Introducing the UNFCWhy classify our resources?

David MacDonald, Vice President Segment Reserves

Outline

History of resource classifications

Fundamental purpose of resource classification

Capital value chain at work in the North Sea

How the UNFC can facilitate development

2

Resource Classification is not a new Problem!

3

Purpose of Resource Classification

4

External user

External Influencers

Internal users

Governance and Assurance

Internal StakeholdersInternal preparers

Capital Value Chain

5

Adding Value

6

Development needs a Plan

7

The UNFC can help to define that development plan

Improving recovery factors in the North Sea

9

Resource progression

BP North Sea portfolio – Resource ‘tube’

Technical Limit52+% RF31% RF 42% RF38% RF

ReservesOnline

NewActivityFunded

Planned Options

Prod

uced

• Optimising base production

• New infill drilling

• Enhanced oil recovery

• Extending facility life

36% RF

Life of Field Depletion Plan

Options with technical barriers

10

Integrating subsurface description with operational activity – depletion planning

• Describing the habitat of the remaining hydrocarbon

− Technical limit seismic imaging

− Forensic reservoir description

− Accurate description of historical drainage & sweep

• Appropriate recovery mechanisms for later field life

− Modifying pore-scale process through EOR e.g. WAG, polymer

− Depressurisation (blow-down)

• Ensuring the facilities are fit-for-purpose and have appropriate life

− Increased water & gas handling; changing fluid chemistries (H2S)

• An integrated depletion plan to optimise infill drilling, wellwork & effective reservoir management

Magnus ongoing redevelopment to maximise recovery factor

12

Magnus pushes recovery factor 60%+

• Very successful initial waterflood development recovered initial sanction volumes

• Subsequent phases of development will increase recovery to 50-65%

− Subsea water injection added to debottleneck water injection well constraint

− WAG EOR scheme using stranded gas from WoS fields involved new import gas pipeline, additional compressor and recompletion of injection wells

− Platform slot constraint reduced by adding 4 new slots with splitter technology to side of platform providing 8 new wells

− Field life extension from 2008 to 2030 through ongoing CAPEX on facilities upgrades

• Enabled by substantial jacket & platform drilling package to reach field extents

• Full field seismic OBC coverage just been acquired (August 2011); 4D seismic for WAG surveillance

13

Magnus Development phases

• 7 subsea & 15 platform wells

•MSM only WF development

• LKCF development

• Increase off-take to 140mbd

• Revised petrophysical interpretation

• Infill drilling to utilise 20 slots

• plant PW de-bottlenecking

• 20 additional wells

• Subsea injectors (SWIFT)

• South Magnus subsea tie-back

• Miscible WAG EOR scheme for MSM and LKCF – brownfield mods

•8 new platform slots

• North West Magnus satellite development from platform

• Phase I and Phase II infill drilling programmes

• Options for further WAG patterns and Extended EOR scheme to progress remaining CR volumes

Magnus Full Field Recovery Factor

30% 40% 50% 60% 70%

500

600

700

800

900

1000

1100

1982

- Init

ial S

ancti

on 1986

1987

1991

1994

1995

2000

2005

2010

Proved

2011

Dep

letion

Plan

Mag

nus

Fiel

d R

ecov

erab

le o

il (m

mst

b)

Current Recovery of 820mmstb

Produced Infill Ph2 Max EOR & BlowdownBase Infill Ph3 Left in ground

Evolution of Magnus Field Production Profiles

0

20

40

60

80

100

120

140

160

1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 2019 2021 2023 2025 2027 2029 2031 2033 2035

Mag

nus

Hub

Oil

Prod

uctio

n R

ate

(mst

bd)

2011 Depletion Plan2010 Proved20052000199519941991198719861982 - Initial SanctionActual

(Historical profiles - Annex B revisions)

14

Improving recovery factors in the North Sea

• Describing the habitat of the remaining hydrocarbon

− Technical limit seismic imaging

− Forensic reservoir description

− Accurate description of historical drainage & sweep

• Appropriate recovery mechanisms for later field life

− Modifying pore-scale process through EOR e.g. WAG, polymer

− Depressurisation (blow-down)

• Ensuring the facilities are fit-for-purpose and have appropriate life

− Increased water & gas handling; changing fluid chemistries (H2S)

• An integrated depletion plan to optimise infill drilling, wellwork & effective reservoir management

Sustainable and Efficient Development

− Long sighted policies for the global markets

− Government resources management for security and efficiency

− Industry processes to develop new technologies and efficient project management

− Cost effective allocation of financial resources

15

• Securing affordable and sustainable energy requires a common standard for developing: