2012-12-12_REVISION - P2010026 (3)

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The Garden Gulch Member illitic Interval was not deposited under the same evaporative conditions as the lower saline portion of the Parachute Creek member. A substantial decrease in the amount of nahcolite and related minerals is observed, with an increase in clastic minerals that include illite are indicative of a fresh water depositional setting contrasting with the overlying Parachute Creek Member which is indicative of a hypersaline depositional setting. The target Illite Zone for the ELHT is greater than 60% illite clay, which is the reason for the low permeability in this interval. Although the oil shales of the Garden Gulch Member differ mineralogically and in physical character from the overlying Parachute Creek Member, the kerogen -rich oil shales of both members are vertically gradational with each other and form essentially one continuous mineral deposit. The Garden Gulch Member of the lower Green River Formation overlies the Eocene Wasatch Formation, which is comprised of mudstones, sandstones, coals, and conglomerates. The lowest test zone of the ELHT is separated from the Wasatch Formation by at least 200 ft of low permeability shales of the Garden Gulch Member. Figure 4 provides a generalized stratigraphic and hydrostratigraphic section illustrating the position of the Garden Gulch Member of the Green River Formation. Figure 5 provides a generalized hydrostratigraphic cross section across Piceance Basin and also shows the location of the Garden Gulch illitic zone and approximate test intervals of both the East RDD and ELHT. 3.0 ESTIMATED RESOURCES The estimate resource recovery for the ELHT is de minimis because the ELHT has intentionally been designed to test horizontal heaters and to minimize hydrocarbon recovery. This is accomplished by spacing the horizontal heaters sufficiently far apart ( -80 -100 ft) to ensure that superposition of heating does not occur. While the East RDD Pilot production is expected to be greater than 1,500 bbls of oil, the production from the ELHT is expected to be less than 175 bbls of oil. This oil will be routed to its own separator and tanks and therefore will be kept apart from the oil produced from the East RDD Pilot to ensure clarity of results. From time to time and for short durations, the production from the two tests may need to be commingled in response to operational problems or scheduled maintenance on one of the two separators. During such times, the cumulative production from each test will be adjusted based on the rate during the time period immediately preceding the event. For the East Long Heater Test, the primary objective is to test subsurface heater technology to inform on the heater design. The test is designed to minimize production, if any, from the pilot by placing the heaters far apart from each other so as to avoid thermal superposition between the heaters. This is expected to result in a small localized pyrolysis zone around each of the heaters. Predictive modeling suggests this zone to be confined to less than 2 ft radius in the vicinity of each heater. Heaters extend 1000 ft in the lateral direction. Average FA in 2 ft radius around the three heaters is 28, 35 and 29 gpt respectively. Assuming a 2 ft horizontal cylinder of affected kerogen around each 1000 ft long heater, the total affected FA resource is about 1645 bbls. Only a fraction of this resource will be produced as necessary to control reservoir pressure. The ELHT does not include a leaching phase. Heating in intervals where nahcolite is present will result in thermal decomposition to soda ash. For the test interval where the nahcolite content is —30 %wt on average (limited to the uppermost heater), it is calculated that the approximately — 1,200 to 1,500 tons of nahcolite will decompose to soda ash which remains in place for potential recovery. 2