PROSPEX UKCS Exploration & Appraisal Status Gunther Newcombe - - PowerPoint PPT Presentation

PROSPEX

UKCS Exploration & Appraisal Status

Gunther Newcombe Director Operations

December 2016

OGA became a GOVCO on 1st October 2016 with additional powers and sanctions

OGA

Progressive Regulation

Balanced application of new regulatory framework

Role of the OGA

Investment and action Encouraging collaboration Effective stewardship

OGA Approach

Sanctions Rewards

Sanctions Information & Samples Dispute resolution Meetings MER UK Strategy – binding obligations & safeguards

Striking the right balance

UKCS Summary

Production (boepd)

2014 1.4 million 2015 1.6 million 2016 1.65 million

Production efficiency

2012 60% 2015 71% 2016 80% target

Infrastructure

12,000+ wells 250+ subsea systems 3,000+ pipelines 250 fixed installations

Exploration & appraisal

2014 wells 32 2015 wells 26 2016 wells 20

Costs

Unit costs down by nearly 30%

Source – OGA Source – OGA and Oil & Gas UK

Development

6.3bn boe

in production

• r under

development

Source – OGA Source

Source – OGA and Oil & Gas UK

Resources

Source – OGA

Remaining potential

Produced

43bn

10bn 20bn

Improving & adapting to new conditions

Supply chain

c.£30bn turnover

Source –Oil & Gas UK and EY

80% of UK oil and gas jobs 40% through exports Jobs

330,000 jobs in the UK

Source – Oil & Gas UK

Delivered through or supported by upstream oil and gas activity

Average unit operating costs have fallen from £18 per barrel in 2014 to an estimate of £13 per barrel in 2016

OGA Corporate Plan

OGA on track to delivering exploration priorities

Share dry-hole review with industry Licensing strategy for frontier & mature acreage Work with HMT & Industry to enhance exploration Provide high quality geophysical data Rockall & MNSH Undertake rigorous pre & post-drill evaluation High-grade operator prospect inventory to stimulate drilling Manage release of geophysical & well data Produce high quality geological maps 2015 2015 2015 1Q 2016 2016 2016 2016 2018 Provide industry with regional prospectivity & YTF 2018

UKCS highly competitive fiscal regime with government working closely with OGA & Industry

Fiscal Regime

Strong commitment & listening from government Recent budgets provided £2.3bn relief to industry OGA provide expertise and evidence to HMT

Mature Yet-to-Find

UKCS has 6bnboe YTF best estimate in mature areas

c

NNS WOS SNS

CNS NNS WOS

SNS

NNS CNS WOS SNS

Source: OGA

Number of Wells

Exploration and Appraisal

Commercial discovery rate better than 1 in 2 with 350mmboe at $3.50 finding cost

Source: OGA mmboe

100 200 300 400 500 600 700 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Reserve Adds Sanctioned Reserves

Oil Gas Loanan Lincoln Lancaster Storr W/E Belinda Eagle Laverda/Slough Finlaggan Bagpuss Winchelsea Skipper

E&A Well Activity

OGA working with operators to ensure well activity is undertaken

Exploration Well Appraisal Well Firm Well Contingent Well Other well

Exploration Activity

Templewood accelerated to 2016 and well spudded in October

• Late Jurassic turbidite sands
• Hanging wall structural trap, HPHT
• 3D seismic reprocessed 2011
• Drill or drop commitment

Templewood – Central North Sea (ConocoPhillips)

Appraisal Activity

Fast track appraisal moving towards development

Fractured basement

Rona Ridge fractured basement potential Hurricane exploration & appraisal

Halifax

Discoveries

5bnboe discovered to date with 2.4bnboe in small pools & 150 small pools in open acreage

Reserves/resources mmboe

Producing fields Ongoing developments Currently locked discoveries 10 100

Source: OGA

1000

CNS WoS MF NNS SNS

3.4bnboe

Total Recoverable Resources (mmboe)

Frontier Exploration

Significant focus & investment in frontier exploration in last 2 years

2015 & 2016 Programs

£40m government funded 80,000 km new/reprocessed data 2016 seismic data acquisition complete, processing underway

Palaeozoic study issued. SW Britain & East Shetland Platform in progress

Competition to define potential

£500k prize money for 2015/2016 projects

New 3D visualization facility

£700k funding for Lyell Centre in Edinburgh

Supporting skills for the future

£750,000 for 3 post-doctoral appointments in geoscience & reservoir engineering

29th Round Areas

29th Offshore Licensing Round

29th Round received 29 applications from 24 companies covering 113 blocks

Supplementary Round with 14 blocks nominated

Offshore Licensing Rounds

30th Offshore Round will open in 2Q 2017 coupled with discovered small pools initiative

Strategies & Expectations

All strategies and stewardship expectations published

10 Asset Stewardship Expectations

JV Hub Strategy E&A Work Programme Optimum use of Subsurface Data Licence Activity, Decision Points & Milestones Robust Project Delivery Production Optimisation Information Management Technology Plan Collaboration Planning for Decommissioning

E&A Stewardship Expectations

Asset Stewardship Expectations co-authored with industry & to be viewed as “good practice”

Annual E&A work program Resource evaluations Pre, syn & post drill evaluations & weekly drilling reports OGA involvement prior to investment decisions Common JV data sets Technical & cost benefit assessment Evaluation best available data, technologies, processes and skills Focus on quality geophysical data sets Executed JOA 6 months from licence award Notify OGA one month before drill or drop OGA notified of farm-out or divestment prior to activity commencing

E&A Work Programme Subsurface Data Licence Activity

Key Messages

OGA, industry & government need to continue to work together

OGA has been a GovCo since 1 October 2016 with new powers & sanction abilities Significant remaining mature & frontier exploration potential and discovered volumes E&A activity had a successful year in 2016 with increasing activity seen Asset stewardship expectations need to be followed