Inter Pan‘es Review — Final Hearing
`
`Weatherford Int’l, LLC, etal., v. Packers Plus Energy Servs., Inc.
`
`Case IPR2016-01509 (U. S. Patent No. 7, 861, 77482),
`
`Case IPR2016-01514 (U. 8. Patent No. 7, 543, 63482),
`
`Case IPR2016-01517 (U. 8. Patent No. 7, 134, 50532)
`
`Carl DeFranco, Administrative Patent Judges
`
`Before the Honorable Scott Daniels, Neil Powell, and
`
`Counsel for Petitioners:
`
`Edell, Shapiro & Finnan, LLC
`
`Heim, Payne & Chorush LLP
`
`Jason Shapiro
`
`Douglas R. Wilson
`
`

`

`Challenged Claims - ’774 Claims 1, 3-7, 9-10, 12, and 16
`
`.m United States Patent
`Fehr 2! al.
`
`.‘20; mm No.:
`us; Dale of Patent:
`
`US 7.861.774 BI
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`1. A method forfracturing a hydrocarbon-
`containing formation accessible through a
`wellbore, the method comprising:
`
`running a tubing string into an open hole
`and uncased, non-vertical section of the
`wellbore .
`.
`
`expanding radially outward the first,
`second and third solid body packers -
`- -;
`
`conveying a fluid conveyed sealing
`device through the tubing string .
`. .;
`
`. to fracture
`.
`pumping fracturing fluid .
`the hydrocarbon—containing formation.
`
`U
`
`

`

`Challenged Claims - ’634 Claim 25
`
`
`
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`
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`,12. United States Patent
`nu. l‘nlcnl No.:
`US 7,543,634 32
`Fehr el al.
`(45. Dale ol‘ Palenl:
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`20. A method for fluid treatment of a
`
`borehole, the method comprising: ...
`
`25. The method of claim 20 wherein
`
`when in a desired position the
`
`apparatus is adjacent an open hole
`section of the wellbore and the
`
`packers are set to seal the annulus
`
`between the apparatus and the
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`

`

`Challenged Claims - ’505 Claims 23 and 27
`
`
`
`
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`,12. United States Patent
`”u. Patent 940.:
`us 7.134.505 82
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`
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`
`
`
`

`

`sleeve and port)
`
`1.75" MSAF (1" sliding
`sleeve and port)
`
`1.5" MSAF (2 ‘ sliding
`
`Second Packer
`
`/ Ellsworth
`
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`
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`
`Long Axis
`- —>
`
`

`

`Ground 2 — Thomson + Ellsworth
`
`Petitioners Fail to Show that Thomson Discloses Various
`
`Open Hole Limitations of the ’774 Claims.
`
`tubing string into an open hole,” a “solid body packer operable to seal about the
`
`Paper 32 (IPR2016-01509) at 56 (emphasis added)
`
`— Thus, Thomson does
`
`not disclose any of the open hole limitations of the claims including: “running a
`
`tubing string and against a wellbore wall in the open hole and uncased, non-
`
`

`

`Ground 2 — Thomson + Ellsworth
`
`Testimony of Packers Plus expert Kevin Trahan:
`
`
`
`
`The open hole application of tools that
`were originally designed for cased hole has
`
`been common place in the industry since I
`
`began working in the industry in 1992.
`There is nothing novel or nonobvious
`
`about such an application.
`
`
`
`
`Ex. 1012 at 10-11 (emphasis added)
`
`

`

`Ground 2 — Thomson + Ellsworth
`
`Patent Owner Response:
`
`These materials fail to address the key
`issue in this proceeding—whether it was
`obvious to use solid body packers in
`combination with ball-activated sleeves
`
`Paper 32 (IPR2016-01509) at 20 (emphases added)
`
`to perform the patented method of
`open hole multi-stage fracturing.
`
`

`

`Ground 2 — Thomson + Ellsworth
`
`isolation
`zone
`is
`approach
`alternative
`An
`accomplished by the installation of external casing packers
`and port collars as an integral part of a casing string in the
`horizontal section.
`Such a completion arrangement
`provided stimulation
`intervals with
`ready-made
`perforations for injecting fracturing fluids in an open
`
`Yost (Ex. 1002) at 1 (emphases added)
`
`hole fracturing condition behind pipe. This was the
`method of completion used in this 2000 foot horizontal well
`to avoid the problems of formation damage associated
`
`with cementing and to eliminate the need for tubing-
`conveyed perforating of numerous treatment intervals.
`
`

`

`Ground 2 — Thomson + Ellsworth
`
`Options considered for isolating the individual zones
`included conventional cementing of
`the casing with
`perforations to access the individual zones, use of
`inflatable casing packers in the casing string with
`
`Overbey 1992 DOE Report (Ex. 1036) at 48 (emphases added)
`
`port collars to access the zones as was done in the
`BDM/RET#1 (Reference 1) well, [and] a combination of
`these two techniques.
`Because of the relatively successful completion of
`the BDM/RET#1 well, the casing packer — port collar
`option was selected for completing the Hardy HW#1.
`
`

`

`Ground 2 — Thomson + Ellsworth
`
`The horizonal section of the first well
`
`.
`
`.
`
`. was
`
`completed in a conventional manner with a cemented
`and perforated liner. Openhole completions were
`used in the next two horizontal wells .
`.
`. because the
`
`[T]he entire job (27 sets) was completed without a
`tool failure or leakage around the packer elements.
`
`former completion method is expensive and there was a
`possibility that vertical natural fractures intersecting the
`wellbore at close to right angles may not connect
`effectively to perforations.
`
`McLellan April 1992 JCPT Article (Ex. 1042) at 3, 5 (emphases added)
`
`

`

`Ground 2 — Thomson + Ellsworth
`
`SPE 37482
`
`Design and Installation of a Cost Effective Completion System for Horizontal Chalk
`Wells Where Multiple Zones Require Acid Stimulation
`D. W. Thomson, SPE, Halliburton M & 8, Ltd.; and M. F. Nazroo, SPE, Phillips Petroleum Company Norway
`
`Ex. 1038 at 31 :6-9 (emphases added)
`
`Patent Owner’s Expert Depo.:
`
`Q: And what would motivate a service company to write an SPE
`paper?
`
`A: Increase sales, and also, to provide a service to the industry.
`
`

`

`Ground 2 — Thomson + Ellsworth
`
`Dr. Rao Reply Declaration:
`
`. “PBR/seal assembly”
`
`- Dr. Rao’s response: “The authors provided a solution to the
`problem and ran the job without incident. Ex. 1003 at 3.”
`
`- “failure of the pump out plug on M1 and the cycle plug on M3”
`
`EX. 1035 at 1“] 3-5
`
`- Dr. Rao’s response: “Not only did the authors of Thomson
`address these issues as they arose as described in the paper,
`but also the authors suggest the use of new ‘disappearing’ plugs
`as ‘a more reliable and cost effective solution to the tailpipe
`plug.’ Ex. 1003 at 5.”
`
`

`

`Ground 1 — Yost + Thomson + Ellsworth
`
`pm Collar mm
`
`External Casing Packer
`
`4.112" Casing
`at 6014'
`
` Cement Packer
`
`.-
`
`Inn-nun”
`
`I
`.
`%- -o-o--o-o--o--o.oo....‘..... ...... H.
`
`nnr ore
`
`ll
`
`10;:lgazl'7i'ole
`
`m maximum-ml 3-m-
`
`7-7/8” Hole
`to 6020’
`
`Fig. 2—Schomatlc ell-gram of completion continuation.
`
`Yost + Thomson + Ellsworth
`
`

`

`Ground 1 — Yost + Thomson + Ellsworth
`
`The key element of the system is a multi-stage acid frac
`tool (MSAF) that is similar to a sliding sleeve circulating
`device and is run in the closed position. .
`.
`. With this system,
`stimulation of 10 separate zones is accomplished in 12-
`18 hours by a unique procedure that lubricates varying sized
`low-specific gravity balls into the tubing and then pumps them
`to a mating seat in the appropriate MSAF, thus sealing off the
`stimulated zone and allowing stimulation of the next zone
`which is made accessible by opening the sleeve.
`This technique provided a substantial reduction in the
`operational time normally required to stimulate multiple
`zones and allowed the stimulations to be precisely targeted
`within the reservoir.
`
`Thomson (Ex. 1003) at 1 (emphases added)
`
`

`

`Ground 1 — Yost + Thomson + Ellsworth
`
`Historically, inflatable packers were used for water
`shut—off,
`stimulation, and segment
`testing.
`More
`recently, solid body packers (SBP’s) (see Figure 4)
`have been used to establish open hole isolation. .
`.
`. The
`objective of using this type of tool is to provide a long-
`term solution to open hole isolation without the aid of
`cemented liners.
`
`Ellsworth (Ex. 1004) at 5 of 11 (emphases added)
`
`

`

`Ground 1 — Yost + Thomson + Ellsworth
`
`3.688” ‘R’ NIPPLE
`
`Extruded Packing Elements
`
`Thomson (Ex. 1003) at 10 (Fig. 3)
`
`Fig. 3 of Thomson galmotated and zoomed-i111
`
`4-1/2" MSAF TOOL
`
`4-1/2" CYCLE
`
`(1 REQPER ZONE)
`
`PLUG/SHEAR OUT SUB
`
`

`

`Ground 1 — Yost + Thomson + Ellsworth
`
`Patent Owner’s Expert Depo.:
`
`If I took the method of Yost and I modified it by
`replacing the inflatable packers with the solid-body
`packers of Thomson and I replaced the port collars
`with ball-actuated sliding sleeves and actuated those
`port collars with balls, like was done in Thomson,
`then the method of Yost as so modified would
`
`Ex. 1038 at 54:19-55:2 (emphases added)
`
`Q:
`
`infringe the ‘774 claims, correct?
`
`A: [believe that’s correct.
`
`

`

`Yost Was Successful
`
`Under current reservoir pressure conditions, the
`horizontal well produced at a rate 7 times greater than
`the field current average of 13 mcfd for stimulated
`vertical wells. This increase in gas production suggests
`that horizontal wells, in strategically placed locations
`within partially depleted fields, could significantly
`increase reserves.
`
`Yost (Ex. 1002) at 1 (emphases added)
`
`

`

`Yost ls Relevant to Commercial Operations
`
`In fact, there has been since before Yost, and
`
`Dr. Rao Reply Dec. (Ex. 1035) at 1] 19
`
`continues to be today, significant commercial drilling
`operations in the Devonian shale and in other fields in
`which operators experience conditions similar to those
`reported by Yost.
`
`Ex. 1038 at 109:1-4 (emphasis added)
`
`Patent Owner’s Expert Depo.:
`
`Q: Now, none of the papers describing the RET No. 1 well said that
`Yost’s system described there was not commercially viable,
`correct?
`
`A: Correct.
`
`

`

`Yost Intended to Fracture Across Zones
`
`Patent Owner’s Expert Depo.:
`
`Q: So let’s — let’s assume that I’m performing the method of Claim 1
`of the ’774 patent and I’m pumping fracturing fluid into the first
`zone. And let’s assume that that fluid communicates through
`the formation to another zone. Do I avoid infringement of Claim
`1 of the ’774 patent because the fluid communicated through
`the formation to another zone?
`
`Ex. 1038 at 93:22-94:6 (emphases added)
`
`A: No.
`
`Q: Okay. Do I avoid infringement of any claim of the ’774 patent
`because my fluid communicated to another zone?
`
`A: No.
`
`

`

`Yost Intended to Fracture Across Zones
`
`2)
`
`3)
`
`1) Primary design was to propagate natural fractures with a slight
`difference in orientation from principal stress orientation.
`Injection at low rates allows fluid to select pre-existing natural
`fractures to be propagated.
`Injection at pressures which will keep the fracture(s) from
`growing out of zone.
`4) By starting off at low rates and not exceeding 200 psi above
`closure pressure with average BHTP natural fractures would be
`propagated.
`5) By increasing injection rates additional fractures would be
`induced which would likely create a network of interconnected
`fractures with orientations of N37°E, N52°E, and N67°E.
`
`SPE 17759 (Ex. 2075) at 2 (emphases added)
`
`

`

`Yost Intended to Fracture Across Zones
`
`Pressure testing and gas sampling of the
`isolated zones confirm that fracture
`
`communication was accomglished along
`nearly 1000 feet of borehole by stimulation of
`one 400 foot long section. A technique for
`
`SPE 18249 (Ex. 1040) at 1 (emphases added)
`
`inducing multiple hydraulic fractures with
`multiple orientations was demonstrated.
`
`

`

`Yost Intended to Fracture Across Zones
`
`As more experience is gained in stimulating
`horizontal wells in low stress ratio environments,
`
`it may be possible to interconnect fractures all
`along the wellbore by stimulating only
`specific intervals with tailored rates and
`
`SPE 18249 (Ex. 1040) at 5 (emphases added)
`
`pressures.
`
`

`

`Yost Fractured
`
`Figure 2 depicts the natural fracture pattern
`and orientations in Zone 1. When high-pressure
`
`fluid was pumped down the tubing and annulus
`of the well, numerous natural fractures were
`
`
`
`enlarged. Actual breakdown of the shale
`may not have occurred, but fluid leak-off and
`subsequent expansion of the existing fracture
`
`system took place.
`
`SPE 18255 (Ex. 2076) at 1-2 (emphases added)
`
`

`

`Yost Fractured
`
`Patent Owner’s Expert Depo.:
`
`Q: Now if I were to use the system that is described in
`Claim 1 of the ’774 patent and l were to pump
`fracturing fluid as is described in that claim and all I did
`was propagate or, sorry, open a natural fracture,
`would I, therefore, not infringe Claim 1 of the ’774
`patent?
`
`Ex. 1038 at 91 :24-92:5 (emphases added)
`
`A: No, I think you probably would be infringing
`because you’re — I think that would still be
`considered a — a frac.
`
`

`

`Yost Fractured
`
`Patent Owner’s Expert Depo.:
`
`Q: Now, do you believe a person of ordinary skill in the art reading
`[SPE 18249] would conclude that they didn’t [induce fractures on
`RET#1]?
`
`Ex. 1038 at 90:2-9 (emphases added)
`
`A: I mean, I think they would take this into account, that that’s
`what they believe happened. It would be a piece of
`information that you would use.
`
`Q: But there’s no doubt that the authors are reporting that they
`induced new fractures on RET No. 1?
`
`A: That's what they believe.
`
`

`

`Patent Owner Has Failed to Show Commercial Success
`
`Patent Owner’s Expert Depo.:
`
`Q: Was it possible to use a sliding sleeve completion in a
`cased and cemented hole at this time?
`
`A: Yes.
`
`Ex. 1034 at 146:18—20, 148:6-9 (emphases added)
`
`Q: What about swellable packers? Could [the sales
`figures] have covered the use of sliding sleeve
`completions that involve swellable packers?
`A: Yes.
`
`

`

`Patent Owner Has Failed to Show Commercial Success
`
`Patent Owner’s Expert Depo.:
`
`Q: Now, when was the last time you considered using a
`ball — an open-hole multistage ball—drop system on a
`horizontal fracturing operation?
`
`Ex. 1038 at 16:1-5 (emphases added)
`
`A: 2012, 2013. We looked at it on — we looked at it on
`
`our vertical completions as well as our horizontal
`
`completions.
`
`

`

`Patent Owner Has Failed to Show Commercial Success
`
`
`Primary or re-frac applica '-
`-
`
`
`Open orcasedzole applications
`Horizontal: vertical, or(“H
`
`
`
`Baker Hughes Presentation (Ex. 2019) at 12
`
`

`

`Patent Owner Has Failed to Show Commercial Success
`
`Purim
`
`Swellable Packers
`
`
`_
`“Mm,
`Inflatable Packer
`
`
`
`
`\Annnm 3m ma
`Cormositc Cm
`
`Mu usual Sam
`
`
`
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`
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`
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`
`.
`
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`
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`
`u
`
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`
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`
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`
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`
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`
`Stimulating tho 4th zone
`
`Annotated Fig. from Ex. 2039
`
`

`

`Patent Owner Has Failed to Show Commercial Success
`
`Patent Owner’s Expert Depo.:
`
`Q: So we know how the system operates, but you don’t
`have evidence of the method being performed, right?
`
`Ex. 1034 at 137:17-25 (emphases added)
`
`I was basically
`of the operation in the field.
`looking at these animation sequences and then
`just saying in the Baker Hughes example we’re
`
`A: Well, this wasn’t my attempt to opine on execution
`
`pumping fracturing fluid into the second annular
`wellbore segment, for example.
`
`

`

`Patent Owner Has Failed to Show Nexus
`
`[E]ven assuming this data is truthful, which
`has not been established, and assuming it says
`what Mr. McGowen contends that it says, which
`has also not been established, it shows that
`
`Dr. Rao Reply Dec. (Ex. 1035) at 1| 26 (emphasis added)
`
`Baker Hughes sold 3.5 times as many prior
`
`art Plug and Perf tools as FracPoint sleeves
`during the relevant time period.
`
`

`

`Patent Owner Has Failed to Show Nexus
`
`As Mr. Ghiselin reports, “The most attractive feature
`of the [open hole multistage fracturing] technique is its
`speed. Several stages can be stimulated in a single
`day.” Ex. 2010 at 3. The speed improvement is due to
`the use of ball drop sliding sleeves in series as was
`taught by Thomson in 1997:
`With this system, stimulation of 10 separate zones is
`accomplished in 12-18 hours by a unique procedure
`that [drops varying sized balls to seal off and open
`the next zone for stimulation].
`Ex. 1003 at 1.
`
`Dr. Rao Reply Dec. (Ex. 1035) at 1] 28
`
`

`

`Conventional Wisdom Included Open Hole
`Multistage Fracturing
`
`fracture during injection and production.
`
`It appears that the type of wellbore completion is not a
`critical factor. However, an openhole completion would
`be preferred if the formation rock is competent enough to
`maintain the wellbore in stable condition during the life of
`[sicz the] well. Openhole completion would allow a
`maximum communication between the wellbore and
`
`Kim and Abass 1991 (Ex. 1043) at 15 (emphasis added)
`
`

`

`Patent Owner Has Failed to Show
`
`- Exhibit 2006 — Financial Post Magazine
`
`- Exhibit 2007 — Calgary Herald
`
`- Exhibit 2045 — PricewaterhouseCoopers
`
`- Exhibit 2061 — Business News Network
`
`\l-‘i‘W/I-‘i CALGARYHERALD PM}:-IBUSINESSNEWSNETWORK
`
`
`

`

`
`
`Patent Owner Has Failed to Show
`
`with Praise Evidence
`
`- Fails to reference the claimed methods
`
`Ex.2020
`
` - Fails to reference ball-drop sleeves
`
`Exs.2005,2008,2048,2054
`
`
`
`- Fails to reference open hole wells
`
`Exs.2007,2054
`
` - Fails to provide praise
`
`Exs.2013,2047
`
`

`

`Patent Owner Has Failed to Show Copying
`
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`

`

`The Challenged Claims
`would have been obvious.
`
`

`

`Dated: October 31, 2017
`
`Respectfully submitted,
`/Jason Shapiro/
`Jason Shapiro
`Reg. No. 35,354
`Counsel for Petitioners
`
`

`

`I certify
`
`that
`
`CERTIFICATE OF SERVICE
`foregoing PETITIONERS’ ORAL HEARING
`
`the
`
`DEMONSTRATIVES were served October 31, 2017 via electronic mail, as
`
`previously consented to by Patent Owner, upon the following counsel of record:
`
`HAMAD M. HAMAD (LEAD COUNSEL)
`BRADLEY W. CALDWELL (BACK-UP COUNSEL)
`JUSTIN NEMUNAITIS (BACK-UP COUNSEL)
`CALDWELL CASSADY CURRY P.C.
`
`hhamad@caldwellcc.com
`bcaldwell@caldwellcc.com
`jnemunaitis@caldwellcc.com
`rapid@caldwellcc.com
`
`DR. GREGORY J. GONSALVES (BACK-UP COUNSEL)
`GONSALVES LAW FIRM
`
`gonsalves@gonsalveslawfirm.com
`
`Dated: October 31, 2017
`EDELL, SHAPIRO & FINNAN, LLC
`9801 Washingtonian Blvd., Suite 750
`Gaithersburg, MD 20878
`Customer No. 27896
`
`Respectfully submitted:
`/Mark J. DeBoy/
`Mark J. DeBoy, Reg. No. 66,983
`Telephone: 301.424.3640
`
`