`
`IPR2016-00596 (U.S. Pat. No. 7,134,505)
`
`IPR2016-00597 (U.S. Pat. No. 7,543,634)
`
`IPR2016-00598 (U.S. Pat. No. 7,861,774)
`
`Baker Hughes Proceedings
`
`

`

`Unless otherwise noted,all citations herein are to the exhibit
`list for IPR2016-01506 (774 patent). This exhibit list is available
`in the Patent Owner Response, Paper 51.
`
`All page citations are to the page numbers addedfor these
`proceedings, not the native page numbersofthe article,
`document, etc.
`
`Frequently Cited Exhibits
`2050 - McGowen First Declaration
`2081 - McGowen Supplemental Declaration
`2017 - A. DaneshyFirst Deposition
`2085 - A. Daneshy Second Deposition
`
`

`

`Thomson
`
`Thomson
`
`3
`
`

`

`Q. And just to be clear, Thomson does
`not disclose pumping fracturing fluid
`into an open-hole annular segment,
`right?
`A. The paper does not describe that,
`no. The paper describes through a
`cemented casing in this case.
`
`Ex. 2085, A. Daneshy Depo. at 54:10-14
`
`4
`
`

`

`Q. Was one of the goals of Ellsworth
`to create multiple fractures through
`open-hole annular segments?
`A. It was not their main goal, no.
`Q. Did they do that?
`A. No, they didn't need to do that.
`That's why they didn't do it.
`
`Ex. 2085, A. Daneshy Depo. at 78:22-79:2
`
`5
`
`

`

`Q. Does the Ellsworth reference
`describe hydraulic fracturing?
`A. It describes acid stimulation,
`and it doesn't get into what
`pressures were used. So it’s not
`easy to discern whether the acid
`fractured the rock or not.
`
`Ex. 2044, V. Rao Depo. at 66:17-67:6
`
`6
`
`

`

`Petitioners must prove a motivation to remove a component.
`
`Pozen Inc. v. Par Pharm., Inc., 696 F.3d 1151, 1163 (Fed. Cir. 2012)
`
`Amkor Tech., Inc. v. Int'l Trade Comm'n, 692 F.3d 1250, 1260 (Fed. Cir. 2012)
`
`7
`
`

`

`$
`5-1/2"TUBING HANGER ;
`
`5-1/2" TRS.C.5.5.V
`
`4-112" x 1-1/2" SPM
`
`(VALVE : BLANK)
`
`4-1/2" x 1-1/2" S.PM
`(VALVE : BLANK)
`
`$ $$
`
`$
`$
`
`$
`$
`$
`
`4-1/2" RD SLIDING SLEEVE
`
`5° PB.R. SEAL ASSEMBLY
`WITH ANN. PRESS. RELEASE
`
`3.688"'R' NIPPLE
`
`Cement &
`Cement &
`casing
`7" RETRIEVABLE PACKER CQ Si Nn g
`
`$
`
` V2" CYCLE
`4-1/2" MSAF TOOL
`F PERMANENT
`
`
`LUGISHEAR OUT SUB
`PACKER
`
`
`(1 REG.PER ZONE)
`
`8
`
`
`(1 REQ.PER ZONE}
`
`$
`$
`$
`
`$
`
`$
`$
`
`

`

`Q. Does the Thompson reference
`explain why the authors use
`cemented casing in the horizontal
`portion of the well?
`A. They don't go into it. As far
`as I can understand, the prior
`wells in that platform had used
`casing and cementing and so -- and
`they were asked to improve the
`efficiency of the prior wells, so
`they continued to use what was
`being used. I doubt it was a
`decision point.
`
`Ex. 2044, V. Rao Depo. at 65:11-19
`
`9
`
`

`

`Safety Risk
`
`Remedial
`Options
`
`Competitor
`Surveillance
`
`Risk of Frac Problems
`
`Formation
`Development
`
`Production
`Impact
`
`Completion
`System Cost
`
`Track Record
`
`10
`
`

`

`Harold McGowen - Fracturing Experience
`• President and CEO, Navidad Resources LLC
`
`• Overseen over 200 wellsites for NRL
`
`• Voted best CEO for a medium size producer (TIPRO)
`
`• Performed multi-year fracturing fluid performance
`study on 1,000 Codell-Niobrara refracs.
`
`• Performed reserves projections and economic
`evaluation of 250+ Bossier/Cotton Valley wells in the
`Bossier trend.
`
`Ex. 2050 at 54
`
`11
`
`

`

`Dr. Ali Daneshy – Fracturing Experience
`• Director of Petroleum Engineering at University of
`Houston
`• VP of Integrated Technology Products at Halliburton
`• SPE Distinguished Lecturer
`• Academic papers related to fracturing
`
`12
`
`

`

`Q. Did you write your report?
`A. Did I write it personally? No.
`[. . .]
`Q. When you say reports, and I may
`have said reports, but we're talking
`about your declarations, right?
`A. Yeah, exactly.
`
`Ex. 2017, A. Daneshy Depo. at 123:24-25, 124:17-20
`
`13
`
`

`

`Q. Well, let me just ask you this.
`What's your understanding of the legal
`test for proving that a patent claim is
`obvious?
`A. You're asking the wrong person. I
`think the definition is somebody -- a
`person of ordinary skill would be able
`to use the -- a person of ordinary skill
`would arrive at that, would come to the
`conclusion, I think. I don't want to
`give you -- because I know this is
`something that is -- I've worked with
`patent lawyers and this is one of those
`subjects that every time you get into
`it, each patent lawyer describes it
`different than others. But if a person
`of ordinary skill would arrive that it
`can be done. Based on existing available
`information, existing knowledge, they
`would say it could be done.
`
`Ex. 2017, A. Daneshy Depo. at 123:24-25, 124:17-20
`
`14
`
`

`

`In the very first declaration that Dr.
`Daneshy gave, he did not render a conclusion
`on the legal issue of obviousness with
`respect to Thomson and its use in an open-
`hole in combination with the Ellsworth
`reference.
`
`Ex. 2085 at 39:22-40:1 (Petitioners’ counsel)
`
`15
`
`

`

`16
`
`

`

`re;‘ ws
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`ediesail5i.ie
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`
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`
`17
`
`

`

`18
`
`

`

`19
`
`

`

`The P&P approach was the initial lower
`completion methodology that allowed the
`effective deployment of multi-fracture
`treatments in horizontal wells . . .
`
`Ex. 2001 at 5, A. Casero, Open Hole Multi-Stage Completion System in
`Unconventional Plays: Efficiency, Effectiveness and Economics, SPE
`164009 (2013); see also Ex. 2050, McGowen Decl. at 26; Paper 51, POR
`at 13-15.
`
`20
`
`

`

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`
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`
`
`
`21
`
`

`

`
`
`22
`
`

`

`
`
`
`
`
`
`23
`
`

`

`24
`
`

`

`25
`
`

`

`la Miro
`
`26
`
`

`

`27
`
`

`

`28
`
`

`

`29oON
`
`

`

`Q. Why does that difference matter?
`MR. GARRETT: Objection, form.
`A. Because the location of the
`fracture influences [well]
`productivity and how the reservoir is
`being depleted. You want uniform
`depletion of reservoir fluid so that
`you get as much of the oil or gas out
`of the formation; and so for that, it
`is better to know more accurately
`where the fractures are located.
`
`Ex. 2017, A. Daneshy Depo. at 21:13-20
`Ex. 2050, McGowen Decl. at 28
`Paper 51, POR at 14
`
`30
`
`

`

`3131
`
`

`

`"NO CEME
`
`OPEN HOLE WELL
`OPENHOLE.
`NO CEMENT
`
`32
`
`

`

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`34
`
`

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`
`35
`35"
`
`

`

`
`
`
`
`36
`36"
`
`
`
`

`

`37
`
`

`

`Plug & Perf
`(Cemented Casing)
`
`Open Hole Multi-Stage
`(No Cemented Casing)
`
`38
`
`

`

`Plug & Perf
`(Cemented Casing)
`
`Open Hole Multi-Stage
`(No Cemented Casing)
`
`39
`
`

`

`Q. What do you mean by that?
`A. You are talking about two systems
`which are very different in the way
`they fracture. In a cemented liner
`completion, as I mentioned, when you
`create a fracture, it is where the
`perforations are. When you use
`external casing packers, the fracture
`-- with ports, with fracture ports --
`the fracture can be anywhere between
`the two external casing packers.
`
`Ex. 2016, A. Daneshy Depo. at 21:5-12
`
`40
`
`

`

`When you fracture the well from
`perforations, your fracture is likely
`to be right at or very near the
`perforation. And since the
`perforations -- the perforated
`interval in the well is a very short
`interval. It could be 12 inches, 18
`inches, as opposed to open space
`between two packers that could be 300
`feet, 400 feet. So when we say
`control, that's the extent of it,
`whether within a few feet or within
`several hundred feet.
`
`Ex. 2016, A. Daneshy Depo. at 29:8-16
`
`41
`
`

`

`A POSITA would be aware that
`there was an optimum distance
`between stages and that
`fracture spacing was critical
`to commercial success.
`
`Ex. 2050, McGowen Decl. at 28
`Paper 51, POR at 13-15
`
`42
`
`

`

`Q. Why would you care about
`controlling where a fracture
`initiates within a 12-to-18-inch
`span versus a 300-to-400-foot
`span?
`A. Because I want to produce the
`well in an optimum fashion. It
`influences the productivity of the
`well.
`
`Ex. 2017, A. Daneshy Depo. at 29:17-23
`
`43
`
`

`

`If you put a fracture at plus 10
`(which is 10 feet from that
`packer, on one side of it) and
`minus 10 (which is 10 feet from
`the packer on the other side of
`it), these two packers are 20 feet
`apart from each other. They
`basically drain the same segment
`of the well. You are not getting
`as much benefit from this as the
`case when the fracture is in the
`100 feet from the packer on one
`side and 100 feet from the packer
`on the other side.
`
`Ex. 2017, A. Daneshy Depo. at 30:6-14
`
`44
`
`

`

`During the period in question,
`it was thought that the
`formation of multiple
`hydraulic fractures that were
`too close together would also
`create complex near wellbore
`fracture geometries that were
`thought to be detrimental to
`successful fracture treatments
`and subsequent production.
`
`Ex. 2050, McGowen Decl. at 29
`Paper 51, POR at 13-15
`
`45
`
`

`

`
`ifa
`
`TL
`
`—
`
`46
`
`

`

`47
`
`

`

`
`
`
`
`48
`A8— =
`
`

`

`Fracture diagnostics during the first
`horizontal well revealed an unexpectedly
`complex near- wellbore fracture
`geometry, a result of fracture initiation
`problems. These problems slowed the
`completion process and severely harmed
`the effectiveness of the fracture-to-
`wellbore connection.
`
`Ex. 2066 at 1, Emanuele, SPE 39941 “A Case History:
`Completion and Stimulation of Horizontal Wells with Multiple
`Transverse Hydraulic Fractures in the Lost Hills Diatomite”
`(1998); Ex. 2050, McGowen Decl. at 27-29.
`
`49
`
`

`

`transversely fractured horizontal wellbores are
`still plagued by a number of problems, most
`of which stem from the complex fracture geo-
`metries connecting the wellbore to the main
`fracture. These complex fracture geometries
`usually take the form of multiple fractures,
`twisted fractures, H- or S-shaped fractures
`Ex. 2063 at 2, Crosby, D.G., “Methodology to Predict the Initiation of
`Multiple Transverse Fractures from Horizontal Wellbores” (2001); Ex.
`2050, McGowen Decl. at 27-29.
`
`50
`
`

`

`[A] decision was made to attempt a cased hole
`completion with a perforated interval not to
`exceed two (2) feet. It has been documented
`in literature and field proven that a smaller
`focused perforated interval (2 to 3 feet)
`enables a major fracture system to be initiated
`rather than several minor fractures which
`compete for fracturing fluid and ultimately are
`unable to propagate and extend.
`
`Ex. 2100 at 9, Murray, SPE 37354 “A Case Study for Drilling and
`Completing a Horizontal Well in the Clinton Sandstone” (1996); Ex.
`2081, McGowen Decl. at 24.
`
`51
`
`

`

`Several years ago, conventional wisdom
`held that a few widely spaced long
`length fractures were the best way to
`fully exploit the reservoir and ensure
`maximum economic ultimate recovery.
`
`Ex. 2011 at 4
`
`Paper 51,
`POR at 25
`
`52
`
`

`

`Recent experience has shown, however,
`that numerous closely spaced short
`fractures produce better results over the
`life of the reservoir. This outcome would
`seem to tilt the scale in favor of OHMS
`owing to its superior efficiency, but
`OHMS is not the predominant technique
`in many plays.
`
`Ex. 2011 at 4
`
`Paper 51,
`POR at 25
`
`53
`
`

`

`A. . . . That’s what a single
`fracture would have looked like. When
`you put 20, 30, 40 of these together,
`then they don't look like that.
`Q. What do they look like?
`A. Today the industry uses the term
`“complex” because they don't really
`know what it looks like.
`
`Ex. 2085, A. Daneshy Depo. at 87:16-23
`
`54
`
`

`

`Q. Are persons of skill in the art
`today trying to create complex
`fractures?
`A. Yes.
`
`Q. In the past, would a person of
`skill in the art try and avoid
`complex fractures?
`A. When is "past"?
`Q. The time before 2001.
`A. Yes, when we fractured vertical
`wells, we did not want to create
`complex fractures.
`Ex. 2085, A. Daneshy Depo. at 89:11-22
`
`55
`
`

`

`Q. Back before 2001, how did persons
`of skill in the art expect fractures
`to behave?
`A. They expected them to behave just
`like they did in vertical wells.
`
`Ex. 2085, A. Daneshy Depo. at 81:8-13
`
`56
`
`

`

`oy
`
`Fig. 6—Nonplanarfracture geometries.
`
`Ex. 2078 at 6 (Abass)
`Ex. 2078 at 6 (Abass)
`
`57
`
`

`

`For a normal hydraulic
`fracturing treatment where
`proppant is used, if there is
`a leak around a packer during
`the hydraulic fracturing
`(“frac”) stage, excessive
`leak-off could cause a screen
`out event, resulting in a
`complete failure of that frac
`stage and loading the hole up
`with proppant that would have
`to be removed at great
`expense.
`
`Ex. 2034, McGowen Decl. at 33
`
`58
`
`

`

`To be effectively fracture stimulated, a
`horizontally drilled well must be cased and
`cemented through the horizontal producing
`section of the well. Casing and cementing
`the horizontal section allows fracture
`initiation points to be controlled in
`placing multiple fractures.
`
`Ex. 2098, Austin, SPE 18263, Simultaneous Multiple Entry Hydraulic
`Fracture Treatments of Horizontally Drilled Wells at 1 (1988); Ex.
`2081 at 24-25; Ex. 2081, McGowen Decl. at 24-25; Paper 51, POR
`at 20-21.
`
`59
`
`

`

`A horizontal well that is to be fracture
`stimulated over multiple zones must be
`cased and cemented.
`
`Ex. 2099, Owens, SPE 25058, Practical Considerations of Horizontal
`Well Fracturing in the “Danish Chalk” at 2 (1992); Ex. 2081,
`McGowen Decl. at 23; Paper 51, POR at 20-21.
`
`60
`
`

`

`Casing and cementing a horizontal well
`is essential to provide zone selectivity
`and isolation during fracture stimulation.
`
`Ex. 2078 at 9, Abass, H., “A Case History of Completing and
`Fracture Stimulating a Horizontal Well” SPE 29443 (1995);
`Paper 51, POR at 20-21.
`
`61
`
`

`

`Perforations play a crucial role in
`achieving a successful fracturing
`treatment in horizontal wellbores.
`
`Ex. 2078 at 9, Abass, H., “A Case History of Completing and
`Fracture Stimulating a Horizontal Well” SPE 29443 (1995);
`Paper 51, POR at 20-21.
`
`62
`
`

`

`HLH. Abass, P. Hagist, J. Harry, JL. Hunt, M. Shumway, N. Gazi
`
`and rapidly flattens after four to five fractures. Based
`on the diminishing slope of the cumulative production
`vs. time curve at 24 months,four or five fractures
`would be the most effective number of fractures for the
`subject well. However,after considering the behavior
`of the well/fracture system, designers considered
`economics and selected three fractures for the subject
`well.
`
`CumulativeProduction,MSTBoBSEEERERS
` Total
`
`o12es «es 87 8 00 n 2
`Number ofFractures
`
`Fig. 7—Cumulative liquid production vs. the number of
`fracturesfor various times afterfracturing.
`
`Stimulation Treatment
`
`Thestimulation treatment was designed to achieve the
`following objectives:
`
`*
`
`*
`
`Fig. &—Longitudinal slots created by hydrojetting.
`
`Fig. 9—Conceptual representation of what might have
`
`
`
`happened after an acid treatment.
`
`The stimulation treatment was designed to achieve the
`following objectives:
`
`To create a cavity near the wellbore. To ease the
`near-wellbore restriction, an acid stage was used to
`communicate all the hydrojetted notches. Fig. 8
`presents a schematic of the longitudinal slots
`created via hydrojetting. Fig. 9 shows a conceptual
`representation of what might have happened after
`an acid treatment. Fig. 10 shows the creation of the
`main fracture as it initiates from the cavity.
`
`To prevent the natural fractures intersecting the
`wellborefrom initiating and propagating multiple
`fractures. For fluid-loss contol, 100-mesh sand was
`pumped after the pad.
`
`Paper 51, POR at 20-21. Ex. 2078
`
`To create a cavity near the wellbore. To ease the
`near-wellbore restriction, an acid stage was used to
`communicate all the hydrojetted notches. Fig. 8
`presents a schematic of the longitudinal slots
`created via hydrojetting. Fig. 9 shows a conceptual
`To help withstand the high compressive stress near
`representation of what might have happened after
`an acid treatment. Fig. 10 showsthe creation of the
`the wellbore and reduce the pressure drop resulting
`main fracture as it initiates from the cavity.
`To prevent the natural fractures intersecting the
`from the radialflow convergence. High-strength,
`wellborefrom initiating and propagating multiple
`Jractures. For fluid-loss contol, 100-mesh sand was
`coarse proppant was used asatail-in stage.
`pumped after the pad.
`To help withstand the high compressive stress near
`*
`the wellbore and reduce the pressure drop resulting
`from the radialflow convergence. High-strength,
`coarse proppant was used asatail-in stage.
`
`Fig, 10—Creation ofthe mainfracture as it initiatesfrom
`the cavity
`
`7 of 9
`
`IPR2016-01506
`
`Ex. 2078 at 9, Abass, H., “A Case History of Completing and
`Ex. 2078 at 9, Abass, H., “A Case History of Completing and
`Fracture Stimulating a Horizontal Well” SPE 29443 (1995);
`Fracture Stimulating a Horizontal Well” SPE 29443 (1995);
`Paper 51, POR at 20-21.
`
`63
`
`

`

`Successful liner installation and
`cementation is considered a
`prerequisite to ensure adequate
`zonal isolation for multiple
`fracture treatments in horizontal
`wells.
`
`Ex. 2079 at 1, Damgaard, A.P., “A Unique Method for
`Perforating, Fracturing, and Completing Horizontal Wells” SPE
`19282 (1992); Paper 51, POR at 20-21.
`
`64
`
`

`

`In the Red Oak horizontal, the geologic
`expectation was to cross natural fractures and
`yield economic production without fracture
`stimulation. Natural fractures were not
`encountered and production was uneconomic
`from the openhole. Thus, the contingency
`plan to set and cement a liner to pump
`multiple transverse fractures was
`implemented.
`
`Ex. 1023 at 3, P.D. Ellis, Application of Hydraulic Fractures in Openhole
`Horizontal Wells, SPE 65464 (2000); Paper 41 Surreply at 3.
`
`65
`
`

`

`The main benefit of horizontal holes comes
`from their long contact with the permeable
`reservoir. Casing and perforating these
`holes reduces this contact. However,
`whenever completion operations require
`hydraulic fracturing, the horizontal
`holes are in fact cased, cemented, and
`perforated to facilitate effective
`fracturing.
`
`Ex. 2015, Encyclopedia of Hydrocarbons, at p. 8 (2007); Paper 51,
`POR at 21.
`
`66
`
`

`

`Some of the features of the OHMS approach
`are often depicted as disadvantages, such as
`the inferred inability to control the initiation
`point of the fractures. . . .
`
`Ex. 2001 at 5, A. Casero, Open Hole Multi-Stage Completion System in
`Unconventional Plays: Efficiency, Effectiveness and Economics, SPE
`164009 (2013); Paper 51, POR at 22.
`
`67
`
`

`

`1998 Halliburton
`publishes Thomson
`1999 Halliburton
`publishes Ellsworth
`
`Lane-Wells
`(Ex. 1002)
`
`1955
`
`1988
`
`1990
`
`1992
`
`1995
`
`1996
`
`1998
`
`1999
`
`2000
`
`2001
`Packers Plus
`performs first
`StackFRAC job;
`68
`Files patent
`
`

`

`1992
`Baker Hughes publishes
`Ex. 2079 (Damgaard)
`Cementation is “prerequisite”
`
`1990
`DOE publishes Ex. 2077
`Cased and cemented
`
`1988
`Halliburton publishes
`Austin (Ex. 2098)
`Cement necessary for
`effective fracturing
`
`Lane-Wells
`(Ex. 1002)
`
`1992
`Halliburton publishes
`Ex. 2099 (Owens)
`Multiple stages must
`be cemented
`
`1995
`Halliburton publishes
`Ex. 2078 (Abass)
`Perforations “crucial”
`
`1996 Yost (DOE) publishes Ex. 2100
`Focused perforations “field proven”
`1998
`Chevron publishes Ex. 2066
`(Emanuele) Analyzes complex
`initiation problems
`1998 Halliburton
`publishes Thomson
`1999 Halliburton
`publishes Ellsworth
`2000
`Ex. 2063 (Crosby)
`published
`Analyzes complex
`initiation problems
`
`1955
`
`1988
`
`1990
`
`1992
`
`1995
`
`1996
`
`1998
`
`1999
`
`2000
`
`2001
`Packers Plus
`performs first
`StackFRAC job;
`69
`Files patent
`
`

`

`1992
`Baker Hughes publishes
`Ex. 2079 (Damgaard)
`Cementation is “prerequisite”
`
`1990
`DOE publishes Ex. 2077
`Cased and cemented
`
`1988
`Halliburton publishes
`Austin (Ex. 2098)
`Cement necessary for
`effective fracturing
`
`Lane-Wells
`(Ex. 1002)
`
`1992
`Halliburton publishes
`Ex. 2099 (Owens)
`Multiple stages must
`be cemented
`
`1995
`Halliburton publishes
`Ex. 2078 (Abass)
`Perforations “crucial”
`
`1996 Yost (DOE) publishes Ex. 2100
`Focused perforations “field proven”
`1998
`Chevron publishes Ex. 2066
`(Emanuele) Analyzes complex
`initiation problems
`1998 Halliburton
`publishes Thomson
`1999 Halliburton
`publishes Ellsworth
`2000
`Ex. 2063 (Crosby)
`published
`Analyzes complex
`initiation problems
`
`1955
`
`1988
`
`1990
`
`1992
`
`1995
`
`1996
`
`1998
`
`1999
`
`2000
`
`2001
`Packers Plus
`performs first
`StackFRAC job;
`70
`Files patent
`
`

`

`A. Daneshy 2007
`Ex. 2014 published
`Still advocating cement
`
`2006
`Packers Plus
`publishes Ex. 2003
`
`2010
`Packers Plus
`receives SPE Meritorious
`Engineering Award
`
`2012
`Packers Plus
`receives Sproule
`Engineering Award
`
`2005
`Schlumberger acquires
`stake in Packers Plus
`
`2009
`Packers Plus named
`E&Y Entrepreneur
`of the Year
`
`2001
`Packers Plus
`performs first
`StackFRAC job;
`Files patent
`
`2003
`2003
`Baker Hughes
`obtains Packers Plus
`tool drawing
`
`2005
`Baker Hughes
`releases
`FracPoint
`
`2005
`
`2006
`
`2007
`
`2010
`
`2012
`
`2009
`Weatherford
`releases
`Zoneselect
`
`71
`
`

`

`727
`
`

`

`The POSITA would have been
`aware that there is a
`significant economic risk
`associated with adopting new
`technology and/or methods that
`defy “tried and true”
`technology and/or methods.
`
`Ex. 2050, McGowen Decl. at 24
`Paper 51, POR at 15-17
`
`73
`
`

`

`The P&P approach was the initial lower
`completion methodology that allowed the
`effective deployment of multi-fracture
`treatments in horizontal wells and it is
`difficult to progress from an established,
`standardized and successful technique;
`unless there are significant tangible benefits
`that can be demonstrated via a different
`method.
`
`Ex. 2001 at 5, A. Casero, Open Hole Multi-Stage Completion System in
`Unconventional Plays: Efficiency, Effectiveness and Economics, SPE
`164009 (2013)
`
`74
`
`

`

`[A]nother, for example, reason you
`would use cemented liner is
`because your neighbors are using
`cemented liner and you're getting
`a better production and you say,
`“I don't know why they’re doing it
`but they're getting better
`production. I’m going to use what
`they are using.”
`
`Ex. 2016, A. Daneshy Depo. at 26:2-10
`
`75
`
`

`

`Risk aversion was concluded as being a
`significant factor in the observed slow uptake
`of technology in the Upstream Sector of the
`Oil and Gas business.
`Ex. 2093 at 1, V. Rao, Accelerating Technology Acceptance: Hypotheses
`and Remedies for Risk-Averse Behavior in Technology Acceptance, SPE
`98511 (2005)
`
`76
`
`

`

`SPE 135386
`
`Comparative Study of Cemented Versus Uncemented Multi-Stage Fractured
`Wells in the Barnett Shale
`Darrell Lohoeter, SPE, Eagle Oil & Gas, and Daniel J. Snyder, SPE, Rocky Seale, SPE, and Daniel Themig, SPE,
`Packers Plus Energy Services
`
`‘Coppight 2010, Society of PotrekumEngines.
`The Paper wae prepared for posseeiation at te-SPE Annus Technica Conference and Exbibiion etd in Flosence. Baty, 16-22 Sagkember 200.
`
`Rod bry they ouch
`Ties pager weet Bebpooeal
`tp
`sertate
`aricbine Tokmedag rewind lekornation corns tead ot aa
`a
`J. Contentsof the paper have
`sot bean rors
`
`any POMof
`the 5
`by the Sosiety of Petras
`peers
`chen by The authoets)
`The
`eaieial does not necess
`Society of Poroleum Enginenes,
`ts. office
`
`
`members. Blechork: cepoduchas. disirbyion, or
`
`
`
`
`ge of any pert of this paner ethout the writen consent of the SocietyofPeioleum Engineses. i paohibded Peomissionto nepeoduce ba print
`
`
`vestricied to arvabetractofeof rraore thew 300 ea
`
`not becopied. The abract must corigin consrécuges acknowledgment of SPE copyright
`stray
`
`
`:
`
`beREERA EHRENTNTRSAif .
`
`peietetececece
`
`
`
`Production(MMCFGE)
`
`i
`
`:
`
`-6Month
`
`Cumulative
`
`:
`
`=
`
`42 Month
`
`Cumulative
`
`;
`
`=
`
`24Month
`
`“60 Month
`
`Cumulative
`
`©
`
`Cumulative
`
`Abstract
`
`The indusiry has made a very quick tumtoward both unconventional reservoirs and horizontal, mult+stage fracturing.
`Some industry experts have begun to question ihe effectiveness of recoveries in these massive reserve assets. A
`notable formation in these discussions has been the Bamett Shale, where a variety of methods and technologies have
`been used to fracture stimulate horizontal wells. In fact, much of the learning curve for completion practices has come
`from experimental work in this unconventional play.
`
`From 2004 throwgh 2006, anew, open hole, multi-stage system (OHMS) completion technology was run in Denton
`County, Texas, Using publically available data fromthe past five years, this study contrasts long-term production
`results from OHMS completed wells and wells completed with cemented casing.
`
`The data set for OHMS fractured wells compared to the data set for cemented fractured wells indicates that open hole
`wells, on dverageé, performed beter. Significantly, no failures or shut-in periods were observed for the GHMS wells.
`This establishes the viability, reliability and effectiveness of this technology for the long-term life of wells not anlyin the
`Barmett, but for performance enhancement in other shale plays
`
`Substantial amounts of money are currently being spent to rapidly develop resource plays similar ta the Bamett
`worldwide. Based on shert-lerm results using current completion methods, predictions for ultimate recoveries may be
`overestimated. This paper evaluates the effectiveness of current completion practices by contrasting two methods in
`tens. of production, economics, operational efficiency, and best fracturing practices to determine whether the
`
`completion method can affect overall well performance and long-term recovery.
`
`Introduction
`Formation Description. The Barnett Shale ls a Mississippian-age shale bocated in the Forth Worth Basin and covers
`approximately 5,000 square miles (12,950 km’) of north-central Texas (Figure 1). The Barnett represents the
`grandfather of shale reservoirs where “shale as source rock” was first established, and where the necessary set of
`technologies, namely horizontal drilling and multi-stage fracturing, were developed to make hydrocarbon extraction
`economically feasible in shale.
`
`The Bamett is conformably overlain by the Pennsylvanian-ege Marble Falls Limestone and unconformably overlies the
`Ordovician-age Viola Limestone/Ellanberger Group, which Sarves as 4 frac barrier (Figura 2) (Bowker, 2003; Pollastro
`et al., 2003). The core area of the Barnett is located in the Denton, Wise and Tarrant Counties whereit is
`approximately 300 to 500 ft.
`
`thick with porosity and permeability values in the range of 3- 5%and 0.00007 - 0.0005 se 6.Summaryof cumulative production data for OHMSandoffset wells in Denton County.
`Ex. 2018;
`Ex. 2018;
`Paper 51,
`Paper 51,
`POR 22-23
`POR 22-23
`
`
`
`77
`
`
`
`

`

`eg Lt aee a
`et es
`
`=
`\ teesim
`it
`Pi
`
`si
`
`Ex. 2018;
`EX.
`Paper 51,
`Paper 51,
`POR 22-23
`POR 22-23
`
`78
`78
`
`

`

`“game-changing technology”
`“prize product”
`(Ex. 2033)
`(Ex. 2004)
`
`“revolutionary
`technology”
`(Ex. 2008)
`
`(Ex. 2048)
`
`“Multistage fracking pioneer…”
`(Ex. 2006)
`
`(Ex. 2048)
`
`(Ex. 2048)
`
`“disruptive technology”
`(Ex. 2046)
`
`“legendary”
`(Ex. 2046)
`
`“… revolutionized the
`completions sector…”
`(Ex. 2006)
`
`“the industry standard”
`(Ex. 2009)
`
`(Ex. 2048)
`
`Paper 51,
`POR 26-31
`
`79
`
`

`

`That focus led to the development of
`a number of completion technologies,
`starting with the StackFRAC system,
`which revolutionized the completions
`sector by introducing multistage
`fracturing systems in horizontal wells,
`credited with unlocking the potential of
`tight and shale oil and natural gas.
`
`Ex. 2006, Leading the Way: Multistage fracking pioneer Packers Plus plays
`major role in cracking the tight oil code, Canadian OilPatch Technology
`Guidebook (2012); Paper 51, POR at 26-31.
`
`80
`
`

`

`NATIONAL WinnER
`
`
`
`4h
`
` ENTREPRENEUR OF THE YEAR
`
`TPR2016-00598
`
`Exhibit 2007
`
`81
`
`
`
`Packers Plus
`==Energy Serv;
` = NO. OF EMPLOYEES IN 2000: 3
` FRM: Whydid ya
`IN JANTARY2000, Dan Then lg, Ken Palteat and Peter Kraly-
`
`benabandoned the security of their jobs at oil-services giant Hal-
`= 2009: ABOUT 350
`liburtan te start their own finm, Based in Cakmry, Packers Plas
` vantages, Most larg
`Energy Services Inc. aimed tohelpthe industrytackle the thorni-
`smaller company
`est, hardest-to-reach deposi. When a chent fron Texas presented
`
`
`the upstart with anc such challenge in 2001, Themig
`= NO. OF OPERATING
`
`used bis time on a flight to a meeting to sketch oat the
`NO, OF EMPLOVEES
`idea for what would become Packers’ StackFrac system.
`
`
` cx,
`2008 ABOUT 350
`The technology unlocks previously unviable depx
`
`
`
`> NO. OF OPERATING
`LOCATIONS IN 2000: 1
`makhrizing production in mature oilfields and tight rack
`
`LOC.
` ror.
`2000 i
`formations. Now, with the help of a partner—imrerna-
`LOCK
`
`
`
`ONS IN 2004: 25
`tonal ailfield giant Schlumberger
`— Packers is rapidly
`
`
`
`
`fing
`overseas. Here, found
`exp
`murine
`and presi-
`
`= LOCATIONSIN 2009: 25
`
`
`With Packers Plus technoiag
`dent Dan Therndg shares the stary.
`
`
`
`the Bakker oilf kbd wer
`FINANCIAL POST MAGAZINE: What drewyou to the oil-
`
`and-gas industry? You're a farm tid from southernIhli-
`
`mois — not exactly oil comnery,
`DAN THEMIG: My dad worked for Unocal pipeline
`
`division, bat not
`im exploration.
`T didn’t krvew mach
`about the cil-and-gas business until
`I graduated with a civil
` wank yen to de: any
`
`With Packers Plus technology,
`That vas like pura]
`engineering: dagen frum the Tniverdep af Tilineds and meta job
`
`
`FPAE What were t
`at Halliburton. I ended up in Texas for foor pears, then 1 talked
`THEMIG: ‘The wholg
`myway into bring transferred te Canada. 1 lowe to snowbaard,
`
`the Bakken oilfield went from
`fro companics in
`sia, climb and whitewater-kuyal, and theyjust don’t have many
`mountains in Tezas. Also, the Canadian oilfields are known for
`
` own. was Like jump
`
`would work. You're
`fostering seal] companies and innovation. Someone ance told
`with Ken and Pove
`
`
`tie that at an oil-and-pas conference in Europe, the first thing
`producing 100 barrels of ail a
`sete to buiki this o
`8 presenter] ssid was, “Wf the technologyisn’t barn in Canada or
`
`Norway, its probably not worth talking about”
`together we had a ga
`
`
`INTERVIEW BY Joanna Pal
`day in 2006 to 60,000 now,
`
`
`CT, DO scant Your Gl
`
`72FFM DECEMBER 2604
`
`

`

`StackFRAC, the company’s prize
`product and primary innovation, is
`an open hole ball drop completion
`system that’s widely credited with
`unlocking old resource plays that
`were thought to be too expensive or
`to technically challenging to tap.
`
`Ex. 2005, Exploration and Development, Alberta Oil Magazine;
`Paper 51, POR at 26-31.
`
`82
`
`

`

`With the objectives of making multi stage
`horizontal well fracturing more efficient,
`both in terms of cost and time, the first
`commercial OHMS systems were
`developed and deployed in 2001 (Snyder
`2011).
`
`Ex. 2014 at 5, A. Casero, Open Hole Multi-Stage Completion System in
`Unconventional Plays: Efficiency, Effectiveness and Economics, SPE 164009
`(2013); Paper 51, POR at 26-31.
`
`83
`
`

`

`Currently, there are a number of commercial
`OHMS systems to choose from, but for the
`most part, these systems utilize similar
`principles.
`
`Ex. 2014 at 4, A. Casero, Open Hole Multi-Stage Completion System in
`Unconventional Plays: Efficiency, Effectiveness and Economics, SPE
`164009 (2013); Paper 51, POR at 26-31.
`
`84
`
`

`

`CPackers Plus.
`
`DO IT ONCE. DO IT RIGHT.
`
`Exs. 2004; 2018; 2053; 2056; 2057; 2058 (video); 2061 (video)
`
`Exs. 2019; 2020; 2052; 2059 (video)
`Exs. 2019; 2020; 2052; 2059 (video)
`
`85
`
`

`

`Q. Are you familiar with Baker
`Hughes’ Fracpoint system?
`A. Ditto what I told you about
`Packers Plus relative to Baker
`Hughes.
`Q. That’s another open-hole ball-
`drop system, right?
`A. Yes. It’s open.
`
`Ex. 2017, A. Daneshy Depo. at 96:1-5
`
`86
`
`

`

`Ex. 2052 at 25-26
`
`« Competition:
`— Packers Plus
`* Proven System
`~=s Opportunities
`Mid Con
`» Generation 1 and Generation 2
`« 6 1/4" Open Hole, 8, 500PSI|, &250F
`— MALT
`= Generation 3
`« 6 % Open Hole, 10,000PSI, & 375F
`
`Market Drivers & Opportunities
`
`isoFrac — Generation 1
`
`e Generation 1
`— System Status (Testing and
`= Packer
`* Design Requirements — Hi
`in. opan hole
`Pp
`Testing Results — |
`able to achieve 10,000 psi}
`= Frac Sleeve
`« Design Requirements — Ri
`+ Ball Testing Time Line anc
`« Equipment Delivery
`: Status of Equipment
`« System Issues
`
`Kaw
`“Niles Mier OF Tat
`
`Feaw
`Alas Raker (4 Terols
`
`Ex. 2052 at 25-26
`87
`
`

`

`comes$=CONFIDENTIAL
`
`
`
`
`
`
`
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