WITSML SIG - Stavanger November 17, 2005 Danny Bush “To be the global energy company most admired for its people, partnerships, and performance.” Energy Technology Company Partners Creating Value WITSML SIG - Stavanger November 17, 2005 Danny Bush

Agenda Chevron technology strategies Standards Why Chevron joined the WITSML SIG Existing tools Chevron’s WITSML activities Summary

CVX 20-Year Strategic Plan Leveraging Technology “The technology strategies enable us to: achieve and maintain world-class 4+1 performance, compete in future energy markets, recruit and retain key technical talent. “Sharing accountability with the operating companies, the technology organizations will continue to closely align their technology efforts with business objectives by concentrating on the focus areas most important to the company's success” Chevron’s 20 year strategic plan identifies technology as having a key role. It is a shared accountability between the 3 technology organizations and our operating companies. ETC ITC CTTV

Energy Technology Company Business Fundamentals Role is an internal technology provider and integrator & supplying differentiated energy technology solutions & services. Value creation is achieved by rapidly integrating and applying technologies & practices to achieve superior operational and financial performance. Business Model based on Multi-tiered funding & external leverage Corp. funded Strategic Research (long term 3+ years) Business-driven R&D (Tech Development) (shorter term 1-3 years) On-demand technical services & support Each Department operates as a fully cost-recovered organization.

Energy Industry Drivers Managing the base and capital business The oil business has always been about managing the margins in both the upstream and downstream segments. Operational excellence in operations is necessary. World class management of capital projects is mandatory. Exploration opportunities will be high risk (e.g. deepwater). Global procurement is here to stay. the industry will be forced to manage both the base and capital business extremely well. the oil industry has always been about managing the margins in both the upstream and downstream segments. The attention to the management of the base business is increasing and the size and importance of the major capital projects is increasing. because of this there are 4 bullets that I have listed which will critical to success in this business/industry.

What becomes critical to the digital technology part of the energy business. Technology application is critical to adding value. Remote operations will be critical in deepwater. Remote operations may be critical in shelf and land environments. Big service companies providing all the innovation is not going to happen (margins are too small). Improved resolution within the reservoir is critical because: deepwater wells cost a lot, fully exploiting existing assets is essential. Integration opportunities become critical. Innovation will come from the “fringes of technology”, improving equations, reducing approximations and refinement of measurement. Workflow efforts will be critical to define business value. as a result of the environment and “drivers” listed on the previous slide “what becomes critical to the digital technology part of the energy business” application and deployment of technology is critical to adding value and continued investment in technology. remote operations will be critical in deepwater. it may be critical in onshore or shelf environments where the infrastructure exists, i.e. managing 10,000 wells from a central point is possible. We seen over the past 10 years that large service companies are not going to provide all the innovation. (remember the point about global procurement being real) Once found deepwater opportunities could be too expensive if the reservoir resolution is not adequate to develop efficiently. as you manage the decline in your existing fields resolution will help with new opportunities on the periphery of your assets. integration of as much of the value chain from upstream through downstream will be important to improve the margins. Innovation in the core upstream areas will be on the fringes ….. WORKFLOW WILL DOMINATE technology innovation because it provides the link to business value.

How does innovation react? Innovation (seismic) will focus on the details at the margin. Workflow efforts could drive innovation to be more conservative than it already is, because it has to contribute immediately to the bottom line. Compute technologies will reduce the need for approximations, Moore’s Law and other IT laws continue. Large volumes of data will be handled by the computer with “smarts” from someone or some algorithm. Inclusion of “financial” data into the workflow will be an everyday part of managing a prospect or oilfield. Innovation will continue to come from people most familiar with both the business need and the technical problem. Universities have and will become more deployment focused. Less pure research, more business focused, and as always individual. Joint ventures will be necessary but are unwieldy and less focused. Small entities will develop niche products/innovations, fostering standards. These activities will drive standards for data exchange. Workflow efforts naturally cause to want to deploy the same technology and tools across as much of the organization as possible and the more “data” we generate and collect the more we need to integrate it and enable people to make decisions from it. All this will drive the need for standards for data exchange.

Standards are not like this ! Standardization Standards are not like this !

Standards What do standards mean? Least common denominator? No! Raising the bar? Yes! Defines what good looks like Loss of creativity? No! Actually can enhance creativity by supplying framework for innovation Allows inoperability – not tool based What can standards accomplish? Improve technical analysis Increased reliability and predictive accuracy for technical evaluations: Operational Excellence Improve organizational efficiency Standard workflows and processes to improve organizational efficiency: Organizational Capability Improve portfolio decision quality Improved ROCE through reduction in number of dry holes: Capital Stewardship Just as standards for hardware allow … us to connect systems together Standards in monetary systems allow … banks to exchange money electronically Standards in workflows allow us … to operate more reliability and efficiently Think about a world without standards

Why Chevron joined the WITSML SIG We consider WITSML to be the most compelling activity currently in POSC but follow through on all sides is important Impressed by the vendor interaction Impressed by standards that are working Real implementations, not just theory Enables the use of Web services Important standard for exchange of data Opportunity to expand the standard So this brings me to the WITSML SIG. I have shown a similar slide at 2 previous SIG meetings where I presented.

Current Uses Using WITSML vendor servers for some deep water drilling projects for MWD/LWD. Brazil, Nigeria, Angola, GOM with increased take-up. Landmark’s OpenWire Well bore mechanical viewing tool integrated into our decision support system

Well Bore Viewer Worked with INT to develop a well bore completion/schematic viewing Worked together with POSC to develop an extension for completions Why WITSML? More of a strategic decision Data in several repositories and files…needed a viewer Allows us to make separate repository and application decisions Encourage take of the standards Learning experience…you have to use it to understand it Chevron worked with INT to develop a well bore completion viewing tool. We had to work together and with the POSC organization to develop an extension to the WITSML standard which has been proposed for including in the a future release. This was a learning experience for us but to really understand a technology you have to work with it.

Example

Example

Future Plans Deepen the use of standard with current vendors Add WITSML server functionality to other apps, and support the use of WITSML for reporting data to non CVX organizations Integrating the well bore viewer into other applications such as our drilling reporting system We are active in the ProdML effort and support its use of the WITSML architecture Handle the well tree and display Display well bore over time Considering displaying multiple wellbores

Multiple well bores

But let’s start at the beginning! Today we… Proposed well…generally done by completions or production engineer…the amount of planning can vary depending on location Actual well bore at completion of job (tubing tally or toursheet, generally saved in well file… usually by the service hand) Update of Drilling Reporting System for static wellbore equipment only , mostly casing, cement, perfs, completion information…usually by the company drilling rep…and is input ONLY for major/minor workover jobs not for routine well work leaving gaps in the data Update of well bore diagram (usually a power point or visio doc...maintained by the production engineer or tech)

What it could be… Workover review Well Plan Update completed well info Real Time data We need to drive the use of WITSML in lower cost wells and collect the completion data and workover as well. This will improve our base operations through technology, partnership, work flow improvement, and deployment Today this is where we stop Complete Well

Summary We are building more internal expertise… slowly Expect benefits from a commercial tools Developing adaptors for our data stores We see opportunities for data bridging vendors to provide adaptors to commercial repositories Encouraging vendors to provide both import/export WITSML Need to find ways to both lower the cost for acquiring real time data for non-DW wells and to help others in CVX understand the value proposition of WITSML

Thank You 21