Christopher Carra

La Experiencia Australiana en Operaciones OffshoreOffshore Operations - The Australian Experience

19/5/2012

Director

> The Australian Offshore Resource Base

> Offshore Development Types and Key Characteristics

> Industry Challenges from an Australian Perspective• Liquids Production• The Mining Boom• Our Social Licence to Operate• Safety

> Key Lessons

La Experiencia Australiana en Operaciones OffshoreOffshore Operations - The Australian Experience

Australian Offshore Resources

Courtesy of ABARE

Conventional Shallow Water: Bass Strait

> Bass Strait has produced almost two thirds of Australia’s oil and almost one third of its gas production to date

> Offshore platforms tied back to onshore processing plants

> Pipeline network taking crude, condensate, gas to major centres and port facilities

> Now in decline – focus mainly on gas supply to the eastern States

Conventional Shallow Water:North West Shelf

> Near shore on shallow shelf a range of oil and gas developments using small mono-towers and platforms linked back to onshore facilities located on small islands

> Major gas platforms located further out tied back by large trunklines to the main Karratha LNG facility

> 5 LNG trains in operation

> Over 2800 LNG cargoes delivered

> From mid 80s onwards, oil discovered off remote north and west coasts

> No infrastructure or local markets

> Region subject to severe tropical cyclones

> Early adoption of new technology required

> Disconnectable FPSO technology developed and employed since 1986

> Significant sophistication on latest FPSOs with complex subsea field requirements and deep water

> Development of robust disconnect criteria to avoid cyclones

Remote Oilfields

Remote Oilfields

> Innovative use of a wide range of technologies

> Large transportation distances to shore based facilities

> First use of floating LNG technology

Remote Offshore Gas Projects

Images courtesy of Chevron, Woodside, Inpex & Shell

> Enhancing Liquids Production

> Consequences of “The Mining Boom”

>Maintaining Social Licence to Operate

> Enhancing Safety Performance

Challenges

> No major new discoveries

> Deep water unexplored with low success rate – 1 in 12

> Growing petroleum trade deficit

Enhancing Liquids Production

Courtesy of APPEA

Consequences of “The Mining Boom”

Courtesy of ABARE

> Significant Structural Change occurring

> Divergence geographically and by industry

> Severe impacts on exchange rate sensitive industries

> Significant employment challenges

> Cost pressures and development constraints increasing financial hurdles for new projects

> New unconventional gas may impact on higher cost Australian developments

Consequences of “The Mining Boom”

> Montara Blow Out: August - November 2009, Timor Sea

> The Montara Commission of Inquiry concluded “that PTTEP Australasia did not observe sensible oilfield practices …major short comings (in systems and processes, communications, risk management, contractor management) were widespread and systemic, directly leading to the blow out.”

Maintaining the Social Licence to Operate

Images courtesy of NOPSEMA

> Commonwealth and State jurisdictions

> “Safety Case” regime

> Performance/Objective based regulations

> Onus to demonstrate to Regulator that risks are“As Low As Reasonably Practicable”

> Operator is responsible for safe and effective operation of an Offshore Facility

> Encourages continuous effort for improvement

Basis of Regulatory Regime

Maintaining the Social Licence to Operate

> Single, unified national regulator for offshore “NOPSEMA” - National Offshore Petroleum Safety and Environmental Management Authority

> Enforces compliance across the industry:• Offshore Safety• Well Management• Integrity• Environmental Management

> Titles Administration separated out to avoid any potential conflicts of objectives between energy supply and safety

Changes to Regulatory Regime

> Comprehensive review of prevention and response operations and procedures

> Reviewed drilling procedures, risk reduction measures, monitoring and assurance processes

> Development of self-audit tools for management of well operations

> Cap and containment procedures

> “Mutual Benefit” aid agreements for drilling relief wells

Industry Response to Findings of the Montara Commission

> Accident rate of 2.02 is lowest since 2005 – typically fluctuates between 2 and 3.7

> International benchmarking indicates there is room for improvement

> Over 40% of incidents occur on floating production units

> FPSOs over represented in hydrocarbon releases

> Rate of damage to safety critical equipment 3 times that for fixed platforms

> Improvements in safety will be critical for the large floating productions systems now being built for offshore gas projects

Challenges – Safety Performance

> Implement best-practice safety and environmental regulatory regime• Need to ensure that Regulatory authorities are adequately resourced & trained &

continues an active industry dialogue> Become an early adopter of technology but manage the risks

> Need to invest to understand regional geology, environment, metocean • e.g. Geoscience Australia’s $75m energy security program returned 833% through

exploration commitments> Need to ensure that Colombian industry has active participation on

services side in long term• Training/university/R&D encouragement

> Consider development of Common User Facilities• Highly successful facility built in Western Australia

> Remain aware of impact of high dollar on viability of local services industry

Key Lessons

Expertise. Innovation. Value.

Thank you