Overview of Port au Port #1 ST #3 Bullhead Acid Squeeze Rev. 0 Submitted by Enegi Oil Inc. 36, Quidi Vidi Road St. John’s Newfoundland A1A 1C1 May 2014 This document is confidential. Neither the whole nor any part of this document may be disclosed to any third party without the prior written consent of Enegi Oil Inc. All rights reserved. Neither the whole nor any part of this document may be reproduced, stored in any retrieval system or transmitted in any form or by any means (electronic, mechanical, reprographic, recording or otherwise) without the prior written consent of Enegi Oil Inc, the copyright owner. Report Approval Cover Sheet Report Title: Overview of Port au Port #1 ST #3 Bullhead Acid Squeeze Project Name: Garden Hill South Approval Record Rev. No. Date Prepared Reviewed Approved 0 6th May 2014 A. Pegram D. Lau A. Minty This document is confidential. Neither the whole nor any part of this document may be disclosed to any third party without the prior written consent of Enegi Oil Inc. All rights reserved. Neither the whole nor any part of this document may be reproduced, stored in any retrieval system or transmitted in any form or by any means (electronic, mechanical, reprographic, recording or otherwise) without the prior written consent of Enegi Oil Inc, the copyright owner. Report Record of Revision Report Title: Overview of Port au Port #1 ST #3 Bullhead Acid Squeeze Project Name: Garden Hill South Record of Revision Rev. No. Date Revision Details 0 May 2014 Original. Overview of Port au Port #1 ST #3 Bullhead Acid Squeeze Rev. 0 Contents Report Approval Cover Sheet i Report Record of Revision ii Contents iii 1. INTRODUCTION 1 2. ACID SQUEEZE OPERATION 1 3. SAFETY PROCEDURES AND EMERGENCY ARRANGEMENTS 2 iv Overview of Port au Port #1 ST #3 Bullhead Acid Squeeze Rev. 0 1. Introduction In December 2011, PDI Production Inc. (now Enegi Oil Inc.) submitted to the Energy Branch of the Newfoundland and Labrador Department of Natural Resources’ Petroleum Engineering Division an application to undertake a workover program on their Port au Port #1 ST #3 well at the Garden Hill South site on the Port au Port Peninsula. One component of that program was an acid squeeze operation, which was performed by Schlumberger, under the supervision of Dragon Lance Management Corporation (who also prepared the application), on 13th February 2012. The acid squeeze operation was performed as outlined in the application submitted to the DNR and in line with appropriate operational, safety and emergency procedures, again as detailed in the application and supporting submissions to the DNR. Specific relevant information is presented here, as outlined in the following sections. 2. Acid Squeeze Operation The procedures employed for the following stages of the operation, as presented in PDIP’s December 2011 application to the DNR, are included within Attachment 1 to this document: Workover matrix injection test. Workover bullhead acid injection. Schlumberger’s report of the injection is also included within Attachment 1. The constituents of the fluids injected, as detailed by Schlumberger in their Bill of Materials for the operation, are summarised in Table 1 below and described in Attachment 1 (as in the application). Description Base Fluid Additives Main Acid 15% HCl Acid A264 Corrosion Inhibitor L058 Iron Control Agent W054 Demulsifier F110 Surfactant U106 Chelating Agent Diverter Acid 20% HCl Acid A264 Corrosion Inhibitor J557 Visco Elastic Surfactant VDA U106 Chelating Agent K046 Methanol W054 Demulsifier Diverter Breaker Fluid Injection Water U066 Mutual Solvent M003 Soda Ash Table 1: Summary of Chemicals Injected Attachment 1 also includes, for information, sections of the application that address the following: Schlumberger C&A rig-up diagram and rig-up spacing diagram. Surface equipment spacing required by the DNR. Arrangements for proper grounding of equipment. 1 Overview of Port au Port #1 ST #3 Bullhead Acid Squeeze Rev. 0 3. Safety Procedures and Emergency Arrangements Safety procedures are in place and implemented during all operations at the Garden Hill South site, and emergency procedures and contingency plans are also in place that describe the response to and provide guidance in the event of a hazardous occurrence. Emergency contact details are posted on noticeboards on site to ensure the necessary information is readily available in an emergency. In addition to these standard safety and emergency procedures, details were provided in the December 2011 application to the DNR of general safety procedures and specific safety precautions applicable to the acid injection operation. These are reproduced in Attachment 2 to this document. 2 Overview of Port au Port #1 ST #3 Bullhead Acid Squeeze Rev. 0 Attachment 1: Operational Procedures and Information Relating to Acid Squeeze Operation Workover Matrix Injection Test Procedure Workover Bullhead Acid Injection Procedure Schlumberger Report of Acid Injection* Chemical Blends Schlumberger C&A Rig-Up Diagram Schlumberger C&A Rig-Up Spacing Diagram NL-DNR Surface Equipment Spacing Chart Proper Grounding of Equipment [All information reproduced from or extracted from application for the workover program prepared by DLMC and submitted to the Newfoundland and Labrador Department for Natural Resources in December 2011, with the exception of *.] au Matrix Acid 16.0 WORKOVER MATRIX INJECTION TEST PROCEDURE: 16.1 Construct a dike containment system to collect and retain any possible leak from the C&A pumping unit and make sure that there are catch pans on all pumping line connections from the C&A unit to the wellhead. 16.2 Rig up the C&A unit as per Diagram in section #17, making sure that the rig up is in compliance with Schlumberger regulations drawing in section #18 for rig‐up spacing and section #19 DNR equipment spacing regulations. 16.3 If there are any conflicts between the requirements in section #18 Schlumberger rig‐up spacing diagram and section #19 DNR equipment spacing regulations, the Newfoundland DNR equipment spacing regulations will take precedence over all other spacing requirements. Make sure that all equipment spacing has been properly measured out and discuss with the office prior to pressure testing lines. 16.4 Pressure the annulus to 5,000 kPa (5 MPa) with glycol water and shut in annulus valve with gauge to monitor the annulus pressure constantly while proceeding with the injection test. Monitor closely as there will be pressure changes with temperature changes, as well as pressure changes if the production packer fails for any reason. 16.5 Prior to pumping any fluids (other than water) for the injection test: 16.5.1 Low range pressure test the C&A and all lines to the wellhead to ensure that there are no leaks to 1,500 kPa (1.5 MPa) low test for 15 minutes. 16.5.2 Check that the check valve is holding in the injection line. 16.5.3 Mid‐range pressure test the C&A and all lines to the wellhead to ensure that there are no leaks to 10,500 kPa (10.5 MPa) low test for 15 minutes. 16.5.4 Check that the check valve is holding in the injection line. 16.5.5 High range pressure test the C&A and all lines to the wellhead to ensure that there are no leaks to 30,000 kPa (30.0 MPa) low test for 15 minutes. 16.5.6 Check that the check valve is holding in the injection line. 16.5.7 Bleed off pressure and drain water from the lines. 16.6 Prepare the load lines and feed lines to feed the preconditioned crude oil to the C&A pumper. 16.7 Fill the C&A tank with preconditioned crude oil and have a 10.00 m3 vacuum truck load with preconditioned crude oil. -27- au Matrix Acid 16.8 Ensure that all units and C&A pumper are properly grounded as per section #21. 16.9 Hold a pre‐job safety meeting with all personnel on location and send all non‐ essential personnel to the site office. 16.10 Slowly open the wellhead line from wellhead to injection line and inspect and confirm that the injection check valve is holding and there are no visible leaks. 16.11 If the injection check valve is not holding or there are any visible leaks SHUT DOWN IMMEDIATELY and regroup and fix the issues. 16.12 When the lines are open and all safety conditions are confirmed then proceed pumping the preconditioned crude oil and follow the injection schedule of rates and pressure. 16.13 Make sure the rate and pressure recording equipment is working properly. 16.14 Establish a consistent feed rate with 0.5 m3 (50 liters per minute) for 10 minutes. 16.15 If no problems follow the rate sheet at the bottom of this page. 16.16 If any pressure or feed rate problems then adjust as required to establish a good feed rate as the acid injection rates and stimulation will be adjusted as required. 16.17 At the conclusion of this pumping schedule shut down and SHUT‐IN the well and record and monitor surface and BH pressures and temperature for minimum of 48 hours. 16.18 Record annulus pressure after shut down and well is shut‐in. Cumulative Cumulative Pump Pump Rate Stage Volume Total Volume Volume Rate Minutes Stage Fluid System (m3) (m3) (liters) (m3/min) (liters/min) 1 Preconditioned Crude 0.50 0.50 500 0.05 50 10 2 Preconditioned Crude 0.50 1.00 1000 0.10 100 5 3 Preconditioned Crude 1.00 2.00 2000 0.20 200 5 4 Preconditioned Crude 1.25 3.25 3250 0.25 250 5 5 Preconditioned Crude 1.50 4.75 4750 0.30 300 5 6 Preconditioned Crude 1.75 6.50 6500 0.35 350 5 7 Preconditioned Crude 2.00 8.50 8500 0.40 400 5 8 Preconditioned Crude 2.25 10.75 10750 0.45 450 5 9 Preconditioned Crude 1.25 12.00 12000 0.25 225 5 10 Preconditioned Crude 0.50 12.5 12500 0.10 100 5 11 Preconditioned Crude 0.25 12.75 12750 0.05 50 5 12 Preconditioned Crude 0.375 13.125 13125 0.025 25 15 -28- Port au Port #1 Side Track #3 Hz Matrix Acid Stimulation (Bullhead Injection Squeeze) 2011 Workover Version 7.00 24.0 WORKOVER BULLHEAD ACID INJECTION: 24.1 Review the Acidizing Contingency Plans with Schlumberger representative on location, refer to related information in the file attachments in Touch Ticket #4169584 and documents prepared by local field operations.