UBD Program

Compton Petroleum Corporation

Compton Thornbury 4 Well Project
January 30, 2008

Prepared By Lee Campbell VP Operations Sonic Energy Services Ltd.

Approved By Adam Way Drilling Supervisor Compton Petroleum

UBD PROGRAM

TABLE OF CONTENTS
1 WELL INFORMATION AND CONTACTS........................................................................................... 2
1.1 1.2 OBJECTIVES .................................................................................................................................................... 3 WELL SCHEMATIC ........................................................................................................................................... 3

MAIN HOLE UBD SECTION ............................................................................................................ 4

2.1 AIR DRILLING DESIGN PARAMETERS ......................................................................................................... 4 2.1.1 Risk and Hazard Assessment ............................................................................................................... 4 2.1.2 Fire & Explosion Prevention Plan ......................................................................................................... 5 2.1.3 Underbalanced Equipment ................................................................................................................... 6 2.1.4 Air Drilling / Circulation .......................................................................................................................... 9 2.1.5 Tripping Underbalanced ...................................................................................................................... 10 2.2 WELL CONTROL ......................................................................................................................................... 11 2.2.1 Definition of Well Control Events ........................................................................................................ 11 2.2.2 BOP System Considerations .............................................................................................................. 11 2.2.3 Well Control Shut-In Procedure .......................................................................................................... 12 2.2.4 Loss of Drill String Integrity Procedure ............................................................................................... 12

MAIN HOLE OPERATIONAL PROGRAM ........................................................................................ 13

3.1 3.2 3.3 3.4 3.5 3.6 3.7 3.8 POTENTIAL HOLE PROBLEMS ......................................................................................................................... 13 MAIN HOLE DRILLING PROCEDURE ................................................................................................................. 13 CONNECTION PROCEDURE............................................................................................................................. 17 TRIPPING OUT OF HOLE PROCEDURE ............................................................................................................. 18 TRIPPING IN THE HOLE PROCEDURE ............................................................................................................... 18 RCD ELEMENT LIFE ...................................................................................................................................... 19 RCD SERVICING PROCEDURE ....................................................................................................................... 20 STUCK TUBING / TIGHT HOLE PROCEDURE ..................................................................................................... 21

APPENDIX I EQUIPMENT SPECIFICATIONS ..................................................................................... 22

SONIC ENERGY SERVICES AIR DRILLING UNIT - AIRPAKTM ......................................................................................... 23 ROTATING CONTROL DEVICE (RCD) .......................................................................................................................... 24

APPENDIX II LEASE LAYOUT DIAGRAM ........................................................................................... 25 APPENDIX III PROCESS FLOW DIAGRAM ........................................................................................ 26 APPENDIX IV UBD RIG INTERFACE CHECKLIST ............................................................................. 27

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1 Well Information and Contacts

WELL INFORMATION
NAME: UNIQUE WELL IDENTIFIER PROJECT #: LICENSE #:
Compton Portage 6-15-78-17W4 104/06-15-078-17W4/0 100167-3 392061

WELL SUMMARY
SURFACE HOLE:
100 m TVD 311 mm HOLE (12 1/4) 244.5 mm CASING (9 5/8) CEMENTED TO SURFACE 347 m TVD 222 mm HOLE (8 3/4) 177.8 mm CASING (7) CEMENTED TO SURFACE

MAIN HOLE:

352.2 m TVD 159 mm HOLE (6 1/4) NO CASING OPEN HOLE

INTERMEDIATE HOLE:

WELL SPECIFIC SERVICES

Drilling Rig: Underbalanced Drilling: Cement: Mud: Casing and Materials: Trucking: IPSCO Lac La Biche Transport Trailblazer #40 Sonic Energy Services Sanjel Phone: Phone: Phone: Phone: Phone: Phone:
(403) 237-9900 (780) 623-4817 (403) 391-3437 (403) 237-9823 (800) 432-2923

OPERATOR PERSONNEL
Drilling Manager: Superintendent: Geologist:
Will Cover Adam Way Julia Feltham

Phone: Phone: Phone:

(403) 807-7222 (403) 669-7238 (403) 801-1026

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1.1 Objectives
The primary objective of this well is to underbalanced drill the Grosmont formation to mitigate the potential for lost circulation. The circulating medium used will be dry compressed air to provide the lowest possible circulating pressures.

1.2 Well Schematic

Compton Petroleum Thornbury 4 Well Project

Estimated Depths
Formation mTVD mSS

SURFACE HOLE: 0-100 mMD

Hole Size Casing Size Drilling Fluid Fresh Water & Native Clays

311 mm
Surface Casing Point

244.5 mm

100

456

VIKING

INTERMEDIATE HOLE: 100-347 mMD

Hole Size Casing Size Drilling Fluid Gel - Chem

JOLI FOU

222 mm
GRAND RAPIDS 172 388

177.8 mm

CLEARWATER SAND

271

289

MAIN HOLE: 347-352 mMD

Hole Size Casing Size Drilling Fluid Air Circulating System

WABISKAW

337

223

159 mm
Preservoir 2400 kPa

Open Hole

GROSMONT

347

213

Est. Production Dry Sweet Gas. <1 MMscfd

TOTAL DEPTH

352

208

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2 Main Hole UBD Section

2.1 Air Drilling Design Parameters
2.1.1 Risk and Hazard Assessment
A Risk and Hazard Assessment has been conducted prior to execution of this well. The following table illustrates the tool that was used to determine Hazards, Potential NPT Events and the associated Risk of each.
Definitions Hazard = a situation / event with the potential to cause harm (to people, assets or environment) Risk = the likelihood event / harm will occur multiplied by the consequences NPT = non productive time, which includes lost time and costs, formation damage and/or any deviation from plan. Consequences = the various scenarios that might develop from the undesired event. Controls = measures taken to prevent the circumstance or initiating incident from occurring. Risk Levels: R High Risk engineering, procedures and training required Y Medium Risk procedures and training required, should consider engineering

G Low Risk training required, should consider engineering and procedures

Operational Phase:
Hazard

UBD Equipment Rig Up, Pressure Testing and Commissioning

NPT Event

What If ?

Consequences

Controls / Safeguards

Considerations

Actions to be taken

RCD doesnt fit under sub

Can not drill UBD Delay in drilling well (lost time and cost) Attempts to try and fit could cause injury to personnel

Accurate BOP stack-up and rig substructure clearance measurements

Raise rig sub height by building up lease around casing bowl. Verify and check equalizing line clearance if built too high. Change BOP equipment. Use different rig. Use different RCD. Add pony sub under rig. RCD supplier go to location to check out rigs sub prior to job. Use hex kelly, square kelly not recommended. Use power swivel instead of kelly. Use top drive instead of kelly. Use Coil Tubing.

Improper kelly (square vs. hex)

Unable to run square kelly through RCD. Delay in drilling well (lost time and cost) RCD leakage. Injury to personnel.

RCD supplier standard operating procedures / risk register. UB Drillstring Diagram.

All wellsite supervisors must review the results of this non-exhaustive (i.e., there could be other Hazards that have not been foreseen) assessment, to ensure their awareness and to possibly identify other Hazards that require control and/or mitigation.

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2.1.2

Fire & Explosion Prevention Plan

In agreement with regulatory requirements, including Directive 033 and IRP 18, it is safety critical to establish a systematic approach for identifying and managing fire and explosion hazards. This process must involve: Evaluating potential risks with respect to fire and explosion hazards; Determining how to effectively manage these potential risks; Determining the need for specific control measures to prevent fires or explosions; Putting the required control measures in place.

Fire and Explosion Risk Management - Critical Operational Parameters

Hazard Downhole fires / explosion Cause Necessary ingredients for a downhole fire or explosion present: - Air - Hydrocarbons - Ignition Source Consequence - Bottom drill collars/drill pipe and bit are melted / heat damaged making fishing operations difficult. - Well killed, formation damage Controls - Experience has shown that downhole fires do not occur when dry gas is encountered in dry air drilling. - The risk of downhole fire increases when wet gas or condensate has been encountered and is present in the system. - The well is to be flowed at all times avoiding any build-up of pressure in the well. - Control ROP to 50 meters/ hr maximum to avoid down hole blockages that can build pressure (diesel ignition). - All personnel to be made aware of risk and causes at safety meetings - Air equipment personnel should monitor blooie line temperature every 15 minutes with IR temperature gun. This should be recorded and a baseline established. Any increase from this baseline should be investigated. Surface fires / explosion Necessary ingredients for a fire or explosion present: - Air - Hydrocarbons - Ignition Source - Harm to personnel - Damage to equipment and environment - Cold venting of returns (no lit flare). A lit flare provides an ignition source. - Rigs well control flare tank must have igniter turned off and locked out. - Ensure proper spacing of flowback tank (minimum 50 meters from wellhead) - Electrically ground the flowback tank to prevent build up of static electricity. - Methane dispersion is very rapid and thus the flammable region around the flowback tank is quite small (very low risk of a flammable mixture blowing over to rig area).

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2.1.3

Underbalanced Equipment
Min Max Consequence Controls / Corrective Action - BHA Non-Return Valves (NRVs) or float valves are required to prevent back flow back up the drill string. - Positioning at least two NRVs in the BHA (normally on top of the mud motor) allows for safe underbalanced tripping. These are to be considered part of the well control equipment. It must be clearly noted that the integrity of the drill string below a float valve is unknown - A Near Surface Non-Return Valves (NRVs) is required during air drilling for operational efficiency reasons only this not to be considered a well control NRV. - For drill string connections, the near surface NRV allows for rapid bleed off of pressure and therefore avoidance of bleeding off the entire drill string. - It must be noted that the integrity of the drill string below this NRV valve is unknown until the drill string can be inflow tested below it (i.e., when the NRV is brought top surface). - To Totco survey the near surface NRV must be removed from the drilling string. - Drill pipe buckling calculations indicate the maximum unsupported stroke length at the maximum potential surface pressure (5,000 kPa) is greater than 9 meters. The push force of the top drive will not buckle the one joint of 101.3mm drill pipe under these surface pressure conditions. - Although torque and drag increases with UBD (no filter cake), previous similar air wells have indicated no torque and drag problems. - See RCD section.

UBD Drill String - Critical Operational Parameters

Parameter

Well Control

n/a

n/a

Uncontrolled flow up the drill string. Harm to personnel.

Air flowback up drill string during drill string connections

Uncontrolled flow up the drill string. Harm to personnel. Waste of rig time.

Buckling

Failed drillstring / loss of drill string integrity

Torque and Drag Fatigue

Failed drillstring / loss of drill string integrity Loss of containment Injury to personnel

Rotating Control Diverter Compatibility

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UBD PROGRAM Air Compression / Injection System - Critical Operational Parameters

Parameter Pressure (kPag) Min 0 Max 10,000 Consequence Pop-off valve on booster will blow Potential for leaks on injection piping Harm to personnel Rate (m /min)
3

Controls / Corrective Action Closely monitor standpipe pressure Control ROP to 50 meters / hr maximum

30

45

- Too low will cause hole cleaning problems and potential stuck pipe. - Too high will cause hole washout and too much frictional pressure loss within wellbore (potential formation damage)

Maintain air rates as specified

Separation System - Critical Operational Parameters

Parameter Erosion Min Max Consequence - Flowline damage (cost) - Hydrocarbon release - Harm to personnel Controls / Corrective Action Maintain flow velocities in primary flowline below 180 ft per second. Reduce number of flowline turns. Ensure 10 internal diameters spacing between flowline turns. This allows the flow to straighten prior to the next turn. Primary flowline must contain targeted tees (turns) and be 101.6mm in diameter or larger. Ensure ultrasonic erosion monitoring program in place for frequent. Maximize liquid injection rate. Control ROP to 50 meters / hr maximum Maintain air rates as specified. Minimize turns in primary flowline Ensure there is no blockages/restrictions in primary flowline

Flowline blockage Surface back pressure (kPa) 1000

- Formation damage - Stuck pipe - Formation damage - Stuck pipe - Poor hole cleaning

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UBD PROGRAM Rotating Control Diverter (RCD) - Critical Operational Parameters

Parameter RCD Type: Grant (see Appendix I Equipment Specifications) Min Dynamic 1,700 kPa (250 psi) Max Static 5,200 kPa (750 psi) Consequence Release of hydrocarbon on rig floor Controls / Corrective Action A no leak policy is in place with regards to Rotating Control Diverter (RCD) sealing element maintenance. As such, a preventative replacement standard operating procedure must be provided by the RCD vendor (see section 3.3.6). This is required to allow the safe replacement of the RCD sealing elements before failure. Ensure rig is centered and vertically aligned. Misalignment will cause premature RCD element failure. Spiral drill collars cannot be used for UBD since a proper seal is not possible. Drill pipe with identification grooves must not be used, as the grooves severely accelerate rubber wear. Kelly savers with rubber inserts are not acceptable, as they severely will damage the RCD rubber. Jars RCD failure Hydrocarbon release Jars should be avoided in the drill string, as they considerably increase stripping and snubbing risks. Jars must be compatibility tested with the stripping elements. Extreme caution must be used while stripping jars. Consideration for staging of jars using the rigs annular preventer should be made. Kelly Drive If a Kelly is being used, ensure it is of Hexagonal type (square Kellys do not allow for an effective seal). Avoid Kelly saver subs with rubber protectors and abrupt OD transitions between Kelly and drill pipe.

RCD Element Wear

RCD failure Hydrocarbon release

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2.1.4

Air Drilling / Circulation

Table 1 below shows the expected air drilling circulation parameters. The minimum air injection rate to fulfill Angels criteria for air drilling of 914 m/min (3000 ft/min) annular velocity is 20 m3/min. In table 2 an annular velocity of 1200 m/min (3936 ft/min) has been used to calculate the optimal hole cleaning velocity. It is recommended therefore to inject between 16 30 m3/min of air to ensure optimal hole cleaning. Puon and Ameri - Simplified Method

Table 1: Air Drilling Parameters Minimum and Maximum Cases

Critical Operational Parameters

Parameter Bottomhole Pressure (kPag) Min 0 Max 800 Potential NPT Events - Too high will cause too much frictional pressure drop and too much relative reservoir pressure depletion adjacent to the wellbore during connections. Dust formation damage will likely result. - Too high will create a greater flammability and explosion mixture risk. - Too high will cause wellbore to load up with solids (poor hole cleaning) and potentially stuck pipe. - Too high will cause higher bottomhole pressures and potential for formation damage. Controls / Corrective Action Ensure optimal injection rate of air.

Drilling Rate of Penetration (ROP in m/hr)

n/a

50

Ensure Driller control drills to a maximum of 50 m/hr.

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2.1.5 Tripping Underbalanced

Important terminology: Snubbing bi-directional mechanical restraint of drill/work string tubulars for prevention of uncontrolled string movement out of the well by positive wellbore surface pressures. With mechanical restraint, snubbing allows controlled removal and insertion of a tubular with a positive wellbore surface pressure. Stripping an operation where a dynamic mechanical sealing device is in place for allowing effective wellbore surface pressure and fluid isolation during removal or insertion of a drill/work string. Stripping devices include Rotating Control Diverters (RCD) and dedicated stripping rams. Operational stripping on the well control Annular Preventer BOP is to be avoided. No stripping is permitted using well control BOP pipe rams. Pipe Light a condition where the drill/work string in well bore is lighter than the upward force create by the positive wellbore surface pressure. In this case, if the drill/work string is not mechanically restrained, it will be ejected from the well in a hazardous uncontrolled manner. Pipe Heavy a condition where the drill/work string in well bore is heavier than the upward force create by -the positive wellbore surface pressure. There are three optional techniques used for removal and insertion of a drill/work string with a positive wellbore surface pressure: 1. Minimized surface pressure (flowing well at maximum rate) so the buoyed weight of the drill string is sufficient for restraint against the pressure force on the drill string (i.e., always pipe heavy). THIS OPTION HAS BEEN CHOOSEN FOR THIS WELL. 2. Snubbing with a hydraulic jacking mechanism (rig assist unit, hydraulic workover unit, push/pull machine) 3. Employment of a well bore isolating barrier (downhole isolation valve). This technique eliminates the requirement to snub, as there will be no surface pressure once the barrier is employed. Tripping design considerations must include buckling calculations, well control and equipment interfaces. In all cases, mechanical restraint for snubbing requires additional specialized and fit for purpose equipment.

Critical Operational Practices

Parameter Maximum operational surface pressures (kPag) Flammable and/or explosive mixtures conditions Min 0 Max 200 Consequence Pipe light conditions can result in unrestrained movement of the drill string (no snubbing unit). Fire and/or explosion Controls / Corrective Action Well is to be flowed at all times to minimize wellhead pressure

n/a

n/a

Do not dead head or close in well at any time there is potential for air/O2 to be in wellbore. Ensure well is flowed at all times. Continuously observe methane detector to verify when was has displaced to 100% methane gas.

BHA handling

Inaccurate measurements could result in blind ram contact BHA.

Ensure all BHA components are accurately measured and BOP stack measurements are also accurately recorder (blind ram to base of RCD is critical).

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2.2 Well Control

2.2.1 Definition of Well Control Events
A well control event occurs when the flow and pressure conditions exceed acceptable levels as defined by drilling flow control matrix or when the failure equipment either presents an imminent danger to the crew or prevents the continuation of safe underbalanced drilling operations. The preferred method for killing the well is Bullheading down the annulus. Ensure the rig pump and kill tanks are lined up and ready to kill the at all times. A well kill is required: 1. Any time when safety of personnel or the equipment are threatened. 2. Any time that a persistent inability to maintain flow and pressure control has occurred. 3. Any time that the secondary well control equipment (rig BOPs) has developed a leak that cannot be isolated from the well. A well kill may be required if: 1. 2. 3. 4. 5. The drill string has lost integrity. A drill string NRV/float has failed. The surface casing has failed or lost integrity. The secondary well control equipment (rig BOP system) fails. Any component of the specialized underbalanced equipment (RCD, UBD separation system) has failed.

2.2.2 BOP System Considerations

It is highly recommended that new BOP elements and a new Kelly Hose be installed prior to commencing UBD operations. Consideration for running a surface drillpipe screen to observe for rubber debris (i.e., indication of imminent kelly hose failure) should be made. Although operations using secondary well control equipment are to be avoided, the following operations will require operational use of the secondary well control equipment: Stripping on the Rigs Annular Preventer will be required for when servicing the Rotating Control Diverter and for installing the Tubing Hanger. The Annular Preventer will be used for primary single barrier isolation when servicing the Rotating Control Diverter. The Blind Ram will be used for primary single barrier isolation when the drill string is out of hole. The BOP drilling spool outlet valve will be used on as a secondary flow path and for pressure equalization of the RCD and for flowing of the well when out of hole with the drill string (blind ram closed).

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2.2.3 Well Control Shut-In Procedure

1. Valves are to be previously lined-up valves for a soft shut-in with an open rig choke and closed HCR. Both drilling spool choke side manual wing valves are to be open. 2. Bypass air. 3. Pick up off bottom and ensure tool joints are clear of the BOP rams. 4. Open HCR. 5. Close rigs annular preventer. 6. Report to supervisors that well has been shut-in. 7. Ensure pressure between Annular and RCD is bleed off. Close primary flowline valve adjacent to RCD and inflow test annular for 15 minutes. Continuously monitor for pressure between RCD and annular preventer. 8. Once well has confirmed it has displaced itself to methane gas, the option to close the well in can be made. Close will in by closing the HCR valve. 9. Evaluate situation to determine if it is necessary to kill the well or resume with underbalanced drilling.

2.2.4 Loss of Drill String Integrity Procedure

A loss of drill string integrity (washouts, twist offs, etc.) can lead to an uncontrolled hydrocarbon release at surface. It is vital while performing underbalanced drilling operations to constantly monitor for any loss of drill string integrity and take immediate action limit the consequences. It should be noted that Floats in the drill string can mask integrity problems below that float. Warning signs of a loss of drill string integrity: Drillability problems, such as unexpected motor stalling, reduction in ROP. Inability to bleed off the string during a connection or while tripping. Flow observed up the drill pipe, either during connections or while performing drill string inflow tests. Sudden loss of string weight, indicating the loss of a portion of the drill string.

Well Control Procedure 1. If a loss of drill string integrity is observed while top drive is not connected, immediately install and then close a stabbing valve or re-connect top drive. Monitor pressures and report top supervisors. 2. If risk of a pipe light condition occurs (shallow twist off), then immediately close Rig Annular preventer to maximum closing pressure. Space out drill pipe and close pipe ram. Proceed immediately with Bullhead well killing procedure. 3. Once a drill string integrity failure has been observed, an appropriate corrective action must be determined.

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3 Main Hole Operational Program

3.1 Potential Hole Problems
Emergency Response Plan: A site specific ERP is not required for this location. Refer to corporate ERP. Kicks: are not relevant as it is planned to be drilling with air underbalanced. High Pressure: Grosmont, maximum reservoir pressure gradient 6.9 kPa/m Fire/Explosion: drilling with air can create fire and explosions conditions / risks Lost Circulation: is not expected. Hydrogen Sulfide (H2S): is not expected in this well. Anhydrites: are not expected. Shale/Coal: is expected, although stringers are expected to be relatively thin and competent

3.2 Main Hole Drilling Procedure

The following is a chronological list of the operations in the 158.8 mm (6-1/4) main hole section. 1. Conduct documented safety, hazard identification and procedural meetings with all personnel on site. a) Address crew handovers while performing underbalanced drilling operation. Discuss in detail crew shift change and hand over requirements. b) Complete UBD Rig Interface Checklist per Appendix A. c) Confirm communications protocol and all radios functioning. At all times the driller will be the focal point of communications and procedure coordination for the entire Underbalanced operation. d) At the pre-job safety meeting, discuss indicators of a downhole fire with all personnel. Ensure everyone is familiar with what to do if a downhole fire is suspected. Indications of a downhole fire: Increase in primary flowline / blooie line temperature Sudden loss of string weight fire can melt the bit and BHA Sudden decrease in ROP 2. Confirm casing and wellhead integrity to the maximum possible wellhead pressure. The casing and wellhead should be pressure tested to this pressure (as a minimum). Ensure sufficient kill fluid is on location for this well minimum 10 m3 will be required. Kill fluid will be fresh clean water treated with 5 liters/m3 Sure-Shale to minimize formation damage in event the well has to be killed. Move in and rig up underbalanced drilling equipment per related service company Standard Operating Procedures (SOPs) as follows: a) Spot and rig up air drilling equipment. b) Nipple up rotating control diverter (RCD) to the rigs BOP stack as per UBD stick diagram. Tie in air drilling equipment to BOP stack, RCD and standpipe as per the UBD stick diagram. c) Install blooie line and flowback tank and production testing vessel/unit. Install gas measurement equipment and function test. d) Label all valves and indicate normally closed or normally open for the drilling operation.

3.

4.

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5. Pressure test all equipment according to the pressure testing table below. The RCD element must be installed while pressure testing. SAFETY CRITICAL: a) b) c) d) The maximum anticipated shut-in wellhead (WHP) is 363 psi / 2,500 kPa The maximum anticipated injection pressure (SPP) is 1,500 psi / 10,335 kPa RCD is weakest component, ratings: 250 psi / 1,700 kPa dynamic, 750 psi / 5,200 kPa static Pressure Testing Requirements: Low Pressure Test 200 psi / 1400 kPa High Pressure Test 363 psi / 2,500 kPa

Equipment Rotating Control Diverter (RCD) Annular Preventer Pipe/Blind Rams Rig Manifold Stabbing Valves / Kelly Cocks Stand Pipe and Associated Equipment High Pressure Air Injection Associated Valving NRV Bleed Off Tool and Line Float Sub NRVs * Low Pressure Flow Lines

Pressure test according to rig contractor standard operating procedures and practices. 200 psi / 1400 kPa 200 psi / 1400 kPa 200 psi / 1400 kPa 200 psi / 1400 kPa 180 psi / 1250 kPa 1500 psi / 10,335 kPa 1500 psi / 10,335 kPa 363 psi / 2,500 kPa 363 psi / 2,500 kPa N/A

e) For pressure testing the Float Non Return Valves (NRVs) use following testing procedure and safety precautions: i. ii. iii. iv. v. Make up the ported test sub to the bottom of float sub. Install the NRV in the float sub. Make up the keeper portion to the top of the float sub to prevent accidental release of NRV. Pressure test via bottom port to 200 psi (1400 kPa) and 363 psi (2,500 kPa) for 15 minutes each. Bleed off pressure through port on test sub and break out NRV test sub. Note: Once the float NRV has been tested in the float sub, do not remove it prior to installation or else it will need to be pressure tested again.

6.

Make up UBD BHA and drill string as follows (bottom to top): 158.8mm (6-1/4) insert bit Bit sub 2 NRVs (Note: NRVs must be in separate subs in order for the valves to function properly) one 4-3/4 Drill collar (check tool joint OD******) Totco ring for surveys 10 joints of 88.9 mm hevi-weight drillpipe 88.9mm drill pipe to surface Install 1 NRV in the top of the drill string before drilling ahead underbalanced.

7. 8.

Install RCD element on drill string as per SOPs. Close blind ram and RIH to gently tag blind ram and establish tripping out of hole bit position for closing of blind ram (accurately record this tally position). Open blind ram and conduct UBD familiarization period with all crews as follows: a. It is recommended to practice and familiarize all wellsite crews with UB tripping operations. b. Ensure RCD snubbing adapter is onsite in the event a decision is made to log the well underbalanced. c. Conduct a BOP drill and well control shut-in procedure.

9.

RIH and tag float collar / cement. All liquid is to be displaced to UBD flowback tank. Begin circulating with water and drill out float equipment and to within 1 meter of casing guide shoe. Do not drill out into new 14 Compton Thornbury

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formation with water. Use maximum pump rate and string rotation to ensure optimum hole cleaning and removal of shoe debris. 10. Prior to drilling out, conduct a pre-job meeting with all personnel to discuss the procedures for drilling out. It is essential that all rubber components are removed from the well prior to displacing to air. 11. Drill through float equipment slowly with maximum pump rate. Once the float equipment has been drilled, consideration should be given to pumping a high viscosity sweep to ensure all debris has been removed from the hole. 12. Displace the water from the wellbore and integrity test drill string as follows: a) Returns will initially be taken to the cellar via the tubing head and pumped to the mud tanks. b) Line-up rig well control valves for a soft shut-in with an open rig choke and closed HCR. Both drilling spool choke side manual wing valves are to be open. Line up rig pump and kill tanks to annulus for bullhead well killing. Rigs well control flare tank must have igniter turned off and locked out. c) Begin pumping air down drill string. Stage the water displacement from the hole at the following rates 5 minutes with 10m3/min (350 scf/min) air 10 minutes with 25 m3/min (880 scf/min) Ramp up air to full rates of ~ 45 m3/min (1,580 scf/min). Maximize the air volume to allow the casing/hole dry.

d) Monitor the standpipe pressure and do not exceed the maximum pressure rating of the compression equipment - 10,335 kPa (1,500 psi). e) Once the majority of water has been displaced, open the valves on the primary flowline to allow flow to the flowback tank. Close the valve on the tubing head. All returning flow is to be COLD VENTED to atmosphere (no lit flare pilot). Continuously check returns at the flowback tank until there is no water in the air stream.

f)

g) Shut-in well and inflow test to ensure casing integrity and cement bond for at least 15 minutes. Continuously monitor for inflow and if pressure is detected, then report to supervisors. 13. Begin injecting air at 25 m3/min (900 scf/min) rate. The objective of this operation is to drill underbalanced while maintaining BHCP as low as possible. Predicted required injection rates of air are from 20 to 30 m3/min (700 to 1050 scf/min). a) Circulate until bottom hole and standpipe pressures stabilize. b) Record torque and drag values for both up and down pipe movement, with and without pipe rotation. c) Perform familiarization period during actual underbalanced drilling operations. Make sure the rig crews are comfortable and understand their roles and responsibilities for all procedures, including communication. Conduct this separately for each crew. d) From this point and while circulating air, well control procedures require a policy of never letting the well build pressure the well is either continuously flowed to the Sonic separator or via the rig choke to the flare tank. This is required to avoid flammability and explosion risks within the wellbore. Only when the well is confirmed free of air (i.e., displaced to methane) can the well be shut-in and allowed to build pressure. 14. Commence drilling and drill to final TD of 352.2 mKB maintaining prescribed conditions at all times: a) The team Geologist, Drilling Engineer, and the Drilling Superintendent will adjust the final TD if necessary. b) Continuously monitor hole cleaning, borehole stability and drill string integrity by watching for: Increased drag Increased torque Observation of a decrease or increase of cuttings at surface Confidential 15 Compton Thornbury

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Monitor for possible signs of a loss in the drill string integrity (i.e., losses of SPP, drop in ROP, etc). If such indications are observed refer to the Well Control Procedures.

c) Do not exceed 50 meters/hour drill rate of penetration (ROP). d) If it is suspected that a downhole fire has occurred then immediately stop injecting air. Allow well to displace itself to gas. Once well has displaced to gas, slowly bleed off remaining pressure in drill string. Inflow test drill string to confirm integrity. Once integrity confirmed then POOH to inspect BHA. If drill string integrity can not be confirmed then kill well. e) Perform all connections according to detailed Connection Procedure. f) Perform any underbalanced trips according to detailed Tripping Procedures.

g) If the RCD requires servicing, follow RCD Servicing Procedure. 15. At TD, perform a wiper trip, circulate the hole for minimum of two circulations or until returns are free on cuttings. 16. Trip out underbalanced according to detailed Tripping Procedure 17. Rig out air underbalanced drilling equipment.

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3.3 Connection Procedure

During connections, the driller is the focal point of communication and will direct the operation. SES personnel will review detailed communication procedures with the rig crew at the pre-job safety meeting. 1. Circulate for 1 bottoms up time (approximately 2-3 minutes) while rotating and reciprocating the drill string. 2. Observe returns to open-top tank to confirm the hole is cleaned. 3. Land drill string in slips. 4. Bypass air. 5. Bleed off drill string through kelly bleed off line to a standpipe pressure of zero (0) kPag. 6. Prior to breaking connection, driller to verify that there is 0 (zero) pressure on the standpipe 7. Make connection. 8. Once connection is complete, confirm all bleed off points have been shut in. 9. Restart air at previous drilling rates. 10. Closely monitor standpipe pressure and ensure the pressures have returned to the level prior. It is very important to not drill ahead until pressures have fully recovered. Observe methane gas detector to ensure gas inflow has returned to previous levels. 11. Increase ROP in 10 m/hr stages up to 50 m/hr to ensure that the hole isnt loading up with cuttings while the effective reservoir pressure is recovering.

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3.4 Tripping Out of Hole Procedure

1. Circulate at drilling rates for twice bottoms up time while rotating and reciprocating the drill string. 2. For the entire tripping operation, flow well at maximum rate to reduce wellhead pressure below 200 kPa (30 psi) to allow tripping without snubbing unit. 3. Trip out to casing shoe and calculate all potential pipe-light conditions based upon the actual wellhead pressure. No pipe light conditions should exist for the entire trip out of hole. If pipe light conditions exist, then consideration for a snubbing or push/pull unit should be made. 4. Strip out of well at a speed compatible with the rotating diverter (typically 1 1.5 m/minute across tool joints). When a drill string NRV is encountered, bleed off pressure below according to NRV Bleed Off procedure shown below: NRV Bleed Off Procedure a) b) c) d) e) f) Make up NRV bleed-off tool to float/keeper sub. Make up HP bleed hose from tool to stand pipe bleed-off line. Screw down stinger until contact with NRV is made. Open NRV slightly until HP bleed hose has flow. Open NRV fully. Bleed off the drill string below the NRV to 350 kPa. Monitor pressure below NRV for 15 minutes to ensure drill string integrity in the section between the top NRV and the next NRV Bleed off drill string to 0 kPa. Break out HP hose and bleed-off tool.

5. Strip out until bit is located above blind rams. 6. Open secondary flowline to separator and isolate RCD by closing primary flowline valve adjacent to RCD. 7. Close blind rams and bleed off pressure below RCD via the hose line on the outlet of the RCD. Close bleed off valve. Inflow test blind rams for 15 minutes to ensure a competent seal. 8. Unlatch and remove RCD element. 9. Pull bit to surface and change out required BHA elements or prepare for next well operation As per main program.

3.5 Tripping In the Hole Procedure

1. RIH with BHA to just above closed blind ram. 2. Install RCD element. 3. Equalize to the existing well pressure above blind ram using the secondary flowline. Close primary flowline valve adjacent to RCD and inflow test RCD for 15 minutes. 4. Open primary flowline valve adjacent to RCD and close secondary flowline choke. 5. Ensure wellhead pressure is below 200 kPa (30 psi) prior to opening blind ram to allow tripping without snubbing unit. 6. Open blind ram and RIH, stripping per RCD SOPs.

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3.6 RCD Element Life

Sonic employs a no leak policy with regards to rotating diverter element maintenance. As such, a preventative replacement matrix has been developed in order to allow the safe replacement of the diverter elements before failure. The matrix shown in table 2 defines the recommended stripping limits for underbalanced drilling and tripping with jointed drill pipe, in good condition and minimal hardbanding, through a passive rotating diverter: Table 1. Passive Rotating Diverter Element Life Matrix WHP < 10% of dynamic rating Maximum allowable pipe stripped (meters) Maximum allowable operating time (rotating hours) 3660 600 WHP range of 10% to 40% of dynamic rating 2440 500 WHP range of WHP range > 40% to 70% of 70% of dynamic dynamic rating rating 1525 200 610 150

In order to maximize the consumed element life, the wellhead should be centered with the derrick throughout the drilling operations. The consumed element life must be calculated based upon a weighted average of time or meters stripped and wellhead pressure. For an example calculation for a Grant 7368 RCD, with a 1,720 kPa dynamic rating, see table 3. Table 2. Example Passive Rotating Diverter Element Life Calculation Pressure 150 kPa 500 kPa 1000 kPa 1500 kPa Meters Stripped 366 m 488 m 610 m 183 m Calculation 366/3660 = 10% 488/2440 = 20% 610/1525 = 40% 183/610 = 30% Life Remaining 100% - 10% = 90% 90% - 20% = 70% 70% - 40% = 30% 30% - 30% = 0%

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3.7 RCD Servicing Procedure

1. Ensure RCD bearing/element replacement assembly is made up on a stand in the derrick ready to be installed (if spare available). 2. Position tool joint at the rotary table (this is required to avoid stripping a tool joint through rigs Annular Preventer). 3. Circulate a minimum of 1 bottoms up time to clean cuttings out of the hole. Ensure all cuttings are out of the hole by observing the returns. 4. Flow well to displace well to gas, confirmed by methane detector. 5. Isolate RCD as follows: a) Open secondary flow line to allow continue controlled flowing of the well. b) Close Annular Preventer and confirm flow through secondary flowline. c) Isolate primary flowline from RCD by closing first downstream primary flowline valve from RCD outlet. d) Bleed off pressure between RCD and Annular Preventer. e) Inflow test Annular Preventer for 10 minutes. Continuously monitor this isolation to confirm no leakage. 6. Pull table bushings. Unlatch RCD bearing/element assembly and strip through the Annular Preventer to position RCD bearing/element assembly above rotary table. Replace table bushings and set pipe in slips. 7. Remove drill pipe with used RCD element/bearing. Make up new RCD bearing/element assembly on a stand in the derrick per RCD Operator SOP. Install this assembly on drill string. 8. Pull slips and table bushings. 9. Strip down drill pipe with the RCD bearing/element assembly back through the table and latch in the RCD spool assembly. 10. Replace table bushings. 11. Equalize the pressure between RCD and Annular Preventer to current wellhead pressure below the Annular Preventer by slowly opening primary flowline isolation valve and then closing once pressures have equalized. Inflow test the RCD for 10 minutes to ensure a competent seal. 12. Open primary flowline RCD isolation valve. Open Annular Preventer. 13. Close secondary flowline. RCD service is complete, resume drilling operations.

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3.8 Stuck Tubing / Tight Hole Procedure

1. If while running the tubing string assembly in the open hole, a restriction or ledge is encountered, the system was design with a drill shoe and circulation capability to permit some gentle rotation and air circulation. 2. Re-establish air circulation at the minimum rates for effective hole cleaning with a 114.3mm to 158.8mm annulus. The recommended air rate is 15 20 m3/min. 3. Circulate, rotate and work the restricted area until the tubing string assembly can be RIH freely. Extreme caution should be taken when working the string to avoid damage to the completion equipment. 4. Continue to RIH 5. If further restrictions or ledges are encountered repeat steps 2-4

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Appendix I Equipment Specifications

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Sonic Energy Services Air Drilling Unit - airPAKTM

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Rotating Control Device (RCD)

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Appendix II Lease Layout Diagram

OFFICE TRAILER

COMPRESSOR TRAILER BOOSTER TRAILER

OPEN TOP TANK 50 m FROM WELL CENTER

Well Center

SAMPLE WELL

UNDERBALANCED AIR DRILLING LEASE LAYOUT

SIZE DATE DRAWN BY REV

Dec, 15th,2006
SCALE NTS

LEE CAMPBELL
SHEET 2 OF 2

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Appendix III Process Flow Diagram

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Appendix IV UBD Rig Interface Checklist

WELL NAME
COMPANY REP RIG CONTRACTOR RIG MANAGER RIG NAME/NO. DATE (YYMMDD)

RIG SUPERVISORY PERSONNEL & CERTIFICATES

UBD CERTIFICATES (Expiry Dates) and TRAINING (Date Completed) PITS Well Control UBD Onsite WellCAP - UBD Well Control Orientation/Training

RIG MANAGER (TOOLPUSH) DAY - DRILLER #1 DAY - DRILLER #2 NIGHT - DRILLER #1 NIGHT - DRILLER #2

NOTE: ANY NO ANSWERS MUST HAVE AN EXPLANATION ITEM YES NO COMMENTS / EXPLANATIONS

HEALTH, SAFETY and ENVIRONMENT

Rig inspection and Emergency Procedures Plan HSE Audit taken place and confirmed that the rig is acceptable on HSE grounds for conventional drilling operations. Health, Safety and Environment Manuals available on site. Drilling Rig ERP Orientation and familiarization Operator ERP Manual for Drilling Supervisors Current ERP contact telephone numbers posted in ER Control Center Roles & Responsibilities for staff designated in ERP Designated emergency radio channel posted in UBD command center Safety Management System available on site Confined Space Code of Conduct available and communicated to all personnel. Safety Trailer or cabin with cascade system Functional visible/audible alarms Rig Schematic showing hazardous zones

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Personal Protective Equipment Protective clothing (fire retardant coveralls, etc) Safety helmets & Safety boots Safety glasses or goggles available Gloves incl. barrier creams Hearing protection available Safety harnesses for working at heights. Breathing apparatus requirements met and in good condition.

Warning Signs DANGER-Restricted access to the rig floor and surrounding area. DANGER-No Vehicles or Unauthorized Personnel Beyond This Point DANGER: Poisonous Gas (H2S wells only) DANGER- High pressure Lines in operation or being tested. Designated smoking areas clearly identified

Others Mobile auxiliary Command Center zone rated and positioned for optimal operation. Adequate lighting in planned UBD equipment area and wellhead or marine riser Emergency Kill checked and operational MSDS available for all chemicals used Permit to Work system being used

PIPING
UBD Process Flow Diagram posted in Doghouse All high pressure piping held down and secured Only targeted elbow Tees are in use

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10 internal diameters spacing between Flowline Tees (no double elbow turns!)

High pressure pump lines and elbows Identified for specified pressure rating Free from dents, bends & excessive wrench marks No threaded pipe greater than 50.8mm

Flare Lines and Stack Certified for use by the Certification authorities Free from dents, bends & excessive wrench marks No barriers (valves, blinds, etc) between separator and flare tip.

Liquid Flow Lines Certified or Identified for specified pressure rating Free from dents, bends & excessive wrench marks

RIG KILL and CHOKE MANIFOLD

Certified or Identified for specified pressure rating Back-up chokes available on site Adequate isolation for choke repairs Controls (remote auto/manual) adequate for specific job Choke stems and plugs serviced prior to startup

UBD TOOL HOUSES

Certified and zone rated Tool racks - tools identified and clearly labelled Waste containers correctly labelled Machine tools/grinders etc. adequately guarded Eye protection in use when using machine tools and well sign-posted Condition of electric tools appropriate for jobs

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INTERFACE BETWEEN UBD EQUIPMENT AND RIG

General Rig and Equipment Height from top of BOP to bottom of rotary table. (capable of accommodating Rotating Diverter) Rig operating with Top Drive Rig operating with Kelly that is in suitable condition for stripping through an Rotating Diverter. Drill pipe mechanical condition incl. hard banding etc. suitable for stripping through an Rotating Diverter Drill pipe inspection completed and reviewed

BOP Control Unit and Accumulators Certified in accordance with Certification Authorities regulations or API or Operator minimum standards. Accumulator size Back-up N2 litres / gallons bottles psi / kPa

BOP Controls Unit and remote site identified and readily accessible Appropriate safety devices for blind / shear ram controls available. Hydraulically actuated by-pass valve installed if pipe is sheared. Annular closing pressure regulated from the rig floor BOP Control Unit remote panel. BOP Control Unit routinely tested and maintained in accordance to API recommendations BOP Control Unit malfunction alarms fitted with repeater alarms on drill floor Housekeeping and safety equipment (fire extinguishers etc.) appropriate for BOP Control Unit area. Pressure Remote psi / kPa psi / kPa psi / kPa psi / kPa psi / kPa psi / kPa

Accumulator Manifold Annular

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Blow Out Preventers (BOPs) BOP certified in accordance with Certification Authorities regulations or API or Operator minimum standards. BOP routinely tested and maintained in accordance to API recommendations BOP configuration in accordance to drilling contractor or specific Operator requirement Annular Preventer element recently replaced or inspected Hydril GK Annular Preventer? Not to be used in UBD wells with expected shut-in WHPs greater than 14 MPa. Shear rams installed with boosters that enable shearing forces sufficient to cut pipe in use Last overhaul date: BOP manufacturers third party certification is valid, current and available. Full BOP systems maintenance register available on-site for audit purposes.

Pump house or rooms Air-intake will not be affected by any zone change imposed by MPD/UBO rig up Shear relief valve correctly set with a relief line secured and connected to a drain or suction Pulsation dampeners fully charged Shock hoses safety chained and all guards for moving parts of the pump installed. Mud pumps protected by a check valve installed in the discharge pump line Hearing protection sign in pump house or room and hearing protection equipment available

Rig floor Stand pipe injection system Size inches (mm) Pressure psi (kPa)

Kelly hose new or internal visual inspection conducted with a camera and is acceptable for UBD operation - for operations where N2/gas injected down drillpipe ONLY. Stand pipe firmly secured to derrick and Kelly or Top Drive hose secured appropriately. Tie-in point for Stand pipe bleed off available and can be tied into the closed process system Tie-in point for UBD injection and bleed off available as part of the standpipe manifold.

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Each side of the manifold can be isolated and pressure tie-in points are available for monitoring Steam tie-in point for heating the manifold available-if required. Kelly cocks with correct connections for DP and DCs available (including keys) Stabbing valves with fold down handles, handling subs, tools etc are properly racked

To Standpipe

To Standpipe To Standpipe

UBD Stand pipe Connection

3

Cement Manifold

12

Standpipe Bleed off choke to Rig or UBD choke manifold

6 2 4

11

Trip Tank Fill

9

10

From Rig Pump Outlet

From Rig Pump Outlet

To Choke Manifold

From Cement Pump Outlet

Schematic - Stand Pipe Manifold (Generic) Mark up as required Valve # Description Valve # Description

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NOTE: ANY NO ANSWERS MUST HAVE AN EXPLANATION

ITEM Rig floor Electrical system All electrical equipment zone rated - API RP 500 Class 1, Division 1 All electrical equipment in good working condition and seals are in good condition YES NO COMMENTS / EXPLANATIONS

Other interfaces between UBD equipment

INSPECTED BY

DATE

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