Rapidly declining production on the NCS

Presentasjon om: "Rapidly declining production on the NCS"— Utskrift av presentasjonen:

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2 Rapidly declining production on the NCS
Gas Production Million Sm3 o.e. per year Reserves and resources in fields reported to RNB Oil 2008 Production from producing fields will be halved by 2023 Production levels can be kept higher through a higher recovery rate from the reservoir reserves and new discoveries Denne grafen viser forventet olje- og gassproduksjon fra eksisterende felt på norsk sokkel, der oljeproduksjonen vises i blått og gassproduksjon er vist i grått. Estimatene viser at produksjonen fra eksisterende vil være halvert i løpet av 15 år, mens den olje produksjonen fra eksisterende felt vil halveres allerede i løpet av de neste 10 årene. Tall fra BP viser at Norge er blant de oljeproduserende land i verden der produksjonen faller raskest. Det er også knyttet usikkerhet til om reservoarene i disse feltene vil produsere som forventet. En større andel av vår produksjon fremover vil komme fra mindre og mer kompliserte felt, som igjen gir økt usikkerhet i reservoarenes evne til å produsere høyt og stabilt. Vår evne til å begrense fallet i produksjonsnivå er avhengig av to aktiviteter; leting og økt utvinningstakt nær eksisterende felt og leting etter store nye felt i nye områder på norsk sokkel. Ref.: Norwegian Petroleum Directorate

3 The easy oil has been discovered
Million Sm3 o.e Discoveries <5 mill. Sm3 o.e. Discoveries 5-10 mill.Sm3 o.e. Discoveries mill.Sm3 o.e. Discoveries mill. Sm3 o.e. Discoveries >100 mill.Sm3 o.e. 2.739 2.208 1.503 1.223 863 469 471 Substantial volumes proven through exploration activities also after 1990, but the size of discoveries are decreasing …. De store feltene på norsk sokkel ble funnet i perioden 1967 til Funnstørrelsen de 20 siste årene betydelig lavere enn i de første 20 årene. Det siste store feltet funnet på norsk sokkel var Ormen Lange i 1997, etter åpning av arealer på dypt vann i norskehavet. Leting på norsk sokkel påviser fortsatt interessante kommersielle volumer - det er påvist 1,8 milliarder standardkubikkmeter (11 Gboe) utvinnbar oljeekvivalenter de siste 16 år. I denne perioden er det boret 338 (wildcat) letebrønner, hvilket gir en gjennomsnittlig ressurstilvekst på litt over 5 millioner standardkubikkmeter per brønn. 235 Ref.: Norwegian Petroleum Directorate

4 Low rate of reserve replacement on the Norwegian Shelf
Resource growth Production Annual resource growth and production Mill. Sm3 o.e De lave funnstørrelsene betyr at vi finner mindre enn vi produserer på norsk sokkel. Siden 1990 har leteaktiviteten en reserveerstatningsrate på ca 50%; hvilket inkluderer ormen lange. Ser vi på funn etter ’97; dvs uten Ormen Lange, har vi påvist mindre enn en fjerdedel av hva vi produserer. 2005 var et godt leteår, og da påviste vi i underkant av 5 mnd produksjon. I 2006 påviste vi nok til å erstatte 1 mnd produksjon. Skulle vi erstattet dagens produksjon med nye funn måtte vi ha påvist hele syv Goliat felt hvert år, eller Ormen Lange hver annet år. Følgen av dette er at vi i hovedsak lever av felt funnet for år siden. Ref.: Norwegian Petroleum Directorate

5 How much more can we expect to find?
1,7 How much more can we expect to find? Estimates for undiscovered resource potential on the NCS contain considerable uncertainty … Mill. Sm3 … especially for less mature areas Undiscovered resources, Mill. Sm3 Undiscovered resources Barents Sea Contingent resources, measures Sold and delivered Norw.Sea North Sea 16,9 13,2 6,6 3,4 6,6 10,6 1,3 4,7 5,2 5,7 3,4 Considerable uncertainty concerning remaining resource potential on the Norwegian Continental Shelf Oljedirektoratet har vist estimater for gjenværende ressurser på norsk sokkel. Naturlig nok er det stor usikkerhet i estimatet, og spredningen i anslagene er selvfølgelig særlig høyt i de umodne områdene i norskehavet og barentshavet. StatoilHydro have a similar estimate – also with a wide range of uncertainty Det er i tillegg svært usikkert hvor mange brønner som må til for å kunne avklare hvilket potensial vi faktisk har på norsk sokkel. 1,3 4,6 4,6 4,6 P90 Anticipated P10 P90 Anticipated P10 Ref.: Norwegian Petroleum Directorate

6 The story so far Ekofisk Statfjord Oseberg Troll Ormen Lange
Skill and best practices - not luck P50 YTF potential ca 20 bbls o.e. !! The exploration activity in the proven provinces will reduce the production fall, but is unfortunately not likely to provide long term production growth. A major contribution to production level require discovery of larger fields – and to find these we need to explore the frontier areas. As mentioned, the last discovery in frontier areas on the NCS is the Ormen Lange in 1997 , although close to 30 wells have been drilled on frontier prospects with no major discoveries. The generic nature of frontier exploration is high risk and a lower confidence level as we have a limited amount information on the petroleum system. There is also a relatively low well count, and we have to admit that our ability to statistically predict the result is low. However – our ability to prioritise the best prospects for drilling is high. This is clearly indicated by the form of creaming curves – they always have a steep start due to the major discoveries in the early exploration phases of new provinces, and then flatten out as the discovery sizes become smaller. The implication of this is that the main success factor for frontier exploration is the prioritisation process – choosing the best opportunities for drilling based on a global prioritisation. This is without doubt an ever increasing challenge on the NCS and the opening of new acreage Nordland 6&7 is probably the best guarantee for success.

7 What’s in the bank Ekofisk Statfjord Oseberg Gullfaks Åsgard
Ormen Lange Oseberg Gullfaks Åsgard Eldfisk Snorre

8 What’s on the shelf Viktoria Skarv Gjøa Onyx Gudrun Goliat Vega
Valemon Gjøa Vega Onyx Stetind Peon

9 . . . but long-term production is depends on exploration
0,5 . . . but long-term production is depends on exploration NPD forecast for overall production, Mill. b.o.e. a day Base estimate assumes considerable production of oil&gas from undiscovered resources already in years 5,0 4,5 4,0 2.5 x Ormen Lange 8 x Goliat Conditions to enable this: Clarification of the resource potential on the NCS Access to unopened areas from 2010 at the latest Resources in discoveries 3,5 Undiscovered resources Resources in field 3,0 2,5 2,0 Reserves 1,5 1,0 0,5 Vi har vist at produksjonsnivå fra eksisterende felt faller raskt. Oljedirektoratet har utarbeidet et basisestimat for fremtidig produksjonsutvikling gitt videreutvikling av norsk sokkel og innfasing av nye ressurser. Dette basisestimatet forutsetter produksjon fra nye funn tilsvarende 2 – 3 Ormen Lange felt eller 8 nye goliat felt innen år. Leting og IOR tiltak nær infrastruktur i de modne områdene på norsk sokkel vil bidra til dette, men det er lite sannsynlig at denne type aktivitet vil kunne løfte produksjonsnivået slik basisestimatet til oljedirektoratet forutsetter. Store, nye funn er dermed nødvendig for å møte ODs basis prognose. Ledetiden fra åpning av nye områder til eventuelle nye funn er i produksjon er minst år. Utbygging av disse bør gjøres mens det fortsatt er tung infrastruktur og aktiv industriklynge tilstede på norsk sokkel. Det haster derfor med å gjøre nytt prospektivt areal tilgjengelig for industrien slik at For å sikre videreutvikling av norsk sokkel må industrien håndtere fokus både på videreutvikling av eksisterende felt samtidig som vi fortsetter leting etter større felt i de umodne områdene på sokkelen. Industrien kan håndtere begge disse elementene fordi aktivitetene baseres på bruk av forskjellige ressurser og har svært forskjellig ledetid. New field development projects crucial to maintaining and developing the industrial complex 0707 0808 0909 1010 1111 1212 1313 1414 1515 1616 1717 1818 1919 2020 2121 2222 2323 2424 2525 2626 Yr. Ref.: Norwegian Petroleum Directorate; Project group 1

10 Where are the recent discoveries?
1.101,0 Where are the recent discoveries? ILX 124 Growth 30 Frontier 252 Total 537,6 1.406,5 195,7 939,7 744,0 2.883,8 Prospect type # of wells Total volume Ormen Lange 2 Bbbl discovered in established petroleum provinces Exploration last 11 years have proven 2,9Bbbl on NCS or if I use production terms, an avreage of 750,000 bbls/day. Even if I exclude Ormen Lange then we have discovered 550,000 bbls/day in this period. However, the last major discovery proving up a new petroleum province on the NCS was Ormen Lange in The Goliat discovery in the BarentsSea has also proven a new exploration model but the volumes are significantly smaller, mbbls? MBOE rec, equity

11 The reliable volumes We find what we say we will find in the established hydrocarbon provinces and that apllies to both Statoil and Hydro and we still find almost as much pr well as we did 10 years ago. Although the volumes we find in the established areas are small to moderate, typicalyy 10 – 50 mbbls, these vloumes are usually profitable as they can be tied back to and utilize existing (mostly SH operatded) infrastructure. Gullfaks and Oseberg are two of the best examples and there is still plenty of exploration potential in the near vicinity of these fields although more and more of this will require dedicated rigs rather tahn platform wells and well-cost will of course be a bigger challenge.

12 Striving for business impact Birds and elephants
Frontier areas - high return when successful Prioritising the right prospects Established provinces - volume predictions reliable, but moderate per well High well count gives higher returns Finding more hydrocrabons in the established provinces is the easier part. Not exactly industry but because we know more in these areas the uncertainty is less and more wells will mean more if smaller volumes. Understand the business …. And master the important details. We have to be realistic but at the same time focus on opportunities. Our opportunities are both our license portfolio but also open acreage and in 2008 we have the opportunity to apply for new acreage across the whole shelf in the annual APA round and the 20th round. The 20th round gives us (hopefully) the opportunity to replenish our portfolio of impact or “elephant” prospects. characteristics & success criteria different for mature areas & frontier Mature basins (bird in the hand is worth two in the bush) Critical for reducing short term production fall High predictive ability Long term growth require finding new large fields – frontier exploration The potential for large fields on NCS need to be clarified historically – high volume have been proven. Our predictive ability is lower due to the immature nature of frontier exploration Success criteria – established provinces Empirical data show st

13 Making the right decisions – together
Drilling Candidates Dropped prospects The two most critical factors for exploration are volume & risk This plot shows our prospect portfolio considered for 2008 drilling. Red dots illustrate drop decisions taken. Just as important what we don’t do as what we do do! Can honestly say that we havn’t spent 1 minute discussing what came from Statoil and what from Hydro. Still potential for highgrading (red ring) and work is in progress to trade commitments or reduce exposure. Typically, we’d like all prospects to be up/right corner, and we’d turn down opportunities that are too risky or too small (orange) In areas near infrastructure small structures have high commerciality and are important factors in extending field life & maximising Rf The larger structures are typically found in frontier areas, and will have higher risk due to the fact that we don’t yet know the petroleum system. It is a bit like having one equation and 1000 unknowns. Consistency (methodology) and quality (QC) is essential. Have discussed and agreed on best practice for risking prospects and for estimating volumes. All major exploration decisions – concession rounds, drill or drop, relinquishmnet of acreage are subject to independent QC even though the entire expl community use the same methods!

14 ILX challenge is the threshold level
The UK history indicates that in the proven petroleum provinces more wells = more volumes – but the discovery sizes will be small…

15 Extending field life and maximizing recovery
2005 2010 2015 OPEX Mboe / d Threshold level Field close down if no new resources Delayed field close down if new resources Prospect A

16 Need the best new acreage
To effectively determine the resource potential, the industry must have access to the most prospective acreage Nordland VI and VII have been identified as the top priority area with the best and most certain potential Av de gjenværende uåpnede arealene på NCS har industrien har identifisert Nordland VI og VII som det mest prospektive areal på norsk sokkel, og dermed det området med størst muligheter for å gjøre nye funn som basis for nye feltutviklingsprosjekter. Ref.: Norwegian Petroleum Directorate

17 Picking the best acreage - together
20th round 301 blocks are nominated by the companies; 129 in Barents Sea, 164 in the Norwegian Sea and 8 in the North Sea 46 companies nominated blocks compared to 19 in the 19th round

18 Securing capacity and doing it right - together
Market Safe, efficient and green operations Co-existence Rigs have been secured for between 30 and 40 exploration wells in Approximately 12 of these wells are operated by Statoil. By the end of June 2 of the 3 rigs that were contracted in co-operation with Shell, ENI and Hydro early in 2005 will have started their exploration programmes. West Alpha is currently drilling the Morvin appraisal well and Polar Pioneer (shown above) is due to commence the Tornerose well next week. The third rig Tr. Arctic will start up in the autumn. Over the last 12 months Statoil has continued to contract considerably more rig capacity for exploration, development and production purposes. In Norway we plan to allocate 2 rig years each year to Statoil operated exploration the next 2-3 years. A new 39 month contract starting autumn 2007 has been awarded to Saipem for Scarabeo 5 and some of this capacity will be used to drill deepwater prospects in the Norwegian Sea. 2 x 6 month options are exercised on Ocean Vanguard which will primarily be used for shallow to medium water depth exploration in Norway until spring 2008 at least. We have also awarded Transocean a new contract through 2010 for Tr. Leader and this rig will also perform exploration work in Norway in the period mostly in the HPHT and deepwater segments. In addition we are currently negotiating additional exploration rig capacity for both Norwegian and international exploration operations for the period and hope to make announcements regarding these negotiations shortly. To sum up, we have secured rigs for a well exploration programme in We are well covered for a similar programme in 2007 and we are taking specific measures to secure rigs for 2008 and beyond in order to maintain our exploration effort in the medium term. Regarding seismic vessels, the story is much the same. We have secured 4 vessels for 3D exploration seismic in Norway in 2006 and are already in the process of securing capacity for 2007.

19 Exploration revived? Conclusions:
Extending field lives is largely a cost efficiency issue We make discoveries – but they are small we have IOR targets – small and further away Production growth depend on new large discoveries Last major find was the Ormen Lange in ’97 Success factors are Rig Resources Cost efficiency level I tillegg til satsing på drift skal vi gjennomføre et omfattende leteprogram de neste årene Årets leteaktivitet er den høyeste noensinne I 2008 vil det bli boret rekordmange brønner på norsk sokkel Bildet viser de brønnene SH har planlagt på norsk sokkel for 2008 Vi skal lete på dypt vann i Norskehavet og i Barentshavet Vi skal bore i modne områder nær infrastruktur (har hatt oppløftende resultater det siste året) Det er viktig å påvise ressurser i et omfang som gir grunnlag for nye prosjekter, aktivitet og produksjon på norsk sokkel Flere av brønnene på norsk sokkel de neste to årene er strategiske brønner Hva er egentlig ressurspotensialet i Barentshavet? Vil potensialet på dypt vann i Norskehavet endelig vise seg? Jeg tror vi vil være nærmere et svar på disse spørsmålene et par år frem i tid.