PROSPEX UKCS Exploration & Appraisal Status Gunther Newcombe December 2016 Director Operations
OGA OGA became a GOVCO on 1 st October 2016 with additional powers and sanctions
Progressive Regulation Role of the OGA OGA Approach MER UK Strategy – binding obligations & safeguards Information & Samples Sanctions Effective Rewards stewardship Sanctions 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 12,000+ wells 2014 1.4 million 2012 60% 250+ subsea systems 2015 1.6 million 2015 71% 3,000+ pipelines 2016 1.65 million 2016 80% target 250 fixed installations Source – OGA and Oil & Gas UK Source – OGA Development Resources Exploration & appraisal Remaining 6.3bn boe 2014 wells 32 Produced potential in production 2015 wells 26 or under 43bn 20bn development 10bn 2016 wells 20 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
OGA Corporate Plan Share dry-hole review with industry 2015 2015 Licensing strategy for frontier & mature acreage Work with HMT & Industry to enhance exploration 2015 Provide high quality geophysical data Rockall & MNSH 1Q 2016 Undertake rigorous pre & post-drill evaluation 2016 High-grade operator prospect inventory to stimulate drilling 2016 Manage release of geophysical & well data 2016 Produce high quality geological maps 2018 Provide industry with regional prospectivity & YTF 2018 OGA on track to delivering exploration priorities
Fiscal Regime Strong commitment & listening from government Recent budgets provided £2.3bn relief to industry OGA provide expertise and evidence to HMT UKCS highly competitive fiscal regime with government working closely with OGA & Industry
Mature Yet-to-Find CNS c NNS SNS SNS SNS WOS WOS CNS NNS NNS WOS Number of Wells Source: OGA UKCS has 6bnboe YTF best estimate in mature areas
Exploration and Appraisal Loanan Lancaster Lincoln Storr W/E Skipper Bagpuss Finlaggan Eagle Belinda 700 Sanctioned Reserves Reserve Adds Laverda/Slough 600 500 mmboe 400 300 Winchelsea 200 Oil 100 Gas 0 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Source: OGA Commercial discovery rate better than 1 in 2 with 350mmboe at $3.50 finding cost
E&A Well Activity Exploration Well Firm Well Contingent Well Appraisal Well Other well OGA working with operators to ensure well activity is undertaken
Exploration Activity Templewood – Central North Sea (ConocoPhillips) • Late Jurassic turbidite sands • Hanging wall structural trap, HPHT • 3D seismic reprocessed 2011 • Drill or drop commitment Templewood accelerated to 2016 and well spudded in October
Appraisal Activity Halifax Fractured basement Rona Ridge fractured basement potential Hurricane exploration & appraisal Fast track appraisal moving towards development
Discoveries Total Recoverable Resources (mmboe) Producing fields 1000 Ongoing developments Reserves/resources mmboe Currently locked discoveries 100 SNS NNS CNS 10 3.4bnboe MF WoS Source: OGA 5bnboe discovered to date with 2.4bnboe in small pools & 150 small pools in open acreage
Frontier Exploration 29 th Round Areas 2015 & 2016 Programs £40m government 2016 seismic data Palaeozoic study issued. funded 80,000 km acquisition complete, SW Britain & East Shetland Platform in progress new/reprocessed data processing underway 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 Significant focus & investment in frontier exploration in last 2 years
29 th Offshore Licensing Round Supplementary Round with 14 blocks nominated 29 th Round received 29 applications from 24 companies covering 113 blocks
Offshore Licensing Rounds 30 th Offshore Round will open in 2Q 2017 coupled with discovered small pools initiative
Strategies & Expectations 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 All strategies and stewardship expectations published
E&A Stewardship Expectations E&A Work Programme Subsurface Data Licence Activity Common JV data sets Annual E&A work program Executed JOA 6 months from licence award Technical & cost benefit Resource evaluations assessment Notify OGA one month Pre, syn & post drill before drill or drop Evaluation best available evaluations & weekly data, technologies, drilling reports OGA notified of farm-out or processes and skills divestment prior to activity OGA involvement prior to commencing Focus on quality investment decisions geophysical data sets Asset Stewardship Expectations co-authored with industry & to be viewed as “good practice”
Key Messages 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 OGA, industry & government need to continue to work together
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