23rd World Gas Conference, Amsterdam 2006

HORIZONTAL WELL PERFORMANCE IN THE MICHIGAN SIX LAKES STORAGE FIELD

Edward Dereniewski Michigan Consolidated Gas A DTE Energy Company June 2006

MichCon Peak Day Planned Supply Profile

19%

Storage Supplies

81% Field Capacity - Bcf

Volume - BCF 90 80 70 60 50 40 30 20 10 0 Washington Belle River Six Lakes West Columbus Washington 10 Mills Columbus 28

Base Gas Working Gas Michigan Facilities

Legend

El Paso West Columbus Great Lakes Columbus MichCon Lines Belle River Mills MichCon Storage Fields Washington 10 Six Lakes Washington 28 Six Lakes Gas Storage Field

Storage Date 1953 Minimum WHP 200 psig Maximum WHP 705 psig Field Capacity 68.6 Bcf Working Gas 40.0 Bcf Peak Delivery 700 MMcf/d Active I/W Wells 134 Horsepower 40,000 Well Flow Performance vs. Time Six Lakes Vertical Wells

Well Flow Performance vs. Time Six Lakes Field Wells 10,000

SL 6 Data

SL 6 Decline = 4.9%

SL 23 Data

1,000 SL 23 Decline = 17.7%

SL 183 Data Flowrate - mcf/d

SL 183 Decline = 2.7%

100 Jan-64 Jan-66 Jan-68 Jan-70 Dec-71 Dec-73 Dec-75 Dec-77-79 Dec Dec-81 Dec-83 Dec-85 Six Lakes Flowrate History

Pre-1980 Vertical Well Performance Post-1980 Vertical Well Performance 5.6% per Year Decline 1,000 900 800 700

600

500

400

300

200 and 70 psi drawdown 70 psi and Flowrate - mmcf/d at 300 psig Field pressure pressure 300 Field psig at mmcf/d - Flowrate 100 1965 1970 1975 1980 1985 1990 1995 2000 2005 Results Of Fresh Water Coiled Tubing Wash

Before Wash After Wash New Technology Lowers Costs;

Reduces Risks Former Design Facility Well Count 281 Miles of Pipelines 41 Miles of Road 53 Free Gas Users 93

Future Design Facility Well Count 50 Miles of Pipelines 15 Miles of Road 6 Free Gas User 5 Wells Scattered Across Two Counties Typical Pad Location View Field Flow Performance vs. Time Six Lakes Vertical Wells

Pre-1980 Vertical Well Performance Post-1980 Vertical Well Performance 5.6% per Year Decline Post-1992 Stimulations and Horizontal Wells 1,000 900 800

700 600

500

400

300

200 and 70 psi and Drawdown 70 psi

Flowrate - MMcf/d at 300 psig Field Pressure Field 300 psig MMcf/d at - Flowrate 100 1965 1970 1975 1980 1985 1990 1995 2000 2005 Vertical or Horizontal Wells?

Vertical vs. Horizontal Well Theoretical Performance Vertical 40' pay, skin = 0 Vertical 40' pay, skin = 10 Horizontal 5,000', skin = 0 Horizontal 5,000', skin = 10 1,000,000

100,000

10,000 Delta P Squared

1,000 0.100 1.000 10.000 100.000 1000.000 Flowrate - MMcfd Length of Horizontal Wells

5,000 foot vs. 2,500 foot Horizontal Well Theoretical Performance 44% Deliverability Increase

Horizontal 5,000', skin = 0 Horizontal 2,500', skin = 0 1,000,000

100,000

10,000 Delta P Squared

1,000 0.100 1.000 10.000 100.000 1000.000 Flowrate - MMcfd Well #429 Second Leg Results

22,000 440 20,000 400 18,000 360

16,000 320 Drainage - acres 14,000 280 12,000 240 10,000 200 8,000 160

Flowrate - mcf/d - Flowrate 6,000 120 4,000 80 2,000 40 0 0 One Lateral Two Lateral One Lateral Two Lateral Flowrate Flowrate Drainage Area Drainage Area Stimulation Results

200% 180% 160% 140% 120% 100% 80% 60% 40%

Percent Deliverability Change Percent 20% 0% 434 Skin 435 Effective 436 Skin 442 Effective 444 Effective Removal Length Removal Length Length Increase Increase Increase Openhole Footage

100,000

90,000 Horizontal Wells

80,000 Vertical Wells

70,000

60,000

50,000

40,000

30,000 Openhole Footage - feet - Footage Openhole 20,000

10,000

0 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 Acres Drained

Acres/1000 Effective Feet es 180

160

140

120

100

80

60

40

20

0 42 429 (1 Leg)429 (2 Legs430 4 4 43 434 435 436 4 4 44 44 442 443 4 4 4 44 448 449 450 4 4 3 3 3 3 4 4 4 5 5 Drainage Area per 1,000 Effective Feet - acr - Feet Effective 1,000 per Area Drainage 7 1 2 3 7 8 0 1 4 5 6 7 1 2

) Effective Wellbore Length

Through the 2004-05 Withdrawal Season 100%

90%

80%

70%

60%

50%

40%

30%

20%

No No No Wells Percent of OpenholeDrilled Utilized Percent 10% Wells Wells Drilled Drilled Drilled 0% 2004 2003 2002 2001 2000 1999 1998 1997 1996 1995 1994 Field Flow Performance vs. Time Six Lakes Vertical Wells

Pre-1980 Vertical Well Performance Post-1980 Vertical Well Performance 5.6% per Year Decline Post-1992 Stimulations and Horizontal Wells 1,000 900 800

700 600

500

400

300

200 and 70 psi and Drawdown 70 psi

Flowrate - MMcf/d at 300 psig Field Pressure Field 300 psig MMcf/d at - Flowrate 100 1965 1970 1975 1980 1985 1990 1995 2000 2005 Compressor Building Built in 1953…53 Years Old… Extra or Unused Slides Safety and Security

• Fewer Wells • Fewer Pipelines • Fewer Roads • Free Gas User Liability • Wells Grouped on Pads • Horizontal Wells on MichCon Land Well Near Home and Crops Well Near Home and Highway Wells on Wellpad on MichCon Land Meter Runs and Launcher and Receiver Meter Runs with Ultrasonic Measurement Six Lakes Storage Field

• MichCon – DTE Energy Gas • Importance of Six Lakes • Geology • Deliverability Loss • Historical Improvement Initiatives • Horizontal Drilling Program • Current Performance • Conclusions Six Lakes Storage Field Mecosta and Montcalm Counties

NN

Fee Acreage Six Lakes Storage Field 2003 Six Lakes Storage Field Mecosta and Montcalm Counties

Existing Wells 2003 Planned Wells Future Wells Six Lakes Storage Field Mecosta and Montcalm Counties

NN

Fee Acreage Completed Segments A A

BedrockBedrock Aquifers Aquifers Michigan SaginawSaginaw Formation Formation MarshallMarshall Formation Formation - rocks Silurian-Devonian rocks Basin - rocks Cambrian-Ordovician rocks Sandstone Precambrian Sandstone Geology

Six Lakes

A’ A’ A A ------A’ Trace A’ Trace Cross of Section cross section 0 0 50 50 100 Miles100 Miles

A Lake Superior A’A’ A Lake Superior Lake MichiganLake Michigan Lake ErieLake Erie SeaSea Level Level -4,000-4,000 ft. ft.

-8,000-8,000 ft. ft. Igneous and Igneous and -12,000-12,000 ft ft. MetamorphicMetamorphic Rock rock . Six Lakes Horizontal Well Profile Michigan Geology

0 Feet Glacial Drift Parma Sandstone - Stray “B” Sandstone Traverse Limestone Devonian Detroit River Group

Silurian Salina A-1 Carbonate Niagaran Reef Clinton Trenton-Black River Ordovician Glenwood Prairie du Chien Foster Cambrian 14,000+ Feet

Salt Gas Oil Six Lakes Depositional Environment

Offshore Sand Bars Field Capacity - Bcf

Field . Base Working Total Belle River Mills 29.2 46.9 76.1 Columbus 4.6 15.0 19.6 West Columbus 3.4 22.5 25.9 Six Lakes 28.6 40.0 68.6 Washington 28 1.9 9.7 11.6 Washington 10 8.5 42.5 51.0 Total 76.2 176.6 252.8

January Peak Day Deliverability -- MMcf/d

Field . Rate Belle River Mills 1,350 Columbus 170 West Columbus 610 Six Lakes 280 Washington 28 50 Washington 10 240 Total 2,700

MichCon – DTE Energy Gas • 1.2 Million Customers • 4.8 Bcf Peak Day System Demand

170 Bcf Direct Sales 40 Bcf Customer Choice Transportation 160 Bcf End-User Transportation 470 Bcf System Transportation 840 Bcf Annual Throughput

• Facilities • 177 Bcf of Underground Storage • 18,900 Miles of Natural Gas Pipelines Six Lakes Gas Storage Field Horizontal Wells Lengths vs. Costs 6,000 $600 Drilled Openhole Cost 5,000 $500

4,000 $400

3,000 $300

Feet of Openhole of Feet 2,000 $200

1,000 $100

0 $0 2 2 & 2 D-1 & D-1 &2 D-1 HD-1 HD-1 HD-1 -1&2 -1& -1 -1&2 -1&2 -1&2 7HD-1 -1 1 3 4 6H 1H D D 2 3 H 44H H 4 430HD-143 4 5HD 43 44 -4 5HD 6 7HD 6-432HD-1 7-43 3 7- 8- 2 4 -4 -437HD 1 -44 -4 -429HD 7 7 8-440HD-1 8-442HD-1&22-443 6 5-44 5 5 1 Six Lakes Gas Storage Field Production Discovery Date 1934 Rock Type Sandstone Areal Extent 12,000 acres Discovery WHP 513 psig Original Production 51.6 BCF Gas Wells 224 Abandonment WHP 25 psig January Peak Day Deliverability - MMcfd 1,600 1,400 1,200 1,000 800 600 400

Daily Flowrate - MMcfd 200 0 Belle River West Six Lakes Washington Columbus Washington Mills Columbus 10 28 Historical Peak Day Sendout Storage Supply

81% 70% 63% 65%

37% 35% 30% 19%

1970s 1980s 1990s Current COILEDCoiled TUBING Tubing UNIT Unit SL #301 1278 ft

Undisturbed kaolinite platelets

No evidence of fines migration after 40+ years of storage operations SL #419 1288 ft. Salt Scale Rotary sidewall core.

1 A /4” thick salt deposit covers the Sandface sandface. Reservoir Rock SL #419 1294 ft.

1 6 /4” openhole completion

Salt deposits are totally covering the sandface SL #328 1246.1 FT Openhole completion after a fresh water coiled tubing wash and 9 spf perforations

Openhole Perforations SL 423 After 1300.1 to 1301.7 feet

Propellant Exploded Perforations

Fractures Six Lakes #423

3.0% % Flowrate Linear (% Flowrate)

2.5%

2.0%

1.5% % Flowrate %

1.0%

0.5% Post Frac Results

0.0% 9/19/91 1/31/93 6/15/94 10/28/95 3/11/97 7/24/98 12/6/99