asset stewardship expectations –a guided tour offshore
TRANSCRIPT
© OGA 2019This presentation is for illustrative purposes only. The OGA makes no representations or warranties, express or implied, regarding the quality, completeness or accuracy of the information contained herein. All and any such responsibility and liability is expressly disclaimed. The OGA does not provide endorsements or investment recommendations. Oil and Gas Authority is a limited company registered in England and Wales with registered number 09666504 and VAT registered number 249433979. Our registered office is at 21 Bloomsbury Street, London, United Kingdom, WC1B 3HF
Asset Stewardship Expectations – A Guided Tour
September 2019
Offshore Europe 2019
© OGA 2019This presentation is for illustrative purposes only. The OGA makes no representations or warranties, express or implied, regarding the quality, completeness or accuracy of the information contained herein. All and any such responsibility and liability is expressly disclaimed. The OGA does not provide endorsements or investment recommendations. Oil and Gas Authority is a limited company registered in England and Wales with registered number 09666504 and VAT registered number 249433979. Our registered office is at 21 Bloomsbury Street, London, United Kingdom, WC1B 3HF
Introduction
Geoff GreenhoweFacilities Engineer, Southern North Sea & East Irish Sea
Session Objectives, Format & Participation
3Participate via Slido.com, event number #1646, Offshore Europe – Asset Stewardship Expectations1
Objectives
An overview of the industry’s recently revised and enhanced Asset Stewardship Expectations including what they are, the value they bring and how to use them.
Format
• Introduction • An Industry Perspective• The Refresh• Success Story – Cessation of
Production• Success Story – East of Shetland• Summary, Q&A and Close
3 easy steps to participate
Audience Participation
?
Open browser Go to slido.com Enter event code
Audience Poll 1
4Please vote via Slido.com, event number #1646, Offshore Europe – Asset Stewardship Expectations2
What do youknow about theAsset Stewardship Expectations?• Not seen much of them
• Could name 3 of them
• Have seen them in action
The Asset Stewardship Expectations
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STEWARDSHIPEXPECTATIONS
ANNUAL STEWARDSHIP
SURVEYBENCHMARKING
TIERED STEWARDSHIP
REVIEWS
Index Asset Stewardship Expectations
SE1 Joint Venture Hub Strategy
SE2 Delivering E&A Work Programmes
SE3 Optimum Use of Subsurface Data
SE4 Well Activity Performance
SE5 Robust Project Delivery
SE6 Integrated Field Management
SE7 Commercial Alignment and Delivery
SE8 Technology Deployment
SE9 Build a Culture of Collaboration
SE10 Cost Effective Decommissioning
Role of the ExpectationsAs
set S
tew
ards
hip
Expe
ctat
ions
MER UK Strategy Clauses
Safeguards OGA plansCentral & Supporting obligations Behaviours & cost
Non MERUK delivery
Primary linkSecondary link
Not relevant
Key
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34
1 Joint Venture Hub Strategy2 Delivering E&A Work Programmes3 Optimum Use of Subsurface Data4 Well Activity Performance5 Robust Project Delivery6 Integrated Field Management7 Commercial Alignment & Delivery8 Technology Deployment9 Build a Culture of Collaboration
10 Cost Effective Decommissioning
6Good practice in support of MER UK 4
• Licence model clauses require ‘good oilfield practice’• Expectations are an industry and OGA view of ‘good practice’• Sets out how stakeholders may meet MER UK obligations
An Industry Perspective
Steve GardyneVice President Greater Fulmar Area Assets, Flotta and Energy Transition
© OGA 2019This presentation is for illustrative purposes only. The OGA makes no representations or warranties, express or implied, regarding the quality, completeness or accuracy of the information contained herein. All and any such responsibility and liability is expressly disclaimed. The OGA does not provide endorsements or investment recommendations. Oil and Gas Authority is a limited company registered in England and Wales with registered number 09666504 and VAT registered number 249433979. Our registered office is at 21 Bloomsbury Street, London, United Kingdom, WC1B 3HF
Asset Stewardship Refresh
Asset Stewardship is crucial to maximising economic recovery from the UKCSEffective stewardship means;
Asset owners consistently do theright things to identify and then exploit opportunities
Assets are in the hands of those with the collective will, behaviours and capabilities to achieve this
2019 Refresh Required• Stewardship Expectations
implementation is critical to delivering MER UK
• Significant basin challenges ahead around performanceand activity
• Content update by OGA in deep collaboration with Industry
• Stimulate activity that leads to resource maturation (new)
8Stewardship Expectations are clear expression of “good practice” in support of MERUK 5
Stewardship Expectationsdeveloped & deployed in 2016• OGA expanded stewardship to full EP
lifecycle• OGA, working with industry, defined the
agenda• Stewardship Expectations set out what
good looks like• OGA set in place an integrated framework
for stewardship using tiered stewardship reviews
Reserves and Resources Progression in 2018 OGA UK oil and Gas reserves and Resources Report, end 2018
Industry Engagement
9Critical to engage a good cross section of industry players6
• Over 40 organisations, 90 individuals engaged
• Breadth of lifecycle• Diagonal slice through industry• Licensees with Exploration focus• Multinational through to midsize
• Non Operated Licensees• Tier 1 contractors• Infrastructure Owners• Trade Bodies• PE Backed
Jon Graham Apache MDas Industry sponsor
MER Forumto support
Breadth of Industry companies interviewed covering the breadth of
the lifecycle
Diagonal slicethrough industry
Update / Monitor through project….
© OGA 2019This presentation is for illustrative purposes only. The OGA makes no representations or warranties, express or implied, regarding the quality, completeness or accuracy of the information contained herein. All and any such responsibility and liability is expressly disclaimed. The OGA does not provide endorsements or investment recommendations. Oil and Gas Authority is a limited company registered in England and Wales with registered number 09666504 and VAT registered number 249433979. Our registered office is at 21 Bloomsbury Street, London, United Kingdom, WC1B 3HF
The Refresh
Alana FinlaysonSenior Exploration Geologist, Northern North Sea & West of Shetland
2016 Stewardship Expectations
1 Hub Strategy
2 E & A Subsurface Work Programme
3 Optimum Use of Subsurface Data
4 Licence Activity, Decision Points & Milestones
5 Robust Project Delivery
6 Production Optimisation
7 Information Management
8 Technology Plan
9 Collaboration
10 Planning for Decommissioning
10 Expectations
1 Joint Venture Hub Strategy
2 Delivering E&A Work Programmes
3 Optimum Use of Subsurface Data
4 Well Activity Performance
5 Robust Project Delivery
6 Integrated Field Management
7 Commercial Alignment and Delivery
8 Technology Deployment
9 Build a Culture of Collaboration
10 Cost Effective Decommissioning
11
REMOVED
Ten refreshed stewardship expectations owned within OGA and worked with industry7
Stewardship Expectation RefreshWhat’s changed?
• New Commercial expectation
• New Wells expectation
• Information management removed
• Merging of others
NEW
NEWMERGED
MERGED
12Please suggest via Slido.com, event number #1646, Offshore Europe – Asset Stewardship Expectations8
How many wells have been drilled on the UKCS to date?
Audience Poll 2
The Issue 2016 2017 2018
No. Spuds 109 94 101
Non Productive Time % 17 15 23*
Surveillance % N/A 8 2*
Intervention Rate % N/A 14 8*
* Provisional numbers
THE ISSUE
STRATEGY INDUSTRYLESSONS LEARNEDSTEWARDSHIP
• Regulatory compliance• Increase activity levels• Improve activity performance
• Well activity performance• Lessons learned, used & shared• Productivity of wells
• Identify common opportunities• Share basin knowledge• Inform industry workstreams
• Competitive well delivery Taskgroup
• Reservoir & well optimisation Taskgroup
Transformational increase in well activity & management required9
Wells
OGA RESPONSE
INSIGHTSREPORT
LESSONSLEARNED
WELLS STRATEGY
STEWARDSHIPEXPECTATIONS
SE4 Well Activity Performance
ExpectationThe OGA expects that Operators maximise the value of wells throughout the lifecycle
Reason for the Expectation
• Well costs are around 50% of development (and decommissioning) capex investment in the UKCS
• Approximately 30% of 2,700 active wells across the UKCS are shut in. Coupled to this, there is a low average intervention and surveillance rate of approximately 14% across the UKCS
• Maximising the value of wells throughout their life will support resource maturation & hence the MER UK strategy
Delivering the Expectation
Well construction performance to increase value of wells• Well management- maximise the value of existing wellstock• Lessons learned, used and sharedDemonstrating Delivery
• Annual Stewardship Survey, Performance Benchmarking & Tier Reviews
1410
Commercial Good Practice
• The Wood Review highlighted the need for improved collaboration and a reduction in the commercial and legal complexity of working in the UKCS
• Challenged the industry to find ways to simplify the complexity and significantly reduce the time required for commercial and legal negotiations
1511
SE7 Commercial Alignment and Delivery
ExpectationThe OGA expects that the adoption and implementation of good commercial practice should enable activity to be progressed in a manner, and at a pace, consistent with obligations in the MER UK Strategy
Reason for the Expectation• The OGA is aware of poor commercial practices and/or parties’ mis-alignment causing
delay and eroding value, consequently failing to comply with MER UK Strategy• Supports and encourages the adoption and implementation of existing voluntary codes
of practice already put in place by industry
Delivering the Expectation• Demonstration that MER obligations are taken into account when entering into and
pursuing commercial activity• Give due consideration to obligation to collaborate with counterparties and the OGA• All commercial activity should be carried out in a timely manner
Demonstrating Delivery• Annual Stewardship Survey, Performance Benchmarking & Tier Reviews
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© OGA 2019This presentation is for illustrative purposes only. The OGA makes no representations or warranties, express or implied, regarding the quality, completeness or accuracy of the information contained herein. All and any such responsibility and liability is expressly disclaimed. The OGA does not provide endorsements or investment recommendations. Oil and Gas Authority is a limited company registered in England and Wales with registered number 09666504 and VAT registered number 249433979. Our registered office is at 21 Bloomsbury Street, London, United Kingdom, WC1B 3HF
Success Story – Cessation of Production
Trish AmundrudSenior Reservoir Engineer, Central North Sea
1813
Success Story – Cessation of Production
19Please vote via Slido.com, event number #1646, Offshore Europe – Asset Stewardship Expectations14
What could be an appropriate action to best steward the asset?
Audience Poll 3
• Obtain new seismic and refresh the subsurface understanding
• Look for remaining optimisation activities within the existing wells and facilities
• Reach out to third party business
• CoP the asset
Joint Venture Hub Strategy• JV better aligned and life extension evaluation
underway• Hub strategy developed
20Success Story – using the expectations to deliver MER UK15
Success Story – Cessation of Production
As a result of OGA challenging CoP request:
Delivery of MER UK
Hub strategy (SE1)
Seismic (SE3)
JV alignment (SE1)
Opportunity portfolio (SE6)
Optimum Use of Subsurface Data• New seismic purchased and interpreted
Integrated Field Management• Evaluation of infill drilling opportunities
© OGA 2019This presentation is for illustrative purposes only. The OGA makes no representations or warranties, express or implied, regarding the quality, completeness or accuracy of the information contained herein. All and any such responsibility and liability is expressly disclaimed. The OGA does not provide endorsements or investment recommendations. Oil and Gas Authority is a limited company registered in England and Wales with registered number 09666504 and VAT registered number 249433979. Our registered office is at 21 Bloomsbury Street, London, United Kingdom, WC1B 3HF
Success Story – East of Shetland
Jan ManoharanAsset Stewardship Lead, Northern North Sea & West of Shetland
East of Shetland Overview
• Application of Stewardship expectations in service of Area Plans
• Area Plans are a shared view amongst industry participants of the optimal way to achieve MER UK in a particular geographical area of the UKCS based on analysis of evidence
• Integrate exploration, development, production, operations to maximise economic recovery
• The East of Shetland is one of a number of regions identified with strategic value arising from the development of a commonly owned Area Plan
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The Challenge (Area view in 2017)
• Late life infrastructure high interdependency between user fields;cost and integrity challenges
• Significant number of single points of failure that can prematurely cut offsections of infrastructure (‘Domino Effect’)
• Opportunity to reduce costs, to enable further drilling, protect longest lived users, provide more certainty around COP and reduce cost of decommissioning by shared learning and collaboration.
Sanctioned
2017 2018 2019 2020 2021 2022 2023 2024 2025 2026
No Longer Economic
2317
Industry Delivery to DateJoint Venture Hub Strategy (SE1): • Identified potential for 65% OPEX reduction in core
infrastructure and resulting in 10 year extended production from the Area
Integrated Field Management (SE6):• Joint development with multiple FDPAs to add 30
mmboe of economic reserves in the area
Cost Effective Decommissioning (SE10):• Identified areas of collaboration with a view to
saving £1 billion of decommissioning expenditure
Well Activity Performance (SE4):• Increased confidence led to 29 new development
wells estimated over the next 3 years
Technology Deployment (SE8):• Joint workshop at the OGTC, requested by
Operators, resulting in technology and commercial options to tackle challenged reservoirs
2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030
Extended Economic Life
Costs
2418
Dotted Lines: 2016 SurveySolid Lines: 2018 Survey
© OGA 2019This presentation is for illustrative purposes only. The OGA makes no representations or warranties, express or implied, regarding the quality, completeness or accuracy of the information contained herein. All and any such responsibility and liability is expressly disclaimed. The OGA does not provide endorsements or investment recommendations. Oil and Gas Authority is a limited company registered in England and Wales with registered number 09666504 and VAT registered number 249433979. Our registered office is at 21 Bloomsbury Street, London, United Kingdom, WC1B 3HF
Summary, Q&A and Close
Steve GardyneVice President Greater Fulmar Area Assets, Flotta and Energy Transition
William WilsonAsset Stewardship Lead, Central North Sea
Steve Gardyne, Vice President Greater Fulmar Area Assets,Flotta and Energy TransitionStewardship Expectations (SEs)
• Link directly to the MER UK Strategy• A valuable toolkit – apply across the whole E&P lifecycle• An OGA and Industry view of “good practice” • Where applied - seen value delivered • Good Stewardship presents a significant opportunity for UKCS
Want to find out more?
• Search “ STEWARDSHIP EXPECTATIONS” (1st hit is OGA website page!)
− 10 SE’s available for download
SE Roll-out:
• Offer of OGA support to Operators / Licensees to raise awareness in organisations− Already significant operator interest and requests for support
26Stewardship Expectations are clear expressions of “good practice” in support of MERUK19
STEWARDSHIPEXPECTATIONS
ANNUAL STEWARDSHIP
SURVEYBENCHMARKING
TIERED STEWARDSHIP
REVIEWS
Industry Delivery to Date
20
Thank you, any questions?
One Final Audience Poll
28Please vote via Slido.com, event number #1646, Offshore Europe – Asset Stewardship Expectations21
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