Budget Period 2 of the East Binger Unit (''EBU'') DOE Project has been. Recent activities included additional data gathering and project monitoring, plus initiation of work on an SPE paper on the modeling efforts of the project. Early production performance suggests horizontal wells do not provide sufficient additional production over vertical wells to justify their incremental cost. It will take more time to evaluate the impact of the horizontal wells on sweep and ultimate recovery, but it is unlikely that an improvement in recovery will be sufficient to make the overall economic value of horizontal wells greater than the economic value of vertical wells. Monitoring of overall performance of the pilot area continues. Overall response to the various projects continues to be very favorable. Injection into the pilot area has nearly doubled, while gas production and nitrogen content of produced gas have both decreased. Nitrogen recycle within the pilot area has dropped from 60% to 20%. Efforts to further disseminate knowledge gained through this project, by means of technical paper presentations to industry groups, are underway. Project monitoring and technology transfer will be focus areas of Budget Period 3.

Implementation of the work program of Budget Period 2 of the East Binger Unit (''EBU'') DOE Project is progressing and nearing completion. Two of three planned horizontal wells have been drilled and completed. The third horizontal well will be replaced by two vertical wells, both of which will be drilled in early 2004. Based on costs and performances of all new wells, it is believed that, in the setting of the East Binger Unit, the benefits of horizontal wells do not justify the additional cost. In addition to the drilling of new wells, the project also includes conversions of producing wells to injection service. Four wells have now been converted, and injection in the pilot area has doubled. A fifth planned conversion has been removed from the project. Overall response to the various projects continues to be very favorable. Gas injection into the pilot area has increased from 4.0 MMscf/d prior to development to 8.0 MMscf/d in November, while gas production has decreased from 4.1 MMscf/d to 3.0 MMscf/d. The nitrogen content of produced gas has dropped from 58% to 45%. This has reduced the nitrogen recycle within the pilot area from 60% to under 20%. Meanwhile, pilot area oil …