Gas Field Development Torolf Christensen, Statoil, October 16, 2013 Development and Production Norway, Field Development North

Gas Field Development - Contents

Lecture 1

Opening a new area

Investment decision framework in Statoil

The Aasta Hansteen development concept

Concept screening and selection Aasta Hansteen

Lecture 2

Economic analysis model in Statoil

The gas transportation system

The gas infrastructure processes

The Polarled development concept

Summing up

2

3

Aasta Hansteen

Norwegian Sea

Aasta Hansteen - opening a new area

Key Area Objectives Opening up a new area with new infrastructure

gives Statoil a key position in the region

Considered as a promising area

Development supports Statoils production ambition from 2017 and onwards

Maintain and extend options for further developments

Resulting effects

Develop competence and experience in harsh and deep water environment

Create local spin-off effects in Northern Norway

Contribute to develop the industry in the region

4

Ormen Lange

Aasta Hansteen

Heidrun Skarv Norne

sgard

Njord Linnorm

Aasta Hansteen Reservoir structures

5

Investment decision framework in Statoil

What is the capital value process? The model for investment decisions - a risk based decision model to mature large projects through decision gates

Acquisitions /farm-ins/mergers

Business Identifi- cation

Concept planning

Definition Execution Operations

DGA DGB DGC

DG0 DG1 DG2 DG3 DG4

Screening business opportunities

Bid preparations

Concession/ Negotiations

Business planning

Project development

8

DG0 Approval to start business planning

Business planning phase: establishes whether a business opportunity is economically, technically, operationally and organizationally feasible.

DG1 Approval to start concept planning Concept planning phase: identify alternative concepts,

select a viable concept, define and document the selected concept and develop design basis for approval at DG2.

DG2 Project pre-sanction start definition

Definition phase: further mature, define and document the business case based on the selected concept for project sanction.

DG3 Investment decision start execution Execution phase: realizes the business case.

DG4 Decision to hand over to start operation

Decisions at increasing maturity level: The Decision Gates Business case and work alignment: Stakeholder Start-up meeting (SSUM) Follow up business case assumptions and context, risk and stakeholder management, and

strategic change management: Steering Committee Quality Assurance Assistance (QAA) Independent technical and commercial review at decision milestones: Investment Arena

review.

Processes between DGs

The Aasta Hansteen development concept

11

Aasta Hansteen development concept

Spar-platform with condensate storage

Process capacity 23 MSm3/day

Steel catenary risers

Polyester mooring

Subsea system

two 4-slots templates plus a satellite

Seven production wells

Gas export through Polarled to Nyhamna

Margins included to serve as future hub Aasta Hansteen Pioneer in Norwegian deep waters

Gas reserves 47 GSm3 Condensate reserves 0.9 Sm3 Lean gas condensate, low CO2 content

Partners: Statoil (operator) 75% OMV15% ConocoPhillips 10%

Aasta Hansteen Key information

Substructure

length 198 m, diameter 50 m

Dry weight 46.000 tonnes

Condensate storage 25.000 Sm3

Topside

Dry weight 23.000 tonnes

Conventional gas processing plant

Gas turbine power generation

Produced water treatment and disposal to sea

LQ 100 beds

12

Aasta Hansteen challenges

13

New area and long distance from shore

Water depth 1300 m

Harsh weather conditions

Worlds largest spar and first on NCS

Need for technology qualifications

Aasta Hansteen

14 -

Concept screening and selection - Aasta Hansteen

15

Product

Multiphase flow land*) Sales gas & rich gas land*) *) Nyhamna or other

Condensate handling

Multiphase transport (Subsea) land*) Injection Piping Heidrun, Skarv, others Storage & off-loading

Production facility

Subsea ( Deep water ) Semi (Deep water ) Semi (Shallow water ) Spar (Deep water) FPU mono-hull (DW) FPU mono-hull ( SW ) Others ?

Power supply

El. power from land ?

Capacity constraints

Capacity at Nyhamna or other landing facilities?

Flexibility to include additional resources ? ( disc. & prosp. )

Subsea Platform Semi Spar FPU (mono-hull) Others

Additional resources in the area

Discoveries Prospects Leads

16

Norwegian sea evacuation scenarios

17

Product streams to Nordland

Snefrid

300 k

m 24

"=> 26

"=> 28

" multi

phase

flowli

ne

LuvaDevelopment

DG2 cases

Statoil

Pipelines- MTO-PTT-DEC

Schematic Sketch

Luva to ShorePhase I development

SIZE Date Prepared by REV

A4 14.12.2009 Per Harald Hansen 0SCALE NTS SHEET 1 OF 1

Luva

300 k

m Umb

ilical

Haklang

Manifold

300 km

2 7/8"

MEG i

njectio

n

Assumptions: 2-4 slot subsea templates + 1 satellite tie-back to

subsea manifold (8 x-trees) with flowlines 12,75" x 22,2 mm X 65 matr, each of 3 km lengths

Subsea manifold w/ structure (600 tonnes) with connection points for 4 x 12" flowlines, 1+ 24"multiphase flowlines, 6 x umbilicals and 2 x 12" future risers and 1 x 16" future risers for compression

One multidiameter flowline to shore 60 km of 24"x 1" mm + 90 km of 26"x 1" + 150 km of 28" x 1 to onshore terminal, Carbon steel, 6 mm asphalt and 60 mm concrete. 1000000m3 gravel installation, shore approach and freespans

1x 300 km umbilical, trenched 1x 300 km 2 7/8" x 6,4 mm MEG injection, X65 matr,

FBE + 5 mm PP coating. Strapped to umbilical, Trenched

Phase I

Phase II From year 5 compression required to produce at plateau rate Power from shore required for Subsea compression This solution creates a very large technology gap, a big

challenge to bridge The near field platform compression alternative selected as

base case

Snefrid

300 k

m 24

"=> 26

"=> 28

" multi

phase

flowli

ne

LuvaDevelopment

DG2 cases

Statoil

Pipelines, MTO-PTT-DEC

Schematic Sketch

Luva to Shore Phase II with Platform located compression

SIZE Date Prepared by REV

A4 07.01.2010 Per Harald Hansen 0SCALE NTS SHEET 1 OF 1

Luva

300 k

m Um

bilical

Haklang

Manifold

300 km

2 7/8"

MEG i

njectio

n

Assumptions: 1 import flowline and SCR from subsea manifold to

floater 6 km - 16" x 22,2 mm X 65 matr , incl SCR 1 export flowline and SCR from floater to subsea

manifold of 6 km - 16" x 22,2 mm X 65 matr incl SCR 2 x 6 km umbilicals from floater to subsea manifold

inlusive dynamic section 320 km DC power cable 30-35 MW

320 km

Powe

r

18

18

Alternative floaters with SCR - storage Floater Deep draft semi

with separate storage columns

Cylindrical FPSO with large bildge or heave damping

SPAR With storage

Octabouy Floater with SCR and separate storage

Pros Acceptable motions Proven Large storage

Heave motions

Proven (under construction)

Proven

Cons Need qualification Limited storage

Motions (roll /pitch) Air gap/green water Topside cosnstruction

Need qualification Motion / air-gap issues HCOG sensitive Limited storage Topside layout

Storage in column and pontoon Open storage /soft tank

Cost

Power cable

Possible Possible

Favorable

Possible

Possible

Offloading Loading buoy Direct needs qualification

Direct proven (ref. Goliat)

Loading buoy Direct needs qualification

Loading buoy Direct needs qualification

Direct

Air gap and green water requirements

19

No green water on spar deck or negative air gap in 100 year storms

Positive air gap to lifeboats in 10.000 year storms

Negative air gap in 10.000 year storms shall not escalate into a sever scenario

The Spar FPSO fulfilled all requirements in competition with the Circular FPSO

Extensive modell testing performed

Economic analysis model

Classification:

C fid ti

Principles of economic evaluation

Value Creation. Corporate decisions based on an overall management evaluation. Value creation for shareholders the main criterion (net present value after tax)

Balanced approach. All elements that can be quantified shall be part of the valuation to obtain an expected value

Strategic value. Compliance with strategic direction

21

Risk management. All relevant risks to be identified and described

HSE considerations a part of the total evaluation of any proposed decision

Value chain considerations

Values for Statoil (and partners) as owner(s) also outside Aasta Hansteen:

Owner shares in other licenses that utilize the infrastructure

Value of avoided deferral (capacity) and acceleration of volumes

Additional values from other licenses in the Vring area

Value of Gassled ownership

Risk considerations

22

Important contributors to value creation

Value chain considerations

Polarled and Nyhamna tariffs directly affected by gas volume basis (non-linearity)

23

Industrial development of the Norwegian Sea requires a new pipeline to transport gas from existing and future fields in the area

The Polarled pipeline and Nyhamna modification project provides the gas export solution from Aasta Hansteen

Other fields will likely utilize the new pipeline for export of gas

Kristin Gas Export Pipe (KGEP) an opportunity for the currently restrained gas volumes from sgard Transport (T)

Volume and tariff scenarios

24

The gas transportation system - Norwegian Sea Infrastructure development Security

Classification: Internal

- Status: D ft

Norwegian Sea

Barents Sea

Aasta Hansteen

Moving into deep water in the Norwegian Sea

26

How to transport the gas from Aasta Hansteen?

?

27

Players in the gas transport value chain Gassled

Owners of the existing gas transport system

Gassco Operator of the transport system

Statoil as Technical Service Provider on Krst and Kolsnes

New infrastructure architecht

Supply fields (licences) Operators and partners of supply fields

Shippers Companies requesting gas transport capacity

Potential funders of new infrastructure

NPD & OED

Gassco yearly transport plan analysis

28

Further development

phases

Gas transport capacity situation from the Norwegian Sea

Existing transport system (sgard Transport) full until 2020 +

New gas transport infrastructure needed

Several companies agreed with Gassco to consider a new transport solution ~2009

29

Source: Gassco transport plan 2013

Process of establishing Polarled

30

Polarled Aasta H

Zidane

Linnorm

Nyhamna

2009 2010: Gassco facilitated feasibility studies for new infrastructure

Recommendation: a pipeline to Nyhamna connecting into the Ormen Lange processing plant and further gas export through Langeled to Sleipner

March 2010: Gassco submitted an invitation to Open season

Several companies invited to participate and 13 joined the study phase

December 2012: Concept decision (DG2) in parallell with Aasta Hansteen

December 2013: Investment decision (DG3) in parallell with Aasta Hansteen

10 companies participated finally

Pipeline route

31

Pipeline length 481 km Uneven seabed Many free spans Optimize route

Polarled Pipeline Project

32

PLEM

36

FIRST DRY WELD

DRAUGEN GAS EXPORT (LINNORM)

NYHAMNA

Aasta Hansteen

ZIDANE

36

FUTURE

KRISTIN

PIP

ELI

NE

SYS

TEM

SU

BM

AR

INE

PIP

ELI

NE

SYS

TEM

SCR 14

Parameter Unit Value

Design pressure barg 233 @ 30 m MSL

Design temperature C -10 / + 60

Operating pressure barg 115 - 231

Operating temperature C 55 (max) + temp. profile

Capacity MSm3/d 58 (entry @ kp0) 70 (exit @ Nyhamna)

VICTORIA

18 (16 ID)

18 16 ID

12

PLEM ERB

PLET

POLARLED

LEGEND SUBSEA STRUCTURE PIPELINE IN-LINE TEE UMBILICAL NYHAMNA PIG RECEIVING FACILITIES

PLEM: PIPELINE END MANIFOLD/TERMINATION ERB: EXPORT RISER BASE SCR: STEEL CATENARY RISER

Max. hydrocarbon

dew point

Max. water dew-point

barg at 0 C C at 69 barg

110 -18

33

Nyhama Ormen Lange well stream processing plant ( operated by Shell) Tie-in of processing of Polarlead rich gas Export of sales gas through existing Langeled to Sleipner/UK

Commercial challenges prior to investment decision

No. of commercial agreements/ arrangements needed, such as

Tie-in and construction agreements between tie-in fields and Polarled and Polarled and Nyhamna (Ormen Lange)

Participants Agreement for Polarled Owners

Capacity allocation agreement at Nyhamna

Proposal for tariffs

34

Operating phase

Polarled and Nyhamna will be merged with Gassled prior to start-up in 2016

Gassco will take over as operator of Polarled and Nyhamna

Shell ( todays operator at Nyhamna) will be Technical Service Provider at Nyhamna

Transport tariffs for Polarled and Nyhamna to be settled finally by MPE prior to start-up in 2016

All shippers requesting capacity must document that they have a Duly Substantiated Reasonable Need for Capacity (DSRN)

35

36

Key messages

Developing a gas field and building infrastructure in parallel is a demanding task

Requires knowledge and understanding of the entire value chain

Close cooperation across internal units and external stakeholders is a must

Involves all technical and economical disciplines

An inspiring challenge, serving as a great learning arena

37

Presentation title: Gas Field Development

Presenters name: Torolf Christensen Presenters title: Vice President E-mail address : toc@statoil.com Tel: +4791589645 www.statoil.com

Thank you for your attention Time for questions

Gas Field DevelopmentGas Field Development - ContentsSlide Number 3Key Area Objectives Aasta Hansteen Reservoir structuresInvestment decision framework in StatoilWhat is the capital value process? The model for investment decisions - a risk based decision model to mature large projects through decision gatesProject developmentSlide Number 9The Aasta Hansteen development conceptSlide Number 11Aasta Hansteen Key informationAasta Hansteen challengesConcept screening and selection -Aasta HansteenSlide Number 15Norwegian sea evacuation scenariosProduct streams to NordlandSlide Number 18Air gap and green water requirementsEconomic analysis model Principles of economic evaluationValue chain considerationsValue chain considerationsVolume and tariff scenariosThe gas transportation system - Norwegian Sea Infrastructure developmentMoving into deep water in the Norwegian SeaPlayers in the gas transport value chainGassco yearly transport plan analysisGas transport capacity situation from the Norwegian SeaProcess of establishing PolarledPipelineroutePolarled Pipeline ProjectSlide Number 33Commercial challenges prior to investment decisionOperating phaseKey messagesSlide Number 37