Gunther Newcombe - Oil and Gas Authority · PROTECTIVE MARKING UKCS Context (as appropriate) Story so far… Current context • 43 bnboe recovered • Up to 20 bnboe remaining •

PROTECTIVE MARKING (as appropriate)

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Future of UKCS

Gunther Newcombe Director

Exploration & Production

DEVEX May 2016


UKCS Context

Story so far… Current context

• 43 bnboe recovered

• Up to 20 bnboe remaining

• 1.6 mmboed in 2015

• £11.6bn capex in 2015

• £338bn production tax to date

• £35bn supply chain revenue pa

• Regarded as a mature basin

• Ageing infrastructure

• Diverse investors

• Low levels of exploration

• Reducing operating costs

• Improving production efficiency

OGA focus is strategic and prioritized to MERUK

About the OGA

1


Building the OGA

Q2 16 Q1 16 Dec Nov Oct Sept Aug July

Establish DECC OGA sponsor team

June 15

Lay Levy Regulations before Parliament

Publish MER UK Strategy consultation

Lay MER UK Strategy before Parliament

Introduce Levy

Introduce Energy Bill into House of Lords

Energy Bill Committee Stage

Energy Bill 3rd reading in House of Lords

Energy Bill Royal Assent

12.05.2016

Energy Bill MER UK Strategy

Energy Bill 2nd reading in

House of Commons

MERUK Strategy & Energy Bill approved

DECC

EDU

LED

Historically From 1 April 3Q 2016

OGA

Executive Agency

(Civil Service)

DECC

OGA

Independent

Authority

DECC

Fra

me

wo

rk

Do

cu

me

nt

En

erg

y B

ill

20

15

Q2 16

Governance

Q2 16 Q1 16

Q2 16

Q3 16

Independent Authority

MER UK Strategy 18.03.2016

Q2 16 Q1 16

2


5.0

0

1.5

Oil mmbo/d

Gas mmboe/d

1973 2022 2015

Produced Reserves

CNS

NNS

SNS

IS

WOS

43bnboe

Upside

OGA Data Base

Production increased in 2015 due to new developments & improved PE

3

PROTECTIVE MARKING (as appropriate) Cost & Production Efficiency

Significant improvements in increasing production & managing costs

1970 2015

1.6 mmboe/day

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

1970 2016

Majors Others

Production

Production Efficiency

L

ifti

ng

Co

st

$/b

oe

2015 UKCS Average $21/boe

29.3 21.0 17.0

L

ifti

ng

Co

st

$/b

oe

2016 UKCS

Target $15/boe

P

rod

ucti

on

mm

bo

e/d

4

OGA Data Base

Production Lifting Costs


Culzean

Mariner

Solan

Scolty/

Crathes

Kraken

Conwy

Cygnus

Catcher Stella/

Harrier

Western

Isles

Clair Ridge

Edradour/

Glenlivet

Laggan

Tormore

Schiehallion/

Loyal

ETAP

Flyndre/

Cawdor

Cayley/ Shaw

Developed & Sanctioned Reserves

CNS

NNS

WOS

SNS

6.5bnboe

More than 300,000 boepd under development

OGA Data Base

5

PROTECTIVE MARKING (as appropriate) Project Timing & CAPEX

50%

100%

150%

200%

250%

300%

350%

-1.0 -0.5 0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5

CAPEX compared with FDP

Tim

ing

co

mp

are

d w

ith

FD

P

Current Projects

Completed Projects

350%

3.5

-50%

Completed projects 40% over budget and 75% delivered late

OGA Data Base

6


NNS

WOS

SNS

CNS

4.4 bnboe

OGA Monthly Performance Pack 2015

Unsanctioned Resources

Technology and cost reduction will unlock value

OGA Data Base

Reserv

es m

mb

oe

Producing fields

Ongoing developments

Currently locked fields WOS

10 pools

SMALL POOLS TOTAL

More than 210 pools

(1 – 1.6 bnboe resources)

MORAY FIRTH

46 pools

CNS

69 pools

NNS

34 pools

SNS

40 pools

EIS

9 pools

7

PROTECTIVE MARKING (as appropriate) Small Pools Initiative

Industry & OGA Small Pools task group working issue

Spooled pipe products

Mechanical/Grouted

Hot tap tees

Subsea fluid

injection skid

Steel /Composite spooled pipe

8

Technology Application SNS Cluster Pilot



Significant additional potential in mature areas

Mature Yet-to-Find

c

NNS

WOS

SNS

OGA Data Base

CNS

NNS

WOS

SNS

Number of Wells

NNS

CNS

WOS

SNS

9 bnboe

9


Appraisal Wells

Exploration Wells

Mature Exploration

Requirement to stimulate infrastructure led exploration

OGA Data Base

In Year Discovered & Sanctioned Reserves (mmboe)

Sanctioned

Discovered

Production (mmboe) 2

01

6

20

17

• High well cost, mis-alignment &

lack of funding are key issues

• Well cost reduction being worked

• OGA working exploration hub

approach & improving alignment

• Active engagement of investors

• Industry looking at setting up 3D

seismic group shoots

• Discussions ongoing with

government

10


OGA Competition to Define Potential

• £1m prize money shared between 2015 & 2016

for best project and interpretation

New World-Class Visualization Facility

• £700,000 funding Lyell Centre in Edinburgh which

is a JV between BGS and Herriot Watt University

Post-Doctoral Appointments

• £750,000 for three post-doctoral appointments

in geoscience and reservoir engineering

2015 & 2016 Seismic Acquisition Programs

• £40m UK government funding seeking to promote

underexplored areas of UKCS

The UKCS North Sea has both mature and frontier potential

Frontier Exploration 11



• Update cost estimates & share plan and demand profile

• Demand-led profile to develop low cost capability & capacity

• Develop new business and contracting models for decommissioning

• Scope programme & secure technology funding

• Identify optimal policy and regulatory conditions

Decommissioning

Avoid premature decommissioning and improve cost efficiency

OGA Data Base

12


Improving Asset Stewardship

Develop Stewardship Expectations

Exploration &

Appraisal

Major Projects &

Developments Licencing

Reservoir

Management

Base Management

Technology

Late Life

Decommission

Information Management

Improving Efficiency & Performance to deliver MERUK

Framework

2016 2017

Interviews Strategy Survey Reviews Benchmark Survey Coach

Benchmarking

Expectations

Reviews

Surveys

13


• OGA working closely with Industry & Government

to deliver MERUK


Key Messages

Considerable potential still exists in UKCS & open for business

• Considerable progress has been made ranging

from exploration to decommissioning

• OGA beginning to develop plans and regional

models to underpin MERUK strategy

• Collaboration exists but behaviours and commercial

complexity are causing drag

14

Documents

Gunther Newcombe - Oil and Gas Authority · PROTECTIVE MARKING UKCS Context (as appropriate) Story so far… Current context • 43 bnboe recovered • Up to 20 bnboe remaining •