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

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

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

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

5. 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

6. slide no. 6 Undeveloped Discoveries Significant UKCS potential resource

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

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

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

10. slide no. 10 UDW survey – development barriers

11. slide no. 11 UDW survey – development barriers

12. 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

13. 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

14. 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

15. slide no. 15 Mind maps to identify barriers

16. slide no. 16 Mind maps to identify barriers

17. slide no. 17 Mind maps to identify barriers

18. slide no. 18 Mind maps to identify barriers

19. slide no. 19 Objectives networks for solutions

20. slide no. 20 Objectives networks for solutions

21. slide no. 21 Objectives networks for solutions

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

23. slide no. 23 Relative importance of solutions Technological SolutionsCommercial

24. 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

25. 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

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

27. 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

28. 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

29. 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

30. slide no. 30 Potential timeline 20022003 2002 ITF Low perm. solutions Code of practice DTI fallow initiative Fallow assets onto LIFT 20042005 Increasing impact of specialist companies PILOT 2005 target Continuing efficiency and technology improvements

31. slide no. 31 Further information www.og.dti.gov.uk www.pilottaskforce.co.uk www.indigopool.com/publicchannel/uklift colin.cranfield@dti.gsi.gov.uk