PROSPEX UKCS Exploration & Appraisal Status Gunther Newcombe Director Operations December 2016
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
or under
development
Source – OGA
Source – OGA 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
mm
bo
e
0
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
Re
serv
es/
reso
urc
es
mm
bo
e
Producing fields
Ongoing developments
Currently locked discoveries
10
1
00
Source: OGA
10
00
CNS
WoS MF
NNS
SNS
3.4bnboe
Tota
l Reco
vera
ble
Reso
urc
es
(mm
boe)
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