1. International Association of Oil and Gas Producers Europe’s Indigenous Oil and Gas Production GSE Workshop Brussels – 24th May 2007

2. ______________________________________________________________ 2 Who are OGP? International Association of Oil & Gas Producers: - Exploration and production - 67 companies and associations Members account for more than half of the world‘s oil output + about 1/3 of global gas production Office in London for global affairs since 1974 Office in Brussels for representation towards the EU since 1992 Courtesy of Statoil

3. ______________________________________________________________ 3 European energy demand Source: ExxonMobil, 2006 Average Growth / Yr. ~60% from oil and gas Europe Share20052030 Oil39%35% Gas24%27% Coal17%15% Other20%23% Source: ExxonMobil 2006

4. ______________________________________________________________ 4 Europe – a major oil and gas producer... Source: BP Statistical Review 2006 1282461014161820

5. ______________________________________________________________ 5 … especially in the North Sea Source: OGP 2005

6. ______________________________________________________________ 6 European production and consumption Figures for 2005 in billion barrels of oil equivalent (BOE) EU 25 (+ Norway) production: - Oil: 1.9= 35% of - Gas: 1.8 = 60% of Indigenous potential is up to 100 billion BOE = more than 27 years (at current production) ! EU 25 (+ Norway) consumption: - Oil: 5.4 - Gas: 3.0 Source: BP Statistical Review 2006 Source: IEA Word Energy Outlook 2006

7. ______________________________________________________________ 7 Essentials for Supply Security Diversification of sources Diversification of supply routes Transparent and non- discriminatory transits Maximise indigenous supplies EU/ Producer country dialogue and policies LNG Commercial gas storage New technology R&D Joint university / industry initiatives Stable and competitive fiscal regime Timely planning approval Open markets Service sector capacity Upstream long term contracts Timely investment Transparent, stable and applied regulation

8. ______________________________________________________________ 8 0 50 100 150 200 250 300 350 400 450 JanFebMarAprMayJunJulAugSepOctNovDec Storage Out Production Flex Storage In Base Load Demand Role of Production Flexibility Production flexibility is not re- usable Amount of prod. flex decreases with time

9. ______________________________________________________________ 9 Technology Unconventional - Large volumes - Hard to develop Improving Recovery Conventional - Smaller volumes - Easy to develop Technically, two strategies … High- Medium Quality Low Perm Oil Tight Gas Heavy Oil Gas Shales Gas Hydrates Coalbed Methane Oil Shale

10. ______________________________________________________________ 10 Recovery factor up… - North Sea currently ~ 45% - Increase by 1% equals 2.5 + years European consumption Technology to access unconventional oil & gas - Oil sands - Tight reservoirs - Difficult geography and geology Por: 5 to 15 % Perm: 10µD – 0.1mD Norway Oil Recovery Factor Ultra Tight Gas... make the most of what we have

11. ______________________________________________________________ 11 ….by technology penetration Key challenges: - Developing improved technologies to find and produce oil and gas with a minimal environmental footprint - To use fossil fuels more sustainably through carbon capture and storage technologies. Examples of technologies under development: - Seismic and Electromagnetic imaging - Snake wells - Enhanced oil recovery - Swellable elastomers - Tight gas - Deep water - Oil shale

12. ______________________________________________________________ 12 …and minimise our environmental footprint Environmental impact assessment before exploration & production Directional instead of vertical drilling avoids sensitive areas Drill cuttings and produced water are injected where necessary Oil-based drilling fluids have been widely replaced by water-based fluids Oil dispersed in produced water standard is 30mg/l – Average is 20mg/l Most sensitive monitoring technology detects no damage around platforms

13. ______________________________________________________________ 13 … within a competitive market The oil and gas producing industry is an integral part of EU industry and : - It operates in a globally competitive energy sphere - It’s continued contribution to EU Security of Supply depends on appropriate policy frameworks that recognise this context Oil and Gas mega-projects requiring high capital expenditure and having up to 10 years lead time and long life cycles require the industry to take a long term view. To ensure that the considerable remaining potential of EEA indigenous production is exploited requires an enduringly competitive and stable regulatory regime.

14. ______________________________________________________________ 14 Thank you for your attention!