UNITED STATES PATENT AND TRADEMARK OFFICE
`
`BEFORE THE PATENT TRIAL AND APPEAL BOARD
`
`WEATHERFORD INTERNATIONAL, LLC;
`WEATHERFORD/LAMB, INC.;
`WEATHERFORD US, LP; and
`WEATHERFORD ARTIFICIAL LIFT
`SYSTEMS, LLC
`Petitioners
`
`v.
`
`PACKERS PLUS ENERGY SERVICES, INC.,
`
`Patent Owner
`
`Inter Partes Review
`of U.S. Patent 7,134,505
`
`EXHIBIT 1035
`REPLY DECLARATION OF VIKRAM RAO
`
`1
`
`Weatherford International LLC et al.
`Exhibit 1035
`Weatherford International LLC et al. v. Packers Plus Energy Services, Inc.
`IPR2016-01517, Page 1 of 22
`
`
`
`BEFORE THE PATENT TRIAL AND APPEAL BOARD
`
`WEATHERFORD INTERNATIONAL, LLC;
`WEATHERFORD/LAMB, INC.;
`WEATHERFORD US, LP; and
`WEATHERFORD ARTIFICIAL LIFT
`SYSTEMS, LLC
`Petitioners
`
`v.
`
`PACKERS PLUS ENERGY SERVICES, INC.,
`
`Patent Owner
`
`Inter Partes Review
`of U.S. Patent 7,134,505
`
`EXHIBIT 1035
`REPLY DECLARATION OF VIKRAM RAO
`
`1
`
`Weatherford International LLC et al.
`Exhibit 1035
`Weatherford International LLC et al. v. Packers Plus Energy Services, Inc.
`IPR2016-01517, Page 1 of 22
`
`
`
`1.
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`My name is Vikram Rao. I am over the age of twenty-one years, of
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`sound mind, and capable of making the statements set forth in this Reply
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`Declaration. I am competent to testify about the matters set forth herein. All the
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`facts and statements contained herein are within my personal knowledge and/or
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`within my field of expertise, and they are true and correct to the best of my
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`knowledge.
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`2.
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`I initially submitted a Declaration at the request of Edell, Shapiro &
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`Finnan LLC in this inter partes review (“IPR”), which is Exhibit 1007. I have
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`been asked to review the Declarations of Harold McGowen (Exhibits 2051 and
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`2081) and to respond to specific points raised by Patent Owner in the Patent Owner
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`Response (Paper 32) and by Mr. McGowen in his two Declarations regarding the
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`validity of U.S. Patent No. 7,134,505 (“‘505 Patent”). This Reply Declaration
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`contains a summary of and the supporting explanations for my opinions on the
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`specific topics requested. Because my task as provided by counsel was limited to
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`opining on certain specific issues, I have not attempted in this Reply Declaration to
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`provide a comprehensive assessment of the Patent Owner Response or Mr.
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`McGowen’s two Declarations.
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`I. The Problems Reported by Thomson Would Not Be Alarming to a
`POSITA
`
`3.
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`At page 32 of 94 of Exhibit 2051, Mr. McGowen highlights a number
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`of “problems” that Thomson et al., encountered during their work. However, in
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`2
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`Weatherford International LLC et al.
`Exhibit 1035
`Weatherford International LLC et al. v. Packers Plus Energy Services, Inc.
`IPR2016-01517, Page 2 of 22
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`my view a person of ordinary skill in the art (POSITA) at the time of the alleged
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`invention would not have seen these as reasons to avoid using Thomson’s ball drop
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`system. To the contrary, he or she would have realized that it is common to have
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`issues in any oil and gas job, especially when working offshore and using new
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`technology. A POSITA would have also realized that Thomson was able to
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`overcome these problems, avoid potential situations and ultimately successfully
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`use the ball drop system in a fracturing operation.
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`4.
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`For example, the first “problem” Mr. McGowen identifies was a
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`concern that was raised before the job was even run about prematurely shearing the
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`shear screws on the PBR/seal assembly. The authors provided a solution to the
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`problem and ran the job without incident. Ex. 1003 at 3. A POSITA would not
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`have found the anticipation of a problem and solution developed before the job was
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`run followed by no problems during the actual job related to the problem
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`“alarming.” That is a normal part of the job of an engineer designing downhole
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`systems. Every other “problem” that Mr. McGowen identifies relates to the failure
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`of the pump out plug on M1 and the cycle plug on M3. Ex. 1003 at 3-4. Not only
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`did the authors of Thomson address these issues as they arose as described in the
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`paper, but also the authors suggest the use of new “disappearing” plugs as “a more
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`reliable and cost effective solution to the tailpipe plug.” Ex. 1003 at 5. A POSITA
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`would have known how to select downhole tools for various applications and
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`3
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`Weatherford International LLC et al.
`Exhibit 1035
`Weatherford International LLC et al. v. Packers Plus Energy Services, Inc.
`IPR2016-01517, Page 3 of 22
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`would not have considered Thomson’s disclosed issues with plugs a significant
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`enough concern to preclude use of the system.
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`5.
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`As Thomson states, the “successful installation of four multiple
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`packer/MSAF completions in chalk formation in the North Sea proved that the
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`system was not only feasible but highly efficient, both from an operational
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`standpoint and from a reservoir treatment standpoint.” Ex. 1003 at 5. Thus, the
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`problems reported by Thomson would not have led a POSITA to avoid using the
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`Thomson system in a cased hole well or an open hole well.
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`II. Casing and Cementing Were Not Required for Multistage Fracturing
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`6.
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`At page 26 of 94 of Exhibit 2051, Mr. McGowen states that in 2001,
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`the conventional wisdom “was that horizontal boreholes should be cased,
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`cemented, and perforated to facilitate effective fracturing.” However, Mr.
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`McGowen’s theory that horizontal boreholes should be cased and cemented
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`ignores the fact that the decision of whether to case a wellbore or leave it open hole
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`is a complicated decision that is dictated by many different factors.
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`7.
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`The most important consideration in this determination is the mineral
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`composition of the formation itself. In Canadian litigation involving Canadian
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`Patent 2,412,072, which has the same specification and virtually identical claims to
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`the ‘505 Patent, Packers Plus and Rapid Completions relied upon the testimony of
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`their expert Dr. Jennifer Miskimins. Dr. Miskimins relied upon a 1991 article by
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`4
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`Weatherford International LLC et al.
`Exhibit 1035
`Weatherford International LLC et al. v. Packers Plus Energy Services, Inc.
`IPR2016-01517, Page 4 of 22
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`C.M. Kim & H.H. Abass, “Hydraulic Facture Initiation From Horizontal
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`Wellbores: Laboratory Experiments,” Rock Mechanics As A Multidisciplinary
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`Science, pp. 231-240 (Jean-Claude Roegiers ed., CRC Press 1991) (“Kim and
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`Abass”) (Ex. 1043). Kim and Abass explain in their article that “an openhole
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`completion would be preferred if the formation rock is competent enough to
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`maintain the wellbore in stable condition during the life of the well.” Exhibit 1043
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`at 15. Thus certain formations, such as the very consolidated shale formations of
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`the Bakken, lent themselves to being completed as open holes. In others, such as
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`when working offshore, or where the rock is unstable, casing would have been
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`preferred. Other relevant factors that would have been considered included the
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`condition of the hole (primarily rugosity), whether there are regulations preventing
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`comingling of production from different zones, and the diameter of the lateral (i.e.,
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`whether it can easily accommodate casing).
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`8.
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`Mr. McGowen also opines at pages 27-29 of 94 of Exhibit 2051 that
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`various concerns about fracture initiation, spacing, and geometry resulted in a
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`perceived need for cementing, casing, and perforations to control fracture
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`initiation. The Kim and Abass article proves that such views were not accepted in
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`the industry because it expressly asserts a preference for open hole completions for
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`fracturing in appropriate formations. Exhibit 1043 at 15. It was not accepted
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`“conventional wisdom” in the industry that casing and cementing were necessary
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`5
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`Exhibit 1035
`Weatherford International LLC et al. v. Packers Plus Energy Services, Inc.
`IPR2016-01517, Page 5 of 22
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`for multistage fracturing in horizontal wells in the 1990s. A person of ordinary
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`skill in the art in the 1990s understood that open hole, multistage fracturing was a
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`viable option in appropriate, competent boreholes and formations.
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`9.
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`Yost itself disproves Mr. McGowen’s theory. Yost disclosed the
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`successful use of open hole multistage fracturing. Yost raised no concerns about
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`fracture initiation, fracture spacing, or any other concerns with open hole fracturing
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`despite carefully documenting where fractures were occurring. Also, Patrick J.
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`McLellan, et al., published a paper entitled, “A multiple-zone acid stimulation
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`treatment of a horizontal well, Midale, Saskatchewan,” in April 1992 in the Journal
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`of Canadian Petroleum Technology (“McLellan”)(Ex. 1042). That article
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`describes the fracture stimulation of a horizontal well using a straddle arrangement
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`with inflatable packers spaced apart with ports between the inflatable packers. The
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`authors describe fracturing 27 zones of a horizontal open hole “without a tool
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`failure or leakage around the packer elements.” Ex. 1042 at 5. McLellan describes
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`treating pressures up to 23 MPa, which is more than 3,300 PSI. Ex. 1042 at 6 (Fig.
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`8). Thus, a POSITA would have understood that open hole multistage fracturing
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`was a viable option for stimulating horizontal wells in 2001.
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`III.
`
`Fracture Communication Through the Formation to Another Zone Is
`Not a Problem
`The ‘505 Patent refers to “zones” or “segments” or “intervals” of the
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`10.
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`wellbore. Thus, the zonal isolation that is contemplated by the patent is the
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`6
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`Weatherford International LLC et al. v. Packers Plus Energy Services, Inc.
`IPR2016-01517, Page 6 of 22
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`isolation of different zones of the wellbore that are isolated from one another by
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`packers. However, these “zones” do not extend into the formation.
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`11.
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`This is apparent on the face of the language in the patent itself. The
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`patent explains that it is directed to providing “selective communication to a
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`wellbore for fluid treatment.” Ex. 1001 at 1:16-19. In order to do so, the “packers
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`divide the wellbore into isolated segments wherein fluid can be applied to one
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`segment of the well, but is prevented from passing through the annulus into
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`adjacent segments.” Ex. 1001 at 6:25-28. Claims 23 and 27 are consistent with the
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`description. The claims explain that each of the three packers “seal the annulus
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`between the apparatus and the wellbore wall.” The “zonal isolation” that is
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`contemplated by the ‘505 Patent is provided by the packers, and it is limited to
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`isolation in the wellbore. Thus, even if a fracture were to initiate in one zone of the
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`wellbore and propagate around the packer through natural fractures in the
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`formation to the next one, the zones would still be isolated from one another by
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`packers, as contemplated by the patent.
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`12. At pages 20-21 of 42 of Exhibit 2081, Mr. McGowen alleges that
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`communication of tracers into different areas of the wellbore in Yost led to
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`conclusions, such as fracturing may not have occurred, and would lead a POSITA
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`reviewing Yost to conclude that open hole multistage fracturing “is mechanically
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`risky, does not produce effective pressure isolation, and does not provide a
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`7
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`Exhibit 1035
`Weatherford International LLC et al. v. Packers Plus Energy Services, Inc.
`IPR2016-01517, Page 7 of 22
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`commercially viable improvement over fracturing through perforations in
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`cemented casing.” I disagree.
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`13. As described in SPE 18249, Yost used a number of different
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`radioactive tracers to track where the fracturing fluid went after each zone was
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`treated, and found that tracer from Zone 1 was present in other zones. Yost notes
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`that there are two possible reasons for seeing this – either the packers failed, or
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`“the fluid traveled to these zones via natural fractures.” Ex. 1040 at 4. However,
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`Yost did a series of additional tests to determine the correct explanation. First, he
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`tested the pressure in each of the zones. This is the standard method for
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`determining whether there is zonal isolation. If there is leakage across the zones,
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`then the pressure in adjacent zones will tend to equilibrate. Yost found that there
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`were distinctly different pressures in different zones. He therefore concluded that
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`“the packers held [meaning that they provided isolation] and the tracer was
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`conducted to Zones 2, 3, and 4 by natural fractures.” Ex. 1040 at 4. As an aside, I
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`note that since the Zone 1 experiments were expressly designed to open up natural
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`fractures, tracer transport along them was to be expected. In fact, the finding of
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`tracers in other zones was a strong indication of the Zone 1 fracturing fluid
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`communicating with the natural fractures. For thoroughness, Yost conducted the
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`pressure studies to eliminate an alternative explanation for tracer communication to
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`other zones.
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`8
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`Weatherford International LLC et al.
`Exhibit 1035
`Weatherford International LLC et al. v. Packers Plus Energy Services, Inc.
`IPR2016-01517, Page 8 of 22
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`14. Also, as I explained above, even if fracturing fluid injected into one
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`zone of the wellbore communicated through natural or induced fractures into a
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`different zone of the wellbore, such communication has no effect on whether the
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`fracturing method practices claims 23 and 27 of the ‘505 Patent. Because these
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`claims only address isolation in the wellbore to create annular wellbore segments,
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`communication through the formation from one wellbore zone to another does not
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`impact whether the claim requirements are met. There is no discussion or mention
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`in the specification of avoiding communication across zones through fractures. In
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`fact, there is no mention of natural or induced fractures at all in the specification. A
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`POSITA would not understand claims 23 and 27 to be addressing communication
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`through the formation about which the patent is completely silent.
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`15. Contrary to Mr. McGowen’s assertions, Yost teaches that the authors
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`sought to and did in fact achieve communication across zones via the formation. In
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`SPE 18249, which addresses the same RET#1 well as SPE 19090, the authors,
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`including Yost, explain that “fracture communication was accomplished along
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`nearly 1000 feet of borehole by stimulation of one 400 foot long section.” Ex. 1040
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`at 1. The authors referred to this achievement as an “accomplish[ment]” not a
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`failure. Id. They state in the next sentence, “A technique for inducing multiple
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`hydraulic fractures with multiple orientations was demonstrated.” Id. SPE 18249
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`explains that the authors set out to test various hypotheses, including the
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`IPR2016-01517, Page 9 of 22
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`hypothesis that the “extension of natural fractures with multiple orientations will
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`produce a complex interconnected fracture network which will be a much more
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`efficient drainage system for low permeable shale and siltstone formations than
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`simple parallel multiple hydraulic fractures induced from a horizontal wellbore.”
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`Id. at 3. A POSITA would have understood that the goal here was to provide as
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`much interconnection as possible to achieve the best drainage of the reservoir as
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`possible. A POSITA would not have understood that the authors hoped that the
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`proposed interconnections would stop at arbitrary locations in the formations
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`where packers happened to be set. Yost was well ahead of his time in his concept
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`of taking advantage of natural fractures to drain reservoirs effectively. Two
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`decades later, in 2007, Julia Gale published a highly cited work on that very
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`subject. See Gale, Julia F.W., et al., “Natural Fractures in the Barnett Shale and
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`their Importance for Hydraulic Fracture Treatments,” AAPG Bulletin, Vol. 91, No.
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`4, pp. 603-622 (April 2007).
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`16.
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`The authors of SPE 18249 actually conclude by noting that “[a]s more
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`experience is gained in stimulating horizontal wells in low stress ratio
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`environments, it may be possible to interconnect fractures all along the wellbore by
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`stimulating only specific intervals with tailored rates and pressures.” Ex. 1040 at 5.
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`Here the authors are expressing the aspiration that they may in the future be able to
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`intentionally interconnect the formations surrounding all the zones along a
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`10
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`Weatherford International LLC et al. v. Packers Plus Energy Services, Inc.
`IPR2016-01517, Page 10 of 22
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`wellbore by stimulating only a few zones. A POSITA would not read these
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`accomplishments, hypotheses, and aspirations as expressing the view that
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`communicating beyond a particular zone with a fracture treatment was a failure. To
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`the contrary, a POSITA would recognize that communicating fractures beyond the
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`starting zone was a proposed fracturing technique that was accomplished and that
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`the authors hoped to refine and reuse.
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`17. Additionally, Yost teaches that the method employed on the RET#1
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`well both propagated natural fractures and induced new fractures. The weight of
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`the Yost-related literature supports the conclusion that Yost did indeed induce new
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`fractures. I note that Layne’s analysis presented in SPE 18255 was focused on a
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`single zone in the wellbore – Zone 1. With respect to that zone, Layne notes that
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`“actual breakdown of the shale may not have occurred.” In point of fact, in Zone 1,
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`low fluid rates were intentionally used to propagate natural fractures, not to
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`produce new ones. In other zones, by design, at higher rates, new fractures were
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`produced. The difference was used to test the hypothesis that low rates would
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`propagate existing fractures and higher rates would induce new ones. This sort of
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`sound methodology is the hallmark of Yost’s experiments. The Yost papers tell the
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`reader in no uncertain terms that new fractures were in fact induced (in zones other
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`than Zone 1):
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`11
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`Weatherford International LLC et al.
`Exhibit 1035
`Weatherford International LLC et al. v. Packers Plus Energy Services, Inc.
`IPR2016-01517, Page 11 of 22
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`a. SPE 17759 notes that the objective of the research “was to determine
`the recovery efficiency of the natural fracture system and the effects
`expected from hydraulically fracturing the well whenever multiple
`fractures would be induced.” Ex. 2075 at 2. The paper concludes that
`“[m]ultiple hydraulic fractures can be induced from a horizontal
`wellbore during a single pumping event.” Ex. 2075 at 5.
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`b. SPE 19090 notes that the objective of the stimulation research was to,
`among other things determine “the effects expected from
`hydraulically fracturing the well whenever multiple fractures would
`be induced.” Ex. 1002 at 3. The technical approach to the experiments
`was, among other things, to “induce multiple hydraulic fractures, both
`controlled and uncontrolled” and to “determine how many and where
`fractures were induced in the borehole.” Ex. 1002 at 3-4. This paper
`also notes that Zone 1 was intentionally kept at flow rates that were
`low enough to only enhance existing fractures. Ex. 1002 at 4.
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`c. SPE 18249 concludes that “multiple hydraulic fractures can be
`induced from a horizontal wellbore under openhole wellbore
`conditions” and that “natural fractures will be selected at low injection
`rates (5-10 bpm) while induced fractures will be selected at high
`injection rates (greater than 25 bpm)”. Ex. 1040 at 5.
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`18.
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`In my view, a POSITA would not have concluded that Yost was
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`limited to propagating natural fractures, which in any event is a form of fracturing,
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`as also confirmed by the Packers Plus expert, Mr. McGowen, who during his
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`deposition in this proceeding testified as follows regarding claim 1 of related U.S.
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`12
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`IPR2016-01517, Page 12 of 22
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`Patent No. 7,861,774 (“’774 Patent”), which is narrower than the challenged ‘505
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`claims:
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`Q. Now, if I were to use the system that is described in Claim 1 of the '774
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`patent and I were to pump fracturing fluid as is described in that claim and
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`all I did was propagate or, sorry, open a natural fracture, would I, therefore,
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`not infringe Claim 1 of the '774 patent?
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`A. No, I think you probably would be infringing because you're -- I think
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`that would still be considered a -- a frac.
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`See Exhibit 1038 at 91:24-92:5.
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`IV. Commercial Fracturing Operations Are Ongoing in the Devonian Shale
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`19.
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`At page 16 of 42 of Exhibit 2081, Mr. McGowen offers the opinion
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`that Yost’s work in the Devonian shale would be “irrelevant to a POSITA” because
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`the “downhole environment in Yost is not representative of the type of downhole
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`environment likely to be encountered in the ‘real-world.’” I disagree. In fact, there
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`has been since before Yost, and continues to be today, significant commercial
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`drilling operations in the Devonian shale and in other fields in which operators
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`experience conditions similar to those reported by Yost. See, e.g., McKetta, “Earth
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`Stress Relationships in the Appalachian Basin,” SPE/DOE 8955, presented at the
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`1980 SPE/DOE Symposium on Unconventional Gas Recovery held in Pittsburgh,
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`Pennsylvania May 18-21, 1980. The McKetta paper reports fracture gradients
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`13
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`IPR2016-01517, Page 13 of 22
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`from 67 gas producing wells, indicating drilling activity at the time. A 2010 report
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`entitled “Expert Panel Report:Bainbridge Township Subsurface Gas Invasion,”
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`https://oilandgas.ohiodnr.gov/portals/oilgas/pdf/bainbridge/DMRM%202%20Chap
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`ter%202%20-%20Hydraulic%20Fracturing%20Analysis.pdf (“Ohio Report”)
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`relies heavily on the McKetta work for their data. It has many references to
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`activity, some in lower and some in higher frac gradient regimes, but many in
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`Devonian shale. An example is:
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`Southern West Virginia deep lower Devonian shale has a very low fracture
`gradient of 0.4 psi/ft or less; most Devonian shale wells in this area are
`drilled on air (Mack, 2003).
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`Ohio Report, at 2-7. Note in this excerpt, the use of air drilling. This is what Yost
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`used.
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`20.
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`One example is Yost’s fracture gradient, which Mr. McGowen
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`criticizes as “extremely low”. At page 18 of 42 of Exhibit 2081, Mr. McGowen
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`provides what he considers to be “typical” fracture gradients in general and in the
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`Devonian shale, but he cites no support for the numbers he provides. In contrast,
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`the chart below shows frac gradients in West Virginia and Kentucky. As shown,
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`14
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`Weatherford International LLC et al. v. Packers Plus Energy Services, Inc.
`IPR2016-01517, Page 14 of 22
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`they range from as low as 0.2 (much like the Yost formation) to as high as just
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`over 1.0.1
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`V.
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`Swellable Packers Are Not Solid Body Packers
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`21.
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`As I explained in paragraph 58 of my prior Declaration, I am unaware
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`of any plain and ordinary meaning for the phrase “solid body packer.” I noted that
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`the inventors defined the phrase in a second provisional application as “a tool to
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`create a seal between tubing and casing or the borehole wall using a packing
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`element which is mechanically extruded, using either mechanically or
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`hydraulically applied force.” Ex. 1015 at 4. I understand that Patent Owner
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`proposes that “solid body packer” be construed as “a packer including a solid,
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`1 Source: McKetta, “Earth Stress Relationships in the Appalachian Basin,”
`SPE/DOE 8955, presented at the 1980 SPE/DOE Symposium on Unconventional
`Gas Recovery held in Pittsburgh, Pennsylvania May 18-21, 1980.
`15
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`Exhibit 1035
`Weatherford International LLC et al. v. Packers Plus Energy Services, Inc.
`IPR2016-01517, Page 15 of 22
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`extrudable packing element.” Under either construction of “solid body packer,” in
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`my opinion swellable packers are excluded. Both constructions require the
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`packing element to be “extruded” or “extrudable.” In the context of the ‘505
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`Patent, the terms “extruded” or “extrudable” would be understood by persons of
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`skill in the art to be associated with a mechanical process in which a solid body is
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`made to expand in one direction by making it smaller (i.e., compressing it) in
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`another direction. That is what the ‘505 Patent describes when it describes the
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`solid body packer shown in Figure 2 of the patent. Ex. 1001 at 8:40-9:20. As the
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`patent explains, “Thus, the packer is set by pressuring up the tubing string such
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`that fluid enters the hydraulic chamber and acts against pistons 36a, 36b to drive
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`them apart, thereby compressing the packing elements and extruding them
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`outwardly.” Ex. 1001 at 9:9-12 (emphasis added).
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`22.
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`A person of ordinary skill in the art would not understand swellable
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`packers to be solid body packers because swellable packing elements are sponge-
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`like - not solid - and they are not expanded in one direction by being made smaller
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`(i.e., compressed) in another direction. Instead, swellable packers expand radially
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`outward by taking in a fluid as, with a different fluid action, do inflatable
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`packers. In no way could this be construed to be compressing and extruding a
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`solid body.
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`16
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`Weatherford International LLC et al.
`Exhibit 1035
`Weatherford International LLC et al. v. Packers Plus Energy Services, Inc.
`IPR2016-01517, Page 16 of 22
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`23.
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`Therefore, a person of ordinary skill in the art would not understand
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`swellable packers to be solid body packers under either proposed definition of
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`solid body packer.
`
`VI. Any Significant Increase in Sales of Open Hole Multistage Ball Drop
`Systems Was Due to the Price of Oil and Gas
`
`24.
`
`At pages 25-27 of 42 of Exhibit 2081, Mr. McGowen estimates the
`
`sales of Baker Hughes’s Mulitstage Frac Completions from information found on
`
`Baker Hughes’s website. Mr. McGowen concludes that his estimate shows the
`
`success of Baker Hughes’s “version of the ‘774 Invention in the market place” and
`
`that such success supports his conclusion of non-obviousness regarding the claim
`
`at issue. Additionally, Mr. McGowen relies on Packers Plus’s sales of the
`
`StackFRAC system as demonstrating commercial success of the ‘505 claims. Mr.
`
`McGowen, however, never addresses what was going on in the marketplace during
`
`the time periods when he alleges such high volume sales of the systems he asserts
`
`are covered by the ‘505 claims. I disagree with his conclusions that the sales data
`
`of Packers Plus and Baker Hughes’s systems shows nonobviousness of the ‘505
`
`claims.
`
`25.
`
`I explained my understanding of obviousness in paragraphs 30-36 of
`
`my first Declaration. As I explained in paragraph 32, I understand that commercial
`
`success is one potential secondary consideration of nonobviousness. However, I
`
`also understand that to show commercial success, a product or service embodying
`
`17
`
`Weatherford International LLC et al.
`Exhibit 1035
`Weatherford International LLC et al. v. Packers Plus Energy Services, Inc.
`IPR2016-01517, Page 17 of 22
`
`
`
`a claimed invention must not only be successful, but there must be shown some
`
`nexus between the claimed invention and that success. In other words, I
`
`understand that the evidence must provide some reason for believing that the
`
`commercial success is attributable to the claimed technology and not some other
`
`reason. I disagree that Mr. McGowen has demonstrated any such nexus between
`
`the ‘505 claims and sales of Packers Plus’s and Baker Hughes’s products, and I do
`
`not believe any such nexus exists.
`
`26.
`
`For example, Mr. McGowen relies on Baker Hughes’s website
`
`information to support his opinion of commercial success as reflected in Exhibit
`
`2019. Exhibit 2019 purports to show sales of Baker Hughes FracPoint sleeves as
`
`of 3/28/12 on page 6 of 22. It shows the cumulative total of such sleeves as
`
`40,664. However, the prior page (page 5 of 22) of Exhibit 2019 shows the
`
`cumulative total of Composite Plugs sold as of 6/1/12 as 147,084. Thus, even
`
`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 Baker Hughes sold 3.5 times as many prior art Plug and Perf tools as
`
`FracPoint sleeves during the relevant time period. Mr. McGowen does not account
`
`for the drastic increase in sales of plug and perf systems or the fact that plug and
`
`perf systems outsold FracPoint systems during the entire time period.
`
`18
`
`Weatherford International LLC et al.
`Exhibit 1035
`Weatherford International LLC et al. v. Packers Plus Energy Services, Inc.
`IPR2016-01517, Page 18 of 22
`
`
`
`27.
`
`Moreover, the data on which Mr. McGowen relies from Baker
`
`Hughes’s website shows that there were very few Plug and Perf or FracPoint
`
`systems sold before 2008, which is 7 years after the original provisional
`
`application was filed that culminated in the ‘505 Patent. The question that Mr.
`
`McGowen does not address is why the sudden increase in sales of fracturing
`
`systems around the 2007-2008 time frame. As the chart below shows, that sudden
`
`increase in fracturing was due to the sudden increase in the price of oil around
`
`2007-2008. Moreover, the sudden drop in the price of oil in 2015 has also caused
`
`a sudden decrease in fracturing in general, including the use of both plug and perf
`
`and open hole multistage fracturing systems. Mr. McGowen does not mention or
`
`address the causal effect of the price of oil on the sales of Packers Plus’s and Baker
`
`Hughes’s systems. He also does not address why plug and perf systems continued
`
`to outsell open hole multistage systems throughout the time period from 2008 to
`
`2012, which does not comport with Mr. McGowen’s contention that the claimed
`
`methods in ‘505 were nonobvious and solved a need that had been unfulfilled in
`
`the oil and gas industry.
`
`19
`
`Weatherford International LLC et al.
`Exhibit 1035
`Weatherford International LLC et al. v. Packers Plus Energy Services, Inc.
`IPR2016-01517, Page 19 of 22
`
`
`
`28. Mr. McGowen also relies on a study entitled, Sleeves vs Shots—The
`
`Debate Rages, by Richard G. Ghiselin, P.E., provided as Exhibit 2010. That study
`
`supports my opinion that there is no nexus between the ‘505 claims and the
`
`Packers Plus and Baker Hughes open hole multistage fracturing systems. 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:
`
`20
`
`Weatherford International LLC et al.
`Exhibit 1035
`Weatherford International LLC et al. v. Packers Plus Energy Services, Inc.
`IPR2016-01517, Page 20 of 22
`
`
`
`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 ball 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.
`The case history data will provide comparisons in operational times
`between traditional stimulations and this new method as well as the
`significant enhancements to cost efficiency that resulted from its use.
`
`Ex. 1003 at 1. Thus, the Ghiselin report concludes that the success of open hole
`
`multistage fracturing systems is due to a feature that was known and taught in the
`
`prior art.
`
`29.
`
`In fact, Ghiselin notes that “[r]ecently, the OHMS technique has been
`
`used on cemented completions that use special acid-soluble cement. . . . This
`
`modification eliminates the need for external zonal isolation devices and can
`
`constrain fracture initiation to the area where the cement sheath has been
`
`dissolved.” Ex. 2010 at 3. Thus, Ghiselin actually includes cemented completions
`
`without packers as part of his definition of open hole multistage fracturing. Such a
`
`system without packers is outside the scope of the ‘505 claims, making Ghiselin’s
`
`“OHMS” system not coincident with the scope of the ‘505 claims. Moreover, the
`
`21
`
`Weatherford International LLC et al.
`Exhibit 1035
`Weatherford International LLC et al. v. Packers Plus Energy Services, Inc.
`IPR2016-01517, Page 21 of 22
`
`
`
`Weatherford International LLC et al.
`Exhibit 1035
`Weatherford International LLC et al. v. Packers Plus Energy Services, Inc.
`IPR2016-01517, Page 22 of 22
`
`
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