downhole portion of 6<l
the well only when the pressure applied to the tluid is
sufficient to deliver the fluid into the downhole portion
of the welL
2. The apparatus of claim I. further comprising a nozzle
anached downstream of said valve whereby the fluid is deliv- 65
ered from said valve through said nozzle into the well and the
fluid is atomized at said nozzle.
apparatus comprising:
(a) a capillary tube comprising a downhole end, wherein
said downhole end is positioned within a downhole por-
tion of the well;
(b) a fluid introduced into said capillary tube;
cient to overcome a hydrostatic pressure in the downhole
(d) a valve anached at s:Jid downhole end of said c:Jpillary
tube, wherein said valve is a one-way valve operable to
open and thereby deliver the fluid from said capillary
tube through the valve and into the downhole portion of
the well only when the pressure applied to the fluid is
sufficient to deliver the fluid into the downhole portion
of the well;
wherein the method comprises the steps of:
(a) passing the capillary tuhe into the well outside of the
production n1be;
(b) injecting the pressurized fluid through the capillary
tube;
(c) delivering the tluid;
us 7,909,101 82
11
(d) directing the fluid from outside of the production tube to
inside the production tube, thereby forming a hydrocar-
bon foam comprised of the fluid and the hydrocarbon;
and
(e) recovering the hydrocarbon foam from the well.
17. The method of claim 16, wherein the well comprises a
downhole hydrostatic pressure, and said injecting step com-
prises a step of adjusting the pressure of the fluid in the
capillary tube to exceed the downhole hydrostatic pressure in
the well.
the pressure of the fluid in the capillary tube comprises the
step of adjusting the pressure of the fluid in the capillary tube
to be at least about 300 pounds per square inch greater than
the downhole hydrostatic pressure.
19. The method of claim 16, wherein the well comprises a
downhole hydrostatic pressure, and said injecting step com-
prises the step of adjusting the pressure of the fluid in the
capillary tube to exceed the downhole hydrostatic pressure in
the well.
the pressure of the fluid in the capillary tube comprises the
step of adjusting the pressure of the fluid in the capillary U1be
to be at least about 300 pounds per square inch greater than
the downhole hydrostatic pressure.
21. The method of claim 16, wherein said delivering step
comprises the step of delivering the fluid through a nozzle
downstream from the valve.
12
22. The method of claim 16, wherein said delivering step
comprises the step of directing the fluid through an orifice in
the production tube.
23. The method of claim 16, wherein the fluid is atomized
upon delivery into the downhole portion of the well.
24. The method of claim 16, wherein the fluid is a surfac-
tant.
25. An apparatus for hydrocarbon recovery in a well com-
prising a downhole portion, the apparatus comprising:
10 (a) a capillary tube comprising a downhole end, wherein
said downhole end is positioned within the downhole
(b) a fluid introduced into said capillary tube, wherein the
fluid is mixed with a hydrocarbon in the well to form a
15 hydrocarbon foam comprised of the fluid and the hydro-
carbon;
cient to overcome a hydrostatic pressure in the downhole
portion of the well; and
20 (d) a valve attached at said downhole end of said capillary
tube, wherein said valve is a one-way valve operable to
open and thereby deliver the fluid from said capillary
n1be through the valve and into the downhole portion of
the well only when the pressure applied to the fluid is
25 sufficient to deliver the fluid into the downhole portion
of the well.
* * * * *
AGREEMENT
This Agreement ("Agreement"), dated as of December _Ll_, 2011, is between X-
Chem, Inc. ("X-Chem"), a Louisiana corporation, with its principal place of business at
2727 Chemsearch Boulevard, Irving, Texas 75062, and Six Degrees, LLC ("SD"), an
Arkansas limited liability company, with its principal place of business at 122 North uth
Street, Fort Smith, Arkansas 79202, and Greg Conrad ("Conrad"). The above parties
may be collectively referred to as the "parties" and each may be singularly referred to as
the "party".
BACKGROUND
SD owns inventory, intellectual property, equipment and other assets relating to the
business of selling and providing capillary string equipment, services and products and
oil and gas field chemical products and services ("Business"). X-Chem desires to
purchase certain inventory, to license certain intellectual property and to lease certain
real estate from SD. Therefore, the parties agree as follows:
1 Purchased Assets. SD hereby sells, transfers, conveys, assigns and agrees to
deliver to X-Chem, free and clear of all liens, pledges, security interests, mortgages,
claims, restrictions and encumbrances, the following assets, rights and interests
("Purchased Assets"):
(a) All rights, information and goodwill relating to customers, prospective or
current customers, vendors of the Business, including all proposals made vendors or
customers;
(b) All transferable or assignable permits, licenses, registrations, franchises,
certifications, approvals, consents and other authorizations relating to the Business
("Permits");
(c) All inventory of the Business ("Inventory"), including the inventory listed
in Addendum B (the inventory is listed in the first two sections of Addendum B);
(d) All internet, intranet, or extranet websites, domain names, URL
addresses, internet addresses, or similar sites, names or addresses, including any
registrations or applications related thereto, e-mail addresses, fax numbers, mailing
addresses, post office boxes and phone numbers, except for any non-assignable internet
protocol addresses or numbers relating to domain names.
2. Purchase Price. Immediately after signing this Agreement, for the Purchased
Assets, X-Chem will pay SD $650,000.
3. Lease of Facility. Subject to the facility passing X-Chem's environmental review
and the parties' signing ofX-Chem's standard lease, SD will lease to X-Chem SD's facility
with approximately 5500 square feet located at 900 Highway 112 North, Pocola,
Oklahoma 74902 for a period of five (5) years at a rent of $4,400 per month (inclusive of
taxes and insurance) with a commencement date of December 1, 2011. X-Chem will pay
for utilities at the leased premises. At any time during this lease, X-Chem will have the
right to terminate this lease at any time by paying a termination fee of $24,000.
EXHIBIT
I C-.
4. License Of Intellectual Property. For one year, SD hereby grants to X-Chem an
irrevocable, world-wide and transferable license to manufacture, use, distribute and sell
products containing SO's intellectual property, including patents, trade marks, trade
dress, trade names, logos, and copyrights. During this period, X-Chem will pay SD a
royalty payment at the rate of two percent (2%) of Operating Income (as defined below
and set forth in Addendum A). This intellectual property includes U.S. Patent Nos.
7,311,144 and 7,909,101 and U.S. Patent Application Nos. PCT/US/2005/038164 and
13/047,973. SD represents that it owns and possesses all right, title and interest in the
Intellectual Property, the Intellectual Property is valid, it has the rights to grant the
license herein, and there is no action, suit, hearing, investigation, claim or dispute
relating to the Intellectual Property or challenging its legality, validity, enforceability,
use, or ownership. SD represents that the use of the Intellectual Property will not
infringe the intellectual property rights of any person or entity and SD will indemnify X-
Chem for any claims of such intellectual property infringement. After this one-year
period, X-Chem may continue to use the patented atomizers and related equipment it
has purchased from SD (without payment of any royalty) and SD will sell to X-Chem
atomizers that X-Chem orders for manufacturing cost plus $100 (and this price will
include a fully-paid up royalty to use the Intellectual Property).
s. Use of Equipment. For one year, SD hereby grants to X-Chem the exclusive right
to use the equipment listed in the third section of Addendum B ("Equipment"). SD
will retain ownership of the Equipment but X-Chem will insure the Equipment and is
responsible for maintenance and repairs to the Equipment during this one year period.
SD represents that the Equipment is currently in good working condition and is not in
need of repair and SD solely owns the Equipment. During this one-year period, X-Chem
will pay SD eight percent (8%) of Operating Income of X-Chem's capstring-related
business only before taxes for the use of the Equipment. The parties agree that
Operating Income will be calculated as set out in the example in Addendum A (the
numbers used in Addendum A are just an example and the actual numbers will be
plugged into each line item and may vary from the example). At the end of this one-year
period, X -Chern will have the right to purchase the particular pieces of Equipment that it
chooses in its sole discretion at the fair market value specified in Addendum B. If X-
Chem elects not to purchase some of the Equipment but still needs to use such
Equipment, then the parties will negotiate a percentage of net profits to be shared (to be
adjusted pro-rata) during the period of such use. If X -Chern does not need to use any of
the Equipment it does not purchase, then there will be no percentage of net profits
payments due going forward. SD may then sell the portion of the Equipment that X-
Chem elects not to purchase or use but it may not sell to anyone who was or is associated
with SD, Nalco or X-Chem. If SD does not sell such Equipment, then such Equipment
may not be used by SD in the cap string business without the prior written approval of
the CEO for NCH's North American Chemical business (Jim Bird).
6. Liabilities. _X-Chem is not assuming and will not assume any liabilities relating to
the Purchased Assets or any liabilities relating to the operation of the Business prior to
the date of this Agreement, which SD agrees that it will retain and timely and properly
discharge.
7. Representations of SD. SD is a limited liability company duly organized, legally
existing, authorized to do business and in good standing under the laws of Arkansas. SD
has full corporate power and authority to carry on the Business as it is now conducted
and as it has been conducted prior to the date of this Agreement. SD has full power and
2
- - -------------
authority to execute this Agreement and to perform its obligations under this Agreement.
The execution, delivery and performance of this Agreement have been duly and validly
authorized by all requisite action by SD. This Agreement constitutes the legal, valid and
binding obligations of SD enforceable against them in accordance with their respective
terms. SO owns the Purchased Assets and has good, valid and marketable title to such
Purchased Assets. SD will convey to X-Chem good, valid and marketable title to all of
the Purchased Assets free and clear of any mortgage, pledge, lien, encumbrance, charge,
restriction, security interest or other claim. The Purchased Assets are in good working
condition and repair, subject to normal useful life and normal wear and tear, and are
fully suitable for the purposes for which they are presently used in the Business. The
Purchased Assets have been maintained in accordance with any applicable warranty or
manufacturer's specifications and there has not been any material interruption of the
operations of the Business due to inadequate maintenance of the Purchased Assets.
There are no pending or threatened suits, actions, litigation, claims, investigations, or
legal, administrative or arbitration proceedings ("Litigation") against or affecting SD or
relating to the Business or the Purchased Assets.
8. Inventory. SO represents that Addendum B sets forth a true and correct list of the
Inventory of the Business. The values listed in Addendum B reflect their true and
correct value based on cost. The Inventory is current and saleable within twelve (12)
months from the date of this Agreement. The Inventory is merchantable, suitable and
usable for the purpose for which it is intended and is in a condition such that it can be
sold in the ordinary course of business consistent with past practice. None of the
Inventory is obsolete, defective, damaged or slow-moving.
9. X-Chem's Representations. X-Chem is a corporation duly organized, validly
existing and in good standing under the laws of the State of Louisiana. X-Chem has full
corporate power and authority to own or lease its properties and to carry on its business
as it is presently being conducted. X-Chem has full power and authority to perform its
obligations under this Agreement and to consummate the transactions contemplated
hereby. The entering into and the execution, delivery and performance of this
Agreement and any related agreements and the consummation of the transactions
contemplated hereby have been duly and validly authorized by all requisite action by X-
Chem. This Agreement and any related agreements have been duly executed and
delivered by X-Chem, and constitute the legal, valid and binding obligations of X-Chem
enforceable against X-Chem in accordance with their respective terms.
10. Non-Compete. During the period that X-Chem uses the Equipment and for a
period of five years after any purchase of the Equipment by X-Chem, SD and Greg
Conrad agree that they will not, directly or indirectly (except as an employee or agent of
X-Chem), either as an individual or as an investor, shareholder, owner, employee,
officer, director, partner, joint venturer, agent, principal, consultant, adviser, manager,
operator, or in any other capacity, whether through any financial interest or otherwise,
conduct, perform, engage in, participate, own, manage or aid or assist any person in the
conduct of, any business, services or other activity that directly or indirectly engages in
the sale, supply, marketing, manufacture or distribution of products or services related
to the capstring related business ("Competitive Business") within the United States,
unless otherwise agreed to in writing by an officer of X-Chem. Notwithstanding the
above, however, SO and Greg Conrad may own less than 2% of any outstanding class of
securities registered pursuant to the Securities Exchange Act of 1934, as amended, of an
issuer that is a Competitive Business.
3
11. Non-Solicitation. During the period that X-Chem uses the Equipment and for a
period of five years after any purchase of the Equipment by X-Chem, SD and Greg
Conrad, directly or indirectly, either as an individual or as an investor, shareholder,
owner, employee, officer, director, partner, joint venturer, agent, principal, consultant,
adviser, manager or in any other capacity, will not actively solicit, sell to, attempt to
actively solicit or sell to, or otherwise engage in discussions relating to potential sales
with any customer of the Business who purchased products from the Business in the 24
months prior to Closing regarding any product that is a competing or similar product to
products sold or offered for sale by the Business at Closing.
12. Non-Piracy. During the period that X-Chem uses the Equipment and for a period
of five years after any purchase of the Equipment by X-Chem, SD and Greg Conrad,
directly or indirectly, either as an individual or as an investor, shareholder, owner,
employee, officer, director, partner, joint venturer, agent, principal, consultant, adviser,
manager or in any other capacity, will not: (i) recruit, solicit or otherwise induce or
influence, or aid or assist any other person to recruit, solicit or otherwise induce or
influence any employees or sales agent that has a business relationship with X-Chem, to
discontinue, diminish, decrease, end, stop, reduce or adversely modify or change such
relationship with the X-Chem for or on behalf of any Competitive Business, or (ii)
recruit, solicit, hire, employ, discuss employment with or otherwise seek, aid or assist in
recruiting, soliciting, hiring, employing, or cause Competitive Business to employ or seek
to employ any person or agent who is employed, engaged or retained by the X-Chem.
13. Non-Disclosure of Confidential Information. SD and Greg Conrad agree that all
of the Business' confidential and proprietary information and trade secrets, including,
without limitation, information, data, lists, identities, compilations, techniques, studies,
plans methods, and records relating to customers, contacts, sources, referrals, prospects,
distributors, formulas, techniques, sales, operations, finances, products, prices, costs,
credit, and other confidential and proprietary aspects of the Business (collectively,
"Confidential Information") is now owned by X-Chem. SD and Greg Conrad agree the
Confidential Information is valuable, special and unique and will be solely owned by X-
Chem. Therefore, Selling and Greg Conrad, directly or indirectly, will not use, disclose,
divulge, disseminate, lecture upon, publish, copy, share, save, retrieve, release or
otherwise obtain benefits from, any Confidential Information, in whole or in part,
whether for their own purposes or for the benefit of any other person or otherwise.
14. Further Assurances. SD and Greg Conrad will execute and/or deliver or cause to
be delivered all such other and further instruments and documents as may reasonably be
requested by X-Chem in order to perfect or vest more fully in X-Chem the rights and
interests intended to be transferred and assigned pursuant to this Agreement. The
parties will also cooperate in delivering any mail, faxes, correspondence, deliveries and
other similar matters received by one party which is meant, intended or pertaining to the
business ofthe other party.
15. Payments Received. The parties will cooperate to ensure that payments are
delivered to the proper party. For instance, if one party receives payments intended and
meant for the other party, such party will promptly transfer and deliver to the other
party such payments as and when received.
4
,{._;
lJ
16. Reasonableness of Restrictions. SD and Greg Conrad agree that the provisions of
this Agreement are necessary and reasonable to protect the proprietary and confidential
information and interests of the Business. SD and Greg Conrad agree and acknowledge
that the restrictions contained herein are reasonable and enforceable against them,
including any territorial, geographical, temporal or time restrictions. Should a court of
competent jurisdiction determine that any provision of this Agreement is invalid or
unenforceable as written, then the parties intend for such court to modify such provision
to the extent necessary to make such provision valid and enforceable. To the extent that
Oklahoma law applies to the restrictions in Section 10, 11 and 12(i), the parties agree this
Agreement will automatically be reformed so that it complies with 15 Okla. St. 219A in
that such restrictions will prohibit direct solicitation, not passive solicitation.
17. Expenses of the Parties. Each party is responsible for their own expenses
incurred in connection with this Agreement.
18. Amendment and Modification. The parties may only amend, modify and
supplement this Agreement in writing signed by both parties. No waiver is effective
unless it is in writing executed by the party making such waiver. No waiver of any
provision of this Agreement will be deemed, or will constitute, a waiver of any other
provision, whether or not similar, nor will any waiver constitute a continuing waiver.
19. Assignment. SD and X-Chem may not assign this Agreement without the prior
written consent of the other party.
20. Entire Agreement. This Agreement, including all Schedules attached, contains
the entire agreement of the parties with respect to the contemplated transactions, and
supersedes all prior understandings and agreements of the parties with respect to its
subject matter.
21. Notices. Any notice required under this Agreement must be in writing and
delivered by (i) facsimile, (ii) overnight courier, or (iii) certified or registered U.S. mail,
postage prepaid, as follows:
If to SD or Greg Conrad:
Bill D. Reynolds
P.O. Box 184
122 North nth Street
Fort Smith, AR 72902
Fax No.:
If to X-Chem:
Jim Bird
NCH Corporation
2727 Chemsearch Blvd.
Irving, Texas 75062
Fax No.: 972.721.6135
with a copy to:
5
General Counsel
Legal Department
2727 Chemsearch Blvd.
Irving, Texas 75062
Fax: 972.438.0100
Any party may change the address to which notices are to be sent to it by giving written
notice of such change of address in the manner herein provided.
22. Governing Law. This Agreement, and its interpretation, construction and
enforceability, will be governed by and construed in accordance with the laws of the State
of Texas without reference to its choice of law provisions. No rule of strict construction
will be applied against either party.
23. Severability. If any provision of this Agreement is found to be invalid, illegal or
unenforceable, such provision(s) will be severed from this Agreement and the validity,
legality or enforceability of the remaining provisions of this Agreement will not be
affected. However, if any provision(s) is found to be invalid, illegal or unenforceable,
then the parties intend and agree that a provision that is valid, legal and enforceable but
that is as close as possible to the invalid, illegal or unenforceable provision will be
substituted for such provision.
24. Injunction. The parties agree in the event of a breach or violation or alleged
breach or violation of any of this Agreement, the other party shall be entitled to
injunctive relief against the breaching party in addition to such other relief as may be
available at law or in equity.
The parties agree to the above terms by signing below in Dallas County,
Texas:
X-Chem:
By:
Gregswartz,
Greg Conrad:

6
Addendum A
Cap String P&L Example
Gross Sales
400 I 0 Gross Sales
Net Sales
Cost or Gooda
50010 Cost of Sales
Variuces
Diatrihution Costs
51220 Depreciation- Auto!;
S 1230 Depr- Buildings/improvements
S 1240 Depreciation. Furniture & Fixtures
S 1250 Depreciation IT Equipment
51270 Depreciation- Machinery & Equipment
51310 Depreciation- Trucks & Trailers
51950 Company Match
52230 Airfare. Other
52260 Auto Rental Other
52290 Lodging Other
52320 Entertainment - Other
52350 Meals- Other
52420 Mileage Other
S2610 Hourly Wages- Accrued
52620 Hourly Wages- Overtime
52630 Hourly Wages- Regular
52710 Salaries
52730 Salaries- Bonus
53020 401K Employer
53030 40IK Profit Sharing Contribution
53070 Group Insurance- Self insured
53080 Group Insurance- Insured
53090 Group Insurance- Disability
53320 Payroll Taxes- FICA
53330 Payroll Tax;es Federal Unemployment
53340 Payroll Taxes- State Unemployment
54220 Rent- Equipment
54310 Lease- Auto
54370 Lease- Trucks & Trailers
B 54380 Lease- Warehouse
54410 Telephone- General
54420 Internet Charges
54460 Telephone - Cell
54510 Utilities- General
54520 Utilities- Waste DispMal
54530 Utilities- Electric
54540 Utilities- Water
54550 Utilities Gas
54640 Office Supplies
54650 Operating Supplies
54670 Unifonns &: Towels
54790 Fuel&. Oil
54810 Employee Relations
54910 Other Operating Expense
55120 Repairs&. Maintenance Autos
55730 Repairs & Maintenance Buildings
55770 Repairs & Maintenance Trucks & Trailers
55780 Repairs & Maintenance- Equipment
57100 TIC Chargcback In- Labor
Total Cost of GOods Sold
Gron Margin
Rep Compensation
A 61830 Commissions - Earned
Total Rep Variable Costs
Contribution Margin
Se1Jing
1
General & A!fministra!ive
Sales & Marketing
Administrative
Total Selling, General & Admini!llrative
0 Operating lncomei(Lou)
Pre--tax
IncomeTn
79550 State Income Tax
Net lncomei{Lo1:')
E2lli!!QI_
A Actual comrQulon will be charged to P&L
Greg suggested 3% on all sales
B 50% of Wa,..house LeasaiUtiliti .. JMaintenance
will ba charged to cap Str1ng Business
C All other expenses will be actual
0 Target 50% Op. Inc. per Greg based on historical run rate
Monthly
Actual
fOOO'Sl
500,000
500,000
(150,000)
0
0
(42)
(167)
(13)
(3,750)
0
(2,500)
(300)
(5,500)
0
(5,500)
0
0
(1,375)
(4,583)
(17,083)
(2,563)
(346)
0
(2,304)
0
(100)
(4,148)
(691)
(346)
0
0
0
(2,000)
(300)
0
(400)
0
(60)
{100)
(100)
(100)
(100)
(3,000)
(100)
(2,000)
0
(2,000)
0
0
(1,000)
(1,000)
(20,833)
(234,403)
265,598
(15,000)
(15,000)
250,598
0
0
0
250,598
250,598
0
250,598
Annual
Actual
fOOO'SJ
6,000,000
6,000,000
(1,800,000)
0
0
(SOO)
(2,000)
(ISO)
(45,000)
0
(30,000)
(3,600)
(66,000)
0
(66,000)
0
0
(16,500)
(55,000)
(205,000)
(30,750)
(4,148)
0
(27,650)
0
(1,200)
(49,770)
(8,295)
(4,148)
0
0
0
(24,000)
(3,600)
0
(4,800)
0
(720)
(1,200)
(1,200)
(1,200)
(1,200)
(36,000)
(1,200)
(24,000)
0
(24,000)
0
0
(12,000)
(12,000)
(250,000)
(2,812,830)
3,187,170
(180,000)
(180,000)
3,007,170
0
0
0
3,007,170
3,007,170
0
3,007,170
Est.
$5,000 in Furniture
$6,000 for 4 PC's & printer
$1,200 Air Comressor
3 trucks@ 45.000/ea- 3 yr. depr.
1 Admin @ $55,000/yr. {Est Salary)
2 Operators $65,000/ea. +one manager@ $75,000 (Est. Salaries)
15% bonus
Warehouse Rent @ $2,000/mo
Brett Hodge + Corp 0/H
53.12%
50.12%
ADDENDUM 8
Full Rolls:
Feet Cost per Foot Total value
3/8" -625 ft. in full rolls
19,000 $4.15 $78,850
3/8"- 2205- DRAKA ft. in full rolls
19,000 $1.62 $30,780
3/8" - 2205- DRAKA ft. in partial rolls
2,600 $1.62 $4,212
1/4"- 625 - PTM ft. in full rolls
33,000 $3.65 $120,450
1/4"- 625- PTM ft. in partial rolls
12,800 $3.65 $46,720
1/4"- 825- PTM ft. in full rolls
165,000 $1.42 $234,300
1/4"- 2205- Webco ft. in full rolls
198,000 $0.46 $91,080
1/4"- 2205- Webco ft. in partial rolls
51,000 $0.46 $23,460
Total feet 481,400 Total Value $629,852
Item Quantity Cost Each Total Valuf
atomizers 104 $105.00 $10,920
Weight Bars 19 $450.00 $8,550
Injector nozzles 81 $65.00 $5,265
Canyon clamps 200 $27.95 $5,590
Hangers 104 $750.00 $78,000
Subs 60 $215.00 $12,900
(2 7/8" packer subs) 7 $225.00 $1,575
(2 7/8" injection subs) 3 $225.00 $675
(2 3/8" ss packer subs) 21 $550.00 $11,550
(3 1/2" Ultra Flush) 1 $465.00 $465
Banding Material 1,000 $3.15 $3,150
Assorted Connections 100 $2.10 $210
Wireline BOPs 1 $15,000.00 $15,000
Total Value $153,850
llim1 Yi!.J..1l.
Value
16 foot install trailer
$45,000
Air foam unit 1VV9F845237E285765
$285,000
Rolligon Unit tE9BF20279S230091
$185,000
Rolligon Unit 1 S9G026214H434063
$125,000
Rolligon Unit 1E9BF202795230093
$185,000
Rolligon Unit 1E9BF202995230092
$185,000
Wlite 1 Ton Unit 1 gbjk34637e533900
$85,000
Install Unit Gooseneck 1 EOBF202795230088
$105,000
Total Value $1,200,000
MASTER LEASE AGREEMENT
This Master Lease Agreement ("Agreement"), effective December 1, 2011, is entered into between
Six Degrees, LLC, an Arkansas limited liability company, ("Lessor"), and X-Chem, Inc. ("Lessee).
Both Lessor and Lessee may be collectively referred to as the "Parties" and singularly referred to as
the "Party." The Parties agree as follows:
1. LEASE. Lessor hereby agrees to lease to Lessee and Lessee hereby agrees to lease from
Lessor, on an AS IS basis, certain Vehicles for use in its business under the terms set forth herein.
The vehicles leased shall be described and set forth in Schedule A.
2. DISCLAIMER. LESSEE AGREES THAT LESSOR IS NOT THE MANUFACTURER,
DESIGNER OR DISTRIBUTOR OF THE VEHICLES. LESSOR MAKES NO
REPRESENTATION OR WARRANTY OF ANY KIND, EXPRESS OR IMPLIED, WITH
RESPECT TO: ANY VEHICLE INCLUDING, BUT NOT LIMITED TO: THE
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OF A VEHICLE; THE
DESIGN, QUALITY OR CAPACITY OF A VEHICLE; OR COMPLIANCE OF A VEHICLE
WITH APPLICABLE LAW.
3. TERM OF AGREEMENT. This Agreement shall commence on the Effective Date for an
initial period of one year. It will continue thereafter until canceled or terminated by either party upon
30 days' written notice to the other.
4. OPERATION. Lessee shall operate the Vehicles in the United States and in accordance with
applicable federal, state and local laws governing vehicle use, operation, maintenance or alteration.
Lessee agrees to repair the Vehicles and to maintain them in safe and good mechanical condition.
5. RENTAL CHARGES. The rental charges for this Lease are set forth in Section 5 of the
Agreement, dated December 13, 20 II, between Lessor and Lessee.
6. SURRENDER OF VEHICLES. At the end of the minimum Lease Term, Lessee may, and at
the end of the Lease Term, Lessee shall, upon reasonable written notice to Lessor, deliver the
Vehicle to Lessor at a mutually agreed location. Upon surrender, the Vehicle shall be in good, wear
and tear excepted, safe and lawful operating condition. Surrender of the Vehicle shall not be
effective until Lessor has actual physical possession of the Vehicle and has received all license
plates, registration certificates, documents of title, odometer and damage disclosures and other
documentation necessary for the sale of the Vehicle. Any personal property in a Vehicle upon
surrender shall be deemed abandoned and may be disposed of by Lessor without liability.
7. INSURANCE. Lessee shall maintain the following coverages during the Lease Term of each
Vehicle with an insurance company acceptable to Lessor and deliver to Lessor a certificate thereof:
a. Automobile liability insurance name Lessor as an Additional Insured with limits of
coverage as Lessor may require, but in no event less than $1 million combined single limit per
occurrence.
. (_;
(;
b. Comprehensive and collision insurance naming Lessor as Loss Payee with coverage for
the actual cash value of each Vehicle. Lessee shall bear all risk of loss, damage or destruction
to the Vehicle (which may. exceed actual cash value), however caused, from the time of
acceptance until surrender to Lessor.
c. Conditions. All insurance policies shall provide for 30 days' prior written notice to
Lessor of any cancellation or reduction in coverage. Lessee authorizes Lessor to endorse
Lessee's name to insurance checks related to the Vehicles.
8. NATURE OF AGREEMENT. THE PARTIES INTEND THE LEASE OF VEHICLES
HEREUNDER TO BE A TRUE LEASE PURSUANT TO TEXAS STATUTES
9. MISCELLANEOUS. If Lessee executes a business use certification with respect to the
Vehicles leased under this Agreement, both Lessor and Lessee agree to report all vehicle leases as
leases for U.S. income tax purposes. Lessee has no right, title or interest in and to any Vehicle leased
hereunder except as lessee. Lessor has the right to mark the Vehicle at any time stating its interest as
owner and to receive and retain rebates, discounts and other compensation directly or indirectly from
manufacturers, suppliers and vendors with respect to the Vehicles leased hereunder. Lessee agrees
that it is not now and will not in the future be listed on any watch list maintained by the U S.
Treasury Department and shall comply with the Patriot Act, international trade control and money
laundering Jaws, as applicable.
10. DEFAULT; REMEDIES.
a. Default. If Lessee shall fail to make the payments or maintain insurance coverage as
herein required or after 10 days' written notice shall fail to perform any of its other covenants
under this Agreement, or Lessee or any guarantor shall (i) make an assignment for the benefit
of creditors, or suffer a receiver or trustee to be appointed, or file or suffer to be filed any
petition under any bankruptcy or insolvency law of any jurisdiction; or (ii) discontinue
business; or (iii) cease its corporate or partnership existence or die; or (iv) be in default under
any other agreement it may have with Lessor or any parent, subsidiary or affiliate of Lessor, or
(v) undergo a change in controlling ownership; or (vi) suffer a material adverse change in
operating or financial condition which impairs Lessee's ability to perform its obligations
hereunder or Lessor's title to or rights in the Vehicles; or (vii) make any representation or
warranty herein, or in any document delivered to Lessor in connection herewith or filed with
any governmental entity and obtained by Lessor in connection herewith, which shall prove to
be false or misleading in any material respect; then in such event Lessee shall be in default
under this Agreement. A default under the terms of this Agreement shall constitute a default
under any other agreement Lessee has with Lessor, or any parent, subsidiary or affiliate of
Lessor.
b. Remedies. In the event of default by Lessee, Lessor shall have the right to: (i) repossess
any or all Vehicles leased hereunder wherever they may be found (and for that purpose Lessor
or its agents may enter upon any premises of or under the control of Lessee) without canceling
this Agreement; (ii) charge Lessee with any deficiency between the amount due from Lessee
and the amount realized by selling such Vehicles to another party; (iii) collect the full rental
due for the period prior to any sale of Vehicles, (iv) recover all expenses incurred to repossess
said Vehicles together with reasonable attorneys' fees for enforcement of Lessor's rights; and
(v) offset any amounts due to Lessee against amounts due to Lessor. In addition, Lessor shall
have the right to cancel this Agreement and shall retain all rights and remedies available at law
or in equity; all such rights and remedies to be cumulative and not exclusive.
11. GOVERNING LAW. THIS AGREEMENT SHALL NOT BE EFFECTIVE UNTIL SIGNED
BY LESSOR IN TEXAS, AND SHALL, UPON SUCH EXECUTION, BE DEEMED EFFECTIVE
AS OF THE EFFECTIVE DATE. THE LAWS OF THE STATE OF TEXAS SHALL GOVERN
ALL QUESTIONS OR DISPUTES RELATING TO THE VALIDITY, INTERPRETATION,
PERFORMANCE, ENFORCEMENT, OR EFFECT OF THIS AGREEMENT, WITHOUT
REGARD TO CHOICE OF LAW PRINCIPLES.
12. ODOMETER DISCLOSURE STATEMENT. Federal law (and State law, if applicable)
requires that Lessee as lessee disclose, and Lessee shall disclose, the mileage of each Vehicle to
Lessor in connection with the transfer of ownership of the Vehicle. Failure to complete an odometer
disclosure statement or making a false statement may result in fines and/or imprisonment.
13. MODIFICATIONS. This Agreement contains the entire understanding of the parties and merge
all oral understandings. Lessee may issue purchase orders for administrative convenience, but such
purchase orders are subject to the terms and conditions of this Agreement and shall not amend or
supplement it. Any modifications, changes, or amendments may be made only in a writing duly
signed by Lessee and Lessor. Failure of either party to enforce any right shall not be deemed a
waiver of such right.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be signed by duly
authorized representatives.
X-Chem:
1
Ac. (Lessee) A
By: n.cv--y .J.J
Title: Pr'Ch, J -e.,..!
(President, Vice President, Treasurer, or provide certcate of authority)
Address:
Six De r es, LLC (Lessor)
__ _
Title: Authori
Address:
Master Lease Agreement Business Use Certification
l. Lessee certifies under penalty of perjury that it intends the Vehicles leased pursuant to
this Agreement to be used more than 50% in the trade or business of Lessee, and
2. Lessee has been advised that Lessor and not Lessee will be treated as the owner of the
Vehicles for Federal Income Tax purposes.
(Lessee)
---
Title: ?rc.c:.,'.clevv"r

(President, Vice President, Treasurer, or provide certificate of authority)

--------------------
Master Lease Agreement Schedule A
16 foot install trailer
Air foam unit
Rolligon Unit
Rolligon Unit
Rolligon Unit
Rolligon Unit
White 1 Ton Unit
Install Unit
Gooseneck
(Lessee)
Vin#
1W9F845237E285765
1E9BF20279S230091
1S9G026214H434063
1E9BF202795230093
1E9BF202995230092
1gbjk34637e533900
1 EQBF202795230088

Date: P-/1'1 /"2.1611
r 1
(Lessor)

Title:

' ..
PLEASE GIVE THIS DOCUMENT TO YOUR INSURANCE AGENT
Insurance Coverage and Endorsement Required by Lease Agreement:
Required Coverage:
COMPREHENSIVE AUTO LIABILITY:
Minimum for all Vehicles: $1 million Combined Single Limit
If transporting dangerous substances or goods: $1 million Combined Single Limit
Coverage amount as outlined in the
"Amendment- Hazardous Substances" to
the Master Lease Agreement
COMPREHENSIVE & COLLISION: Maximum deductible $10,000
Required Endorsement:
"Six Degrees, LLC is Additional Insured and Loss Payee"
1Telematics Services Addendum -12/18/07

Six Degrees Et. Al. v. X-Chem

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IN THE UNITED STATES DISTRICT COURT

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