Icewine 2
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Icewine#2 Overview –Spud Early Q2 2017
•Single stage, multi-perforation cluster stimulation and production test over 160’ interval (HRZ and basal Hue Shale)
•Estimated 30-45 days to drill, log and conduct micro stimulation
•Main stimulation will then be refined over 1-2 week period before execution
•Flow test results expected mid 2017 (late June - July)
•All major permits secured as planned
•Permit To Drill being finalised & on track
•Well cost estimated at US$17.7m* (net US$14m)
•88E funded from current cash position (US$20m) for Icewine#2
•Franklin Bluffs Pad location –year round access via Dalton Highway

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Latest NEWS 18/07/17
Icewine#2 Operations Update

88 Energy Limited ("88 Energy", "the Company", "Operator") (ASX, AIM: 88E) is pleased to provide an update on Project Icewine, located onshore North Slope of Alaska.

Highlights

· Icewine#2 well shut-in on 10th July to allow for imbibition and pressure build-up

· Analyses of flowback results to date ongoing

Icewine#2 Operations Update

The Icewine#2 well was shut-in on the 10th July for a six week period to allow for imbibition and pressure build up to occur. Prior to shut-in, 16% of the stimulation fluid had been recovered from the reservoir under natural flowback, with trace hydrocarbons returned at surface.

Imbibition, or "soaking", allows for absorption of frac water into the formation, which may displace reservoir water molecules that are restricting hydrocarbon molecules from flowing into the created fractures. The pressure build up data will provide insights into the permeability created by the stimulation. Ultimately, the post shut-in well performance will determine the next steps required, such as continuing to flowback naturally or the introduction of artificial lift (eg swabbing).

The HRZ shale shares several characteristics with other successful shales in the Lower 48; however, there is no blueprint or benchmark against which it is meaningful to measure performance as there are also many differences. At this juncture, the Joint Venture is of the view that further analyses are required to determine what impact the performance of the well to date has on the probability of success for the play. These analyses include, but are not limited to;

· comparison of the flowback rate against expected the expected flowback rate based on reservoir parameters and the successful execution of the fracture stimulation;

· reconciliation of the petrophysical model, and the apparent in-situ hydrocarbons, with the hydrocarbons recovered to surface to date.

These analyses are ongoing and will be communicated once complete.

Further updates will be made as and when appropriate throughout the testing program.

** NEWS 10/07/17**
Icewine#2 Operations Update

88 Energy Limited ("88 Energy", "the Company", "Operator") (ASX, AIM: 88E) is pleased to provide an update on Project Icewine, located onshore North Slope of Alaska.

Highlights

· Stimulation fluid has continued to flowback naturally

· ~16% of total stimulation fluid recovered to date

· Shut in planned for 6 weeks

Icewine#2 Operations Update
Flowback operations have continued, with fluid composition comprising 100% water. After analysing the performance of the well to date, and comparing to results from other plays, a decision has been made to shut the well in for six weeks to allow for pressure build up and imbibition to occur. Imbibition (or soaking) has proven to be effective in other plays by allowing frac fluid to be absorbed, displacing in-situ water that may be blocking hydrocarbon molecules from being able to flow through the reservoir.
Post the shut in period, the well may then be swabbed.
Further updates will be made as and when appropriate throughout the testing program.

VIEW https://youtu.be/zOU0RPU_tlo
READ
"In short, swabbing is a form of “well control” that releases bottom hole pressure in order to “kick” the well off. When wells are first drilled, they are usually fractured by a pressurized liquid to help open up “production zones” where oil or gas can travel to. The next step is where the actual swabbing takes place.

Swabbing rigs are then used to remove the fluids from the production zones. These swabbing rigs normally have a winch with a cable and a foldable mast with a pulley on top. First, the rig operator must back the machine as close to the well as he possibly can. Next, the operator raises the mast and moves it until it is aligned with the center of the well. Next, the operator lowers the cable in and out of the well via the “winch drum”. Here, the operator must be able to maintain control of the machine while taking into account the well’s sound and depth.

The activities of the swabbing rig then allow for the removal of the liquids inside the well. Standard practices involve removing 6 barrels of fluid out of the well. This practice if referred to as a “Run”. Some wells may take just one run while other may require multiple. Removing these fluids then causes the bottom hole pressure to increase. This allows the oil or gas to be pushed out of the well to cause it to start “flowing”. Oilfield workers may then start collecting and storing the natural resource that it being emitted from the well they are working on. As the well ages, the bottom pressure of the well may not be enough to push the oil and gas out of the well anymore. The well has then stopped flowing and the swabbing process needs to be started over again.
Further analyses are required to determine the impact, if any, of the performance of the Icewine#2 well on the probability of success for the HRZ play at the Franklin Bluffs location and over the wider acreage position."
Further updates will be made as and when appropriate throughout the testing program.
IMBIBITION
The process of absorbing a wetting phase into a porous rock. Imbibition is important in a waterdrive reservoir because it can advance or hinder water movement, affecting areal sweep. Spontaneous imbibition refers to the process of absorption with no pressure driving the phase into the rock. It is possible for the same rock to imbibe both water and oil, with water imbibing at low in situ water saturation, displacing excess oil from the surface of the rock grains, and oil imbibing at low in-situ oil saturation, displacing excess water. An imbibition test is a comparison of the imbibition potential of water and oil into a rock. The wettability of the rock is determined by which phase imbibes more.

Artificial Lift
http://www.rigzone.com/training/insight.asp?insight_id=315

NEWS 03/07/17
88 Energy Limited (“88 Energy”, “the Company”, “Operator”) (ASX, AIM: 88E) is pleased to provide an update on Project Icewine, located onshore North Slope of Alaska.
Highlights
• Stimulation fluid continues to flowback naturally
• ~15.3% of total stimulation fluid recovered to date
Icewine#2 Operations Update
Flowback operations continue, with fluid composition comprising 100% water. A recent increase in salinity of the recovered fluid possibly indicates that some in-situ reservoir fluid is starting to flowback.
The forward plan remains unchanged and may include shut in for pressure build-up and soak and/or artificial lift to increase the rate of stimulation fluid recovery.
Further updates will be made as and when appropriate throughout the testing program.

suggested read
http://gekengineering.com/Downloads/Free_Downloads/Fracturing_Flowback_Controls_Analysis_Benefits_15_Jan_2014_v2.pdf

http://petroleum.mines.edu/research/emg/EMG_papers/2016%20JNGSE%20Effect%20of%20shut-in%20time%20on%20gas%20flow%20rate%20in%20hydraulic%20fractured%20shale%20reservoirs...%20by%20Fakcharoenphol%20.pdf

NEWS 26/06/17

Highlights
• Flowback continues with ~13% of stimulation fluid recovered
Icewine#2 Operations Update
Flowback commenced on the 19th June from stage 2 (upper zone). Approximately 8% of total stimulation fluid volume was recovered until it became apparent, due to rate and pressure observations, that the upper zone was likely in communication with the lower zone. Consequently, a decision was made to drill out the plug between the upper and lower zones. No increase in pressure was observed, confirming that the two zones are in effective communication. Trace hydrocarbons were encountered whilst flowing back the upper zone prior to drilling out the plug and, as expected, the flow rate returned to 100% stimulation fluid once the two zones were flowed back together.
Flowback, currently comprising 100% stimulation fluid, is continuing. Percentage of fluid recovered to date is ~13% of the total fluid pumped. It is estimated that up to 30% of the stimulation fluid will need to be recovered before hydrocarbons will be released from the reservoir.
The forward plan is to monitor pressure and flow rate and continue to draw stimulation fluid off the reservoir. Artificial lift, using nitrogen or swab cups, may be introduced at some stage to increase the rate of draw down of fluid. If pressure becomes too low it is possible that operations will necessitate a shut-in to allow fluid to ‘soak’ and pressure to build up. This ‘soaking’ is not uncommon in other shale plays as it allows stimulation fluid to be absorbed into the reservoir and can result in lower required fluid flowback before onset of hydrocarbon flow.
Further updates will be made as and when appropriate throughout the testing program.
Managing Director, Dave Wall, commented: “We continue to monitor pressure and flowback of stimulation fluid whilst we wait for hydrocarbons to be released from the reservoir. Given that we are breaking new ground in relation to the HRZ formation, we need to establish the conditions under which the hydrocarbon cut will return and then increase.
The stimulation was executed precisely as per plan with over one million lbs of proppant placed into the formation. A little patience is now required as we give the rocks time to show us what they can

NEWS 20/06/17
88 Energy Limited ("88 Energy", "the Company", "Operator") (ASX, AIM: 88E) is pleased to provide an update on Project Icewine, located onshore North Slope of Alaska.

Highlights

· Stage 2 stimulation operations completed successfully

Icewine#2 Operations Update
Both stages of the planned two stage fracture stimulation operation have now been executed successfully as per the stimulation design. Over ninety eight percent of the intended total proppant volume was able to be injected into the HRZ reservoir.
Flowback will now commence from the upper zone until a representative sample can be obtained. The lower zone will then be comingled with the upper zone and additional samples acquired. Subsequent to the sample acquisition, the choke will then be gradually opened up to ascertain the maximum potential flow rate from both zones over the coming weeks. Sample analysis will take place in a lab over the next four to six weeks to allow for detailed characterisation of the hydrocarbon composition and phase in the reservoir.
Further updates will be made as and when appropriate throughout the drilling / testing program.

News 19/06/17
Icewine#2 Operations Update

88 Energy Limited ("88 Energy", "the Company", "Operator") (ASX, AIM: 88E) is pleased to provide an update on Project Icewine, located onshore North Slope of Alaska.

Highlights

· Stage 1 stimulation operations completed successfully

o Stage 1 executed as per plan with all proppant placed in reservoir

Icewine#2 Operations Update
The first stage (lower HRZ) of the planned two stage artificial stimulation of the HRZ shale was completed successfully over the weekend, as per the plan. Preparations for the execution of the second stage (upper HRZ) are nearing completion and the job is expected to be completed over the next twelve hours.
Flowback is then planned from the upper zone until a representative sample can be obtained. The lower zone will then be comingled with the upper zone and additional samples acquired. Subsequent to the sample acquisition, the choke will then be gradually opened up to ascertain the maximum potential flow rate from both zones over the coming weeks. Sample analysis will take place in a lab over the next four to six weeks to allow for detailed characterisation of the hydrocarbon composition and phase in the reservoir.
Further updates will be made as and when appropriate throughout the drilling / testing program.

NEWS 13/06/17
88 Energy Limited ("88 Energy", "the Company", "Operator") (ASX, AIM: 88E) is pleased to provide an update on Project Icewine, located onshore North Slope of Alaska.

Highlights
· Sundry application for stimulation approved
· Logistic planning on schedule to perform stimulation ~17th June
· Production testing remains on schedule for late June / early July

Icewine#2 Operations Update

The sundry application for execution of the main stimulation work at Icewine#2 has been approved by the Alaska Oil and Gas Conservation Commission ("AOGCC"). Based on the interpretation of data collected in both Icewine#1 and Icewine#2, the final design submitted was based on two stimulation stages comprising of multiple perforations in each stage. One stage will be executed in the lower HRZ and the other in the upper HRZ. These two zones were chosen largely based on areas with similar stress profiles, coincident with where hydrocarbon concentration is highest.

The upper zone will be flowed back for up to two weeks before the lower zone is opened up and comingled with the flow from the upper zone. An additional two weeks of clean up will occur for the comingled flow before the Company may be in a position to report hydrocarbon flow rates.

Production testing remains on schedule for late June / early July.

Further updates will be made as and when appropriate throughout the drilling / testing program.

Managing Director, Dave Wall, commented: "The Company would like to thank its shareholders for supporting the Project Icewine team in getting us to the cusp of flow testing a potentially significant resource play in the HRZ shale.

The work done to date by a dedicated group of employees and consultants has been to a high standard utilising the latest best practice techniques in industry. This increases the chance of a successful execution of the program but does not increase the likelihood of success for the play itself. The remaining key uncertainties, namely effective creation of complex fractures and gas to oil ratio, cannot be resolved until the stimulation is executed."

notes on coilFRAC stimulation.
http://www.slb.com/services/completions/stimulation/reservoir/contact/intervention/coilfrac.aspx

News 06/06/17
Icewine#2 Operations Update
Following the successful completion of the initial drilling activities at Icewine#2, the Artic Fox drilling rig has been demobilised. The Company would like to thank Doyon Drilling Inc and the Arctic Fox crew for executing a safe and efficient operation.
The stimulation design for Icewine#2 has been completed, and the final application has been lodged with the State. The logging program in Icewine#2 was tailored to optimise the location of perforations for the stimulation design by identifying areas within the HRZ with:
• the same stress profile;
• the highest hydrocarbon saturation; and
• any pre-existing planes of weakness that may be exploited by artificial stimulation.
All three of the above goals were accomplished successfully and the Company is confident that the stimulation design has been optimised based on the best information currently at hand.
Additionally, insights have been gained into the stress profile and pore pressure of the HRZ, which appears higher than previously expected. This can have a direct effect on potentially higher flow rates. Consequently, the planned micro stimulation (DFIT) is no longer necessary and will be removed from the forward program.
The next phase of the program will comprise the planned artificial stimulation and production testing, which will aim to resolve a number of current uncertainties, including whether complex artificial fracture systems can be created within the HRZ via the proposed stimulation. These complex fracture systems are evident in the best performing shale plays as they result in maximised stimulation rock volume, which directly impacts potential flow rates. Similarly, whilst substantial work has been done on thermal maturity, the exact gas oil ratio is difficult to predict prior to a flow test. The Company interprets that the vast majority of the HRZ sweetspot has been captured irrespective of any uncertainty, due to the large acreage position.
Production testing remains on schedule for late June / early July.

notes on micro stimulation.
http://www.halliburton.com/public/ts/contents/Papers_and_Articles/web/Diagnostic-Fracture-Injection-Tests-in-Ultra-Low-Perm-Formations.pdf
News 29/05/17
Icewine#2 Operations Update
Cementing of the 4.5” liner in the production hole section (through the HRZ) was completed successfully over the weekend, without incident.
Final preparations for the main stimulation are underway, with execution expected in the 3rd week of June.
Production testing remains on schedule for late June / early July.
Managing Director of 88 Energy Limited, Dave Wall commented:
“The Alaska team have successfully completed the Icewine#2 well on schedule, after an effective adjustment to the completion plan, post the initial unsuccessful attempt to set the production liner.
Everything is now lining up for execution of the main stimulation operation, with flow testing of the HRZ on target for late June.”
Further updates will be made as and when appropriate.

News 220517
Highlights
• Wireline logs acquired successfully throughout the production interval
o Data quality excellent
o Processing and interpretation underway
• Icewine#2 4.5” production liner completion to be re-run
o Finalisation of completion expected prior to end of week
• Production testing remains on schedule for late June / early July
Icewine#2 Operations Update
Wireline logging throughout the production interval at Icewine#2 was completed over the weekend, with great success. The quality of the data acquired is excellent and complements the core and logs retrieved at Icewine#1. The enhanced data suite will ensure that optimal design of the planned stimulation is achieved at Icewine#2.
During cementing of the 4.5” production liner, hole conditions in the Pebble Shale Unit (beneath the HRZ production interval) prevented successful completion. The liner was retrieved to surface and will undergo minor repair whilst the hole is reconditioned to minimise the chance of recurrence. Post repair the liner will be run back in the hole and re-cemented. This operation is expected to be finalised during the week. Production testing remains on schedule.
Managing Director of 88 Energy Limited, Dave Wall commented:
“The data quality from the wireline logs recently completed is excellent and, at this early stage in the processing and interpretation, is confirmatory to the data obtained from Icewine#1 – as expected. Additional insights are expected from the log interpretation and completion of the micro stimulations over the coming days as we finalise the design to the stimulation program.
The minor setback related to completing the production liner installation has not altered the schedule for production testing, as prior to this we were running several days ahead of plan.”
Further updates will be made as and when appropriate throughout the drilling / testing program.

News 17/05/17
Highlights

**· Icewine#2 Total Depth reached on schedule and without incident

· Wireline logging operations underway

· Production testing / flowback to begin in late June / early July**

Icewine#2 Drilling Complete

Following the spud of the Icewine#2 Production Test well on 24th April, the Arctic Fox drilling rig reached Total Depth of 11,450' at 19:55 15th May (AK time).

Forward Program

The immediate forward program involves completion of wireline logging, cementing the production liner and demobilising the Arctic Fox. Subsequently, in early June, micro stimulations will be performed to calibrate the stress profile in the zone of interest. This data will then be combined with the processed and interpreted log information in order to select the optimal location of perforations for the main stimulation operation. Execution of the main stimulation is scheduled to take place in the third week of June with cleanup of stimulation fluid over the following one to two weeks. The well will then be placed on production test, initially at a choked back rate in order to ensure that proppant is not displaced from the reservoir.

News 09/05/17

88 Energy Limited ("88 Energy", "the Company", "Operator") (ASX, AIM: 88E) is pleased to provide an update on Project Icewine, located onshore North Slope of Alaska.

Highlights
— Icewine#2 drilling operations remain on schedule and without incident
— Intermediate hole complete - setting of intermediate casing underway

Icewine#2 Drilling on Schedule

Following the spud of the Icewine#2 Production Test well on 24(th) April, the Arctic Fox drilling rig has completed drilling the intermediate hole, reaching a depth of 10,715 feet at 08:51 8(th) May (AK time). Intermediate casing is now being cemented prior to planned drilling of the production interval, down to 11,400 feet, over the weekend.

Production testing remains on schedule for late June / early July.

Further updates will be made as and when appropriate throughout the drilling / testing program.

http://www.londonstockexchange.com/exchange/news/market-news/market-news-detail/13218872.html

News 03/05/17

88 Energy Limited (“88 Energy”, “the Company”, “Operator”) (ASX, AIM: 88E) is pleased to provide an update on Project Icewine, located onshore North Slope of Alaska.
Highlights
• Icewine#2 drilling operations on schedule and without incident
• Arctic Fox drilling ahead in intermediate hole
Icewine#2 Drilling on Schedule
Following the spud of the Icewine#2 Production Test well on 24th April, the Arctic Fox drilling rig has completed drilling the surface hole, reaching a depth of 2,978 feet at 20:33 27th April (AK time). Surface casing has subsequently been cemented and a statutory test of the blow out preventer has been completed. Drilling is now underway in the intermediate hole section, which extends from ~3,000 to 10,710 feet.
Production testing remains on schedule for late June / early July.
Further updates will be made as and when appropriate throughout the drilling / testing program.

** NEWS** 25/04/17

88 Energy Limited ("88 Energy", "the Company", "Operator") (ASX, AIM: 88E) is pleased to provide an update on Project Icewine, located onshore North Slope of Alaska.

Highlights
— Spud of Icewine#2 Production Test well occurred at 1915 24(th) April (Alaska time)

o Arctic Fox currently drilling ahead

Icewine#2 Drilling Commenced

Drilling at the Icewine#2 Production Test well commenced at 1915 24(th) April (Alaska time). The Arctic Fox rig is currently drilling ahead in the surface hole.

Production testing remains on schedule for late June / early July.

Further updates will be made as and when appropriate throughout the drilling / testing program.

Managing Director of 88 Energy Limited, Dave Wall commented:

"The spud of Icewine#2 represents another milestone for the Company and its shareholders and we now look forward to a safe operation, above all else. "

timeline as per Q & A March,2017
Conservatively TD Late May / early June
Stimulate Mid June
Clean up late June
Flow oil early July
Have stabilised rate late July If we are successful then we move forward to the next phase of appraisal and delineation. Hopefully share price goes up!

Icewine #2

Objective
"So the objective of the well - and this well (Icewine #2V), or the lateral (Icewine #2H as originally proposed) - is to prove the productive potential of the HRZ.
So our job is to maximise our chance of achieving that objective.
And this (Icewine #2V) is the design that does that and that is the main reason why this design was chosen.
Things like cost-reduction… it’s a by-product.
Things like being able to test the HUE… that’s a cherry on the top.
But they’re not the drivers. The real driver is reducing risk, mitigating uncertainty and increasing the chances of achieving the objective which is flow-testing the HRZ."
Extract from London Presentation September, 2016

31/01/17 Question to Dave Wall from :
"Will industry accept the Ice2 HRZ flow rates (assuming it flows) as gospel across the whole of our acreage or will industry request further wells to prove the HRZ flows everywhere?

31/01/17 Answer from Dave Wall:
"It is difficult to talk on behalf of a whole industry, which has a very diverse cross section…. however, we believe that we have compelling evidence of where the sweetspot lies in the play – and the geology at that depth is pretty well understood as being consistent across our acreage.

So… if the well has enough encouragement (and we are aiming for way more than just encouragement) then industry will definitely take notice."

09/02/17 email response from Dave Wall:
"Our target rate of 100-150 bopd is based on empirical evidence in other plays where you can expect 15-25x of this rate when horizontal drilling completion has been optimised. Still leaves a degree of uncertainty as the range is then 1,500 (100*15) – 3,750 (150*25).

So if we got 80bopd – we would need to figure out whether we thought we could go to 80 * 25 = 2,000bopd – which would still be very good. This would involve further appraisal drilling and its questionable whether the investment community would fund this in a way that was palatable from a dilution perspective. I expect that industry would view this as encouraging enough to warrant a pretty decent farmout – so we would lay off some of the risk most likely.

Other options do include waiting until oil price increases, striking a deal with the State on reduction in tax / royalty to improve economics, looking at more innovative ways to reduce cost etc.

The project would be far from dead but my experience tells me that the investment community would be less interested until more clarity was known on some of the above so that value would be easier to determine."

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