Andrew Gould Chairman & CEO Schlumberger

2nd IEF NOC-IOC Forum

April, 7-8th , 2011

Paris

Is the industry facing more

stringent regulations and new

safety challenges?

Increasing Complexity in E&P: Unconventionals, Deepwater

Source: IEA World Energy Outlook 2009, & 2010, WoodMcKenzie

0

20,000

40,000

60,000

80,000

100,000

120,000

2000 2005 2010 2015 2020 2025 2030

Tho

usan

d bb

l/d

Unspecified

Deepwater

Source of Oil Production

Shallow

Onshore

10%

12%

14%

16%

18%

20%

0

1

2

3

4

5

2008 2015 2020 2025 2030 2035

Tril

lion

m3

Unconventional

Conventional

Source of Gas Production

Source:BOERM/MMS; Montara Commission of Inquiry; Press Releases and SBC Analysis

Recent accidents have triggered governments to tighten regulations on

environmental review, permitting and drilling / production

Environmental

Review

Permit Issuance

Drilling & Production

2

3

• Thorough environmental reviews of lease sales & drilling projects

• Support for polluter pay principles & establish off-the-shelf monitoring program

• New drilling standards and certification needs by independent 3rd party

• Operator to show readiness to handle blowouts & worst case discharge

• New drilling standards and requirements for well design, equipment and testing.

Implement management programs to reduce risk of human error

• Authorised official, professional or 3rd party signoff required at critical steps

• Use of offshore skilled and certified personnel

• Joint responsibility between operators and contractors

• Safety Case regulation

CHANGES IN REGULATION US

1

Blowout Containment and

Spill Response

Oversight – Strengthen

Regulator

4

5

• Establish independent or centralized agency to look after safety, well integrity and

environmental management

• Regulator with sufficient and skilled resources to approve and supervise plan& operation

• Set industry body to self-police and complement the regulator

• Industry and public collaboration to strengthen safety, blowouts prevention and spill

response

• Inclusion of worst case spill scenario calculations in application package

Impact

• Extended timing and availability of supply from deepwater projects

• Cost escalation

• Loss of license to operate for those who do not adapt quickly enough

Recent Trends and Accidents Have Long-Term Impacts

Predicted outcomes

Regulation Technology Capability

• Shift to stricter regulation

• Upgrade standards in

environmental, permit, drilling &

production and blowout

containment/spill response

• Reorganization of regulator

• Critical for deepwater drilling

success

• Opportunities for competitive

advantage

• Safety assurance constantly

tested and upgraded

• Talent and development needs

• Improved processes

• Adequate Management Systems

• New values and behavior

Source: SBC O&G HR Benchmark 2008, 2009, Company data, SBC Analysis Based on: 1.4% Attrition; Retirement rate at 20% for 55-59 age group, 90% for 60-64 age group, 100% for +65yr Excludes China

Projected Competency Requirements for the Oil and Gas Industry

PTPs OLDER THAN

35 YEAR-OLD

2014

Projections

2009

Actual

82,054

COMPETENCY PLANNING

COMPETENCY SCREENING

COMPETENCY DEVELOPMENT

• Work Plans

• Technical Capabilities

• Organization Chart

• Job description and requirements

1

2

3

• WHO: Staff, contractors, assets and vendors

• WHAT: Values and competencies

• WHEN: Recruitment, annual, transfers

• Certification

• On-the-job training

• Technical Coaching

• Mentoring and job rotations

77,201 Loss of

~5,000 PTPs

A Service Provider Approach Operational Integrity—Excellence in Execution

LEAN

Principles

Remote

Operations

Support

Standardized Maintenance

Centralized Bases

Andrew Gould Chairman & CEO Schlumberger

2nd IEF NOC-IOC Forum

April, 7-8th , 2011

Paris

Is the industry facing more

stringent regulations and new

safety challenges?