PROSPEX 2016

Exploration Forum

Business Design Centre, Islington 14th December 2016

PROSPEX 2016 | London

Exploration

Forum

Agenda • Introduction

• MER Exploration Board and Forum Review of Status and Next Steps (Phil Kirk, Chrysaor)

• Exploration Strategy Overview (Nick Richardson)

• Government Seismic Programme Update (Jim Ross)

• New Acquisition

• Reprocessing Projects

• Regional Maps and 21CXRM Projects (Malcolm Gall & Andy Alexander, Siccar Point)

• LR Project Status

• SWB and ESP Projects – Phases 1 & 2

• Future Projects

• Enhanced Asset Stewardship (Scott Robertson)

• E&A Stewardship (Paul Herrington)

• E&A Expectations

• Drilling Activity Update - 2016 review and forecast

• Licensing Activity (Nick Richardson)

• AOB

PROSPEX

Exploration Board

Phil Kirk

Chrysaor

Exploration Board

Actions defined in Exploration Delivery Programme Board Seeking Nominations for New Members in 2017

Exploration Board: Progress/Highlights 2016 Strategy

• Exploration Strategy published 24 October 2016 • Exploration Forums established in London and Aberdeen on quarterly basis • Exploration & Appraisal Asset Stewardship Expectations Published • Successful Promotion of the UKCS at domestic and overseas conferences

Seismic • Release of 2015-2016 Government Funded Seismic Data • 2016-2017 Seismic Acquisition completed safely and within budget by mid-October, and processing work now underway • Extensive legacy seismic dataset selected for re-processing, plus well data package clean-up. • Evaluations undertaken for industry seismic Group Shoots

21st Century Roadmap • Completion of BGS Palaeozoic Study (due for publication at time of 29th Round awards) • Completion of Well Lookback Study (published on OGA website) • Areas selected (East Shetland Platform & SW Britain) for 2016-2017 Geotechnical Studies by Technical Advisory Committee. • 21st Century Roadmap Committee scoping future projects in ‘mature’ areas.

Licensing • Innovate Licence approach developed by task group and implemented for 29th Round • 29th Licence Round closed, with 29 applications covering 113 blocks • Model Clause Consultation in progress (close 6th Jan 2017) to formalise Innovate licences in Seaward Production Licence Model

Clauses for 30th Round • Fees and Levy Consultation (closed 5th Dec 2016) • Supplementary Licensing Round launched (14 blocks; closes 7th March 2017) • 30th Round Preparation for 2017

PROSPEX

Exploration Strategy Overview

Nick Richardson

OGA Exploration & New Ventures Manager

Exploration Strategy

Actions defined in Exploration Delivery Programme

Regulate:

Licence

Stewardship

Promote:

Regional

Exploration

Influence:

Technical

Assurance

• Licensing Activity

• Optimise Acreage Use

• Monitor Work Programme

Delivery

• Play Based Exploration

• Data and Knowledge Sharing

• Global Promotion

• Portfolio Management

• Improve Technical Standards

• Remove Barriers to Activity

Strategy Defines Key Areas for Industry and OGA Efforts

https://www.ogauthority.co.uk/media/2835/exploration_strategy_master.pdf

Exploration Strategy

Actions defined in Exploration Delivery Programme Actions defined in ten areas

https://www.ogauthority.co.uk/media/2835/exploration_strategy_master.pdf

PROSPEX

OGA Seismic Programme

Jim Ross

OGA Principal Geophysicist

East Shetland Platform

Status and Milestones

• 7762 km of PGS

GeoStreamer data

• Survey Completed 30th Sept

• Processing completion

March 2017

• Pre-Migration processing is

nearing completion

• Major processing steps

concluded to date: De-Ghost,

Broadband Optimisation,

DeNoise, Multiple

Attenuation & Coarse

Velocity Grid

SW Britain

Status and Milestones

• 5,849 km of WesternGeco

Q-Marine Data

• Survey Completed 7th

October 2016

• Pre-imaging workflow

testing to be completed by

mid December.

• Imaging velocity analysis

now underway

• Processing completion

March 2017

• Create a low-cost regional grid across

the UKCS in key prospective areas

• Explore the use of modern processing

algorithms for better imaging and

imaging deeper

• Complementary to new data acquired in

2015 and 2016 especially in areas that

are environmentally sensitive or difficult

to access

• Provide ties to regional well control

• Seek access to both multi-client and

proprietary seismic data

Legacy Reprocessing Update

Selection Criteria

• Phase One ~ 16,300 km of 2D data:

• SW Approaches ~1,630 km

• Northern Approaches (Bristol Channel) ~1,900 km

• Northern Approaches & Cardigan Bay ~1,300 km

• Cardigan Bay ~3,330 km

• Morecambe Bay ~1,100 km

• East Shetland Platform ~4,380 km

• Minches and Firth of Clyde ~ 2,660 km

• Phase Two ~ 10,270 km of 2D data:

• Offshore Anglo-Paris Basin ~6,200 km

• Onshore Anglo-Paris Basin ~300 km

• Offshore SW Approaches ~2,250 km

• BIRPS data in SW Approaches and

English Channel ~880 km

• Onshore data on Skye around Upper

Glen well ~90 km

• Solway Firth and Unst Basin ~550 km

Two separate phases have been initiated. Phase two possible due

to bid costs for phase one coming in under estimated total cost.

Reprocessing Headlines

Actions defined in Exploration Delivery Programme Total Reprocessing Phase 1 & 2: 26,570 km 2D Data

PROSPEX

Regional Projects & 21CXRM

Malcolm Gall, OGA Senior Geologist, Regional Exploration Team

Andy Alexander, Siccar Point Energy

Regional Projects

• Regional Geological Maps Project – 3 year contract awarded to Lloyds Register

• Continuation of the 21st Century Exploration Road Map (21CXRM) initiative

• Collaboration with companies to facilitate release of additional data into the public domain

• Three 2 year Post-Doctoral Projects linked to Government seismic acquisition programmes

• all now underway with PDRAs recruited

• Heriot-Watt University - Evaluating the Geological Structure and Hydrocarbon Prospectivity of the Western Platform and MNSH areas of the CNS

• Aberdeen University - Evaluating the Prospectivity of Rockall: towards a complete view of the petroleum system West of Britain

• Durham University - New Appraisal of the Western Approaches Basins

Regional Geological Maps Project

• Three year contract awarded to Lloyds Register to provide a set of key geological maps for the whole of the UKCS

• Published maps and associated databases designed to facilitate regional, play-based exploration in both frontier and more mature areas

• Integration of wells, seismic and other relevant data types where available

• Areas will be published out as they are completed • Starting with CNS/MF • Aiming to publish maps in April 2017

21st Century Exploration Road Map

• Future projects to be formulated by Technical Advisory Committee and endorsed by MER UK Exploration Board

• Technical Advisory Committee composed of OGA and 10 industry technical representatives:

• Prioritised projects will be in line with on-going exploration initiatives & future licence round activity

• 21CXRM Palaeozoic project will be published once the 29th Round awards have been made (or 1st July 2017 at the latest)

21CXRM: New Projects

1. East Shetland Platform

2. SW Britain

• Phase 1 will be completed by end March 2017 – Funded 100% through OGA budget contribution

• Results from both projects will be released into the public domain once completed and prepared for publication

• Potential Phase 2 could include: – Integration of 2016 Government seismic and potential fields data sets

– Analysis of new geochemical samples to further understand source rock potential & maturity

– Analysis of potential reservoir distribution and quality for stratigraphic intervals of interest

• Industry funding will be requested in Q1 2017 to enable continuation of these and other future 21CXRM projects

21CXRM Current Project: East Shetland Platform Phase 1

• Focus on key subsurface uncertainties:

– understanding the structural evolution and basin geometries

– an assessment of potential source rock presence and expected maturity

• Currently tendering for the following Phase 1 studies:

• Evaluation of the structural evolution of the East Shetland Platform area primarily using potential fields data but also integrating any other available data sets

• Assessment of source rock potential using non-seismic geochemical methods e.g. compilation & interpretation of available raw geochemical data, collection new geochemical samples and compilation & interpretation of relevant seep data.

• Focus on key subsurface uncertainties:

– assumed lack of source rock plus petroleum system timing issues associated with phases of uplift, erosion and thermal activity

– Lack of clarity of offshore basin geometry & structural and stratigraphic correlation

• Currently tendering for the following Phase 1

studies:

• Compilation of processed gravity & magnetic potential fields data across the SW Approaches & Western Europe

• Comprehensive literature review of the late and post Variscan basins of Western Europe, specifically focused on source potential of the Late Carboniferous to Lower Permian intervals.

• Initial assessment of the possibility of Late Carboniferous terrestrial source rocks in the SW Approaches, including a compilation of existing relevant geochemical data.

21CXRM Current Project: South West Britain Phase 1

21CXRM Current Project: South West Britain Phase 1

Plymouth Bay Basin Saar Nahe Basin

DEKORP 1C

McCann et al., 2006 (after Henk, 1993)

SWAT 9

MER UK in Practice

Asset Stewardship Strategy

Scott Robertson, OGA Area Manager – Central North Sea

Effective Asset Stewardship

Asset stewardship has evolved under MER UK

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

OGA Regulatory Framework

Regulatory framework underpins approach and priorities

Legislative Context

Supporting Obligations

Execution

Guidance

Sanction Notices

Statutory, non-statutory and Stewardship Expectations

Enforcement notice

Financial penalty notice

Operator removal notice

Licence revocation notice

Central Obligation

Infrastructure Act 2015

Regulatory Powers Meetings Licence

model clauses

MER UK Strategy: ‘to take the steps necessary to secure that the

maximum value of economically recoverable petroleum is recovered’

Exploration Regional development Asset stewardship Technology Decommissioning

Collaboration

Cost reduction

Principal Objective The principal objective is that of ‘maximising the economic recovery of UK petroleum’

Energy Acts 2011 and 2016 Petroleum Act 1998

Regulatory powers MER UK plans Strategies and delivery

programmes Licensing regime Facilitation

Information and

samples

Non-binding dispute

resolution Third party access Sanctions

Asset Stewardship Framework

Asset Stewardship Expectations key tool to evaluate performance

Expectations for

industry, across the

lifecycle, which, if

followed, are intended

to help facilitate the

delivery of the MER

UK Strategy

obligations

Benchmarking assets for:

• Production efficiency

• Recovery factor

• Operating cost

• Decommissioning cost

Results communicated

confidentially in a non-

attributable way to help

continuous improvement

Proactive, structured

and prioritised tiered

stewardship reviews,

based on intelligence

gathered

Priority given to the

greatest MER UK

impact

New single, annual,

UKCS Stewardship

Survey which replaces

nine previous surveys.

Reduces complexity,

time, effort and burden

on operators and the

OGA

Asset Stewardship Expectations

Asset Stewardship Expectations co-authored with industry

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

Link to supporting obligations of

MER UK Strategy and/or Energy Act

Set out minimum expectations

of what good looks like

Expectations have a one page

overview & short guidance

Issued in 4Q 2016 with

implementation during 2017

Asset Stewardship Survey

Currently socialising with industry with launch in November

New Survey Existing Surveys

• Fallow & Licensing Review

• Exploration & Appraisal

• Reserves (PARS)

• Field Activity

• Production Efficiency

• Treasury Economic Forecast (TEF)

• Decommissioning (Insights)

UKCS Stewardship Survey

Nov 2017

Utilise & Review

17 Feb 2017

Preparation

1Q 2016

Assurance

16 Nov 2016

Submission

3Q 2016

• Rationalise numerous surveys into one high quality submission

• Data submitted by industry via new application on OGA Energy Portal

• Improve OGA asset stewardship capability & inform regional strategies

Benchmarking

Industry demand for benchmarking using statistically significant OGA dataset

• Success of Production efficiency benchmarking

• Additional benchmarks in development for 2017 • Recovery factor • Operating cost • Decommissioning cost Recovery Factor

• Screening tools

• Used in Operator Stewardship Reviews

• Published in non attributable manner

Tiered Stewardship Reviews

Tiered reviews: point of integration, value in discussion and actions

Future Past

• Operator sets the agenda

• General focus on operate phase

• Adhoc objectives

• OGA sets the agenda

• Focus on whole upstream lifecycle

• Data driven (Expectations, Annual

Survey, Benchmarking and Scorecards)

Main touch point between operator/licensee and the OGA

Vehicle by which the OGA facilitates improvement with industry

Prioritised, focused, structured, proactive

• Priority based on performance, scale & upcoming

decisions

• Tiered approach based on organisational level and

breadth of scope

Stewardship Plan Expectations

interviewed to harvest feedstock (Apr/May)

21 companies

input to specific content of Expectations (Jun-Sep)

33 companies

engaged through MERUK Boards (Aug-Sep)

19 additional companies

Engagement covering the breadth of the lifecycle

Industry Engagement in Numbers

Significant industry engagement on Strategy and Expectations

A diagonal slice across industry

Licensees with exploration focus

Multinational through to midsize

Operators across the lifecycle

Non-operated licensees

Tier 1 contractors

Infrastructure owners

Trade bodies

Interviews between 5 April and 5

May 2016

21 Companies

interviewed

33 Companies

consulted

Company & MER UK Asset

Stewardship Board input &

engagement

76 Professionals

interviewed

97 Professionals

Consulted

Key Messages

OGA facilitating stewardship with a proactive industry

Asset Stewardship has evolved under the MER UK Strategy

Spans full oil and gas lifecycle

Components which:

10 Stewardship Expectations defining the right practices

Strategy and components developed with significant industry engagement

2017 first full year of new stewardship cycle

Define the right things, right behaviours for the first time

Efficiently collect and provide the right information / data / benchmarks

Culminate in prioritised, structured reviews, focused discussion on OGA/ industry priorities

PROSPEX

E&A Stewardship

Paul Herrington

OGA Exploration Portfolio Manager

Portfolio Team • Custodians of Prospects + Unsanctioned discoveries

• Delivery of E&A work programmes

• Technical Assurance

• Portfolio Analysis & Yet-to-Find

• Licence Rounds

• BGS Outsourced Contract

• Stewardship

OGA became a GOVCO on 1st October 2016 with additional powers and sanctions

Gunther Newcombe (Operations Director)

Gemma Milne (PA)

Brenda Wyllie WOS/NNS AM

Scott Robertson CNS/MF AM

Eric Marston SNS/EIS AM

Nick Richardson EXP & NV Manager

Paul Herrington Portfolio

Jim Ross Principal

Geophysicist

Jen Brzozowska Exploration

Licensing

Jo Bagguley Principal Regional

Geologist

Peter Napier Government Seismic Prog.

Giles Watts Processing

Geophysicist

Mark Ibram Processing

Geophysicist

Malcolm Gall Regional Geologist

Claire Black Technical Analyst

Andy Upton Licensing

Geoscientist

Kim Moss Administrative

Support

Senior Explorer WOS/NNS

Senior Explorer CNS/MF

Joy Gray SNS/EIS

Annual Survey

Portal based on long-running O&GUK DECC joint survey

Focussed on drilling activity, 3-year look-ahead + prior year actuals

E&A Stewardship

Asset owners consistently do the right things to identify & then exploit opportunities

Tier Reviews

Annual Tier 2 reviews linked to Survey;

UKCS, ref long-running Fallow Reviews, E&A work programmes

Single-asset Tier 3 reviews linked to Expectations

OGA agenda, meetings only where required

1 JV Hub Strategy

2 E&A Work Programme

3 Optimal Subsurface Data

4 Licence Activity

5 Robust Project Delivery

6 Production Optimisation

7 Information Management

8 Technology Plan

9 Collaboration

10 Decommissioning

Expectations

E&A Stewardship in Practice

Consistent, timely engagements, minimise work additions

Capture technical & economic evaluations

Support with any JV issues & decision-making [eg. Contingent wells]

>1 month prior to decision [18 months ahead of term expiry]

Independent review, share lessons learnt

Agree plans for WONS submission & ops communication

>3 months pre-spud

Assess & improve overall exploration performance

Support appraisal and development plans

Initial results <1, review <6, discovery appraise/dev plans <12 months

Annual Work Programme Ensure licensees pursue & exploit all opportunities [Resources]

Advancement of committed work programme & relinquishment

Expectation Outcome & Timing

Ensure JV alignment, facilitate work commitments progression

<6 months of award, fully signed and executed JOA

Well Investment /

Relinquishment

Pre-well

Post-well

Joint Operating Agreement

Tim

ed

to

lic

en

ce

wo

rk p

rog

ram

me

Operations

Informed eg. cc.d on weekly reports, consulted on major deviations

Reservoir section, agreement that commitments fulfilled, initial results

Op

tim

al d

ata

, te

ch

nolo

gy,

pro

cesses &

skill

s

JV assesses value at Bid and Annually

E&

A fa

rm-o

ut / d

ive

stm

en

t a

ctivity

OGA comment on practices and timescales

prior to commencing

E&A Stewardship Next Steps

Asset Stewardship Expectations co-authored with Industry

Expectations published & now putting into practice -

full engagement in 2017

• Implementation guides Q1 2017

Developing systems and requests:

• Want to take on feedback

Exploration Appraisal Firm Contingent Other

2016 2017 2018

Laverda

CN

S N

NS

SNS

/ EI

S W

oS Loanan

Skipper

FarragonS

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

Lancaster

Komodo

Bagpuss

Ravenspurn

Lincoln

Finlaggan

Eagle

Templewood

Winchelsea

Belinda

Halifax

Maclure S

Storr W Storr E

Slough

Kinord West East

2016-2018 E&A Well Look-ahead

2017 not all approved and contracted Well intent: Licence commitment:

PROSPEX

Licensing & AOB

Nick Richardson

OGA Exploration & New Ventures Manager

Licence Rounds

30th Round will offer Significant Acreage in Producing Basins

Supplementary

Licensing Round

Innovate Licence Terms will Apply

• 14 Blocks on Offer • Details on OGA Website

• Nominations by Industry • Where early licensing before 30th

Round may accelerate activity

• Round Closes

• 7th March 2017 at 16:00 GMT

https://www.ogauthority.co.uk/licensing-consents/licensing-rounds/

OGA Powers to Attend Meetings if Necessary

OGA JV Meeting Attendance Meetings: Statutory Notice Under Part 2, Chapter 4 (Meetings) Of The Energy Act 2016

• OCMs & TCMs on OGA Opportunity Matrix

• Major Project Review Meetings (>£300MM)

• Exploration and Appraisal Well Pre-Investment Meetings:

Meetings where there is technical peer review on prospects

and undeveloped discoveries, with the intent that this will

lead to an investment decision regarding Exploration and

Appraisal (E&A) wells

• Written Notice >14 days Prior to Meeting to:

meetings@ogauthority.co.uk • OGA may choose to attend

• In any case, all materials and meeting summary must be sent

to OGA

Other Business

• Model Clause Consultation on OGA Website (closes 6th January 2017)

• Please inform OGA (incl. Jen/Licensing Admin as appropriate) of any changes in organisation, personnel, address, etc.

• It is the Licensee’s responsibility to request licence extensions, amendments, etc in good time, preferably three months prior to deadlines, and no later than one month prior.