Schlumberger Private

Brownfields : The Call for Efficiency

Olivier le Peuch Vice President & General Manager, Schlumberger North Sea DEVEX Conference – Aberdeen May 12th 2010

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UKCS Brownfields The state of decline or rejuvenation time ?

UK Oil– Demand and Supply UK Forecasted Production Output

Source: Energyfiles, Douglas Westwood

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UKCS Brownfields A respectable prize !

Potential reserves in brownfield estimated at 2.6B boe

Reserves  Forecast  –  UK  Oil  &  Gas  2010   Reserves  Growth  by  Region    –  UK  Oil  &  Gas  2010  

Estimated oil reserves in brownfields

Area Reserves, billion CNS ~0.7

NNS ~0.7

WoS ~1.0

SNS ~0.2

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UKCS Brownfields The growing challenge ...

Projected Cumulative Decommissioning Costs

Source: Oil & Gas UK

Growth in Unit Operating Costs

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The call for Efficiency Key lever for brownfield asset value creation

Asset value Creation

Operational Efficiency

Technology Adoption

Measure Innovate Integrate Reward

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Measuring Efficiency We can only improve what we measure & share

0 100 200 300 400 500 600 700 800 900 1000

20092008200920082009200820092008200920082009200820092008200920082009200820092008200920082009200820092008200920082009200820092008200920082009200820092008200920082009200820092008200920082009200820092008

12

34

56

78

910

1112

1314

1516

1718

1920

2122

2324

25

North  Sea  Floating  Rigs  Meters/Day  On  Bottom  Drilling

Norway  2009 Norway  2008 UK  2009 UK  2008

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Innovating Efficiency Focused innovation on operational efficiency gains Efficient Re-Entry using TTRD SlimHole Very-High-Dogled Through-Tubing Rotary-Steerable Drilling

Developed in cooperation with Statoil & FMC

Aimed at reducing costs vs conventional sidetrack

Designed to overcome TTRD challenges (including subsea) •  Reduced & straight OD to avoid damage to DHSV & HXT •  Need for 3D RSS to target small targets •  Need for high DLS to steer away quickly

Uses both “push-the-bit” and “point-the-bit” to achieve very high dogleg – 15 deg/30m

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Integrating Efficiency where rubber hits the road ....

Independent  Fibre  Optic  and  El ectrical  Connector  through  the  Tubing  Hanger

Y-­‐Splitter  block  to  separate  the  Fiber and  the  Electri cal  conductor

NEON  Hybrid  Electro-­‐Optic  Cable

NHQG  Downhole Pressure  Gauge  for  HPHT   Conditions

FiberOptic  Bulkhead  to  provide  i n-­‐line  Pressure  Barrier

XMP  Feedthrough Packer

FiberOptic  Cable  Across  the  Perforating  Guns

Special  design  Protectors  to  al ign  and  protect  Cable  while  Installation  and  perforation

Special  design  bullnose to  Accommodate  and  protect  FO  Cable  end

High temperature –high flow zonesHigh temperature –high flow zones

600ft of TCP guns firing Temperature signature

Flow contribution with DTS

Integrated monitoring for subsea well test Monitoring flow and completion integrity of a subsea HPHT appraisal well during an extended well test using permanently installed optical fiber temperature measurements

1.  Integrated subsea deployment of Electro/Optic monitoring system for P&T and DTS across the reservoir sand face

2.  Novel use of DTS to monitor efficiency of through Tubing conveyed Perforation

3.  Integrated interpretation of downhole P&T during DST flow test, to model efficiency of extended well test

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Rewarding Efficiency Are we ready for it ? Run-Life improvement on ESP deployment

Old Contract New Contract DeltaNo. of ESP wells 15 15 0Sales Price, ESP ($) $500,000 $750,000 250,000$ Dayrate charge ($/day) N/A $250 $250Avg. Runlife (years) 2.0 3.0 1.0Malus charge NA -750,000 $ -750,000 $ Bonus NA 250,000$ 250,000$ WO Duration (days) 7 7 0WO Rig Cost per Day ($) 250,000$ 250,000$ 0Meat time to repair & W/Os (days) 60 10 50Oil Production/Well/Day 5000 5000 $0Operator Internal Oil Price (@5%) $50 $50 $0Direct ESP Costs $3,750,000 $4,597,500 -$847,500Indirect ESP Costs (Rig) $13,125,000 $8,750,000 $4,375,000Deferred Oil Value @5% 6,281,250$ 1,062,500$ $5,218,750Total Cost Of ESP Ownership per Year $23,156,250 $14,410,000 $8,746,250

What Operators expect ?

-  Improved well profitability

-  Guarantee of performance

- New contractual relationship

What Service companies can offer ?

- Innovative pricing model with malus/bonus structure

- Investment in Run-Life improvement technology & services

•  Monitoring & Surveillance

•  Dismantle Inspection Failure Analysis

•  Logistics / planning / execution

- Reduction of Total cost of ownership

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The prize for Efficiency : Brownfields Closing remarks

•  Brownfield potential is significant but requires step change in Efficiency

•  Efficiency can should become the industry motto through –  Systemic & transparent efficiency KPIs –  Focus on Innovation for efficiency –  Integration of operations with efficiency as a priority –  Support of reward mechanism for efficiency