DEA-154 – DGS Technology Dual Gradient Services

Project Summary

DEA-154 “DGS Technology”

Date Submitted: 10/23/03

Technical Area: ExplorationProduction

Sponsor: Unocal

Title: Dual Gradient Drilling

Submitted by: Dual Gradient Services LLC / 713-964-7735/ 2800 Post Oak Blvd / Suite 5220 / Houston / TX / 77056 713-964-7735 /

Principal Investigator(s): Luc de Boer – / Curtis Huff –

Business Impact:

DGS has developed a new process that can be utilized on existing deepwater drilling ships and rigs to reduce the effect hydrostatic pressure in deepwater wells. The DGS system does not require complex subsea pumping systems or major modifications to drilling procedures and rigs. Initial analysis indicates around 20 deepwater rigs could be used for the system without any material or costly modifications. The process involves the injection into the annulus of a light-weight fluid at or below the seabed in a manner that is designed to reduce the weight of the fluid in the riser to 9-9.5ppg. DGS is currently conducting a series of tests on the separation process used in the system to identify and design the most appropriate drilling fluids and equipment to be used for the separation process. The system is particularly suited for wells in water depths of 5,000 feet or deeper and has significant benefits for wells in water depths over 3,000ft. Estimated cost savings using the DGS system up to $12 million a well depending on depth. Benefits include: ? Reduced Number of Casing Strings (Average 3 in 6,000ft WD) ? Slimmer Well Profile (Less Steel and Cement) ? Reduced Rig Time ? Reduced Mud Loss While Drilling and Running Casing

Technical Objectives:

1. Identify exploration and development projects within the industry where implementing the DGS technology can add significant benefits
2. Identify specific drilling units that can incorporate the DGS technology with minor modifications and define the modifications, if any, that need to be done and the costs associated with the modifications. The assistance of the DEA is not being requested for the technical aspects of the system or the design or manufacture of the system, all of which are currently being funded privately.

Methodology: From participants collect and study specific field data:
1. On pore pressure and fracture gradient profiles,
2. Well design and final well cost, and 3. Non-productive times while drilling and testing. DGS will also be asking each participant to provide a technical liaison to assist in the well design and to coordinate within their organization information that may be desired.

Deliverables: Identify and design up to ten prospect (exploration and development) wells of the various participants that could be drilled using dual gradient drilling and the DGS system. For each well, The well design would include: 1. Casing Seats and Casing Design 2. Time Line 3. Well cost with and without the DGS system

Startup Date: Jan 15 2004

Project Duration: six month

Project Cost: $250,000.- 300,000

Cost per Participant: 5-6 participants / $50,000 each