Unlocking the potential from UKCS low deliverability reservoirs Colin Cranfield (DTI) Pete Naylor (ECL Technology)

slide no. 2 Overview Background – PILOT vision – Size of the prize DTI study – Literature review – Meetings – Workshop Ongoing activities

slide no. 3 PILOT - vision & challenges Maintaining UK production – 3 million boe/d in 2010

slide no. 4 Total UKCS production (million boe/d)

slide no. 5 PILOT - vision & challenges Maintaining UK production – 3 million boe/d in 2010 Production increments needed from – Brown fields – Undeveloped discoveries – Exploration and appraisal success

slide no. 6 Undeveloped Discoveries Significant UKCS potential resource

slide no. 7 high low high P3 P2 P3 P2 UKCS - produced & remaining 300+ undeveloped discoveries > 6 BBOE reserves

slide no. 8 Undeveloped Discoveries Significant UKCS potential resource Technical challenges – Heavy oil – HPHT – Sour reservoirs – Low deliverability

slide no. 9 Undeveloped Discoveries Significant UKCS potential resource New technical challenges – Heavy oil – HPHT – Sour reservoirs – Low deliverability Undeveloped Discoveries Workgroup survey

slide no. 10 UDW survey – development barriers

slide no. 11 UDW survey – development barriers

slide no. 12 DTI action on low deliverability Low deliverability is a barrier in at least 46 undeveloped discoveries 35 undeveloped discoveries examined in detail Review literature Collate data Structured discussions Interactive workshop Disseminate results

slide no. 13 Literature review – 4Q 2000 Many reasons for low deliverability – Industry does not focus on overall problem Established remedial techniques – Hydraulic fracturing – Long deviated wells Relatively few novel techniques – Seismic – Visco-elastic fracturing fluids

slide no. 14 Study - Indicative HCIIP distribution Aggregate undeveloped discoveries studied: – HCIIP > 2.5 billion boe – Technical reserves > 0.5 billion boe By geographical areaBy fluid type

slide no. 15 Mind maps to identify barriers

slide no. 16 Mind maps to identify barriers

slide no. 17 Mind maps to identify barriers

slide no. 18 Mind maps to identify barriers

slide no. 19 Objectives networks for solutions

slide no. 20 Objectives networks for solutions

slide no. 21 Objectives networks for solutions

slide no. 22 Relative importance of barriers Technical BarriersNon-technical

slide no. 23 Relative importance of solutions Technological SolutionsCommercial

slide no. 24 Conclusions Primary technical barriers: – Uncertainties in reservoir characterisation – Compartmentalisation – Low permeability Solutions exist in many cases – Relatively few technology gaps Significant contractual / commercial barriers Future opportunities - what is required: – Change in culture – Strategies to manage risk

slide no. 25 Recommendations Evaluate progress in key technological areas – Quantify potential benefits – Report successes / failures – Disseminate best practices Reduce risk – Collaboration – Field trials Review procurement practices – Focus on value Raise awareness – Technology champions

slide no. 26 Current strategies (1) DTI / PILOT – Fallow blocks /discoveries initiative

slide no. 27 Fallow process Four years of no drilling, or no Development Programme four years after discovery Doing all that can be expected Misalignment, Not economic, Commercial barriers Market testing (12 – 18 months) Divest/ReassignRelinquish Retain CLASS ACLASS B Renewed activity? NO YES

slide no. 28 Current strategies (2) DTI / PILOT – Fallow blocks / discoveries initiative – Shortened licence terms for new licences – Access to infrastructure – Consultation on “promote” licences – Availability of regional data – UK-Norway North Sea co-operation

slide no. 29 Current strategies (3) DTI / PILOT – Commercial “Code of Practice” – Study on technology uptake Brown field work group ITF solutions to low permeability Show-case events

slide no. 30 Potential timeline ITF Low perm. solutions Code of practice DTI fallow initiative Fallow assets onto LIFT Increasing impact of specialist companies PILOT 2005 target Continuing efficiency and technology improvements

slide no. 31 Further information