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  • Periodic Reporting for period 1 - Octopus Technology (Octopus Technology: Shale gas and tight oil drilling technology evolution - 100’s micro laterals drilled simultaneously to maximise well productivity)

Octopus Technology Report Summary

Project ID: 743760

Periodic Reporting for period 1 - Octopus Technology (Octopus Technology: Shale gas and tight oil drilling technology evolution - 100’s micro laterals drilled simultaneously to maximise well productivity)

Reporting period: 2016-12-01 to 2017-03-31

Summary of the context and overall objectives of the project

In Europe: France, Bulgaria, Germany and Scotland have imposed bans on fracking. Globally, several countries have either banned or restricted frack chemicals. There is a high level of mistrust between fracking companies and the public due to lack of transparency, suspicions of collusion, acid and heavy metal pollution, increase in traffic levels. Further to these barriers, huge quantities of relatively clean water (e.g. from rivers, lakes) are needed to fracture gas shale formations and this threatens supplies. By removing the need for the fracking process, our technology would allow multilateral well completions to be made at a fast and sustainable rate; the Octopus technology will remove or reduce the potential for conflict, and shale gas will become easier for energy companies to ‘sell’.

An alternative solution to fracking is to drill lots of small holes of a main bore to access the gas, but this process is too time consuming as each lateral is drilled separately. This process might take 5-10 days (depending on the sealing level) and must be repeated for each lateral.

Octopus Completions’ current product uses innovative technology to simultaneously deploy hundreds of ‘mini-drills’, which are driven in to the formation by fluid flow from the rig pumps, leaving a full-bore production liner behind. Up to four mini-drills can currently be installed within each joint of casing; each capable of drilling a micro-lateral that creates a production pathway and dramatically increases contact with the reservoir. In a matter of hours, 400 micro laterals can be drilled simultaneously. Laterals are achieved without the need to use acid-loaded fracking fluids and without the use of hydraulic fracturing; furthermore, the spread and distribution patterns can be optimised for the formation being drilled.

Octopus technology has a high potential value to Europe and to the world by enabling sustainable exploitation of shale gas and tight oil and gas. It would also increase profitability of SAGD wells and could easily be adapted for deep geothermal energy resources. We expect for our technology to deliver significant and sustained increases in production from horizontal wells by substantially increasing reservoir contact.

The main objective for the Phase 1 was successfully achieved, this was to create a Feasibility Study report. The overarching objectives for the Octopus project are are to enhance the Octopus technology and demonstrate to the target market the efficiency and environmental improvements our technology offers over state-of-the-art alternatives. We plan for these objectives to be achieved during Phase 2.

Work performed from the beginning of the project to the end of the period covered by the report and main results achieved so far

The overall objective for this Phase 1 project was to generate a Feasibility Study report to be used as a basis of a Phase 2 application. The specific tasks completed are:
1) Identify the route to market - We have identified our target markets, their size and location, the markets specific needs, and their buying drivers.
2) Scope the legislative pathway – We better understand the legislative pathway and adapted our commercial model based on the understanding with market barriers considered.
3) Identify strategic Phase 2 project partners – Phase 2 project trial partners have been identified. A facilities plan has been developed and field service unit considered.
4) Generate a technical and commercially focused Phase 2 work plan – A Phase 2 technical work plan that considers effort, cost, deliverables and milestones has been produced.
5) Further develop our business plan – Our business plan has been refined, this features Executive Summary; company and team profiles; a description of the market need; a detailed product description; a competitor comparison; a market analysis and identification of our target markets; our growth strategy, a SWOT analysis; our marketing strategy and strategic position; technology strategy; financial plan and five-year horizon; FMEA risk register.

The Feasibility Study outputs are commercially sensitive, and therefore have been kept confidential. The main outputs are the ‘Sales and Marketing Plan’; several industry letters of support; building facilities and field service unit designs; a ‘Microsoft Project’ file with the Phase 2 work plan; and a detailed ‘Business Plan’.

Throughout the project, we have subcontracted work to specialists to ensure we achieve the most relevant outputs as possible. External contributions have supported our understanding of the market needs, trends and route for access. The coaching provided has primarily supported the progression of the business plan to ensure we are poised to apply for Phase 2 grant funding as well as consider alternative funding routes.

Having completed this Feasibility Study, we are now confident that the Octopus technology is commercially viable. Therefore, we are proceeding with our plans to reach market as soon as possible. To achieve this, we shall submit a Horizon 2020 Phase 2 application that has the overall objectives to complete the technology development, increase the technology capability, complete commercial trials, gain successful market reference and reach a commercial setting. Our plan is to complete our Phase 2 project in Q2 2019 and entering the market in Q3 of 2019.

Progress beyond the state of the art and expected potential impact (including the socio-economic impact and the wider societal implications of the project so far)

Against our competitors, Octopus bring the following unique benefits:
- Significant reservoir contact for minimum of rig time, resulting in increased production
- No additional rig services or equipment required, reducing capital costs
- Elimination for the requirement of fracking to achieve well productivity, eliminating the negative impacts of fracking to land and water as well as overcoming public fears/market barriers to accessing reserves.

Once commercialised, the wider technology key benefits to society are:
- Once commercialised, Octopus will save operators millions of Euro’s per well and will allow earlier transition to the sales phase 40 to 70 days sooner, releasing further revenues. This will modify current financial models and is likely to create downwards pressure on gas prices (or SAGD well oil prices, or deep geothermal investment costs). The supply network will see strong growth as UK and European shale opens up, especially as offshore plays are exploited. Europe will benefit from a fast track to more indigenous energy at a lower cost.
- The development of shale gas in Europe could add as many as one million jobs to the economy, make industry more competitive and decrease the region’s dependence on energy imports. It is projected for shale gas to add a total of 1.7 trillion to 3.8 trillion euros to the economy between 2020 and 2050.
- Environmentally, the lack of fracking means no water haulage and a cleaner and safer road network near big fracked gas or oil fields. Fracking fluid spills and seepage will also be eliminated, as will the initial intense haulage to remove ejected fluids. It also means reduced risk of earthquakes, from wastewater injection. Indigenous shale gas could replace 40% of coal derived power and thus reduce European CO2 emissions, significantly contributing to the ECs 2020 obligation to reduce GHG by 30%.

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