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					Three DGWS Case Studies
Down Hole Injection

Since 1995, DHI has been developing and improving specialized down hole
separation technology for the oil and gas industry.

These products are now in their second generation of Down Hole Gas and Water
Separation (DGWS) Technology. With the help and funding from Gas Research
Institute (GRI), DHI was able to demonstrate the value of the technology as a
viable and commercial product.

All three case study wells had water co-produced with natural gas that adversely
affected the economics of gas production in a variety of ways. As with most
wells, water had to be produced to the surface and required costly processing
and disposal fees.

By producing the water to the surface, the economic burden was sufficient to
discourage and/or limit the commercial development of natural gas. Furthermore,
produced water had an adverse impact on the surrounding environment. These
environmental issues are of great concern to State Regulatory Commissions and
with the Environmental Protection Agency (EPA).

In all three of these case studies, DHI increased the production of natural gas
while reducing lease-operating expenses by eliminating surface water and the
associated treatment and disposal costs. The results validate the effectiveness
of DHI’s DGWS technology by increasing gas production while eliminating
produced water to the surface. The economics of each well changed dramatically
and provided each operator with positive cash flow and an asset that delivered a
significant ROI in a short period.

Today, two of the three case studies presented in this paper are operating with
DHI’s technology, however there are many more then just three case studies. In
the case study of Well #2, the RFI system successfully operated for
approximately eight months and then was halted for an unknown reason. The
operator of Well #2 removed DHI’s RFI system and installed a competitors
system (by-pass tool with gravity injection). The competitions tool allowed
saltwater pressure to develop at the surface, and within a short period of time,
the surface stuffing box began to leak.

The leak allowed produced water to spill at the surface and caused serious
environmental degradation (see Figure #1 below). DHI is pleased to announce
that this particular operator is once again discussing the use of DHI’s DGWS
                                  Figure #1:
                            Salt Water Leak Caused
                           By Competitors Technology

The operator of Well #1 retrieved their DGWS system several times due to
problems associated with the well. The system was first retrieved due to a tubing
leak and later for a casing leak, which was the genesis of the tubing leak. In each
situation the DHI DGWS system was in perfect condition and was reinstalled
without incidence.

In Well #3, this particular DGWS system has injected more water then any other
RFI system installed by DHI. This system has injected over 90,000 barrels of
water. This system has been retrieved and inspected by DHI and has not shown
any wear or mechanical problems associated with the tool. This system
continues to inject water today.
Case Study Comparison

                                                                                                     Well Name

                                                                           Units       Well #1         Well #2     Well #3
      General Data
         DGWS Installation Date                                                       4/5/2001       11/11/1999   3/4/2002
         Operator                                                                         -               -           -
         State                                                                           OK              KS          OK
         County                                                                        Texas           Seward     Muskogee
         Depth of Disposal Zone                                             Feet        2886            2974        3576
         Current Status                                                                Active         In-Active    Active

      Gas Performance
         Gas Production Rate Before DGWS Installation                      MCF/D         225              98        48.6
         Gas Production Rate After DGWS Installation                       MCF/D         258             172       127.7
         Increase in Gas Production                                        MCF/D          33              74        79.1

      Water Performance
         Average Water Produced to the Surface before DGWS System         BWPD            39                50       2.3
         Surface Disposal Cost                                            $/BBL         $1.75            $1.85     $1.64
         Water Produced to the Surface after DGWS System                  BWPD             0                 0        0
         Average Water Injected Rate after DGWS System                    BWPD            43               160     128.2
         Cumulative Water Injected after DGWS System to Date               BBL         42332             35200     91181
         Average DGWS Disposal Cost Savings per Day                       $/Day        $75.25          $296.00    $210.25
         DGWS Disposal Cost Savings to Date                                  $        $74,081          $65,120    $149,537
      *The DGWS systems have also eliminated all associated costs with handing and treating the disposal fluid.
Energy Performance
   Percent Power for Conventionally Lifting Same Fluid to the
   Surface                                                            %         100                       100             100
   Percent Power for DGWS Injecting                                   %          92                       N/A             69.9
   Percent Power Savings                                              %           8                       N/A             30.1
*The power savings allows the gas engine prime movers to consume less of the
produced gas to operate, therefore allowing more gas to be sold.
** Where electric prime movers where present the DGWS power savings reduced the electric bills.

Externality Costs
The DHI DGWS systems in all three of these cases eliminated all chances for surface spills by providing zero injection pressure
at the surface. These DGWS systems hold the tubing full with fresh inhibited water, providing the rods with lubrication and with
lower torque, yielding a longer service life. In addition, the batch treatment inhibitor program is a preventative maintenance that
reduces scale and corrosion for both the rod and tubing strings.

Overhead Costs and LOE
When compared to the conventional lift method, the DGWS system requires less operating maintenance and supplies, i.e.
compressor filters and etc.
Other DHI DGWS Installations

DHI has installed over 30 additional DGWS (RFI and BPD) systems throughout
the United States and Canada. These systems were installed in a variety of
geological basins ranging in depths from 900’ to 6800’. Table #2 below
represents the eleven States and their respective basins where DHI has tested
its DGWS technologies.

       State        Basin Name               Type of Gas
       Michigan     Michigan Basin           Tight/Fractured Shale/CBM Gas
       Ohio         Appalachian Basin        Tight/Fractured Shale/CBM Gas
       Indiana      Illinois Basin           Fractured Shale Gas/CBM
       Illinois     Illinois Basin           Fractured Shale Gas/CBM
       Oklahoma     Cherokee Basin           CBM Gas
                    Anadarko Basin           Tight Gas
       Texas        Permian Basin            Tight Gas
                    Fort Worth Basin         Fractured Shale Gas
                    East Texas/Arkla Basin   Tight Gas
                    Gulf Coast Basin         Tight/Fractured Shale Gas
       Kansas       Anadarko Basin           Tight Gas
       Nebraska     Denver Basin             Tight/Fractured Shale/CBM Gas (Niobrara)
       Colorado     Piceance Basin           Tight/Fractured Shale Gas
       Utah         Unita Basin              Fractured Shale Gas
                    Pardox Basin             Fractured Shale Gas
       New Mexico   San Juan Basin           CBM Gas

                                      Table #2:
                                   DHI DGWS Tests

The testing and installations have provided DHI with a wealth of data to analyze
and have helped outline a collection of information that is being used to improve
the success ratio of DGWS installations. DHI has gathered a tremendous amount
of Intellectual knowledge over the past 9 years and this knowledge now provides
DHI with the opportunity to exploit its technologies with a high degree of
confidence. The following is a representation of our manual of best practice:

       Classifications and Specifications
       Manufacturing and Quality Control
       Assembly Procedures
       Project Understanding - What Determines a DGWS Candidate Well - Data
       Designing the Installation
       Well Preparation Procedures
       Installation and Operation of DGWS Systems
       DGWS Monitoring and Control
       Continuous Improvement of Service -Training – Communication –
        Lessons Learned
Lessons Learned

DHI has been able to identify problems associated with the first generation
design and inconsistencies caused by installing a DGWS system in well bores
that were less than accommodating for the technology. In the early days of
Research and Development, DHI spent much time working on the concept and
the first design of the RFI system. Before manufacturing the first prototype, many
designs were tested and retested in a controlled laboratory environment. The
willingness to be patient and not rush a product to field-testing proved to be most
valuable as the product began to take shape before its first test well. Over the
next 6 years DHI was able to test several different design types and make the
necessary revisions to deliver a product that is technically and mechanically

The oil and gas industry is demanding a complete water management solution
and not just another tool to solve another problem. In the early days of field-
testing, DHI made business decisions that were based on product deployment
and did not fully evaluate the well conditions that would be most suitable for the
implementation of the technology. DHI experienced several problems caused by
a lack of strict protocol and rushing through installations on wells that had bad
casing, were extremely deviated or wells that did not have the proper disposal
zone below the production zone. These failures, while disappointing at the time,
provided DHI with valuable data that helped develop today’s protocol for
qualifying wells and increasing the chances of success. The following is a partial
list of questions that are used by DHI to help qualify a well as a candidate for

                    What determines a DGWS candidate well?

      In data collection how can the appropriate and correct well data be
      What is a practical and efficient downhole design?
      What should be the appropriate well preparation steps taken before the
       DGWS installation?
      How can DHI better define procedures and protocols for installing the
       DGWS systems correctly and eventlessly?
      How can DHI understand how the DGWS system is operating downhole
       and monitor and control the DGWS system from the surface?
Product Development

During the research and development cycle, DHI strived to provide continuous
improvement of service along with designing a better product.

Continuous improvement of service means making things better, being proactive
verses reactive. Our goal at DHI is not to blame other people for our problems or
failures. Our objective is to understand our shortcomings and improve upon the
process to insure future success. If DHI were to take the position of just
resolving a problem, DHI most likely would never get to the root cause of any one
problem. For this reason DHI prefers to engage in process improvement by
understanding the root cause of such events in an attempt to prevent that issue
from recurring. DHI will continue to implement the following:

      Update protocols, procedures, and the products
      Reduce variation
      Remove activities and processes that have no value to DGWS technology
      Improve success

DHI has invested a substantial amount of time and resources over the past
several years developing and testing its technologies. The three prime sections
of the RFI system that DHI has focused on are the Barrel Seal Manifold (BSM),
Downhole Stuffing Box (DSB)/Valve Rod, and the worldwide inter-changeability
of all DHI products. DHI has successfully tested its latest revision utilizing the
latest materials and manufacturing methods to insure that DHI’s DGWS
technology remains the best in the market.


References and additional case studies can be provided upon request.
                                           July 23, 2002

Mr. Jeff Miller
Down Hole Injection, Inc.
P. O. Box 69104
Tulsa, Oklahoma 74169

Dear Jeff:

Okie Crude Company installed in March, 2002, a Reverse Flow Injection (RFI) System in the
Carbonex # 1 well in an effort to recover remaining gas reserves. The results have been impressive
with an immediate increase in gas production. This technology and the tools are leased from Down
Hole Injection, Inc. The RFI system is currently injecting 95 barrels of water per day into the Hunton
formation below four producing pay zones. As a result, no produced water or injection pressure is
handled at the surface. The reduction in operating costs from the elimination of water disposal has
changed the well from a plugging candidate to a money making producer.

The pumping unit and three stage compressor are powered with gas produced from the well. The only
operational expenses for the well are the pumper for daily maintenance, the compressor rental and the
bottom hole injection tool (RFI) lease. The RFI system has eliminated water production at the surface
and consequently this well is now one of Okie Crude Company's best gas wells. Without the RFI
system the well would have been plugged by now due to the high cost of water disposal.

Down Hole Injection, Inc. provides continued dynamometer assisted and fluid level checks to keep the
RFI system operating at maximum efficiency. DHI's monitoring equipment and interpolations have
provided Okie Crude Company's engineers with accurate water volumes and pressures being injected.
From the Technical Proposal to the on-site supervision, the quality of Dill's people and equipment
exceeded our expectations. Please accept my sincere thanks for a job well done. Okie Crude Company
would strongly recommend DHI's RFI System, technologies and excellent service to our industry


                                           Thomas M. Atkinson

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