1. 1 INFORMATION STANDARDS: An Essential Enabler for Integrated Operation of the Digital Oilfield Alan Doniger Chief Technology Officer POSC National Data Repository Conference #7 Cartagena, Colombia 18-20 September 2006 and Successful Realization of National Objectives

2. 2 POSC and NDR Long-term Partners Long-term Partners Strong Support from the beginning and in the future Strong Support from the beginning and in the future We make presentations about POSC industry standards We make presentations about POSC industry standards We publish conference announcements and material We publish conference announcements and material Today’s Themes Today’s Themes Update: POSC is changing! Update: POSC is changing! Update: The standards are growing; we continue to learn better ways of collaborating and delivering value! Update: The standards are growing; we continue to learn better ways of collaborating and delivering value! Thoughtful Questions for You… Thoughtful Questions for You… How can you help POSC be more helpful? How can you help POSC be more helpful? How can POSC help you help each other between conferences? How can POSC help you help each other between conferences?

3. 3 About POSC About POSC Petrotechnical Open Standards Consortium Petrotechnical Open Standards Consortium Not-for-profit membership corporation Not-for-profit membership corporation Founded 1990 by 5 energy companies Founded 1990 by 5 energy companies 50 + members 50 + members Upstream E & P is our subject area Upstream E & P is our subject area www.posc.org is our Web site www.posc.org is our Web site www.posc.org

4. 4 Members: Energy Co’s, Service Co’s, Software Co’s BP BP Chevron Corporation Chevron Corporation ExxonMobil Corporation ExxonMobil Corporation Norsk Hydro a.s. Norsk Hydro a.s. Oil & Natural Gas Corporation Limited (ONGC) Oil & Natural Gas Corporation Limited (ONGC) Pioneer Natural Resources USA, Inc. Pioneer Natural Resources USA, Inc. Shell Shell Aspen Technology Inc. Aspen Technology Inc. Flare Solutions Ltd. Flare Solutions Ltd. Halliburton Landmark Graphics Corp. Halliburton Landmark Graphics Corp. Intelligent Agent Corporation Intelligent Agent Corporation Interactive Network Technologies, Inc. ( INT) Interactive Network Technologies, Inc. ( INT) Knowledge Systems, Inc. Knowledge Systems, Inc. M & H Energy Services M & H Energy Services MetaCarta Inc. MetaCarta Inc. Oil IT Journal Oil IT Journal Oilware, Inc. Oilware, Inc. OpenSpirit Corporation OpenSpirit Corporation Paradigm Geophysical Paradigm Geophysical Petris Technology, Inc. Petris Technology, Inc. Petrolink Services Petrolink Services Petrotechnical Data Systems BV (PDS) Petrotechnical Data Systems BV (PDS) RF - Rogaland Research RF - Rogaland Research Roxar Roxar Satyam Computer Services Ltd. Satyam Computer Services Ltd. Schlumberger Schlumberger SDC Geologix Ltd. SDC Geologix Ltd. Seismic Micro-Technology, Inc. (SMT) Seismic Micro-Technology, Inc. (SMT) United Petroservices Energy Group United Petroservices Energy Group

5. 5 Members: Government Agencies, Academics, Industry Groups American Geological Institute (AGI) American Geological Institute (AGI) British Geological Survey British Geological Survey Bureau of Land Management (US BLM) Bureau of Land Management (US BLM) Common Data Access Limited (CDA) Common Data Access Limited (CDA) Department of Trade and Industry (UK DTI) Department of Trade and Industry (UK DTI) Geoscience Australia Geoscience Australia Geoshare Users' Group (GUG) Geoshare Users' Group (GUG) Institut Français du Pétrole (IFP) Institut Français du Pétrole (IFP) Internet Society Internet Society Minerals Management Service (US MMS) Minerals Management Service (US MMS) Nancy School of Geology (GOCAD Project) Nancy School of Geology (GOCAD Project) Norwegian Petroleum Directorate (NPD) Norwegian Petroleum Directorate (NPD) Object Management Group Object Management Group OFS Portal OFS Portal Open Geospatial Consortium (OGC) Open Geospatial Consortium (OGC) Petroleum Industry Data Exchange (PIDX) Petroleum Industry Data Exchange (PIDX) POSC/CAESAR Association POSC/CAESAR Association Romanian Society of Geophysics (RSG) Romanian Society of Geophysics (RSG) The Open Group The Open Group

6. 6 Board Economics Reservoir Engineering Expl Geology PetrophysicsPetroleum Engineering Drilling Engineering Production Geology Production Engineering Facilities Engineering Production OperationsGeophysics Drilling Operations Completion & Workover E&P Catalogue Standards XML exchange standards, design guidelines, profiles Data Management SIG Production SIG Reference Data Standards eRegulatory SIG Global Unique Well Id Stds Areas of Focus E&P Business Process Reference Model Drilling SIG

7. 7 The New POSC POSC Board: Re-ignite upstream industry- wide interest in standards definition and adoption by Taking a fresh look at the organization Taking a fresh look at the organization Capabilities Capabilities Delivery model Delivery model Positioning Positioning Including broader representation Including broader representation More national energy companies More national energy companies More regulatory agencies More regulatory agencies More vertical service companies More vertical service companies More horizontal IT organizations More horizontal IT organizations More professional services organizations More professional services organizations

8. 8 The New POSC Focusing on value Focusing on value Community effect Community effect Information exchange efficiency Information exchange efficiency Value delivered by existing standards Value delivered by existing standards Drive through to deep deployment Drive through to deep deployment Re-inventing the organization Re-inventing the organization Same upstream E&P focus, but Same upstream E&P focus, but New leadership New leadership Clarified mission and vision Clarified mission and vision New name New name New image New image Launch November 8, 2006, Houston Launch November 8, 2006, Houston

9. 9 Join your E&P colleagues to hear the latest in thought leadership for upstream oil and gas standards. Catch up with exciting changes taking place at POSC: new leadership, new mission and enhanced membership value. This exciting event will introduce our Energy Standards Resource Centre, new collaborative services on offer and the development of a global open standards user community. A special hosted reception will follow immediately after the Standards Summit from 5:00 – 8:00 PM, so Register Now! Meet the new leadership Connect with E&P colleagues Catch up on new offerings DATE/TIME: November 8, 2006 3:00-5:00PM Summit 5:00-8:00PM Reception PLACE: Marriott West Loop 1750 West Loop South Houston, Texas 77027 Hotel Information: marriottwestloop.com marriottwestloop.com

10. 10 The Prize The upstream oil and gas industry believes that increased standardization can result in billions of dollars of additional value in the area of production optimization, alone, and knows that there are additional billions to be saved in other areas of the business. The upstream oil and gas industry believes that increased standardization can result in billions of dollars of additional value in the area of production optimization, alone, and knows that there are additional billions to be saved in other areas of the business.

11. 11 Example (from PRODML Work Group) Consider this in terms of production increase potential: Consider this in terms of production increase potential: Shell produces about 4 million bbls oil equivalent per day Shell produces about 4 million bbls oil equivalent per day With optimization, conservatively, Based on 5% improvement, that would add 200k bbls per day. With optimization, conservatively, Based on 5% improvement, that would add 200k bbls per day. To achieve that much more production, 2 platforms would have to be built and put in service in the Gulf of Mexico To achieve that much more production, 2 platforms would have to be built and put in service in the Gulf of Mexico Cost: 3 billion USD Cost: 3 billion USD Time: 5 years Time: 5 years Resources: up to 3 thousand people. Resources: up to 3 thousand people.

12. 12 E & P Standards Recent investment in E&P standards efforts focus on information exchange in high value areas, such as Drilling (costs) and Production (revenues) Recent investment in E&P standards efforts focus on information exchange in high value areas, such as Drilling (costs) and Production (revenues) WITSML: Drilling Data to Office (started 2000) WITSML: Drilling Data to Office (started 2000) PRODML: Production Optimization (started 2005) PRODML: Production Optimization (started 2005)

13. 13 WITSML™ – WWW.WITSML.ORGWWW.WITSML.ORG Wellsite Information Transfer Standard Markup Language “The ‘right-time’ seamless flow of well-site data between operators and service companies to speed and enhance decision-making” An Open Information Transfer Standard for the Oilfield

14. 14

15. 15 General Well Message Operations Report Real Time Wellbore Wellbore Geometry Risk Directional Drilling Systems Tubular / Bit Record BHA Run Fluids Systems Fluids Report Surface Logging Mud Log Logging While Drilling Log  Well Log (includes Wireline) Formation Marker Coring Sidewall Core Conventional Core Surveying Survey Program Target Trajectory WITSML Data Objects Rig Instrumentation Rig / Rig Equipment Cement Job Source: BakerHughes/Paradigm Communication Subscription Server Capabilities Existing Updated New

16. 16 Extending WITSML WITSML’s original mandate for at-wellsite and wellsite-to-operator (contextual and real-time) data transfers is proving to be extensible: WITSML’s original mandate for at-wellsite and wellsite-to-operator (contextual and real-time) data transfers is proving to be extensible: operator-to-wellsite and operator-to-regulator transfers operator-to-wellsite and operator-to-regulator transfers data-flows to partners, labs, repositories and more data-flows to partners, labs, repositories and more re-using the common architecture, infrastructure and terminology re-using the common architecture, infrastructure and terminology providing maximal commercial product and service incentives and benefits providing maximal commercial product and service incentives and benefits

17. 17 PRODML Introduction Everyone speaks about “Fields of the Future,” but want them now Everyone speaks about “Fields of the Future,” but want them now The application integration task can be extremely difficult The application integration task can be extremely difficult What if we had an industry standard that would interface – not necessarily integrate – applications? What if we had an industry standard that would interface – not necessarily integrate – applications? Wouldn’t that be a good thing? Wouldn’t that be a good thing? This is a problem that everyone faces. This is a problem that everyone faces. PRODML can help achieve that PRODML can help achieve that

18. 18 Operators BP BP Chevron Chevron ExxonMobil ExxonMobil Shell Shell Statoil Statoil Standards POSC (heavily invovled; brought much knowledge; becomes custodian as of Oct. 2006) POSC (heavily invovled; brought much knowledge; becomes custodian as of Oct. 2006) Vendors Halliburton Halliburton Invensys (ctl sys) Invensys (ctl sys) OSIsoft (historian) OSIsoft (historian) PETEX (app suite) PETEX (app suite) Schlumberger Schlumberger Sense Intellifield (infrastructure) Sense Intellifield (infrastructure) TietoEnator (EC) TietoEnator (EC) Weatherford Weatherford Who built PRODML V1?

19. 19 E&P Data Problem Real time data rich, information poor Real time data rich, information poor Exxon, BP, Shell, Chevron, Statoil, etc., have millions of electronic instruments Exxon, BP, Shell, Chevron, Statoil, etc., have millions of electronic instruments Generating terabytes of data every day Generating terabytes of data every day Fields are becoming more and more electronic Fields are becoming more and more electronic How can PRODML help turn this data into useful information? How can PRODML help turn this data into useful information? It is getting worse. Fibre optic technology is recording pressures and temperatures every 2 feet! Seismic during production will generate masses of data! It is getting worse. Fibre optic technology is recording pressures and temperatures every 2 feet! Seismic during production will generate masses of data!

20. 20 Disintegrated Applications and Models Abnormal Situation Management Abnormal Situation Management Production Allocation - Energy Components (TE) Production Allocation - Energy Components (TE) Optimization Applications – CaseLift (Weatherford) Optimization Applications – CaseLift (Weatherford) Maintenance Management - SAP Maintenance Management - SAP Reservoir Simulations - MBAL (Petex) Reservoir Simulations - MBAL (Petex) Well Simulations - Prosper Well Simulations - Prosper Pipe Line Simulations – Pipesim (Schlumberger) Pipe Line Simulations – Pipesim (Schlumberger) Process Simulations - Romeo (Shell  Invensys) Process Simulations - Romeo (Shell  Invensys)

21. 21 Make Data Useful Use data to enable continuous optimization Use data to enable continuous optimization Artificial Lift Optimization Artificial Lift Optimization Continuous estimate of well/reservoir oil, gas, water flows Continuous estimate of well/reservoir oil, gas, water flows Safeguard integrity Safeguard integrity Abnormal situation management Abnormal situation management Right information to right people, at right time, in right context, in right workspace to serve right work process Right information to right people, at right time, in right context, in right workspace to serve right work process Enable remote operations and real-time process control Enable remote operations and real-time process control Example: Example:

22. 22 Gas Lift Optimization 0.0 0.5 1.0 17131925 Time Oil Production. True Production PotentialPeriodic Manual OptimizationNo Optimization Activity SCADA or Historian Gas Lift Optimization Application 2-Phase Flow Model Real-time data to and from SCADA Real-time data to and from wells Optimal set points from model Real-time data to model

23. 23 Technical Integrity Problem Who is watching the unmanned wells and facilities ‘round the clock? Technical Integrity is a key objective. Gauge operators often only visit a well once during each month. That is not ensuring technical integrity.

24. 24 Technical integrity most important North Sea one week before Piper Alpha North Sea one week before Piper Alpha Explosion in gas compression module Explosion in gas compression module SCADA system retrieved data, cause found SCADA system retrieved data, cause found Incident could have been prevented Incident could have been prevented Piper Alpha was the worst disaster in oilfield history. Piper Alpha was the worst disaster in oilfield history. It happened after 10 o’clock on July 6, 1987 It happened after 10 o’clock on July 6, 1987 167 lives were lost. 167 lives were lost. Survivors had to jump into the North Sea’s hostile conditions. Survivors had to jump into the North Sea’s hostile conditions. The oil company involved lost all of its business in the North Sea. The oil company involved lost all of its business in the North Sea.

25. 25 Technical integrity most important Other incidents Other incidents Longford Longford Texas City Refinery raffinate splitter Texas City Refinery raffinate splitter Flow assurance – hydrates, leaks Flow assurance – hydrates, leaks Production facilities get more fragile as they age! Production facilities get more fragile as they age! Only one week before the Piper Alpha incident, Shell had a similar problem in a gas lift and gas compression area. The system on-board sniffed the gas and shut the system in. Nobody was injured. The explosion just shut everything down. The SCADA system took snapshots that were analyzed in Aberdeen. Very soon, we knew what happened… Only one week before the Piper Alpha incident, Shell had a similar problem in a gas lift and gas compression area. The system on-board sniffed the gas and shut the system in. Nobody was injured. The explosion just shut everything down. The SCADA system took snapshots that were analyzed in Aberdeen. Very soon, we knew what happened… We still don’t know what happened to Piper Alpha!

26. 26 Technical integrity most important The Shell team concluded that there was sufficient information in the system to have PREVENTED the initial failure. At that time, we weren’t smart enough t The Shell team concluded that there was sufficient information in the system to have PREVENTED the initial failure. At that time, we weren’t smart enough t In the Texas City refinery failure last year, they had a rafinate splitter with a build-up in the column to the point of ignition. The explosion followed the build-up after four or five hours. Data running through simulations should have identified the integrity violation before the catastrophic failure. Appropriate executive action could have taken place to prevent the disaster. In the Texas City refinery failure last year, they had a rafinate splitter with a build-up in the column to the point of ignition. The explosion followed the build-up after four or five hours. Data running through simulations should have identified the integrity violation before the catastrophic failure. Appropriate executive action could have taken place to prevent the disaster. Unfortunately, there were literally hundreds of such incidents! Unfortunately, there were literally hundreds of such incidents! We still don’t know what happened to Piper Alpha!

27. 27 Gathering Separation & Distribution Injection (Water, Steam, CO2) Water Handling Gas Treating Facilities Oil Treating Facilities Gas Export Facilities Oil Export Facilities Reservoir Management: Gas & Oil Contract Deliverability The Production Domain Initial Scope* From bottom of the well to initial separation Decisions we can effect in a day PRODML Producing Asset Scope *Scope has expanded downstream

28. 28 Optimization Applications Abnormal Situations Hydrocarbon Accounting Maintenance Management Reservoir Simulations Well Simulations Pipe Line Simulations Process Simulations Real Time Data ESD F&G Process – Reservoir – Well – Surface – Export – Pipeline Data in (input) Data out (set points or recommendations) Data Across The PRODML Bridge

29. 29 Potential Enabled Business Benefits Improved technical integrity Improved technical integrity Improved safety Improved safety Increased production Increased production Reduced OPEX Reduced OPEX PRODML is the key enabler for these benefits! PRODML is the key enabler for these benefits! Halliburton speaker at OTC ’06: “Integration is the issue.” PRODML is our answer! Halliburton speaker at OTC ’06: “Integration is the issue.” PRODML is our answer!

30. 30 IHS Signs LOI with POSC to Offer Enhanced GUWI Service Unique Ids for all Known Wellbores Unique Ids for all Known Wellbores Can replace diverse practices and naming conventions. Can replace diverse practices and naming conventions. Applies to all 4+ million wellbores world-wide Applies to all 4+ million wellbores world-wide Services available to the entire industry Services available to the entire industry Uses and builds on the existing IHS International Id Uses and builds on the existing IHS International Id POSC will POSC will Publish GUWI industry standards Host a DM SIG WIS Work Group representing operators and service providers. Contract with IHS for centralized services (by year-end 2006) Contract with other service providers for secondary services

31. 31 Well Identity Services Matching Request Registration Request Host: POSC DM SIG WIS Work Group Well Identity Services (operated by IHS) POSC Well Identity Standards Well Identity Services (indirectly thru others) Registration Request Matching Request

32. 32 Lessons Learned Show Leadership Where You Can. Blend Standards for Industry and Agencies. Be Visionary, but Act Incremental, Iterative.

33. 33 North Sea Leadership U. K. DTI promoted the development of XML data transfer standards by POSC for national repository input/output use, e.g. WellHeaderML, WellPathML, WellChemicalML U. K. DTI promoted the development of XML data transfer standards by POSC for national repository input/output use, e.g. WellHeaderML, WellPathML, WellChemicalML Norway NPD based the DISKOS national repository on a key portion of POSC’s Epicentre® data model Norway NPD based the DISKOS national repository on a key portion of POSC’s Epicentre® data model Leading to a commercial product line Leading to a commercial product line And repositories in many more nations! And repositories in many more nations!

34. 34 U.S. ePermitting Patience, patience, patience Patience, patience, patience “We are now ready to make use of the good work you (POSC) have done over the past few years.” (Representative of a group of U.S. state agencies) “We are now ready to make use of the good work you (POSC) have done over the past few years.” (Representative of a group of U.S. state agencies) When regulatory agencies find industry standards worthy of using and expanding …instead of building separate standards of their own, … good things can happen. When regulatory agencies find industry standards worthy of using and expanding …instead of building separate standards of their own, … good things can happen.

35. 35 ePermitting and WITSML™ The California state agency decided to build ePermitting data transfer on the WITSML family of standards in 2004 The California state agency decided to build ePermitting data transfer on the WITSML family of standards in 2004 If not for unrelated problems, this would have been in use from 2005. It now looks like Q2 of 2007. If not for unrelated problems, this would have been in use from 2005. It now looks like Q2 of 2007. The Ground Water Protection Council (GWPC) group of ~20 U.S. producing state agencies have also endorsed this approach. The Ground Water Protection Council (GWPC) group of ~20 U.S. producing state agencies have also endorsed this approach. Look at the current promotional brochure from GWPC and Chevron… Look at the current promotional brochure from GWPC and Chevron…

36. 36

37. 37

38. 38

39. 39 Lessons Learned Drive Standards Collaboration through “Development” to “Early Adoption” and “Beyond”

40. 40 Case in Point: WITSML BP and Statoil BP and Statoil Saw the vision Saw the vision Organized vendors Organized vendors Drove the initial development and encouraged product implementation Drove the initial development and encouraged product implementation Six years later Six years later WITSML is successful WITSML is successful (+) and has led to standards in other areas (+) and has led to standards in other areas (-) growth to the ‘next’ plateau in uncertain (-) growth to the ‘next’ plateau in uncertain

41. 41 Case in Point: PRODML BP, Chevron, ExxonMobil, Shell and Statoil BP, Chevron, ExxonMobil, Shell and Statoil Saw the vision Saw the vision Organized vendors Organized vendors Drove the initial development and funded realistic pilot implementations on a collaborative basis Drove the initial development and funded realistic pilot implementations on a collaborative basis One year later One year later PRODML V1 is about to be published PRODML V1 is about to be published There is a good chance that these and other energy companies will drive incremental annual efforts within the POSC community to add features and function There is a good chance that these and other energy companies will drive incremental annual efforts within the POSC community to add features and function Lesson: Drive to deep deployment and full market share Lesson: Drive to deep deployment and full market share After all, “Standards” are products, too. After all, “Standards” are products, too.

42. 42 Next… We hope to see more PRODML-like collaborations: We hope to see more PRODML-like collaborations: Visionary (Value-driven) Visionary (Value-driven) Step-by-step staging (Iterate/Incremental) Step-by-step staging (Iterate/Incremental) Funding members + key vendor = resources Funding members + key vendor = resources Given time and project management Given time and project management Drive through to realistic pilot projects Drive through to realistic pilot projects Leaders remain involved Leaders remain involved Better collaborative tools and accessible results Better collaborative tools and accessible results

43. 43 Thoughtful Questions for You

44. 44 Questions How can you help POSC be more helpful? How can you help POSC be more helpful? How can POSC help you help each other between conferences? How can POSC help you help each other between conferences?

45. 45 How can you help POSC be more helpful? My Ideas My Ideas Tell us about Tell us about your problems. your problems. your dreams. your dreams. See if what you need is found in our Standards Resource Centre See if what you need is found in our Standards Resource Centre If so, use it – and help make it better If so, use it – and help make it better If not, help us understand – other may need it, too If not, help us understand – other may need it, too Your Ideas Your Ideas ?

46. 46 How can POSC help you help each other between conferences? My Ideas My Ideas We could manage We could manage An NDR mailing list – or a number of subject-specific mailing lists An NDR mailing list – or a number of subject-specific mailing lists NDR Web-based discussion forums NDR Web-based discussion forums A process for NDR regional and/or subject groups for form (virtual or physical) A process for NDR regional and/or subject groups for form (virtual or physical) A process to harvest NDR proposals, results, etc. into agendas of future conferences A process to harvest NDR proposals, results, etc. into agendas of future conferences Your Ideas Your Ideas ?

47. 47 Thank You!

48. 48 Join your E&P colleagues to hear the latest in thought leadership for upstream oil and gas standards. Catch up with exciting changes taking place at POSC: new leadership, new mission and enhanced membership value. This exciting event will introduce our Energy Standards Resource Centre, new collaborative services on offer and the development of a global open standards user community. A special hosted reception will follow immediately after the Standards Summit from 5:00 – 8:00 PM, so Register Now! Meet the new leadership Connect with E&P colleagues Catch up on new offerings DATE/TIME: November 8, 2006 3:00-5:00PM Summit 5:00-8:00PM Reception PLACE: Marriott West Loop 1750 West Loop South Houston, Texas 77027 Hotel Information: marriottwestloop.com marriottwestloop.com