NCS Prospects Conference OGA Strategy & Plans Gunther Newcombe November 2016 Director Operations
OGA OGA became a GOVCO on 1 st October 2016
Progressive regulation Role of the OGA OGA Approach MER UK Strategy – binding obligations & safeguards Information & Samples Sanctions Effective stewardship Sanctions Rewards Meetings Dispute resolution Striking the right balance Encouraging Investment collaboration and action Balanced application of new regulatory framework
UKCS summary Infrastructure Production (boepd) Production efficiency 5,000+ wells 2014 1.4 million 2014 65% 250+ subsea systems 2015 1.6 million 2015 71% 3,000+ pipelines 250 fixed installations 2016 1.65 million 2015 range 30% to 90+% Source – OGA and Oil & Gas UK Source – OGA Resources Development Exploration & appraisal Remaining 6.3bn boe 2014 wells 32 Produced potential in production 2015 wells 26 or under 43bn 20bn development 10bn 2016 wells (est) 16 to 19 Source – OGA and Oil & Gas UK Source – Source – OGA OGA Supply chain Costs Jobs c.£30bn turnover Unit costs down by nearly 30% 330,000 jobs in the UK 80% of UK oil and gas jobs Delivered through or supported by Average unit operating costs have fallen from £18 per 40% through exports upstream oil and gas activity barrel in 2014 to an estimate of £13 per barrel in 2016 Source – Oil & Gas UK and Source – OGA EY Source – Oil & Gas UK Improving & adapting to new conditions
Mature Yet-to-Find CNS c NNS SNS SNS SNS WOS WOS CNS NNS NNS WOS Number of Wells Source: OGA UKCS has up to 9bnboe YTF in mature areas
Exploration and appraisal Lack of funding is a global issue for exploration High well costs and JV misalignment OGA work to ensure inventory is drilled Source: OGA Estimated/OGA forecasts E&A activity currently at low levels but increasing with encouraging discovered & appraised volumes
Frontier exploration 2015 & 2016 Programs 80,000 kms 2016 seismic data CNS well review & new/reprocessed data acquisition complete Palaeozoic study issued Competition to define potential £1m prize money shared between 2015 & 2016 New world-class visualization facility £700,000 funding for Lyell Centre in Edinburgh New world-class visualization facility £750,000 for 3 post-doctoral appointments in geoscience & reservoir engineering £40m UK government funding to incentivize frontier exploration
Offshore licensing rounds 29 th Round applications closed on 26 th October currently being evaluated
Discoveries 350+ unsanctioned Central estimate of reserves/resources mmboe discoveries¹, 3.4bn boe* Producing fields 1000 Small pools (< 50mm boe ) Ongoing developments contain 2.4bn boe* 100 Currently locked discoveries Over 150 small pools in unlicensed acreage 10 Source: OGA ¹ Excluding potential developments currently under discussion * P50 technically recoverable resources Significant potential can be unlocked with a combination of technology, reduced cost & access
Reserves 2013 2015 143 Mmboe 2016 150 Mmboe 2014 300 Mmboe 342 Mmboe 458 Mmboe 72 Mmboe 65 Mmboe 157 Mmboe 582 Mmboe 566 Mmboe 514 Mmboe 511 Mmboe Sanctioned Produced Discovered and appraised UKCS production increasing, smaller projects in 2016, successful E&A
Asset stewardship Asset owners consistently do the right things to identify & then exploit opportunities Assets are in the hands of those with the collective will, behaviours & capabilities to achieve this Asset stewardship framework developed between OGA, Industry & Government
Strategies & expectations All strategies issued, delivery programmes in progress, stewardship expectations end 2016
Stewardship expectations 10 Asset Stewardship Expectations Link to supporting obligations of MER UK Strategy and/or Energy Act JV Hub Strategy E&A Work Programme Optimum use of Subsurface Data Set out minimum expectations of what good looks like Licence Activity, Decision Points & Milestones Robust Project Delivery Production Optimisation Expectations have a one page overview & short guidance Information Management Technology Plan Issued in 4Q 2016 with Collaboration implementation during 2017 Planning for Decommissioning Asset Stewardship Expectations co-authored with Industry
Key messages Since 1 st October OGA is a GOVCO & has new powers & sanction abilities Significant remaining mature & frontier exploration potential and discovered volumes NPD & OGA working together to share best practice to maximize value OGA, Industry & Government worked to develop an asset stewardship framework Processes and plans now in place with 2017 being about delivery
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