Observations on the Tamar Observations on the Tamar ProjectProject

Leslie NicholsLeslie Nichols

July 4, 2010July 4, 2010

Leslie NicholsLeslie NicholsProfessional BiographyProfessional Biography

20 years as senior oil and gas consultant20 years as senior oil and gas consultant 28 years with Shell in E&P becoming operations 28 years with Shell in E&P becoming operations

manager in major operations.manager in major operations. Sample experience:Sample experience:

BG: design and development of a new offshore gas BG: design and development of a new offshore gas platform (Trinidad)platform (Trinidad)

Shell: Operations Manager for Shell Companies Shell: Operations Manager for Shell Companies Malaysia (300,000 bpd oil, 2.5 Billion cfd gas, 140 Malaysia (300,000 bpd oil, 2.5 Billion cfd gas, 140 offshore structures, 3 loading terminals)offshore structures, 3 loading terminals)

Shell: Shell: Operations Manager Brent Field (UK)Operations Manager Brent Field (UK) Mossgas, Offshore Operations Advisor (South Africa)Mossgas, Offshore Operations Advisor (South Africa)

Gas Processing Onshore/OffshoreGas Processing Onshore/Offshore

Operators Operators alwaysalways prefer onshore where prefer onshore where possiblepossible operating costs, logisticsoperating costs, logistics

But onshore But onshore notnot always a reasonable option always a reasonable option Land use/availability, population, master planLand use/availability, population, master plan

In this case, I believe offshore more practicalIn this case, I believe offshore more practical OnshoreOnshore: lack of reasonable sites: lack of reasonable sites OffshoreOffshore: unlimited site options, industry standard: unlimited site options, industry standard

Why not onshore (in Israel)Why not onshore (in Israel) Inspected 5 Carmel Coast sitesInspected 5 Carmel Coast sites None appear suitable unless absolutely no alternativeNone appear suitable unless absolutely no alternative

Land scarcity/Population density/Transport infrastructureLand scarcity/Population density/Transport infrastructure Pollution/Disturbance/Safety/SecurityPollution/Disturbance/Safety/Security Residents resistance (Corrib)Residents resistance (Corrib) Undesirable industrial spread & expansion threatUndesirable industrial spread & expansion threat

Insufficient safety and risk analysis (QRA)Insufficient safety and risk analysis (QRA) Extremely high gas arrival pressureExtremely high gas arrival pressure

Reduce offshore (as per PDC) ?Reduce offshore (as per PDC) ? Reduce on beach (as per IGA) ?Reduce on beach (as per IGA) ? To what pressure (150 or 250) ?To what pressure (150 or 250) ?

Offshore is a viable alternative (1)Offshore is a viable alternative (1) - - development time as an issue development time as an issue - -

Example - Poinsettia: Example - Poinsettia: 3 years FEED to EPIC3 years FEED to EPIC (in (in a very tight development market)a very tight development market)

Offshore is a standard alternative (2)Offshore is a standard alternative (2) - - Virtually as reliable as onshore operationallyVirtually as reliable as onshore operationally - -

When designed and managed properlyWhen designed and managed properly As much built in redundancy (ie, As much built in redundancy (ie,

maintenance, hot standby) as requiredmaintenance, hot standby) as required

Example – Shell Sarawak: Example – Shell Sarawak: no unplanned downtime in no unplanned downtime in 5 years (across 3 large offshore facilities) 5 years (across 3 large offshore facilities)

• Small tie-in area• Landing pressure low

Offshore is an equally viable choice (3)Offshore is an equally viable choice (3) - - Minimum onshore real estate requirementMinimum onshore real estate requirement--

Source: PDC ~ 10 Dunam

Observations on Planning Observations on Planning DocumentsDocuments

Some questionable assumptions:Some questionable assumptions: 17 – 20 months statutory planning ?17 – 20 months statutory planning ? 40 – 48 months development ?40 – 48 months development ? 18 days out per year ? 18 days out per year ? 60 dunam onshore facility ?60 dunam onshore facility ? Israel goes dark if Tamar goes down ? (what about an Israel goes dark if Tamar goes down ? (what about an

onshore failure ?)onshore failure ?)

Absence of basic documentationAbsence of basic documentation Onshore site QRA ?Onshore site QRA ? Independent offshore evaluation ?Independent offshore evaluation ?

Recommendations (1)Recommendations (1)

Independent specialist QRA report for Independent specialist QRA report for onshore optionsonshore options

Objective detailed evaluation of the Objective detailed evaluation of the offshore optionoffshore option TimingTiming Onshore requirement or FSOOnshore requirement or FSO Planning approvals readily forthcomingPlanning approvals readily forthcoming

Recommendations (2)Recommendations (2)

Comprehensive Master PlanComprehensive Master Plan Back-up to Tamar Back-up to Tamar

irrespective of offshore or onshoreirrespective of offshore or onshore Future development planFuture development plan

export plans (pipeline, LNG) ?export plans (pipeline, LNG) ? domestic liquid fuels (Fischer Tropsch)domestic liquid fuels (Fischer Tropsch) where will these plants go?where will these plants go?

Infrastructure securityInfrastructure security Line looping and the security that it offers ?Line looping and the security that it offers ?

Explore options for covering near-term supply while Explore options for covering near-term supply while conducting proper planning. conducting proper planning. EMG issues ?EMG issues ? ““Lateral thinking” eg, near-term supply through Mary B.Lateral thinking” eg, near-term supply through Mary B.

2013Cover supply

shortfall

2015Provide backup

supply TamarPlatform

“Lateral Thinking” Example concept tosolve possible Mary B shortfall before full Tamar development

Proposed Tamar

Development

Thank YouThank You